You might have heard that closing your credit card account can impact your credit score. Well, is this true? Because of this perception, many of us are in a dilemma whether one should close their credit card account or continue with it just for the sake of credit score.
However, closing a credit card can indeed impact your score, but not in all cases. There are many valid reasons to close a credit card such as:
- You have too many credit cards.
- You don’t want a particular credit card anymore.
- Your card has a higher interest rate.
- Your credit card issuer is charging you more on the annual fee.
However, it’s best to leave your credit card accounts open, even if you’re not using them. But for valid reasons, it can be closed anytime. Let’s discuss the smooth ways to close a credit card account.
Settle all your Outstanding Balance
While closing a credit card account, the first thing you need is to settle the outstanding balance on the card. So, you need to pay off the outstanding balance on your card, try to keep it low so that it can be convenient while closing. You can also go for a balance transfer to another card which you are using.
Here, it’s important to redeem all your reward points before you close your card.
Contact your Credit Card Provider
After paying off the due amount, you need to approach your card provider and inform them about your decision. You can reach them out by calling the customer care number or your bank directly to cancel your card. You need to provide them the details and request to close your card.
You can also mail a certified letter to your card issuer to cancel the account. Attach your card statement to show 0 balance and ask them to send you the closed account status in the mail.
Get Cancellation Confirmation
It is always advised to have a confirmation on your closed account. For this, you need to ask your lender to send a confirmation while you are placing your cancel request. When you receive the cancellation confirmation take note of the effective date of cancellation of your credit card for future reference.
Ask for a no-due certificate
After you settle the outstanding amount and raise a request to close your card, ask your lender to issue a no due certificate on your name.
This will help you if any dispute happens between you and the bank in the future on an outstanding amount. The no due- certificate should also contain the date from when it is effective.
Check your Credit Score
After you close your credit card account, it’s important to check your credit score. Your credit report should mention that you have closed your card. Mentioning that the credit account was closed by the provider can be reflected negatively on your credit score and can affect your creditworthiness for the future.
You can check your credit score from any of the authorized bodies such as CIBIL or TransUnion. In case there is any mistake regarding your card closure, approach the bank’s customer service department, and request them to resolve the issue with the credit bureau.
Don’t close your credit card account without any genuine reason. Having many credit cards won’t necessarily hurt your credit score until you handle them responsibly. Once you decide to close your credit card follow the above-mentioned points for a smooth closer and good CIBIL score.