with the customer service representative. He sent the letter through Registered Post, so that there is a legal record of the same.
Step 5: After a few weeks, Satish received confirmation from the bank that the credit card has been cancelled and closed. He then proceeded to cut the credit card into small pieces across the magnetic strip. This completes the cancellation process.
Things to keep in mind while cancelling the credit card:
* The first most important thing to remember is that the bank will not cancel your card unless you have paid all dues. This not only includes the expenses you incurred on your card, but also includes all interest, fees and charges on the card. Sometimes, you may cancel your card after the billing date, and as a result, there may be a residue amount which is not reflected in your last statement.
* Most customers feel that some card charges are unfair and proceed to cancel the card without paying these. However, the bank will not cancel the card unless you pay these dues. Further, you will have to continue paying interest and late payment charges on these dues till you settle everything.
* Simply cutting the card at your end and mailing it to the bank will not cancel the card. Insist on getting a written acknowledgement from the bank that the card has been cancelled.
Does closing a credit card affect your credit score?
Closing a credit card can reduce your credit score. This is because you are reducing your overall credit limit by closing a card. As a result, your credit utilization will go up on an overall basis. Assume you have three cards with a total credit limit of Rs.1.5 lakhs and you spend Rs.75,000 in a month. So your credit utilisation is 50%. Now supposing you want to close one of the cards which has a credit limit of Rs.50,000 as you are not using this card - Then your overall credit utilisation will be 75% (75,000/100,000). This can suggest that you are credit hungry in nature.
Does this mean that you should not close unused cards? No. It is better to close unused cards to prevent misuse or fraud. However, if you wish to close more than 1 card, you should do so gradually and not all at once. Further, the older the credit history, the better it is for your credit score. A long track