While credit cards remain to be a strong force in the modern demands of the Singaporean lifestyle, for some, getting rid of a credit card is a relief. Whether the terms and conditions of your preferred card have changed, the benefits no longer match your needs, you want to take advantage of the sign-up promotions or trim down your annual expense.
Closing a credit card account doesn’t happen when you simply decide to run a scissor across it. You still have to be accountable for the outstanding balance, make use of your earned points, and consider your credit score. So, how does one properly cancel a credit card and make sure it won’t take a toll on you in the future?
What To Ask Yourself Before Cancelling Your Credit Card?
You might already have made up your mind when you decided to cancel your card, but it would still be helpful to reassess whether your card is still beneficial to you.
1. Are you using your card actively?
If you’re actually enjoying and maximizing the perks and benefits of your card, you might want to reconsider, as it would be in vain if your goal is to reset your status as a new-to-bank customer.
2. Do you hold another credit card from the same credit card issuer?
If you own another card from the same bank, your status remains to be an “existing customer,” even if your objective is to take advantage of the new customer sign-up bonus. Most banks will consider you a “new customer” only after the 12 months have elapsed from the time your card has been canceled.
3. Will it have an effect on your credit score?
Suppose you have two or more credit card accounts, and one of them carries some balance. Canceling the card with zero balance increases your credit utilization percentage while your credit limit decreases. The same goes for credit cards with a long history of on-time payments.
Prioritize canceling newly-acquired cards than the most used one as much as possible. To answer if it will have an effect on your credit history, yes. But still, it depends on your personal financial objectives as long as the advantages outweigh the effects.
Step-By-Step Guide on How To Successfully Cancel Your Credit Card
So now you have assessed the pros and cons, and canceling your card is deemed to be the best move, here are our pro steps on how to safely and properly close your account. Keep in mind that once your card has been canceled, it is irreversible.
Step 1. Check your prevailing points.
Whether you’ve earned a modest amount of points to buy a cup of coffee or enough miles to cover a two-way flight, start redeeming them before you call or reach out to the credit card company to cancel.
It is also important to see if your credit card issuer uses “pool points,” which happens when you hold two different cards from the same bank, like Citibank credit card: Citi Rewards and Citi Prestige. Canceling the other card could potentially forfeit your earned rewards held.
Step 2. Review the account closing procedure.
Since not all credit cards are the same, most likely, the terms and conditions are also different, especially regarding the associated fees in credit card cancellation. Most cards waive the annual fee during the first year, and your next year’s fee is usually based on how much you’ve spent. Reviewing the cancellation process and pre-emptive cancellation will save you so much time and money on fees.
Step 3. Clear your outstanding credit card balance.
Even those cards that you seldom use, it is smart to double-check if you have any remaining credit card debt. Sometimes, your outstanding balance isn’t fully reflected on your most recent statement of accounts as there are transactions that may not have been posted yet.
Step 4. Cancel your automatic payments and transfers.
This includes online subscriptions, digital shopping payments, and other services you signed up to that require you to put your credit card information. Doing so will help you finalize your total accounts payable to settle properly.
Step 5. Request for the most updated statement of account to confirm the $0 balance.
Do this even to unused credit cards. It is always best to check if your card has incurred any fees or charges that may have been overlooked before.
Step 6. Reach out to your bank to close your account and get the effective date of its cancellation.
This can be done ahead of time by sending an email of the cancellation requests and making a phone call to confirm. The customer service officer will naturally ask for your reason for canceling, and you might want to keep your answers plain and simple. Credit card companies will usually probe your responses and beware of counteroffers.
Step 7. Request for a written confirmation from your bank that your credit card has been fully canceled.
Credit reports usually arrive within 30 days from the date of your call, and it should state that your account has $0 outstanding balances and that it has been fully closed at the consumer’s request. Take note of the effective date so you’ll have an idea when you can reapply to be considered as a new customer to qualify for welcome bonuses.
Helpful Tips When Cancelling A Credit Card
Plan your call before canceling
Make sure you have an uninterrupted time when in touch with the bank representative. Avoid busy hours as much as possible, so you could do away with the queue or being put on hold for a long period of time. You may also check if your bank has an automated cancellation key-in option when you call, so you no longer have to speak with a representative. Moreover, banks like UOB and Citibank have a cancellation request option conveniently on their app.
Do not overshare your reasons for canceling
While on call, the representative will ask you questions that will give them the chance to convince you to reconsider. Simply avoid giving too many answers, particularly about your spending habits, to speed up the cancellation process.
Be mindful of counter-offers
Banks are keen on retaining their customers, and they may offer you attractive promotions for you to keep your account. If the offer seems to be working to your advantage, make sure to ask for the terms and conditions, particularly the associated fees. Some banks may offer to waive the annual fee if you retain your account for another year, but be sure to keep a copy of the terms. Remember that your main objective is to cancel, so before you agree on such retention terms, take your time assessing the benefits and disadvantages to avoid unwanted charges.
After the successful cancellation, dispose of your card properly and update your records.
Inactive credit cards need not be lying around your space, but before tossing it in the bin, cut your card with a pair of scissors (or a metal clipper if it’s a premium card) running it through the EMV chip. Update your records with the effective date of cancellation so that in case you reapply for another card, the fineprint will match with the date you closed your account. This makes you eligible for welcome offers or sign-up bonuses when you decide to sign up again.
Find The Right Card That Works For Your Needs
Banks have a diversified range of credit cards that are unique for every lifestyle, spending behavior, and cardholder’s goal. But no single credit card is actually better than the other in its category or for everyone, as it ultimately depends on one’s actual needs.
Here are some of our pro tips when choosing:
- Determine your monthly budget and your credit score
Among the many factors to consider, your financial capability is a major decision-maker on which card application requirements make you eligible. If you could also get your credit score for free, do so as it might affect your chances of approval. Remember to stick to your monthly expenditures when computing your average expenses and be honest to yourself if a particular credit card is within your spending habits.
- Identify the credit card with features that meet your specific needs
We’ve collected some of the most popular cards in Singapore that offer unique key features for different lifestyles and financial goals. Rates and percentages are sourced at the time of publishing.
- Credit Cards with Great Cashbacks
These cards come with easy rebates that could offset your monthly card statement. Cashbacks are earned through purchases or transactions with the card’s respective partner merchants or if you meet a certain monthly spend. Some popular cashback cards are:
- UOB One Card – generous 5% Flat Rebates
- Maybank Family and Friends Mastercard – 8% cashback on 5 preferred categories (dining, transport, groceries, etc.)
- POSB Everyday Card – 10% cashback on food delivery and 21.8% on fuel savings
- Air Miles Earning Cards.
Frequent travelers can earn miles from flights and accommodation transactions and enjoy other travel perks, but nowadays, there are more ways to earn. Regular points from non-travel-related purchases can be converted into miles for free or at a minimal cost. The most favored cards are:
- DBS Altitude Visa – 3 Miles for every dollar spend on online flight booking and hotel transactions
- KrisFlyer UOB Credit Card – Comes with great rates for Singapore Airlines flights and earn 3 miles for every dollar spend
- UOB PRVI Miles Amex – generous 6 miles for every dollar spend on Agoda, Expedia, and UOB Travel
- Rewards Cards for Low Spenders.
Works best for younger consumers, students, or those who seldom use their cards for their daily transactions. Some cards that stand out for their affordability but with easy accessibility to high rewards are:
- OCBC Frank – 6% cashback rates with low minimum monthly spend of $600
- Maybank Platinum Visa – 3.33% rebates for all local and overseas spend with at least $300 minimum monthly spend
- HSBC Revolution – 4 miles for every dollar spend online, and other contactless payments with no minimum monthly spend
- Apply for the card with the highest overall value to you. After narrowing down your options, you will most likely be resting to 2-3 credit cards that are quite similar. Take your time to look closely and see which one gives you the most value. Some helpful factors to look for are:
- Penalty for late fees
- Automatic increase of credit limit after a few consecutive on-time payments
- Easier to achieve required spending to qualify for the sign-up bonus and rebates
- Rewards/points expiry period
So You’ve Finally Cancelled Your Card…
Any supplementary or add-on cards will also be cancelled. Keep in mind that you also won’t be able to balance transfer to another account once your request to cancel has been communicated to your card issuer. Here are our key takeaways:
- If you are just starting out with building your financial portfolio, it is always ideal to start with fewer cards so you can keep track of your payments on time and settle fully.
- In one way or another, canceling your card might have some impacts on your financial portfolio, so minimize frequent cancellation or jumping to another card type to maintain a healthy credit history.
- The benefits of your card must always justify the cost of the annual fee and interests.
Holding a credit card comes with hefty benefits. But it’s still good to have some cash available, especially when your credit balance limits you. If you’re looking for fast cash loans and you’re unsure where to take one, Instant Loan can significantly shorten your time searching for the most suitable loan plans.
You’ll be glad to know that up to three personalized loan quotes are free. Send us a request today.