When you upgrade to a credit card with better features, you might want to close or cancel your old card. However, this can have negative effects on your credit score, even if it’s not directly related to the card. If you feel it’s necessary, go ahead and cancel your old card. This article will provide you with valuable information on how to close or cancel a credit card.
For example, if you have a credit card with a high annual fee that you no longer use, consider closing it without worrying about the impact on your credit. If you’ve already decided to close your credit card and aren’t sure how, we’re here to help. Keep reading to learn how to close a credit card and what to consider before taking that step.
Different Ways To Close Your Credit Card
There are a couple of ways you can close or cancel your credit card. You can choose the one that is easier for you.
Call Customer Service
Want to close your credit card account for any reason? Just give your credit card customer care a call. They’ll either start the process for you or walk you through the steps to close your credit card. You don’t have to call them, though – you can also reach out to customer care by mail.
Alternatively, you can send a written request via mail if you’d rather not call or email. If the bank executives confirm they can close your credit account, be sure to ask them the exact date the card will be closed so you can pay the outstanding balance on time and take care of any other necessary tasks.
Submit an Online Request
Many card issuers provide their customers with the ability to submit an online request to close their credit accounts. If you prefer online methods, you can check whether your card issuer offers this option. 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
Some of us may not be fans of online methods for completing our banking tasks. 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
While you might want to make a copy of your credit card statements and do other preparations before closing it for expense tracking and other personal budgeting, here are two things you shouldn’t forget:
Pay your Outstanding Balance
Before closing your credit accounts, ensure that you pay off any outstanding balances. You need to settle your account to close your credit card. However, some issuers may let you close your card even if you still have an outstanding balance, but you’ll still need to pay it off after closing.
Shutting down your account without paying off the balance just accumulates the extra fees. It’s a much better idea to pay the balance first and request account closure only when your credit card balance is zero.
Redeem the Remaining Reward Points
If you are using a credit card that offers reward points, be sure to check how many points you have and redeem them before closing the card. Many people make the mistake of closing their credit card without checking for their rewards and hence lose points that are sometimes worth thousands of rupees.
If you’ve accumulated a good number of reward points, start redeeming them first. Choose a category that’s most beneficial for you. You should also take advantage of this chance to collect your savings before canceling your card.
How to Cancel a Credit Card Without Having an Impact on Credit Score?
Closing a credit card can impact your credit score in several ways, so it’s essential to consider a few key points to avoid any negative effects. First, keep your credit utilization ratio below 30% after closing one of your credit cards. For instance, if you have two cards with limits of ₹1 lakh and ₹50,000, and you spend ₹40,000 each month, closing the card with the ₹50,000 limit will increase your credit utilization ratio to 40%. This could negatively affect your credit score.
Additionally, closing a credit card that is part of your oldest credit account can harm your credit score. The average age of your credit accounts is a key factor that credit bureaus consider when calculating your score. Therefore, closing your oldest account could negatively affect your credit profile, so it’s best to avoid doing so.
Bottom Line
Card issuers offer various online and offline options to close your credit card account. You can pick any method that you find most convenient. However, before closing your account, keep a few important points in mind, as mentioned above.
Ensure you pay your dues, redeem all remaining reward points, and review your credit score before closing your card. If you have a lifetime free credit card, there’s no harm in keeping it even if you don’t use it, as it can help build your credit score. However, if it has high annual fees, it might be better to close it so you can rebuild your credit score.
If you still have any doubts or queries about the topic, please write them in the comment section below!