Do These Things Before Saying Goodbye To Your Credit Card
In general, the first bit of advice we would give you at CreditSmart is IF you have a credit card with no or minimal annual fee, then you should not cancel it. Why you ask? Because having open credit accounts that are paid in full help your CIBIL score by adding to you available credit, showing you are responsible with your credit line since it’s not carrying a balance, and adds to your average age of accounts.
Credit is built over time, so having an old credit card account that is in good standing is one of the best things you can have to build a high CIBIL score. So in general, if you do not need to cancel a card then please keep it! It will only help your CIBIL in the long run.
However sometimes a new credit card comes along, or perhaps the relationship with your bank has soured, or for some other reason you just want to cancel your credit card. In that case there are just a few things you should do first before cutting that card in pieces.
Pay Your Card In Full
This is the most important thing you can do to keep your CIBIL in good standing after a cancellation. Never cancel a card until you have paid your balance down to zero.
Cancel All Recurring Charges
Often we set up automatic payments for certain bills, but it’s very important to make the changes needed so your card you intend to cancel is not charged. Even if you pay off your card in full and plan to cancel the card the next day, you may end up with an unexpected charge if that happened to be the day your mobile phone bill was charged. Now you need to pay it down to zero again before closing the account, so it pays to be aware of your recurring charges.
Do Not Get Hit With An Annual Fee
The annual fee of a credit card usually is charged in the same month every year on the anniversary of when you created the account. Keep this in mind when cancelling, because if you plan on cancelling it’s obviously better to do so before the fee is charged. Also if he day of your cancellation is close to your next billing date where the fee might post, clarify with a rep you will not have to pay the fee since you are closing the account.
Again, it’s best to just keep the card! It really helps your credit profile and if the card has no annual fee, it’s simply helping you just by owning it. Only cancel if you absolutely have to!
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