Closure of old credit card can negatively impact credit score

If the card is old and expensive but not useful, downgrade it to a no-fee card

- SANJAY KUMAR SINGH & KARTHIK JEROME

Neha Sinha (name changed on request), a 37-year-old Delhibased advertising executive, recently attempted to close a rarely used credit card. A procedure she thought would be simple and quick turned out to be quite prolonged. When she called the bank's customer support, she was bombarded with questions on why she wanted to close the card. "They tried to persuade me not to cancel it.

They even offered me incentives. Then they stalled. I was transferred to the cancellation department, where they again tried to dissuade me," she says. Only when she remained adamant was the closure procedure initiated.

Getting a card is easy. Nowadays, preapproved cards can be obtained with just a few clicks. However, if you thought cancelling a card would also be a cinch, you might be in for a reality check.

Diverse procedures

Closure procedures are not uniform across players. "Customers who are not well-informed about their issuer's process may face difficulty in closing their credit card," says Adhil Shetty, chief executive officer (CEO), Bankbazaar.com.

Issuers also have customer retention policies. "The customer service personnel may try to dissuade you from closing the card by offering various incentives," says Ankush Setia, co-founder, Multiply.

When to close a card

Closing a credit card is the right move in certain circumstances. "If you have a card with an annual fee that you don't use, it's better to close it," says Sumanta Mandal, founder, TechnoFino.

Closing is also justified if the rewards on it have been reduced. "Cards sometimes undergo massive devaluation," says Rohit Chhibbar, head of credit cards business, Paisabazaar.