Opening a new credit card can be an exciting prospect. It’s hard to say no to the welcome bonus, special financing deals, and rewards system that could pay off big. However, the honeymoon period doesn’t always last. You might find that the card doesn’t work for your spending or way of life after using it for a few months. This makes me wonder how soon after getting a credit card can you close it without hurting your credit or getting fined by the company that gave it to you.
The short answer is that you should never close a credit card within the first year of opening it. While there are no legal issues with closing an account earlier, it is widely recommended to keep new credit cards open for at least 12 months. Here’s why
Closing Too Soon Risks Clawbacks and Account Closures
Credit card issuers don’t take kindly to people who open accounts just to earn the welcome bonus and then close them soon after. This practice, known as “churning”, is frowned upon Issuers make it clear in their terms and conditions that engaging in this behavior can lead to clawbacks (revoking rewarded points/miles), account closures, and even blacklisting from future bonuses
For example, American Express is known to claw back welcome bonuses if you cancel within the first year. Their terms state: “If you have a history of cancelling or downgrading American Express Card accounts within your first year and you cancel or downgrade your new Card account within your first year, we may not credit, we may freeze, or we may take away Membership Rewards® points from your account.”
So even if you already spent the welcome bonus, Amex can claw those points back if you cancel too soon.
Closing Before the Fee Hits Lets You Avoid Paying
For many credit cards, the first year’s fee is free. This allows customers to try out the card without obligation. Don’t pay the first fee if you cancel the card before the 11th or 12th month. You got away with it.
Issuers know this loophole exists. Their terms often advise that while you won’t be charged a fee since you cancelled early, you also won’t get the full benefits you already paid for by closing before your cardmember year is up.
Rather than trying to avoid the fee, a better option is to call the issuer when it posts and ask them to waive it or provide a retention offer. Issuers want to keep long-term customers, so they may credit you to keep your business.
Early Cancellation Can Hurt Your Credit Score
One of the factors that makes up your FICO credit score is the average age of your credit accounts. When you close a credit card, you lower the average age and lose those months or years of credit history. This is especially true if you close one of your oldest accounts.
While the impact may be relatively small in the grand scheme, every point matters when you’re trying to keep your score as high as possible. Don’t close an account earlier than necessary when waiting a few more months won’t really hurt.
Bottom Line – Keep New Cards Open for 12 Months Minimum
Credit card issuers are making it increasingly clear that engaging in churning or closing accounts too soon after opening can land you in hot water. You may face penalties like revoked bonuses, frozen points, account closure, or blacklisting from future offers. It’s simply not worth the risk for a small short term gain.
Additionally, by closing before the annual fee hits, you miss out on benefits you already paid for with the fee. And you lose the credit history associated with that account which can hurt your scores.
The standard recommendation is to keep any new credit card open for at least 12 months before considering closure. This shows the issuer you are a genuine, long-term customer and avoids any potential penalties. If you truly don’t want to keep the card after the first year, check for retention offers first before closing it. But closing before month 12 comes with unnecessary risks.
- Closing within the first year risks clawbacks and account closures per issuer terms
- You miss out on card benefits you already paid the annual fee for
- Early closure reduces your length of credit history and hurts credit scores
- Keep new cards open for at least 12 months to avoid issues
- Check for retention offers before closing after the first year
When you get a new credit card, think about the long term. A welcome bonus isn’t worth the short-term gain of having to close early. If you keep a new account open for at least a year, you can avoid fees and show the issuer that you are a real, responsible customer.
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- You might be able to cancel a credit card application right after applying if the credit card issuer hasn’t completed processing it yet.
- If you’ve already been approved for the card, you’ll probably need to cancel your new card just like you would any other card.
- Before you cancel your new credit card, consider potential consequences, such as the impact on your credit utilization and credit scores.
When you apply for a credit card, the decision is usually almost instant. This can be convenient — unless you realize you don’t want the card after all.
Also, keep in mind that you will lose any welcome bonus you had your eye on. Issuers tend to frown on those who open and close their accounts within a year or less after acquiring it to prevent a practice called card churning.
What to do before you cancel
At the end of the day, you may still decide to go ahead and cancel. This may be because when you actually got your card in the mail, your terms turned out to be not exactly what you expected. Perhaps the actual credit limit is different, or the annual percentage rate doesn’t appeal to you. You will find out such details by going through the fine print.
Even then, if you still want to hold on to the card, you could try talking to the issuer to see if you could negotiate the terms you’re not happy with. Also, if you change your mind about paying an annual fee, you could ask to downgrade to a different no-fee card from the same issuer.
If the issuer doesn’t negotiate with you, you will have to cancel the new card, much as you would any other card you hold.
Should I Close a Paid Credit Card Or Leave It Open?
FAQ
How soon can you close a credit card after opening?
You can close a credit card relatively soon after opening it, but it’s generally not recommended to do so immediately or within a year.
Does closing a credit card hurt your credit score?
Closing a credit card can hurt your credit score, but the impact varies depending on your individual credit situation.
Can we close a credit card immediately?
Closing a credit card can hurt your credit score. That is why it is important to follow a process while cancelling it. Pay off your balance: To cancel your card, your balance must be paid in full. Otherwise, you’ll need to keep it open until the balance is zero.
Can I cancel a credit card I just activated?
Bottom line. You should call the card issuer to cancel the card instead of ignoring it if you change your mind about a card you just opened. You could be hit with an annual fee you didn’t expect, or the card issuer could close your account because it’s not being used.