If you have more than one credit card, this article is a must read for you. You might have various reasons to discontinue your credit card: multiple credit cards is the most common one, increase in annual fees or annual rate, dissatisfaction from the current services, or you don’t want to use a credit card anymore. Though, it is always advisable to keep your old credit card open for best credit score, but if you have made up your mind then go for the correct way of doing it.
Clear all your dues:
If you will owe some money to the bank then how will you be able to close your account?The first step is to pay the bank the total outstanding balance. This will consist of all amounts that are due to the bank under the agreement, including other amounts and transactions that are not charged yet. The credit card will be considered open if you don’t clear all due amounts.
Use all your credit card rewards:
Upon closing the credit card you will be withdrawn from every facility that was provided through usage of the credit card or credit card number. Therefore, we advise you that you check all your reward balance and see how many left over points you have. Spend and make use of these points as soon as possible. Remember, if your card allows you to use your rewards points to pay off the balance then use it.
File a written request for closing the credit card:
You can discontinue the credit card agreement any time by mere writing a notice to the bank. Just attach the credit card and any added credit cards cut into several small pieces through magnetic stripe and full payment of outstanding balance. Termination will be only effective after the receipt of the cut credit cards and full clearance of any outstanding dues made to the credit card account. Joining, annual or renewal fees will not be refunded on pro rata basis.
Ensure your credit card account is closed:
After doing all these formalities, wait for two to three months. After that, you must check your credit report to ensure that he credit card is reported as closed. Your credit card will reflect as closed in your credit report. In case the situation is not updated, get in touch with the bureau and the bank for correction.
One of the key things to remember is that after closing your credit card your total credit limit will automatically come down. Consequently, this will result in a higher credit utilization ratio –the proportion of credit used by you against the total credit available. A higher credit utilization ratio is usually the reason for bringing down your credit scare. You may approach another bank or a new credit card or request another alternative card’s provider to increase the credit limit. That was all on how to close the credit card in the right way.