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How to Close Credit Card: Steps and Precautions
Posted on Monday, July 22nd, 2024 | By IndusInd Bank
Closing a credit card can be a strategic move to manage your finances. It can be to simplify your finances, reduce overspending, or transition to a new card with better features. However, it is crucial to understand the process and its potential consequences.
This blog explains how to close a credit card and the precautions to mitigate the negative effects on your credit score and financial standing.
Steps for Closing a Credit Card
Here is the usual procedure to close a credit card:
1. Pay off your Balance
Paying off any outstanding dues before closing your credit card is a must. It ensures that you do not incur any additional interest or fees. You can transfer the balance to another card with a lower interest rate if you have multiple cards.
2. Redeem Rewards
Redeem rewards such as cashback, points, or miles before closing the account. You may lose the accumulated rewards once you close the credit card.
3. Update Automatic Payments
You may have automatic payments or subscriptions linked to your credit card. Update such services with a new payment method. It prevents any missed payments and service interruptions.
4. Contact Customer Service
Call the customer service number. Inform the representative that you wish to close your credit card account and follow their instructions.
The representative may offer to lower your interest rate. They may also provide other incentives to keep the account open. Confirm the closure request if you still wish to proceed.
5. Get Written Confirmation
Request written confirmation from the bank after closing your credit card account. The confirmation must state that your account is closed and there are no pending dues. Keep this document for your records.
6. Monitor Your Credit Report
Keep monitoring your credit report to ensure it reflects the account closure. Dispute any discrepancies with the relevant authorities if necessary.
7. Dispose of the Card
Always dispose of a card by cutting it off or destroying it in another manner. It helps prevent any fraudulent use of a card.
Also Read: What is Skimming of Credit Cards?
Precautions to Keep in Mind When Closing a Credit Card
Now you know how to close your credit card account. However, it is crucial to carry out the procedure only after following certain precautions.
1. Consider the Impact on Your Credit Score
Closing a credit card affects the credit score in several ways. It may increase your credit utilisation ratio, which means the percentage of available credit you use. A higher ratio affects your credit score.
Closing an older account also reduces the average age of your credit accounts. This can also negatively affect your credit score.
2. Evaluate the Need for the Card
Consider whether a credit card is necessary. It might be worth keeping active if it has no annual fee and offers valuable benefits. You can also switch it with another card with no annual fee. It can help you avoid the fee while maintaining the account’s history.
You can also deactivate the credit card if you are looking for a temporary closure.
3. Opt for Closure at the Right Time
Avoid closing the credit card right before applying for a loan or mortgage. This may lead to a temporary dip in your credit score, which could affect your loan application. Plan the closure when you do not have major credit needs.
Conclusion
Closing a credit card requires careful consideration and planning. Remember to follow the steps outlined above and take the precautions.
IndusInd Bank offers a range of Credit Card options for all your financial needs. We also have solid customer service to offer help for any queries or doubts. With best-in-class features and an easy digital application process, we make your credit card experience seamless and stress-free.
Apply for a Credit Card Online with IndusInd Bank today!
Disclaimer:
The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
