I've Closed Old Credit Cards Even Though It Hurts My Credit Score. Here's Why

Sometimes, the downsides of keeping a card open can outweigh the upside. 

Like most financial writers, I often advise keeping old credit cards open even if you are no longer using them. There's a really good reason not to close down outdated credit accounts, including the fact they help your credit score by showing a payment history over the years and by helping you maintain a lower credit utilization ratio. 

But, despite the fact that I emphatically believe it's generally a good idea not to shut down old credit card accounts, I actually closed several of my own cards not too long ago. This hurt my credit score, just as I had projected it would, but I did it anyway. Here's why. 

Keeping the cards open came at a cost

The reason I decided to close down some old credit cards is that keeping them open was actually costing me money. The cards had annual fees, which meant I was paying every single year in order to keep them open just to avoid taking a hit to my credit score.  

While the annual fees were once justified by the perks, which included airline lounge access and other travel-related benefits, this was no longer the case. Because of COVID-19, I was not able to travel much. And even if the pandemic hadn't hit, the fact that I have two small children and an elderly dog has curtailed my ability to fly very easily for the foreseeable future.

Since I was paying a lot of money for benefits that were of no use to me, and since I have other cards that can earn better rewards based on the spending I'm doing now, it just did not make sense to keep the cards open and incur those costs indefinitely. 

I could afford to take a small hit to my credit score

Another big reason why I decided it was an ideal option to close down old credit cards is because I don't really care if my credit score goes down a little bit.

My credit score is currently well over 800, so even if it were to decline quite a bit, I would still have a score that lenders look upon very favorably. Closing down the old accounts was not going to relegate me to being unable to borrow or render me a customer that companies would be concerned about doing business with. 

I also do not plan to do any major borrowing anytime soon. We already own our home and we don't take out car loans or other kinds of loans such as personal loans. And we already have a credit card we like so we were not planning to apply for any new credit cards in the coming months.

Because I'm not worried that a temporary dip in my credit score could make a big loan more expensive or stop me from borrowing the way I want to, there was absolutely no justification for continuing to pay the fees to keep unused cards open. 

Now, my calculation was personal to me and others may find that closing down old cards is not worth it now, even if they do have to pay a fee to keep them open for a while longer. The important thing is to not just blindly follow the rule to always keep them open, but to consider what's best for you.