When you get a credit card that is better than the card you were using previously, you generally want to close or cancel your old card that comes with fewer features. However, doing this can be disadvantageous sometimes as it can affect your credit score in many indirect ways. But, you should go for it if you feel it’s necessary. So, simply reading this post will give you a lot of info about How To Close Or Cancel Credit Card.
For example, if you have a credit card with a high annual fee, but you don’t use it anymore, you should consider closing it without thinking about how it can impact your credit. Now, if you have already decided that you are going to close credit card and don’t know how you can do that, we are here to guide you on the same. Keep reading the article to know how to close credit card and what you need to consider before taking such a step.
Different Ways To Close Your Credit Card:
Call Your Credit Card Customer Care
If you want to close your credit card account for any reason, you can just call your credit card customer care for the same. They will either initiate your request or will guide you about how you can proceed further to close credit card. Calling them is not necessary, but you contact customer care through mail as well.
If you don’t prefer calling or mailing, you can also send a written request via post. If the bank executives assure that they can get your credit account closed, make sure to ask them the exact date when your card will be closed so that you can pay the outstanding balance by then, and do other necessary things.
Submit an Online Request
Many card issuers provide their customers with the facility to submit an online request to get their credit accounts closed. If you are someone who prefers online methods, you can find out whether your card issuer provides this option or not. You can search for the same on your card issuer’s official website. Once the request is made, a bank representative will contact you to confirm whether you want to get your card closed or not. It is one of the easiest and hassle-free methods to close/cancel your credit card account.
Visit The Branch
Many people don’t prefer calling and other online methods to get their banking works done. In such a case, you can visit the nearest branch of your respective card issuer and fill in the physical form to request the closure of your credit card account.
Things To Do Before Canceling a Credit Card
Pay Your Outstanding Balance
Before you think of initiating your credit account closure, make sure to pay your full outstanding amount. Without clearing your dues, you will not be able to close your credit card. However, some card issuers allow you to close your card even if your dues are not clear but you will have to pay your outstanding balance after that as well.
The purpose of closing your account without clearing dues is just to avoid the extra charges. So, it is way better to pay off the balance first and request the closure of your account only when the balance on your credit card is zero.
Redeem The Remaining Reward Points
If you were using a credit card that offers reward points, make sure to check how many points you have and redeem them before you close credit card. many people do the mistake of closing their credit card without checking for their rewards and hence lose points that are worth thousands of rupees sometimes.
If you think that you have earned a good number of reward points, initiate the reward redemption process first and make sure to redeem your points against a category that is most beneficial and useful for you. You should not miss out on collecting your savings before canceling your card.
How To Cancel a Credit Card Without Hurting Your Credit Score?
Closing a credit card can affect your credit score in many ways and to avoid any negative effect on your credit, you will have to keep a few things in mind. Make sure that your credit utilization ratio doesn’t go higher than 30% after you close one of your credit cards. For example, if you have 2 cards with limits of Rs. 1 lakh & Rs. 50,000 and you generally spend 40,000 each month. Now, if you close the card with a limit of Rs. 50,000, your credit utilization ratio will be 40% after that which will affect your credit score negatively.
Moreover, closing a credit card that belongs to your oldest credit account can also have a negative impact on your credit score. It is because the average age of your credit accounts is also a major factor that is considered by the credit bureaus while calculating your credit score. This is how closing your oldest account might have a negative impact on your credit profile and hence it should be avoided.
Card issuers provide you with different online as well as offline ways to get your credit card account closed. You can choose any method that feels to be most convenient for you. But, before closing your account, you must keep a few things in mind, which have been mentioned above.
Make sure to pay clear your dues, redeem all your remaining reward points, and think about your credit score before you close your card. If you have a lifetime free credit card, there is no harm in keeping it even if it is not in use as it can help you build your credit score. But, if it comes with high annual charges, it will be better for you to close it as you can rebuild your credit score.
If you still have any doubts or queries regarding the topic, make sure to write them in the comment section below!