Like you decide on to close your idle bank account which you haven't used for a while, you can also consider closing your credit card account. There can be n number of reasons for such a decision as you may be having multiple credit cards and you now wish to use less cards to reduce your debt obligation and at the same time reduce your credit limit.
Nonetheless, don't go on to aggressively shut all your credit account simultaneously as it will reduce your available credit limit and increase your credit utilization ratio.
Given here are few pointers you need to note while closing your credit card account.
1. Don't close the credit card account that has been in long use: As judicial and wise servicing of debt obligation against it will go a long way in improving your credit score over the long run and with it you may easily get additional financing facilities without much hassles.
2. Go on to cancel the card with higher interest rate and annual fees: This shall bode well for you as it help you save money and will also be a wise move.
3. Clear off all the outstanding balance on the credit card or transfer it: There are two options on credit card closure either you will have to clear off all the outstanding balance on the credit card usage or you can transfer the balance to the card which you still wish to use. Also, make sure to redeem all your reward points earned during the usage of the card.
4. Must obtain no-dues certificate: As with other credit options, you need to certainly obtain the no dues certificate from your credit card issuing bank upon the closure of the account as without it you may land in trouble if at a later stage there arise some dispute over non-servicing of obligation on the credit card.
5. Dispose of the credit card after cancellation: For avoiding identity theft, credit card must be disposed of properly such that no information is visible to anyone upon cancellation of the card.
6. Post the closure of the account, ensure to check your credit history: Credit history should be checked certainly upon closure of the credit card and it should be showing that the facility has been cancelled from the entity's end.