“It’s difficult to get a card cancelled. I had to approach a friend in the company to get both my cards cancelled” — Naresh Soni, 31 HR professional Soni got an additional card with his petrocard even though he hadn’t asked for one.The company kept billing him the annual fees though he didn’t use either card.
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Less is definitely more when it comes to credit cards. You do not need a wallet full of everything from the humble ATM card to the uber-premium platinum or titanium (or whatever the favoured metal of the day is) credit cards. Of course, if the point is to impress the less fortunate mortals who still live with gold or even (gasp!) silver cards, go right ahead. But if you think it makes good financial sense to have a dozen or so cards, think again.
Most financial planners suggest that two or three cards are ideal, where the second card is purely a safety net. Mumbai-based financial planner Zankhana Shah says: “Too many cards creates chaos in terms of keeping track of payment schedules. Moreover, if a card is not used on an ongoing basis, it should be cancelled.” Ashish Kapur, CEO, Invest Shoppe, adds: “Having two cards makes sense in case the first card is lost or is not accepted in some merchant establishments. In that case, the second card comes handy. One can also take advantage of the different billing cycles of the two cards.” Some people say they have several cards simply because they get a larger credit limit. That’s flawed in two ways: one, you’re more than likely to get a far higher credit limit on your existing card if you ask. And two, assuming you do have this humungous credit limit (spread over a dozen cards), can you afford to pay the bills?
It’s difficult not to accumulate credit cards these days when companies are literally doling them out like sweets. It’s tempting to take that gold or silver or platinum or whatever card for the reward points or freebies offered. But learn to say no, or you’ll end up paying fees for cards you’ve never used. So, what do you do with the cards you already have?
First, choose the two or three that you want to keep. Are these cards accepted at most merchant establishments? Then, consider the fees, penalties and interest rates. Are there cancellation fees? Also compare reward point schemes and any add-ons like free insurance. Then, sort your cards out in terms of billing cycle, and make sure you keep those with different cycles. Once you’ve decided on two or three of the best, be ruthless about cancelling the others. Make sure there are no dues on any of these cards before you begin the cancellation process.
The cancellation process is really simple. Call the customer care number and ask for the card to be cancelled. Of course, the company will most likely make offers and counter-offers. Often, card companies will offer you a whole lot of discounts, freebies and other sops like waiving charges, lower interest rate, or free cards to make you change your mind. If these offers make a prospective reject a better choice than a card you’ve decided to keep, jettison the latter. If all the credit card companies offer similar deals, simply make a new shortlist, taking the new deals into consideration. But finally, it’s up to you to say no. Once you’ve decided, it’s a good idea to write to the company so that you have a record of the cancellation request. Once the company says the card has been cancelled, make sure you get a written notification of that as well. You could end up getting bills for cards that you thought are no longer valid. Get a written notification so that in such cases, you have legal proof.
One Too ManyIF YOU HAVE MORE THAN TWO, or if you have cards that you haven’t used for over six months, you have too many CANCEL EXTRA CARDS—compare features, offers, etc and decide which you don’t need BEFORE CANCELLING, make sure there are no dues on the card(s) CALL CUSTOMER CARE and ask for the card to be cancelled. Better option is to write so there is a record of your request
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It’s a simple process, but be prepared for incredible delays. Every cancellation hits the sales targets of credit card companies, so they will try every trick in the book to stop you from getting out. “If an account is closed, it means no renewal fees, no revolving credit card fees, etc, and no revenue through interchange for the company,” says Vijay Mehta, consultant, Credit Card Management and Consultancy.
However, credit card companies refute these allegations. Says TR Ramachandran, business manager (cards), Citibank, India: “Delays happen only when the person has outstanding dues. Unless the dues are settled, the account cannot be closed. Getting a card terminated is solely a customer’s discretion.” So, make use of your discretion, and you’ll probably find that it makes more sense to cancel a card than keep it unused in your wallet. Can closing a credit card affect your credit worthiness? The Credit Information Bureau (India) Limited (Cibil), which keeps a record of the credit worthiness of borrowers uses a number of parameters based on the credit behaviour of the borrower.
These include the number of times he has defaulted on payment, status of the card at the time of closure and outstanding dues among others. In fact, more credit cards may lead you to a debt trap, which would then pull down your credit worthiness.
