6 Precautions to Take When Cancelling Your Credit Card - The Independent Singapore News

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If and when you do decide to cancel a credit card, keep in mind that it is not just a matter of cutting it into two and sending a cancellation request to your bank.

with a bank. These products are designed to help you make credit card repayments more easily over a course of a few months to a few years.

This makes balance transfer loans and debt consolidation plans ideal for consumers who need to get rid of their credit cards but are unable to do so because they don’t have enough money to pay off their balance right away. By breaking up your repayment into small portions spread over a long period of time, you can more easily manage your card balance repayment while still cancelling your credit card immediately.

Furthermore, some banks continue to charge credit card accounts that have been closed if your account carries a credit balance for more than a year after closure. Although the amount that the banks charge is usually small, it’s best to double-check that your account is reduced to a nil balance before closure.The correct way to withdraw a credit balance on your account is to request the bank to pay you. Don’t make the mistake of logging on to your card account and transferring the money out.

That’s why you should always remember to claim the rewards that you are entitled to before you communicate your intention to cancel your credit card. By doing so, you will avoid the bother of having to convince the bank to reinstate your points.If you have set up any recurring payment instructions from your credit card, cancelling your card will automatically result in these payments being discontinued.

Here’s an example to demonstrate the mechanics of this process. Let’s say that you have two credit cards – card 1 and card 2 – and you intend to cancel card 1. If you have some outstanding balance on both cards, the table below illustrates what your credit utilisation could look like before you cancel card 1.

 

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