Should You Close a Credit Card After Paying It Off?

Paying it off feels like a finish line — but closing it can cost you

You finally paid off a credit card. The instinct to close it — to remove temptation, simplify, or "clean up" your finances — is natural. But for your credit score, closing a paid-off card is often the wrong move. Two of the biggest FICO® factors work against you when you close a card you've held for a while.

What closing actually does

• It raises your utilization ratio. Closing removes the card's limit from the denominator. If you have $15,000 in total limits and $3,000 in balances (20% utilization), closing a $5,000-limit card drops your total limit to $10,000 — and your utilization jumps to 30%. That single change can lower your score, sometimes immediately.
• It can shorten your average account age. If the closed card was one of your oldest, losing it from the "active" mix can reduce your average age (15% of your score). Closed accounts in good standing can stay on your report for up to 10 years, so this effect may be delayed, but it comes.

When closing makes sense anyway

• High annual fee you're not using. If the card charges a yearly fee and you no longer get enough value from it, the cost outweighs the score benefit. Consider product-changing to a no-fee card from the same issuer first — that often preserves the account history.
• It's a genuine temptation. If having the card open leads to overspending you can't manage, the financial harm outweighs the score impact. Your overall financial health comes first.
• You're about to apply for a mortgage. Counterintuitively, avoid any credit change — openings or closings — in the months before a major application.

The usual best move

For a no-fee card you've held for years: keep it open. Put one small recurring charge on it (a subscription, a single gas fill-up) and set autopay, so the issuer doesn't close it for inactivity. You preserve the limit, the age, and the payment history — all of which quietly help your score for years.