Yes, there is a downside, and you need to be careful when closing credit card accounts. If you've held a credit card awhile, closing the account could shorten the length of your remaining credit history, which could lower your credit score. The longer a person's credit history, the better.
In addition, when you close credit accounts, outstanding card balances will become a higher percentage of your remaining credit lines, which can also lower your credit score. The industry term for this relationship between outstanding debt and available credit lines is your "credit utilization ratio." For example, a $6,000 credit card balance compared to a $30,000 line of credit is a 20% ($6,000/$30,000) ratio. If the total of credit lines decreases to $10,000 because accounts are closed, the ratio increases to 60% ($6,000/$10,000). Credit scores often drop when someone's credit utilization ratio exceeds 50%.
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