Should I Close My Credit Card Account if the Balance Is $0?

Quick Answer

You should generally keep a credit card account with no balance open. But if there’s a high annual fee you may want to consider closing or downgrading your card.

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If you've been working to pay off your credit card and finally have a $0 balance, you may wonder if it's a good time to close the account. Generally, it's best to keep your credit card account open—even when your account balance is $0.

Here's why it's a good idea to keep your card open once you pay it off—and when it may make sense to close a card with no balance.

Why You Should Keep Your Credit Card Account Open

There are good reasons to keep your credit card open, even if you recently paid it off:

  • Lower credit utilization: Keeping your credit card account open can preserve your credit utilization rate, which is how much of your available credit you're using. Credit utilization is a huge factor in the "amount owed" portion of your credit score, which makes up 30% of your FICO® Score , the score used by 90% of top lenders. When you close a credit card, you lose the amount of available credit you had with the card. If you've got balances on other credit card accounts, this can increase your credit utilization rate and potentially lower your credit score.
  • Reduced length of credit history: Another aspect of your credit score that can be affected when you close your credit card is the average length of your credit history, which makes up 15% of your credit score calculation. Closing a $0 balance card can affect that average because credit scores typically factor the age of your oldest account, your newest account and the average age of all your accounts into your score. However, if you do close a credit card account in good standing, the payment history stays on your credit report for up to 10 years, which could continue to help your credit score during that time.
  • Loss of card benefits and perks: Finally, if you have a card that earns rewards and offers other benefits, you'll lose access to them once you close your account. If you're set on closing your card, be sure to redeem any unused rewards, credits or perks associated with it—especially if you've already paid the annual fee.

When You May Want to Close Your Credit Card Account

You may want to close a credit card if it carries an annual fee and you no longer get much use from the card. For instance, if you have a travel credit card with a hefty annual fee and haven't used the travel benefits in a while, it could be a good idea to close it.

If you close your account, any hit to your score will likely be temporary and not hard to recover from—especially if you closed the account in good standing and continue to use your other credit products responsibly. Paying off your other card balances can also help your score bounce back quickly.

Alternatives to Closing Your Credit Card

If you decide to keep your credit card open but aren't making much use of it, you have options:

  • Downgrade your card. If you have a card with an annual fee, some issuers will allow you to downgrade your credit card to a no-annual-fee card they offer. This is also known as a product change and can help you keep your account open without incurring an annual fee.
  • Ask your issuer to waive the fee. If the annual fee is the main reason you want to close the account, you could call your issuer and ask them to waive it as a courtesy. They aren't obligated to do it, but it's not uncommon for issuers to grant a one-time fee waiver. Then you can take the extra time to decide whether you may prefer to keep it open.
  • Get a new card. You can also consider opening a new card that has benefits you want, such as better rewards or intro 0% APR financing. But keep in mind that your credit report will be pulled, possibly causing a small, temporary dip in your credit score. If you continue to keep the other card at a zero balance, your score could even benefit from the additional available credit the new card offers—as long as you keep the balance low.

To make your search for a new card easier, you can use Experian CreditMatch™ to find credit offers that match your credit profile. The tool also shows you the cards with the highest approval odds based on your current score.

Don't Forget to Keep Your Credit Card Account Active

If you decide to keep your $0 balance account open, it's important to keep it active; otherwise, your issuer could close the account due to inactivity. Your account could look inactive if you don't make any payments or purchases on the card for an extended period of time.

To avoid this, consider automating some activity on your card. You can put a small, recurring subscription on your card each month, for example. Then, you can set up automatic payments to make sure the balance is paid on time and in full each month.

The Bottom Line

Choosing to keep your zero balance credit card open or closing it depends entirely on your personal financial circumstances and preferences. If you're concerned about how any changes to your credit card accounts will affect your credit score, consider signing up for free access to your Experian credit report and FICO® Score, which comes with credit monitoring and alerts.