In last week’s budget, Prime Minister announced that there will be a RM50 service tax on every credit card, and RM25 for every supplementary card.
One way to avoid this service tax is to cancel your extra credit cards. Many of you are thinking how to cancel your credit cards or charge cards.
This post is a simple guide to cancel your credit card.
The first decision to make is reducing the number of cards you hold to a minimum. This might be one or two credit cards. Which cards do you cancel?
- Cancel cards that charge you annual fees (or unwilling to waive their annual fees). You can easily get free-for-life credit cards.
- Cancel cards you hardly use. As in less than two transactions per month.
- Cancel cards if you don’t use the special discounts or benefits.
- If you pay bills online, keep the card that allows you to pay all your bills.
- Those of you who are frequent travelers may want to keep a card from an international bank. I had an experience where my local bank card was not accepted in a store in Hong Kong.
- Cancel cards from banks with poor service, or don’t offer convenient repayment options
How To Cancel?
Here are four simple steps to cancel your credit cards:
- Read the terms and conditions of for your credit card. If you can’t find the terms and conditions, check out the bank website. They will tell you how you need to return the card to the bank.
- Settle any outstanding amount
- Write a polite letter (refer next section)
- Destroy your credit cards and dispose. Check out how to securely destroy your credit card in 15 slices. (If you want to return your card to the bank, some banks specify cutting only in half in their terms and conditions)
Update: Some have suggested to me that a phone call will do, but in my experience, banks still want a letter. My theory is, they want to make it as inconvenient as possible.
A Sample Letter
Just copy this into your favorite word processor and fill in your details accordingly. Some other excuses you could use are: not using the card anymore, or you have taken a credit card from another bank.
You may want to attach your destroyed credit card in the letter (personally I feel this is optional).
<BANK CARD CENTRE>
<BANK CARD CENTRE ADDRESS>
27 October 2009
RE: CANCELLATION OF CREDIT CARD FACILITIES
I have been using your credit card facilities since 2007, and I am happy with the excellent convenience and benefits.
Unfortunately I have to cancel my credit card because I do not want to pay the credit card service tax <OR PUT ANY OTHER EXCUSE HERE>.
Please cancel the following credit cards effective immediately:
4444 5555 6666 7777 – <Principal Card Name>
4444 5555 6666 8888 – <Supplementary Card Name>
I would appreciate a written confirmation after you have completed the cancellation process.
The Retention Call
A few weeks after mailing your cancellation letter to the bank, you might receive a call from the credit card retention department.
Usually they will offer you some great offer, like a free upgrade to a platinum card, or waive annual fees, or increase your credit limit.
Just decline with a firm but polite reply.
The bank might send a letter to you to confirm that the credit card has been cancelled.
If not, you may want to give customer service a call.
Once you get the confirmation (preferably in writing), you are done!
Photo By: Sanja Gjenero