My credit card has a $59 annual fee. If I close the account, will I damage my good credit score? —Carol Lamson, Oswego, N.Y.

Yes, your credit score will take a temporary hit. That's because your credit utilization ratio, or your debts as a percentage of your available credit lines, is one of several key factors that goes into determining your score.

When you close a credit card with no outstanding balance, you raise that ratio. But plenty of good no-fee options abound, so unless the card offers rewards that you're taking full advantage of, it's probably worth closing it to save on the annual fee, says John Ulzheimer, president of consumer education at SmartCredit.com. Besides, assuming you have several other cards and aren't carrying high balances on them, the impact on your credit score will be fairly small, says Gerri Detweiler of Credit.com, and your score will probably recover in a couple of months.

One caveat: If you think you'll need to apply for a loan soon, hang on to the card for now; trimming your score by just a few points can disqualify you from getting the best interest rate.

—Allan Chernoff

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