You’ve probably heard that you shouldn’t close a credit card account because it will lower your FICO score by increasing the percentage of what you owe in proportion to your total debt.
However, there are times when you should close a credit card: first, if you have too many cards and need to cut back; and second, if your card has a high interest rate—18% to 29%.
If you have too many cards, your best bet is to close the card you’ve had for the least amount of time; keep your oldest cards since length of credit history accounts for about 15% of your score. If your cards have high interest rates, try to negotiate a lower rate first. If unsuccessful, close the account and shop for a card that offers more favorable terms.