Most people believe that closing a credit card is a good financial decision. Fewer cards means fewer bills, fewer fees, and less temptation to spend. It feels clean.
But your credit score doesn’t always agree. In many cases, closing a card can pull your score down, sometimes by a lot.
Here’s why that happens and what you can do instead.
Closing a Card Raises Your Credit Utilization
This is the biggest reason.
Credit utilization means how much of your available credit you are using. Lenders like to see it low. A common rule of thumb is to stay under 30%.
Here’s a simple example.
You have two cards:
- Card A: AED 30,000 limit
- Card B: AED 20,000 limit
Your total limit is AED 50,000. Say you owe AED 15,000 in total. That’s 30% utilization. Looks healthy.
Now you close Card A. Your total limit drops to AED 20,000, but you still owe AED 15,000. Your utilization jumps to 75%.
You didn’t spend a single dirham more, yet your score can drop. To a lender, it looks like you’re leaning heavily on your credit.
You Lose Some of Your Credit History
Age matters. A card you’ve had for eight years tells lenders you’ve handled credit for a long time. That’s a good sign.
When you close an old card, that history stops adding to your profile as an active account. If it was your oldest card, the effect can be bigger. Your average account age shrinks, and lenders see a shorter track record.
This is why closing your first card, the one you got years ago and barely use, is often a mistake.
Your Credit Mix Gets Smaller
Lenders like to see that you can handle different types of credit, like cards and loans. If a credit card is the only card in your profile and you close it, you’ve narrowed things down. It’s a smaller factor than utilization, but it adds up.
Closing a Card Doesn’t Erase the Debt
This one catches many people off guard.
Closing a card does not cancel what you owe. If you have a balance, you still have to pay it. The bank will keep charging interest, and late payments will still hit your credit report.
Some people close a card hoping the problem goes away. It doesn’t. The debt stays, and now you have less available credit, which can push your utilization even higher.
If you’re closing cards because the balances feel too big, that’s a sign to look at a proper plan instead. More on that below.
How Your Credit Score Works in the UAE
In the UAE, your credit score comes from the Al Etihad Credit Bureau (AECB). It ranges from 300 to 900. Banks and lenders check it when you apply for a loan, a new card, or even some rentals and services.
The score is built from things like:
- Whether you pay on time
- How much of your credit limit you use
- How long you’ve had credit
- The types of credit you have
- How often you apply for new credit
Closing a credit card can touch several of these at once. Let’s go through them.
When Closing a Credit Card Makes Sense
To be fair, there are times when closing a card is the right call. For example:
- The card has a high annual fee and you don’t use it
- You keep overspending on it and can’t stop
- You have too many cards and can’t keep track of the payments
- The card is being misused or you’re worried about fraud
If this sounds like you, your financial health matters more than a few score points. Just close it the smart way.
How to Close a Credit Card the Right Way
If you decide to go ahead, these steps can reduce the damage.
- Pay off the balance first
Clear everything, including fees and interest. A card with dues can’t be closed cleanly.
- Close your newest card, not your oldest
Keep the older ones open, since they carry more history.
- Check your total limit
Make sure your utilization won’t jump after the closure.
- Cancel any automatic payments.
Remove the card from subscriptions so you don’t get surprise charges or missed payments.
- Ask for a closure or clearance letter
Keep it safe. It’s your proof that the account is closed with nothing owed.
- Check your AECB report afterward
Make sure the card shows as closed and that the details are correct.
Better Options Than Closing Your Card
Before you cancel, think about these:
Keep it open and use it lightly
A small purchase every few months, paid off in full, keeps the card active.
Ask for a lower annual fee
Many banks will offer a fee waiver or switch you to a no-fee card.
Ask for a limit increase on another card
This can balance out the loss of credit if you do close one.
Move to a simpler card
Downgrading is often better than closing.
What If You’re Closing Cards Because of Debt?
If you’re thinking about closing cards because the bills are piling up, pause for a moment. Closing cards won’t fix the balances, and it may make your score worse right when you need it most.
This is where real help makes a difference. A debt management company can look at your full picture, including all your cards, loans, and monthly income, and suggest what actually fits your situation.
Depending on your case, that might mean:
Debt consolidation: Combining several debts into one payment, so it’s easier to manage and you’re less likely to miss a due date.
Debt management: Building a clear repayment plan that fits your monthly budget.
Credit card debt settlement: Working with banks to settle what you owe when you truly can’t keep up with regular payments.
Each option works differently, and the right one depends on your income, your debts, and your goals. That’s why it helps to talk to someone before making a move you can’t undo.
Quick Recap
- Closing a card can raise your credit utilization and lower your score
- It can shorten your credit history, especially if it’s an old card
- It doesn’t remove any balance you still owe
- If you must close one, pay it off, pick the newest card, and get a closure letter
- If debt is the real problem, get advice before you cancel anything
Need Help With Credit Card Debt?
If your credit cards are getting hard to handle, you don’t have to figure it out alone. Lin International Debt Management helps people across the UAE with debt consolidation, debt management, and credit card debt settlement. You can start with a free consultation to see what your options are.
Call 800-5464685 or visit lininternational.net to speak with a debt advisor.
Frequently Asked Questions
Q1. Does closing a credit card hurt your credit score?
Yes, it can. Closing a credit card lowers your total available credit, which raises your credit utilization ratio. It can also shorten your credit history if the card is an old one. Both can bring your AECB credit score down, even if you never missed a payment.
Q2. Why does closing a credit card lower your credit score?
Closing a card removes its limit from your total available credit. If your balances stay the same, you’re now using a bigger share of the credit you have left. Lenders see high utilization as a risk. Closing an old card can also reduce the average age of your accounts.
Q3. What should you do before closing a credit card in the UAE?
Pay off the full balance, including fees and interest, and cancel any automatic payments linked to the card. If you have several cards, close the newest one and keep the oldest open. Ask the bank for a closure letter, then check your AECB report to confirm the card shows as closed.
