Musk's X Now Involved in Visa Deal

[thesquanderer]

30. Cancelling a credit card canhave negative consequences.

Two reasons I would be careful about cancelling a credit card.

One factor in your credit score is what percentage of your available credit you're using. To keep the example simple, let's say you have two credit cards, and each has a $5000 credit, for $10k of total credit. Let's say that you have $2000 in debt between the two cards. You consolidate the debt onto one card and cancel the other., reducing your total available credit from $10k to $5k. Now, instead of using 20% of your total available credit ($2000 out of $10000), you're using 40% ($2000 out of $5000), and your credit score will likely fall.

A second factor in your credit score is how old your accounts are. If your Visa card is something you've had for many years, but your other card is something you've had for only a short while, cancelling the Visa could cause your credit score to drop.