INCOME TAX26 Sept 2026
Closing an unused credit card? Experts explain how it can affect your credit utilisation | Mint
Closing an unused credit card looks like simple cleanup, but it shrinks your total available credit. If your outstanding balance stays the same, your credit usage ratio rises, which can lower your credit score and make future borrowing costlier. This mainly affects cardholders with old or fee-free cards. Before cancelling, check fees, benefits, limits and dues, or keep the card active with small spends.
Key Statutory Highlights
- Closing a credit card reduces your total available credit limit, which pushes your utilisation ratio higher if your outstanding balances stay unchanged.
- A lower credit utilisation is generally seen more favourably by lenders, with 30% often used as a rule of thumb rather than a fixed cut-off.
- If the card you close is your oldest one, it shortens your credit history, which is a key factor in credit scoring.
Actionable Advice for Taxpayers / Founders:Before cancelling any unused card, review its annual fee, benefits, credit limit, dues and whether it is among your oldest accounts. If you keep it, make one small transaction every few months and repay it in full. For advice on your own situation, speak to a certified financial advisor.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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