Carragher admitted the style 'doesn't suit' Richards live on CBS Sports' Champions League coverage.
Presenter Kate Scott said it was 'new year, new you', referencing Richards' new look.
"Oh wow, I look fantastic don't I?" Richards added before Carragher offered his opinion.
"It doesn't suit you. I'm saying that as a friend," Carragher bluntly said to the former Manchester City defender.
"Could you not have said that off-air?" Richards replied in between fits of laughter.
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"You're not feeling it, new year new me?" Richards added.
Scott added that she liked it shorter, describing it as 'nice and crispy'.
"You look awful, you look so cool in the other one [before]," Carragher interjected.
Richards replied that he 'just wanted a change' when responding to Carragher's question on why he opted for a new lid.
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His hair has always been a hot topic having previously revealed there is no expense spared for his looks.
The ex-England man claims that he would pay £200 for a haircut three times a week, totalling £2,400 each month, or £30,000 annually.
Sheldon Edwards - a barber to famous footballers - explained on Reach's Euro podcast that the cost includes more than just the haircut itself.
For Richards, particularly when abroad for work, such as the Qatar World Cup, the travel and accommodation costs mean the haircut itself is far more expensive.
"What Micah was saying was how he had three haircuts a week when he was in Qatar, and he was talking about me, so that was true," Edwards said.
"I have to back up the barbers on this one. If you break down the £200 for a haircut, people do not take into consideration the travel and what else it takes to execute that appointment.
"In Qatar it was not cheap; you could be paying £50-a-round trip, or £60 for a one-way journey to do the job.
"So you have to factor in the travel and expenses, which breaks it down to about maybe £80-£100 after you pay for the expenses. People do not factor that in."
Micah Richards banned from CBS segment as Jamie Carragher leaves studio in stitches