Cancellation of a credit card should not be an impulse action. A credit card can come in handy during emergencies and maintain credit or CIBIL score! If you are desperate to cancel it, you should be aware of a few things before going ahead.
When To Close A Credit Card?
Firstly, credit cards can be generally canceled on these two occasions:
- When you are really unable to resist the temptation to overspend and if your credit balance is growing heavily.
- When the interest rates and other terms of the card not friendly.
More reasons for the cancellation of the card include:
- If you are not using a new credit card that does not have balance and you have other cards to use.
- A credit card in used can be canceled when the interest rates or annual fees jump suddenly.
- If you do not agree or reject the new terms and conditions of the credit card, the credit card issuer may cancel the card.
- In case of theft identity and fraud situations, you will be advised to close the credit card to avoid fraudulent charges.
Check These Things Before Closing A credit Card
Do not opt to close the card out rightly. Rather look for all the available options.
Downgrade the Card: For instance, if you are closing it due to annual fee burden, downgrade the existing card to another one. Make a thorough check of the terms of the new card. This helps you preserve credit history.
Decide after thorough analysis. Once you all for a cancellation option, you would be connected to a retention specialist who tries to convince you with various offers like bonus points, annual fee waiver, etc. So before making a call analyze thorough and make a well-informed decision.
Do not close the one with available credit. Closing a card with available credit will not help in maintaining a credit score.
Cancel the automatic payments linked to the card. Do not forget to cancel even linked payments like a gym membership, EMIs, etc. Shift all the automatic payment options to another credit card to avoid other money disturbances like late payment charges, penalties, etc.
Canceling a credit card doesn’t mean cutting into two. Before deciding, ensure to take a well-informed decision. Ensure that you have not missed out on anything. Also, make sure to a make a smooth transition into the new card, if you opt to. For more information on personal finance, approach ArthaYantra.