Many people in India hold one or two old credit cards that they barely use. Some cards are from the first job, some have low limits, and some remain unused in the wallet. A common question is whether closing these old credit cards is advisable.
The short answer is, it depends. Closing a credit card can help in some cases, but it can also hurt your credit score if done without planning.
Let’s clarify this so you can make the right call.
Why People Think About Closing Old Credit Cards
Most people consider closing old cards because
- They do not use the card anymore
- The card has an annual fee
- The credit limit is low
- They want to simplify finances
- They worry about misuse
All these reasons are valid. Lekin credit score angle bhi samajhna zaroori hai.
How Old Credit Cards Affect Your Credit Score
Old credit cards impact your credit score in two significant ways.
1. Credit History Length
Credit history length indicates how long you have used credit.
Older cards increase the average age of your accounts. A more extended history usually helps your credit score.
If you close your oldest card, your credit history becomes shorter. This may result in a slight drop in your score.
2. Credit Utilisation Ratio
Credit utilisation is how much credit you use compared to your total limit.
When you close a card
- Your total available credit reduces
- Your utilisation ratio may increase
Example
You have two cards
Total limit ₹2,00,000
You use ₹40,000
Utilisation is 20 per cent.
If you close a card with a ₹1,00,000 limit, your total limit becomes ₹1,00,000, and your utilisation is 40 per cent. This can hurt your score.
When Closing an Old Credit Card Makes Sense
Closing an old credit card is usually fine if
- The card has a high annual fee and no benefits
- You have multiple cards with high unused limits
- The card is rarely used and hard to manage
- You are confident that utilisation will remain low
In such cases, the impact on your credit score is usually minor and temporary.
When You Should Avoid Closing Old Credit Cards
Avoid closing old cards if
- It is your oldest credit account
- It has no annual fee
- It has a high credit limit
- You are planning a loan soon
- Your credit utilisation is already high
In these cases, closing the card can do more harm than good.
Yeh galti kaafi log loan apply karne se pehle kar dete hain.
Safer Steps Before Closing a Credit Card
If you still want to close a card, follow these safer steps.
Step 1: Check Your Credit Utilisation
Calculate your utilisation after closing the card. Try to keep it below 30 per cent.
Step 2: Clear All Outstanding Amounts
Pay all dues and ensure the balance is zero before requesting closure.
Step 3: Redeem Reward Points
Once the card is closed, reward points are usually lost.
Step 4: Get Written Confirmation
Ask the bank for written confirmation that the card has been closed successfully.
Step 5: Check Credit Report After One Month
Verify that the card is listed as closed in your credit report, not as active or overdue.
Should You Close or Keep Dormant Cards?
If a card has no annual fee, keep it open and use it once every few months for a small amount.
This helps
- Maintain a credit history
- Keep utilisation low
- Avoid accidental closure by the bank
Small usage with full payment is the safest approach.
What If You Already Closed an Old Card?
Do not panic.
If your score drops slightly, it usually recovers in a few months if
- You keep payments on time
- You control utilisation
- You avoid new credit applications
Regularly monitoring your profile helps you track changes in your credit score and avoid surprises.
Final Thoughts
Closing old credit cards is not always a bad decision, but it should never be rushed.
Old cards quietly support your credit profile in the background. Before closing any card, review your credit history, utilisation, and future loan plans.
Thoda soch samajh ke decision loge, to credit score safe rahega.
FAQs
Does closing a credit card reduce credit score?
It can, especially if it reduces the length of credit history or increases utilisation.
Is it bad to keep unused credit cards?
No, as long as they have no fees and you monitor them occasionally.
Should I close cards before applying for a loan?
Usually no. It is better to keep your profile stable before applying for a significant loan.
How long does the score take to recover after closure?
Typically, 1 to 3 months if other habits are healthy.
Can banks close inactive cards automatically?
Yes. Some banks may close inactive cards, so occasional use helps.
