Terminating The Credit Card

These are only a couple of instances wherein the customers have aired their grievances. With the recession taking its toll, all classes of people, including the salaried as well as the businessmen, have been opting for cancellation of their credit cards (CCs). A credit card, no doubt, has been a boon in disguise. However, there are two sides to the same coin. On the one hand it has been a friend in need or a god-sent gift. But when the situation worsens it could turn out to be real nightmare for those frustrated customers who wish that they had never bought it and would like to terminate the services without a second thought.

Reasons For Frustation
The main reasons for the frustration among the customers are the decisions of the credit card issuers to lower available credit limits and raise interest rates coupled with increase in fees for late payments and balance transfers. Unless the credit card is really beneficial in the long run, no one wants to continue using it. ‘Overcharging’ is the real bone of contention between the customer and the credit card (CC) issuing banks.

The rate of cancellation of CCs has been on the rise due to the economic slowdown in the second half of last year and it is still continuing even in the New Year. The trend has picked up momentum as the interest rates charged by the card providers have not been palatable to consumers. Instead of considering the CCs to be salvaging instruments during the ongoing financial crisis, customers prefer to cancel them as they fail to use them in the proper manner, or in some cases, they are never activated. If you have balances spread out over several cards, you may want to consolidate balances on one or two low-rate cards and cancel the rest. One more reason for the temptation to cancel the card is that it leads to becoming too extravagant.

How To Cancel Your CCs?
Most of the customers realise the importance of cancelling the CCs only after they are bombarded with bills from the banks. Just cutting the card into pieces and disposing it off will not sing a swan song for it. Unless you cancel the card in a systematic way it will be only the beginning of all your future problems. Find out the exit procedures set by the bank that has issued the card, follow them systematically and opt for an amicable settlement. Then only will you be able to rest in peace for the rest of your life. If you have decided to terminate your card, even before contacting the concerned bank for the same, ensure that you have fully repaid all your dues including all transactions and other amounts not yet charged to the account.[PAGE BREAK]

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Call up or send a written request to the bank intimating your intension. The bank will consider your requests only if your account is clean.  Unless and until it receives a request no bank will close the CC account at their end (excluding exceptional cases). You will have to deface the CC by cutting it into four pieces along the magnetic strip. Verify from the bank whether the credit card is de-activated and the account is cancelled. This is absolutely necessary because one of the conditions laid down is that the card-holder will be liable for charges incurred on the card, either by misuse or any other reason. Request for a written confirmation and preserve it. This will certainly help in sorting out any communication gap in the future, if and when it arises.

Misunderstandings
Misunderstandings usually result from outstanding amounts or interest charges. “When the bank sends the bills, customers get annoyed. Most of the cancellations are due to disputed bills,” says Pramod Kulkarni, Manager, ABN AMRO. The differences of opinions are due to lack of understanding of the interest calculation system. “Once they understand the correct procedures, they do realise their mistake. In most of the cases the customers agree to continue with our services. We do provide the details about the right procedure to cancel or dispose off the CCs to those who are adamant on cancelling them,” he adds.

Stressing on the importance of better customer education and awareness, Amol Dhugule, Sales Executive of HDFC Bank at Magarpatta in Pune says that he has made it a point to brief the customers regarding the interest calculation procedure even before enrolling them for the CC. “From my personal experience I have realised that this has helped reducing cancellation cases by keeping the customer convinced,” he asserts. “We don’t have any disputes with our customers as far as cancellation of CCs is concerned. Even if we come across any we try to solve them amicably. There are set procedures to follow such as clearing all dues. Once the formalities are completed we cancel the account. We intimate the customers too,” says Satish Deshmukh, ICICI Bank. Ruling out any harassment of customers, he says, “For us customer is god, and we don’t believe in annoying him or her.”

ICICI Diktat
The procedure for surrender of card by a card-holder is thus: The CC-holder may at any time choose to terminate the card account with or without giving any prior notice. For avoiding misuse, it is advised to cut the credit card into four pieces ensuring that the hologram and magnetic strip are destroyed permanently. An intention to terminate the card membership shall be intimated to ‘ICICI Bank Limited, ICICI Bank Phone Banking Centre, P O Box No 20, Banjara Hills P O, Hyderabad 500 034, India’ by mentioning the 16-digit card number. On termination, all outstanding dues[PAGE BREAK]

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shall be payable forthwith and the card-holder shall be liable to pay applicable interest till such time all monies are paid to the bank.

Sweet Sixteen
Parvesh Panchal, an executive with a multinational company, is the proud owner of 16 credit cards. However, he wants to get rid of four of them. “I tried to speak to the card-providers several times. Instead of helping me to cancel them, each time they offered me better incentives and talked me out of cancelling them. I have really benefited with these cancellation initiatives but still I would like to get rid of the other cards which are not providing the right support,” he says. So far so good. Companies are well aware that retaining the customer is easier than finding a new one but a ‘sweet sixteen’ customer, like Panchal, finds it a real burden holding on to such “unproductive” cards.

Follow The Rules
The steps to be taken to cancel a CC are very simple and this is what Prashant Gaekwad, Manager, State Bank of India, has to say: “You just need to inform our Customer Care Section and rest assured that it will be done. If you are planning cancellation due to frustration after you have been overcharged, first ensure that all your dues are cleared. If you cancel your CC with a balance outstanding, the creditor can charge you a penalty or raise your interest rate to the maximum available. So be sure you want to cancel the card before you tell any of the credit card representatives about your intentions.”

Surendra Sharma, a CC-holder, says, “If your documentation is perfect, it will act as a real shield against future onslaughts from the CC companies. Keep a record of the date and time when you called up for the cancellation.  Once they agree to the cancellation insist that they mention in the intimation note that it has been ‘closed or cancelled at customer’s request’. Make it a point to take down the name and designation of the person you have spoken to. If he says he will send the intimation within two days you will have to hang on to it. If you fail to get it within the next two days call up the same person again and find out the status and ensure that you get it and file it in your records. In future if anything happens contrary to your expectations you will be in a better position to prove the facts.”

Multiple Problems
Cancellation of CCs may lead to multiple problems if one is not cautious, warns Ms Jennifer, Branch Manager, ICICI, Magarpatta. It is absolutely necessary to know when not to cancel a card before deciding to cancel one. Even if you have an umpteen number of CCs you will have to choose the right card for cancellation. Random cancellation might lead to sealing your own credit lines. It is always better to stick to the unused credit lines if you are planning to make any investments in property or a vehicle. You will put yourself in a fix if you cancel the card before the loan is[PAGE BREAK]

sanctioned. However, if you think that your credit card is tempting you to spend even when you don’t have the right resources to repay the amount, don’t hesitate to close the account without a second thought.

“Our procedures for cancellation are very simple,” claims Prashant Shetty, Sales Manager, Credit Card Section, Axis Bank. “You need to just call us up for the cancellation and it will be done within the next two days. We intimate the customer about the closure through email or SMS or other regular communication channels. It will be reflected in the monthly statement also. There are no hassles as far as Axis Bank is concerned,” he adds.

“However, if there is any outstanding balance in the customer’s account we guide him to repay it before cancellation. We always try to retain our customers by understanding their grievances and trying to solve them. We advice them to cancel the card only if there are no other options left,” he adds. Sampada Gadkari, Executive, Axis Bank, adds that customer satisfaction is occupies the prime slot with their bank. All said and done, the Triple Cs should to be handled with due care and it will, no doubt, spell a new beginning.