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Credit cards offer several benefits. However, users often want to close them to reduce overspending. These days getting credit cards has become so easy for earning individuals that they end up having multiple cards in their wallets. But it becomes a monthly hassle to keep track of all credit card bills. In this case, also, users want to get rid of multiple cards. However, before closing a credit card, there are certain things that need to be kept in mind.

1. Pay Off Your Balance in Full
 Before you end up closing your credit card, it is very important to clear all dues and pending payments as these pending payments will attract interest and late penalty charges, according to Gaurav Chopra Founder & CEO of IndiaLends.

 This will be a clean break between you and your credit card company. Moreover, this will also protect your credit score. If you are unable to pay off your dues due to liquidity issues, you can transfer your credit balance to a new credit card by initiating a transfer process with the help of your bank.

2. Ensure that there are no standing instructions on the card
 You may have a Netflix subscription, or you may be paying your EMIs and utility bills from the card. It is advisable to stop these payments before closing the card.

“These payments do not stop automatically because once you initiate the process of closing, it does not happen instantly. Until you get the no-dues certificate or written confirmation, you can’t be sure that the card has been properly closed. The bill will continue to build and if you miss the payments due to being unaware, your credit score may dip and you will also be charged with penalty charges if the money is not paid within the due date. Hence it is best to cancel all auto-payments beforehand to avoid falling into trouble at a



later stage,” Chopra told FE Online.


3. Credit card’s age matters
 If you have multiple cards, it is better to close the newer cards first.
While closing your credit card, consider the age of the card since the age of your credit account has a major impact in the computation of your credit score.

“The older your credit card, the higher is its contribution to your credit score. Having an old credit line indicates that you have been a responsible borrower and therefore creditworthy thus being eligible for the best loan and credit card offers,” said Chopra.
Thus, before closing an old credit card, you must consider the repercussions it will have on your credit score.

4. Avoid closing if planning for a big loan
Usage of your credit card reveals that you have been a responsible borrower throughout that period thus contributing to your credit score.

According to Chopra, closing your credit card reduces your credit score. The older the card, the more is the contribution to your score and the larger is the drop. A low score means a high interest rate on your loans. If you need to take an education loan or home loan, this can be very expensive. Hence it is advisable to avoid closing your cards if you have are planning to take a loan soon.

5. Redeem all benefits before closing your card
Credit card offers reward points that can be redeemed for cash back, discounts, coupons etc. Many times, people do not keep a tab on their reward points. So before closing your credit card, make sure to redeem all your existing points and only then apply for cancellation.

You can redeem your points by visiting the reward catalogue and choose any of the available options to redeem your points.

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