Skip to main content

Closing Credit Card

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on 94 8300 8300

 

 

Credit Card Closing

 

Enough can’t be said on the diligent care one must take when handling a credit card! Sometimes, you may feel that a particular card is not of much use to you, or you may realise that you are holding several credit cards and many of them are not getting used. So you may wish to cancel your credit card. However, you may sometimes realize that despite taking the initiative to cancel the card, you continue to receive statements from the bank declaring that you have unpaid dues in your account. What is the reason behind this? It is possibly because the exact procedure has not been followed in cancelling the card.

Let’s take the case of Satish who had applied for a credit card from ABC Bank about a year ago. 12 months after getting the card, Satish realised that he did not receive much benefits from the card, and it was simply an additional headache to manage. So he decided to cancel the card and adopted the following process while closing his credit card -

Step 1: Satish contacted the customer service desk of the bank by dialling the number given behind the card. He then found out what is the actual amount outstanding in the card.

Step 2: He made an online payment for this amount and cleared all dues in the card account. As the amount was small, he made the payment in one go. Sometimes, the amount outstanding is quite large for an individual to pay it at once. In such a case, make regular payments, either on a weekly or monthly basis and clear the dues. Note that if a monthly payment is made, you will still accrue interest on the balance, and the final payment should include all fees and charges. Satish kept a record of his payment as proof.

Which credit card personality are you?

Step 3: On making a full payment of the outstanding balance, Satish contacted the customer service desk again and placed a request for cancellation of the card. He made a note of the date and time of the call, as well as the name of the representative who took down the request. Satish also got a request confirmation number, which will be the reference in all future correspondence on the request.

Step 4: Satish then wrote to the credit card company and sought verification that the account has been closed. He mentioned the details of his call 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 record will help lenders judge your track record and hence determine future behaviour and default chances. Hence you must always look at keeping older credit cards alive, and close the newer ones if the need arises. This is because the history of closed unused cards goes off the report after some years. Remember, if you already have a weak score, then work on improving your score first before proceeding to cancel the cards.

·         What are the effects if the credit card is not closed properly?

·         If you do not follow the proper steps in closing the card, there may be a case when there is an outstanding balance on your card. For instance, if you do not get an acknowledgement from the bank, the bank may charge renewal fees which will get showed as unpaid dues, even though you may have cut the card. This will get carried on month after month, attracting penalties. This will automatically affect your credit score, affecting your future prospects of availing a loan. So remember to actively follow up with the lender and get your credit card closed.

 

 

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

 

Best Performing Mutual Funds

    1. Largecap Funds             Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds         Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds          Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds   Invest Online

      1. DSP BlackRock MicroCap Fund

2.       Franklin India Smaller Companies

E. Sector Funds          Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds      Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds        Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds         Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...
Read more

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Read more

Birla Sun Life Mutual Fund Launches Birla Sun Life NIFTY ETF

Birla Sun Life has launched a new fund namely, Birla Sun Life Nifty ETF, an open ended exchange traded fund. The new fund will be open for subscription from 4th July to 18th July 2011, at an offer price of Rs 10 per unit. The investment objective of the scheme is to generate returns that closely correspond to the total returns of securities as represented by S&P CNX Nifty, subject to tracking errors. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against S&P CNX Nifty and will be managed by Satyabrata Mohanty.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/...
Read more

Short-Term Bond Funds

These are schemes that invest in fixed income instruments of short durations. Short-term bond funds with less than one year duration are good investment options provided you have a one-year investment horizon. Lower average maturity of the fund ensures that the fund NAV is not hit much when short-term interest rates move up. We expect the RBI to hike the policy rates by 50 to 75 basis points in this calendar year. That makes it a bit tricky for short-term bond fund investors. Check the average maturity and exit load before you invest in a short-term bond fund. As a rule of thumb, the average maturity should be less than your investment time frame. Some funds do charge an exit load if you log out early. To avoid such a cut in the returns earned, it is better to check at what threshold of time the fund charges an exit load. The funds have a wide range of 'exit load' thresholds. Some charge an exit load if you were to redeem units within 90 days, while there are some that let ...
Read more

Short-Term Investment Options in Mutual Funds

Mutual funds offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds. Who should invest in these? These are open-ended schemes. Investors with a short investment horizon or with surplus cash and low risk appetite should look at these. These could include corporate as well as retail investors. Those interested in staying invested for less than 15 days can opt for liquid funds. Retail investors who want to remain invested for two-four months, can look at ultra short-term funds. The short duration for both liquid and ultra short-term funds shields them from any interest rate volatility.   What kind of returns do they offer? In terms of an investment period less than 15 days, these funds are comparable to a ba...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now