Updated: 07/01/18

Firstly, the answer is… Yes! Absolutely! You can close a credit card even though it has an open balance. Actually, it is recommended in some cases, to close a credit card with an open balance. For example, if the bank wishes to raise the interest rate on your open balance. In such a case, you will have 45 days to either agree to the new APR or you can close the card, but still stay with the old APR for as long as it takes you to pay off the balance.

Will My Credit Be Affected?

Having a closed account with an open balance may affect your credit. Because credit models look at credit utilization a lot, which is how much percent off your credit limit you’re using (never use more then 30%). If you have a closed account with an open balance, then aversely your utilization will be above 100% which may be very damaging to your credit.

If you’re only closing the credit card because of a high APR, then you might rather want to balance transfer the open balance to one of these great 0% APR credit cards, before closing the card. Make sure, though, that you apply for new account before you close the old one, because once you close the old account your credit will be damaged and you might not get approved for the new account.

Can A Credit Card Issuer Close My Account With An Open Balance?

Yes. Even if you still have an open balance, credit card issuers have the right to close the account if they suspect fraud, if you have a sudden drop in your credit score, or for any other reason they decide to close you down. But even if they have the right to close your account, they don’t have the right to change the APR you’re paying, for as long as it takes for you to pay up the balance.

If you get closed down by your credit card issuer for any reason (Chase closes down people left and right) while you still have an open balance and your credit is affected by the high utilization, then this is what I recommend. Either pay up the balance as soon as possible, or you can balance transfer the balance to an open credit card with a limit above 300% percent of your balance.

P.S. Keep in mind that when you close an account you might lose reward points that you have accumulated on the account, so make sure to cash the points out before closing the account.

If you have any questions or need any further information on any topic discussed in this post then feel free to email me at sam@helpmebuildcredit.com.

Thanks!