Source: ConsumerReports.org August 04, 2015 07:00 PM
Q. I received a notice saying that the annual fee on my American Express Rewards Gold Card will be going up and that I have a right to reject this change and cancel the card. Will canceling hurt my credit score? —B.D., Fairlawn, N.J.
If you have, say, $25,000 in available credit across your credit cards and your current balances add up to $5,000, your utilization rate would be 20 percent. If you cancel a card, that rate could rise because you’d have access to less credit. Generally, a lower utilization rate is better for your FICO score.
But the American Express Rewards Gold Card is a charge card. (There is no preset spending limit, and the balance needs to be paid in full every month.) Charge cards don’t affect your credit-utilization rate, so the impact of canceling the card is likely to be small.
Have you cancelled a credit or charge card and noticed a difference in your credit score? Comment below.