Open and close credit card to save on annual fee

Is it OK to cancel your first credit card?

Experts often warn against closing a credit card, especially your oldest one, since it can have a negative impact on your credit score. Before you close your credit card, consider the potential effect.

Why shouldn’t you close your first credit card?

Because closing your first credit card can cause a dip in credit score, never close an account before applying for a major loan such as a mortgage or an auto loan. Even if your credit score only drops by 15 points, this could potentially result in a higher interest rate.

Does closing 1 credit card affect score?

A credit card can be canceled without harming your credit score⁠; just remember that paying down credit card balances first (not just the one you’re canceling) is key. Closing a charge card won’t affect your credit history (history is a factor in your overall credit score).

Is it better to cancel unused credit cards or keep them?

In general, it’s best to keep unused credit cards open so that you benefit from a longer average credit history and a larger amount of available credit. Credit scoring models reward you for having long-standing credit accounts, and for using only a small portion of your credit limit.

Does closing a credit card improve credit score?

The longer you’ve had credit, the better it is for your credit score. Your score is based on the average age of all your accounts, so closing the one that’s been open the longest could lower your score the most. Closing a new account will have less of an impact.