Firstly, the answer is… yes! Absolutely! You can close a credit card even if it has an open 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 of your credit limit you’re using (never use more than 9%). If you have a closed account with an open balance, then your utilization will obviously 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 want to rather 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 a new card before you close the old one because once you close the old card, your credit will be damaged and you might not get approved for the new card.

Tip

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.

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 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 of at least above 300% percent of your balance.