5 steps to smooth closure of your credit card account

Do you have multiple credit cards from various banks and haven’t used many of them for payments or transactions for over a year? Then it’s logical to close those idle credit card accounts. It’s important to select the right credit cards for cancelling. So, choose credit cards that charge hefty annual fees and have high interest charges. Do not cancel a credit card that has a long credit history. This is because, on your credit report, timely payments of due amount are viewed favourably when you apply for a home loan, car loan, etc.

Closing a credit card is just as important as opting for one. Always follow the right procedure when cancelling a credit card. Otherwise, it could adversely impact your personal finances and affect your credit report. The process for cancelling the credit card differs from bank to bank. Here are some important steps to take for closing a credit card account.

Settle all your dues

While cancelling a credit card, banks first ask you to settle the outstanding balance on the card. So, you should pay off this due on the card before applying for closure. In case you aren’t able to settle the outstanding dues on the card, transfer the balance to another card that you will continue to hold. Before settling the dues, you should also utilise all the reward points earned. Since reward points earned will expire upon cancelling the card.

Communicate with the customer service department

In the second stage, you need to approach the card issuer's customer service department to cancel your card. While calling the bank representative, keep the credit card and the latest statement handy since they may be useful for authentication and for clarifying details. While interacting with the bank representative, get his/her name and ID number for future communication if any issue arises while cancelling the card.

Get confirmation of the cancellation on email

Using the phone-banking facility of the bank, you may be able to cancel your credit card. However, it’s advised to have an email confirmation. So, you should send the email from the registered ID with your name, address and the last four digits of your credit card requesting the cancellation of the card. The bank will update you on mail with the status of cancellation process. Take note of the effective date of cancellation of your credit card communicated in the email for future reference.

Seek a no-due certificate from the bank

After settling the dues and applying for the closure of your credit card account, request your bank to issue a no due certificate. Should there be any dispute between you and the bank in future on outstanding dues, the no due certificate from the bank with the effective date is the ultimate deciding factor.

Review your credit report

It’s important to review your credit report after cancelling a credit card. Your credit report should mention the fact that you have cancelled the card. It shouldn’t say that the credit account was closed by the issuing bank because it will reflect poorly on your creditworthiness while you apply for a loan in future.

In case there is such discrepancy in your credit report, approach the bank’s customer service department and request them to resolve the issue with the credit bureau.