Credit cards are a lot of help for instant money, but sometimes closing a few credit card is also required. There could be multiple reasons to close/cancel a credit card. For instance, you may be either spending unnecessarily or not using some of your credit cards at all. Generally, there is no standard procedure for closing a credit card and the process of cancellation differs from bank to bank. However, when you decide to close a credit card, there are certain things that you need to take care of.
While canceling a credit card, your credit score also gets impacted. Canceling credit card increases your credit utilization rate. Hence when a cardholder cancels his card, he/she also reduces his/her overall available credit.
If you are planning to close/cancel your credit card, here are certain things to keep in mind before you do so:
- While closing your card, consider the age of the card. Closing the oldest card that you hold may harm your credit score, as it can cause your credit history to appear shorter.
- Before closing your credit card, cancel all auto payments linked to that credit card. If you do not cancel all your auto bills, the establishments requesting payment to that already closed credit card would levy a penalty if the pending money is not paid within the due date.
- The credit card provider company will only close a credit card if all the dues are cleared. Hence, clear your dues before applying for cancellation or in the next cycle.
- Also, before closing your card make sure to redeem its benefits. For instance, check for your reward points balance and redeem them before you apply for cancellation of the card.
- Be sure and make up your mind while opting to close a credit card. Many times, credit card providers give attractive offers especially to you for continuing. If you really want to close your credit card, do not fall for those offers.
- While applying for cancellation, always follow-up in writing. One should make sure that they have it in writing that they want to close/cancel their credit card account. Also, try to get a written confirmation from the credit card provider, stating that the credit card was closed.
- Lastly, check your credit report to make sure that the credit card provider reports that the credit card as closed.