The use of credit cards has increased tremendously nowadays. Banks, which once considered many factors for granting credit cards, are now offering credit cards easily in the face of increased competition.
Private banks especially offer credit cards with various offers. Due to this, the number of people using credit cards beyond the requirements is also increasing.
Before You Begin: Consider the Impact
Closing a credit card can impact your credit score in two ways:
Credit Utilization Ratio: This ratio compares your credit limit to your outstanding balance. Closing an unused card with a high limit can increase this ratio, potentially lowering your score.
Average Credit Age: The longer you’ve held credit accounts, the better it reflects on your creditworthiness. Closing an old card can shorten your average credit age.
Weigh the Pros and Cons
- Annual Fees: Are you paying for a card you never use? Closing it can save you money.
- Temptation: Does having the card readily available lead to overspending? Closing it can help you avoid that temptation.
- Credit Benefits: Does the card offer rewards or perks you utilize? Consider keeping it if the benefits outweigh any drawbacks.
But at one point, we get the idea to remove the useful cards. How should we close the card in such a situation? What procedure should be followed for this? Let’s know the complete details now.
Many people are taking credit cards in the background of announcing huge offers with credit cards on online sites.
However, paying the credit card charges every year becomes a hassle. That’s why they want to close unnecessary cards.
Closing Your Unused Card
a) Phone Call Method
To close your credit card, call your bank’s customer care first. After that, you should inform the customer care executive that you want to close the credit card.
A question about the reason for closing the card should be answered. For this, details like your mail id and date of birth will be asked.
b) Online Method
You can also close the card online. To do so, go to the credit department’s website and open the relevant link.
Remember
But before closing your card, there are some things to remember.
Pay Off Your Balance: Ensure your balance is zero before closure to avoid future issues.
If the card is closed without payment, the CIBIL score is likely to be affected, and interest will also be charged.
Check if there are any redeem points and use them. Also check if there are any EMI payments and auto debit on your credit card and close them.
Confirm Closure: Get confirmation from the issuer that the account is officially closed.
Monitor Your Credit Report: Monitor your credit report to reflect the closure accurately.
Closing an unused credit card can help you avoid annual fees and the temptation to overspend. Remember to settle your balance first and follow the proper cancellation procedures with your issuer.
By following these simple steps, you can confidently say goodbye to that unwanted credit card!