Closing Credit Cards
For instant money, credit cards provide a lot of support, but it is often important to close a few credit cards as well. There may be many reasons for a credit card to close. You can, for example, either be spending excessively or scarcely use some of your cards. There is usually no common procedure for closing a credit card and the cancellation process varies across banks. There are some things you need to take care of when you decide to close a credit card, however. Your credit score is also affected when a credit card is cancelled. The cancellation of credit cards raises the rate of credit usage. Therefore, if a cardholder cancels his or her card, he or she also decreases his or her total available credit.
Here are some tips on how to close a credit card.
Things to keep in mind while closing Credit Cards
- Regular payments
Typically, a cardholder requests the bank to make their regular payments. Such payments may be for online subscriptions, EMIs, or even payments for energy bills. All such directions need to be cancelled or transferred before the credit card closes via the credit card login portal. Transfer any standing instructions on the credit card to another credit card or bank account before you close your card. Failure to do so can lead to non-payment of online subscriptions, insurance premiums, or living expenses.
- Credit Card bill payment
When you close your credit card, make sure that your credit card bill payment is done and your account does not have any dues. A credit card account with pending charges will not be closed. They will draw interest and late payment fines if you have any outstanding charges, and will bring down your credit score. Any existing EMIs/Loans can be repaid in one go.
- Credit Utilisation Ratio
The rise in your Credit Utilisation Ratio (CUR) is one of the effects of getting a credit card closed. CUR is the percentage you spend on available credit. Your credit score is affected by a high CUR. Cur should preferably remain within 20-30%
- Reward Points
Make sure you utilize the reward points you have earned. Several credit card companies provide reward points on credit card purchases that can be redeemed via the bank’s marketing partners for cashback, discounts, coupons, goods or services. Make sure you have redeemed all your points before you close your card. To pick the goods or services to buy in return for your accrued reward points, you can visit the bank’s website and rewards page.
- Stay updated
As a credit cardholder, you need to realise that banks and their workers have a lot of obligations and are often filled with work that leads to late receipt of certain requests. As a consequence, your request to cancel your credit card cannot be made in real-time, so it is important for you to follow up with the bank. Contact the bank to ensure that the bank has cancelled the credit card and that no purchases are carried out with the card. Don’t forget to collect the bank’s no-dues certificate.