Found this nice article today about the effects of cancelling your credit card on your credit score. As we’ve discussed previously on http://creditcards-withrewards.com, cancelling a credit card (for example, when your transferring to another card with a 0% APR intro rate) can actually damage your credit score, because your credit utilization ratio is changed, an important part of your overall credit score.
Think of it like this: you have $2,000 balance on a $4,000 limit card, and then you transfer the balance to a new card with the same limit. At that point, between the two cards, you are using $2,000 out of a total available credit of $8,000, so your credit utilization ratio is 25%. When you cancel the first card, you’re now using $2,000 out of a possible $4,000, which means your credit utilization score has shot up to 50%. This doesn’t look so good to the credit bureaus.
Jeremy Simon goes into more detail in this excellent, and very readable article at: http://www.creditcards.com/credit-card-news/faq-jeremy-simon-cancel-close-credit-card-score-fico-1508.php