Here's What Happens When You Close a Credit Card After 15 Years

After 15 years with the same credit card, you might be ready for a change. That's especially true if your old card doesn't have much to offer. Assuming you've paid on time, your credit score is probably good enough to qualify for the best credit cards now.

But when you aren't using an old card anymore, you need to decide what to do with it. The conventional wisdom is to avoid closing old credit cards, because it will hurt your credit score. If you're worried about that, I have some good news.

Closed credit cards stay on your credit report for up to 10 years

The age of your credit accounts affects your credit score. All other things being equal, it's much better to have a 15-year credit history than a five-year credit history. That's the reason behind the advice to keep old credit cards open. If you close them, it will lower your overall account age.

There's a key point this advice misses. Closed credit cards don't immediately drop off your credit file. They stay there for a certain amount of time, depending on whether the card had any reported payment issues. Here's how it works:

• Closed accounts with no late payments stay on your credit report for 10 years. During that time, they will continue to positively impact your credit score.
• Delinquent accounts and accounts with late payments stay on your credit report for seven years. These will negatively affect your credit score, but the impact will diminish over the years.

Don't worry that closing an old credit card will immediately lower your credit account age. That's not how it works. If it's an account with no payment issues, it won't come off your credit for 10 years. At that point, you'll presumably have other credit cards with long credit histories to effectively take its place.

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Your credit utilization could go up

Your credit history will be fine after you close a credit card. There's another way this could affect your credit score, though. If you're carrying any balances on other credit cards, your credit utilization could increase. This is one of the biggest factors in your credit score.

Credit utilization is the portion of your credit that you're using. Every month, card issuers report the balances and credit limits on your cards. Let's say you have $5,000 in total balances and $20,000 in credit limits. Your credit utilization is 25%, which is pretty good.

You decide to close your 15-year old credit card, which has a $0 balance and a $10,000 credit limit. Now, you have the same $5,000 in balances on your other cards, but with only $10,000 in credit limits. Your credit utilization goes up to 50%, which will hurt your credit score.

The best way to keep your credit utilization low is to pay off your cards every month. You also avoid interest charges this way. But if you're currently in debt, you may want to wait until you've paid it off to close any credit cards.

Deciding to close a credit card

If you're not using a credit card anymore, there's nothing wrong with closing it, even if you've had it for 15 years or longer. The idea that closing old cards hurts your average account age is a misconception.

The real risk to your credit score when you close a card is your credit utilization. But if you don't carry large balances on your credit cards, then this won't be an issue, either.