Hyderabad: In the present day digitalised world, credit card has become one of the most important necessities. We must pay constant attention to all aspects pertaining to our credit card. Take care even blocking or cancelling a credit card. Banks offer these cards if you have got a good credit score. When there are more cards than needed, get rid of those with too low credit limit as much as possible.
Banks periodically offer to increase your maximum credit limit. Use this opportunity to the maximum possible extent. It doesn't mean you can spend too much. It is to keep your debt utilization ratio is low. Suppose you have a credit card with a limit of Rs 70,000. If you spend Rs 7,000, credit usage comes to 10. In a card with Rs 20,000 limit, even if you use Rs 2,000, it will reach the same utilisation of 10 percent.
Cards with lower limits can increase your debt utilization ratio. This affects your credit score. So, when you have two or three credit cards, cancel the lower limit card. It is very important to keep an eye on the usage of credit limits on every card you have. Better to have one card with the highest possible credit limit and lowest utilisation ratio.
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The first credit card that you take is your best way to keep a good credit score. Continue with it as long as possible. Since your are using for a long time, your credit history and score will depend on it. Cancelling it will leave a negative impact. No big problem in cancelling the newly taken cards. Ask the bank to increase the limit as much as possible for the oldest card. Ask for reducing annual fee if it is high.
Use all reward points before cancelling a card. Most people don't pay attention to these reward points. This may have thousands of points. Use all these for any purchase. Only then block the card. Card cannot be cancelled even if there is a single rupee outstanding. Make sure that the bill is not overdue at all. If needed, pay a bit more.
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Ensure there are no standing instructions on the card. First, any payments going through that card should be diverted to another card. After completing all these, cancel the card only after billing period is over. You can contact the bank after paying balance and using reward points. Make sure that the card is no longer working.
Requests for cancellation of cards can be made online and in mobile app. Go to the bank branch and say that you are cancelling the card through e-mail, phone. Banks immediately stop a credit card when a cancellation is requested. The entire process takes some time to complete. Don't forget to take a no-dues certificate from the bank. The card should appear cancelled on your credit report to avoid any dispute.
