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All You Need to Know About Cancelling Your Credit Card

By Prabhat Singh - Apr 28,2022
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A credit card is essential for building and maintaining a good credit report. It allows users to spend freely, earn rewards, and enjoy amazing offers & benefits. Today it has become quite simple to apply for a credit card and get it sitting at your home. However, when you own a few of them, it becomes difficult to remember all the amount due, due dates, and annual maintenance fees. 

A simple solution to this problem is cancelling the credit card/s that you do not use often. Well, of course, it is not as easy as cutting it in half with scissors. There are a few steps you need to follow to cancel your credit cards. After all, you do not want to jeopardize your credit score, or do you?

Also Read: What is an Interest-Free Grace Period on Your Credit Card

Yes, cancelling your credit card may result in denting your CIBIL score, especially if you only have a single credit card. So, then what to do? Well, before you rush off to cancel your credit card, consider the following points: 

Pay Off All Your Remaining Dues

Before you cut your credit card in half, make sure you pay all your dues in full. It is impossible to even raise the query or application for cancellation without getting rid of all the levies. If you are not financially capable of repaying, shift it to a different credit card or take a personal loan and knock out all your debts.

Redeem All Your Benefits/Rewards

Credit cards usually offers tremendous rewards in the form of reward points, which can later be redeemed for travel, shopping etc. However, when you close your credit card, all these offers and rewards, all the fringe benefits your card possesses will be gone. Thus, before you cancel your credit card, check the reward points, and try if you can redeem them as a statement credit. It will decrease your outstanding amount. 

Call Off All Your Auto-Payments

Log in to your bank’s website and cancel all your auto payments of utility bills, subscriptions etc. If you forget to do that, the company may continue to charge you on the closed credit card. Which will fail eventually, and as a result, you will miss out on the payments. This might result in utility companies levying a fee for overdue payments. 

Examine the Impact on Your Credit Report

Closing your credit card will result in a loss of your credit score. Hence, make sure to evaluate it. Especially if you only have a single credit card and have not taken any loan yet, then cancelling your credit card will hinder the credit bureau from getting your repayment history, resulting in no credit score. Remember, your credit score depends heavily on the repayments towards your credit card dues or loans. Hence, you must reconsider cancelling it if you only have a credit card.

After contemplating all the factors, if you still want to cancel your credit card, then try calling the customer care centre of the service provider.

Try to follow the following points for a smooth cancellation experience: 

Inform Your Bank/Credit Card Issuer

Once you have paid all your dues and redeemed offers, call your bank, or credit card issuer and inform them that you want to close your credit card. To persuade you and convince you not to close it, they will provide you with numerous benefits like more reward points or lower interest rates etc. However, if you really want to close the credit card, make sure you have a steady mind.

Written Follow-Up

After informing the bank, follow up your request in writing through mail or a letter. The letter or email must contain every detail of the credit card holder and the request raised, like name, card number, date of issuance, date of request raised, mode of request, etc. The written letter will also work as proof that you have requested the issuer of the bank to cancel your credit card. 

Check Your Credit Score

Once you receive the final confirmation from your bank or the issuer about the cancellation of the credit card, make sure to check your credit report to find out whether it has been finally knocked out or not. It may take 4-6 weeks (about one and a half months) to reflect in your credit report. In case of any discrepancies contact your card issuer or file a complaint with the credit bureau. 

Destroy Your Card

After the credit card status appears closed in the credit report, take out your favourite scissors and cut the cards into pieces. Once closed, remember to destroy your card. 

Closing a credit card is easy, just like applying for it. However, try to avoid cancelling it unless it is absolutely necessary. Also, examine the points mentioned above to inspect the pros and cons of cancelling a credit card.

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