Author: Dan Rafter / Source: Wise Bread
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Please visit our Advertiser Disclosure to view our partners, and for additional details.You look down at the credit card in your hand. It’s one of your older cards, and you’ve bought plenty with it. The problem is, it charges an annual fee, and you’re sick of paying it. You’re tempted to cancel the card to eliminate the fee altogether. But you know doing so will hurt your credit score.
Should you cancel your card? Or should you continue paying that annual fee when you could easily find another credit card that provides a generous rewards program without any annual charges? (See also: 8 Fees You Need to Stop Paying Right Now)
Why you shouldn’t cancel your card
It can be tempting to cancel any credit card that charges an annual fee, especially if that fee is a big one. But canceling a credit card can hurt your credit utilization ratio. This ratio measures how much of your available credit you are using at any one time. The more credit you use, the more your credit score will drop.
When you close a credit card, your credit utilization ratio will automatically increase, even if you don’t make any…
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