Closing a credit card is a simple process but an important financial decision that requires proper planning to avoid any negative impact on your credit score. Following the correct steps ensures a clean closure without outstanding dues or credit report errors.
Credit card closure is the act of permanently closing your credit card account with the issuing bank, either because it is no longer required, has high fees, or you wish to streamline your credit profile. Once closed, the card is not viable for use as a transactional tool, and any add-on cards riding on it are automatically cancelled as well.
1. Assess your financial requirements: Prior to pursuing closure, evaluate the reasons behind it thoughtfully i.e., excessive annual fees or spending risk.
2. Transfer all reward points: Make sure you utilise or transfer all the rewards, cashbacks, or vouchers earned so that they do not remain unused when you request closure since they can be lost afterwards.
3. Pay all outstanding amounts: Settle your full credit outstanding and pending EMIs; a bank will not accept closure when there are dues outstanding.
4. Call customer service: Call the bank's helpline or approach the branch to lodge a closure request. You can also go to the bank's website or mobile app if it is an option.
5. Make a formal application: Send a written or email application stating your name, registered contact, and card's last four digits. State clearly that you want to close the credit card.
6. Get confirmation: Always request written or email confirmation after the closure has been processed. This evidence prevents any potential future disagreements.
7. Shred the actual card: Upon receiving closure confirmation, destroy the card by cutting it diagonally to avoid unauthorised use.
8. Track your credit report: Verify your credit report between 30–45 days to confirm that the account is listed as "closed by customer" and not "settled".
Closing the credit card will decrease your credit score slightly by shortening your credit history and raising your credit utilisation ratio. To limit the impact, clear outstanding debts in time, keep old accounts, and don't close multiple cards in succession.
Closing a credit card correctly means settling dues, giving formal intimation to your bank, and taking confirmation in order to protect your financial record. Done efficiently, it reinforces money management habits and keeps your credit profile healthy and accurate.
