Don’t we all enjoy a shopping spree on our credit cards?
A credit card allows us to buy products with a promise to pay later. It helps us lessen the current burden of payments. However, at times, when we are not happy with the credit card And we might want to close/cancel it.
There are several reasons why one wishes to close their credit card. Maybe you do not need it anymore, or you never used it as such, or you do not want to be associated with the particular bank now.
Sometimes, the annual fees of holding the card are too much, and the usage is comparatively null. The reason could also be that one is not happy with the credit card provider’s services.
The reason can be any.
Nobody can stop you from closing your credit card, provided you have all the dues cleared. It is a reasonably straightforward process to close the credit card and not really come with any complications.
If you are wondering what impact it would have on your credit score – we have some good news for you!
If you follow the right credit card cancellation/closing procedure, it will not negatively impact your credit score.
For those who are wondering what a credit score, it is a numerical representation and an analysis based on the person’s credit files. It represents the creditworthiness of the person, and the higher it is, the better it is.
You can check your credit score at CIBIL Website.
Closing the credit card varies from bank to bank and depends on the specific process they follow. However, every bank has a generic system of closing the card that one can rely on. Below are the ways how you can close your credit card –
1. Call your customer care:
Find the customer care number of your respective bank.
The customer care numbers are available either online or on the documents, if you have any. Request the customer care executive for closing the card in your name after providing all the necessary details.
The customer care executive might ask you for a reason, so make sure to provide him/her with that too.
After the conversation, the bank will process your request for closing your card within a few hours, days, or even months, depending on the bank.
2. Submit the closure request in writing:
For a prompt response, you can also write a letter to the bank’s manager. Mention your credit card’s essential details, such as the credit card number, card holder’s name, address, and contact information.
Ensure that you do not mention your card’s CVV number of PIN, for safety reasons. The postal address to send the letter on will be available on the bank’s official website that your card belongs to.
If you do not find it there, you can also call the customer care executives to know the same.
After you send the letter and the authorities receive it, you might get a call for them. As the request is confirmed, the bank will process your credit card closure request.
3. Submit an online request:
To make your work simpler, there is also a provision to submit an online request to close the card.
Visit the official website of the bank to which your credit card belongs to. Fill the closure form there and submit it.
One of the bank’s executives will call you to confirm the request, and upon confirmation, they will initiate your request.
However, not each and every bank offers this facility to its customers, so ensure that you check the availability of this way beforehand.
4. Send an E-mail for the card’s closure:
Raise a request to close your credit card by e-mailing the same to your card’s issuer.
Again, not every bank might have an e-mail solely dedicated to this purpose. But the ones who do, you can find a dedicated e-mail address for the closure of the card on their official website.
The e-mail shall have all the necessary details of your credit card and your personal details required to close the card.
As and when you send the e-mail, your request for closing the card will be processed after you hear from the bank’s representative either via an e-mail or through a call.
You can opt for either one or more of the steps above to be extra cautious.
Once you do the following, wait for your card’s closure. Once it is closed, and it shows in your credit report, make sure that the reason for the closure is ‘closed at consumer’s request’ and nothing else.
A different reason such as ‘closed at issuer’s request’ can harm our credit score.
As soon as this step is done, too, comes the last step of the process. Destroy your credit card! Either out it into a shredder or cut it into tiny pieces and discard it.
However, once you decide to close your credit card and are about to use one of the above-stated methods, there are a few things you need to keep in mind –
1. Clear all your outstanding dues before you make a cancellation/closure request of your credit card. If you have unpaid dues, the bank will not process your closure request.
2. Ensure that you read about the closure process and the penalties if any. Every bank has a different set of rules for each process, so confirm with your bank if you will have to bear any additional costs in order to close your card.
3. Use up the outstanding rewards/points before you apply for a card closure. If you fail to do so, all your existing points and rewards will stand canceled. If you are wondering how to get these rewards or have any – we are sure you do. Every purchase that you make through a credit card reaps some points that you can use later.
4. Cancel all your automatic bill payments and transfers beforehand. If you make a closure request and have automated payments aligned, there is a possibility that you will be fined at the time of the dues.
5. Do not make any payments right before the closure request. When you make a new payment and apply for closing your credit card, the banks deny the request.
6. Follow up with the bank’s representatives and get the exact date for the closing of your card. This will ensure that you will not be paying any extra fees, charges, or penalties.
7. Always get a written statement from the credit card issuer about the closure of your card. This way, any fraudulent practices in the future are hindered. Even if somebody makes a fraudulent payment from your card later, you have proof that you were not the one who did it.
8. Always check your credit card balance statement before applying for a card closure. When you are aware of the final balance, you avoid any fraudulent transactions that can possibly happen on your card.
How closing your credit card will affect your credit score?
1. Lowered credit scores due to one lesser card in your pocket:
When you close a credit card, your overall credit limit decreases.
This increases the credit utilization ratio. The credit utilization ratio is the ratio between the credit limit and credit utilization.
An increase in this ratio leads to a decrease in your credit score, especially if the utilization goes 30% above the limit.
2. Reduced credit history:
If you plan to close one of your very first credit cards that had a lot of transactions, your credit history length will decrease.
This may or may not impact your credit score, depending on the bank’s terms and conditions.
So, even if your credit card’s closing does not have any major effect on your credit score, you need to keep a few things in mind and commence the process carefully.
It is an effortless method, and all you have to do once you make the request and provide the details – is wait.
There is no specific time limit as to when your credit card will be closed, and it can even take months.
So be patient as you close your card, and probably look for a new one if you need it!
You should also check out our list of the best cashback credit cards in India.
If you’ve any questions, let us know in the comments.