Credit Card Closure: The card is not closed immediately after application. Don’t just take verbal assurances. Also obtain a no-dues certificate in writing from the bank
Using a credit card is common in the current era and it has many benefits too. But if you are not careful in its use then there can be trouble. Many people close the credit card after some time. If you are going to do the same, then you should take care of some things. Money9 is telling you about these things.
Pay all dues
When you are about to close your card, there should not be any outstanding on it. Without this you cannot close the credit card. Interest and late fees are also levied on the outstanding amount. In case you are transferring the existing card balance to the new card, inform the concerned bank.
Redeem Award Points
Reward Points can be redeemed for cash back, card payment, receiving discounts, coupons or any other product. Many times people do not pay attention to the reward points.
Cancel current instructions
Many times instructions related to OTT payment, phone bill payment or other such payments are attached to the credit card. These need to be canceled before closing the card. It often takes a month for these to be cancelled. Wait a month to close this card.
Loan preparation
Do not close the credit card if you are taking a personal or auto loan. Doing so can affect your credit score. If you hold a credit card and have a good credit record, it is possible that you can get a loan at affordable rates.
Credit utilization ratio
A portion of the credit you are spending is called the CUR. Closing the credit card increases it. A high CUR has a bad effect on the credit score. For example, if you have two cards with a spending limit of Rs 2 lakh each, then your total spending limit will be Rs 4 lakh.
If you are spending 50 thousand rupees on each card, then it will mean that a total of one lakh rupees are being spent. In such a situation, if you close a card, then the CUR increases by 50 percent. It should be within 35%. So keep this in mind while closing the credit card.
Credit edge
If you have multiple cards, close the new card first. The older the credit account, the better the credit score. Old credit accounts reflect your credibility, which will make it easier to get loans in future. Avoid closing old credit cards.
Keep in touch with bank
If you have applied for closure of credit card, then keep taking information in this regard from the bank continuously. The card is not closed immediately after application. Don’t just take verbal assurances. Also obtain a no-dues certificate in writing from the bank.
