Many people use credit cards for more flexibility, 30 Days free credit, Reward Points, Lounge Access, Free Movie Tickets, Shopping Discounts and Tons of other features. While you end up getting more and more credit cards, it is at times hard to manage. So the question here is,” Cancelling all other cards which you are not using a good decision? ”
For people who have been using a credit card for so many years and today find in a situation where you think you are spending more or maybe not spending at all, you consider closing a card due to stress or maybe your Finances are getting disturbed, I would say please consider following points before you take the FINAL decision:
1. Your credit ageing may go low
You are having a card for long 5 Years, with a good credit limit, and say it is the oldest card in your credit portfolio. If you plan to cancel that credit card then your credit ageing score may be impacted, instead of cancelling the oldest credit card go for cancelling your newest credit card. It helps in maintaining credibility and overall credit score due to positive lending and repaying behaviours in the past for a long period of time.
“Beware of little expenses; a small leak will sink a great ship.”Track your Expenses Wisely
2. Increase in Credit utilization Ratio
Say you have two credit cards at the moment and your monthly expenses on one card are Rs20,000 and another card is Rs30,000. If you cancel one card then total expenses on another card will increase to Rs50,000. So your credit utilization will increase. This negatively impacts your credit ratings.
Personal advice: Before cancelling one card, either increase the credit card limit and spend or have multiple cards to split your bills.
NOTE: Your credit card limit utilization should not be more than 80%. It decreases your Credit Score.
“If you don’t take good care of your credit, then your credit won’t take good care of you.”― Tyler Gregory
3. Reward Points Redemption
At this point, you have finally decided to cancel your credit card. Make sure to call your bank and check the rewards you earned. These reward points can be utilized against various cashback offers or on partner websites. Don’t let your rewards go wasted. Many people make this mistake while in a hurry to cancel a credit card.
“The one who hugs a debt also shakes hand with a danger.”Amit Kalantri
4. Pay Off All The Due Amounts
To avoid accumulating huge interest over a period of time make sure to clear all your outstanding amount. A minimal amount left over can pile up and negatively impact credit ratings and also attract huge financial charges. Call up your bank and check on the amount due. After redeeming reward points, the current outstanding amount needs to be paid off completely.
People who recognize that money won’t buy happiness are still willing to see if credit cards will do the trick.E. C. MCKENZIE
5. Double-check On No Standing Instructions
Most of us don’t want to get automatically billed while in the process of cancellation of a credit card. Call your bank and check auto-debit instructions in your account for Auto Payments, Electricity Bill, Telephone Bills, Insurance and others. Transfer all your standing instructions to other financial services to avoid payment bounce penalty charges or last moment hustle in the closing of a credit card.
The only road, the sure road–to unquestioned credit and a sound financial condition is the exact and punctual fulfilment of every pecuniary obligation, public and private, according to its letter and spirit.RUTHERFORD B. HAYES
6. Contact your bank for the entire process on card closure
Closing of credit cards can be tricky as it depends on the institution. Few institutions require you to physically submit an application for closure of a credit card, few can accept request over the phone and few may request you to send a letter to head office for cancellation.
I suggest to call your financial institution and make a note on the entire process on how to close your card. If you are convinced place a request to cancel your card and take a reference number for your track records.
Credit is to money what money is to articles of merchandise.DANIEL WEBSTER
7. Write a letter to the bank for closure and email
After placing a request to cancel your credit card just to double-check after 24 hours write a letter to your bank with Your Name, Account Number and appropriate details mentioning as per Telephonic conversation REf no: ABC I request you to please cancel my credit card request.
Also, write an email to the customer service department, mentioning the same details for the cancellation of your card.
In the letter make sure to mention to update the cancellation of the credit card to Financial Credit Institutions or credit bureaus at earliest.
The man who avoids debt doesn’t have to worry about avoiding his creditors.EVAN ESAR
8. Wait for a Written communication- No Dues Certificate and Cancellation Letter
After placing a request through the required channels and writing a physical letter, please wait for communication from the required institution. This letter or confirmation will make sure you don’t have any liabilities and the card cancellation or loan cancellation is processed.
Modern man drives a mortgaged car over a bond-financed highway on credit-card gas.EARL WILSON
9. Check your credit report after 45 days
Now to ensure the card is cancelled as you have received official communication from the financial institution, it takes 45-60 days to update on your credit report. Download a new credit report and check if your credit card account stands to cancel on your report. If not seek an explanation from your bank why is the card still showing active on your credit report?
Had to hock the hot rod to pay the credit card
Debt was too easy, life is too hardTHOMPSON BROTHERS
10. Dispose of your card properly after confirming cancellation on your credit report
Congratulations Your card is cancelled on your credit report and you have all necessary documents and proof of your card cancellation. Destroy your card securely.
In the end, credit cards are like life: they are what you make of them.LAURA J. MCDONALD & SUSAN L. MISNER