Nowadays the use of credit cards has increased tremendously. Banks, which once considered many factors for granting credit cards, are now offering credit cards easily in the face of increased competition.
Especially private banks are giving credit cards with various offers. Due to this, the number of people using credit cards beyond the requirement 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 actually utilize? Consider keeping it if the benefits outweigh any drawbacks.
But at one point we get the idea to remove the cards that are proving useful. And how to close the card in such times? 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.
But 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
If you want to close your credit card, you should first call your bank’s customer care. 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. For this, the card can be closed by going to the website of the credit department and opening the relevant link.
Remember
But before closing your card there are some things to keep in mind.
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. In addition, 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: Keep an eye on your credit report to ensure the closure is reflected accurately.
Conclusion
Closing an unused credit card can help you avoid annual fees and the temptation to overspend. Just remember to settle your balance first and follow the proper cancellation procedures with your issuer.
By following these simple steps, you can say goodbye to that unwanted credit card with confidence!
FAQs about Closing Credit Cards
Why are credit card issuers giving cards more easily now?
Increased competition among banks has led to easier access to credit cards.
Why are people considering closing their credit cards?
Some find they have more cards than necessary, leading to hassle and fees.
How can I close my credit card?
Contact your bank’s customer care or close it online through the credit department’s website.
What information will I need to close my credit card?
Expect questions about your reason for closing, along with personal details like email and birthdate.
What should I do before closing my credit card?
Pay off any outstanding balances immediately to avoid affecting your credit score.
What happens if I close my card without paying off dues?
Closing without payment may negatively impact your CIBIL score and incur additional interest charges.
Should I check for any redeemable points before closing?
Yes, make sure to utilize any redeemable points before closing your card.
What should I do about EMI payments and auto-debits before closing?
Check for any ongoing EMI payments or auto-debits and ensure they’re closed to avoid future charges.
Can I close my credit card through online banking?
Yes, visit the credit department’s website and follow the relevant link to close your card online.
Will closing my credit card affect my credit score?
Closing a credit card may impact your credit score, especially if you have a high credit utilization ratio or if it’s your oldest card.