Credit cards are excellent financial tools to have on hand. Not only do they make shopping online or remotely booking travel possible, but they can also be used to establish and build good credit. HSBC offers a suite of excellent credit card options to choose from.
Unfortunately, credit cards can also be the source of mounting debt when not used properly. They can also be the target of fraud or theft. In these cases — as well as others — cancelling a credit card might be warranted.
If you hold an HSBC credit card that you’re thinking of cancelling, is it possible to close your account online? Or is it necessary to speak with a live agent to initiate and complete the cancellation process?
Reasons To Cancel Your Credit Card
There may be any number of reasons why you may want to cancel your HSBC credit card, including the following:
- You lost your credit card
- Your credit card was stolen
- You noticed unauthorized spending on your card
- You haven’t used your credit card in months
- You want to switch your card to one that offers rewards
- You’re looking for something with a lower annual fee or APR
- You need to cut back on your credit card spending
- You need to pay down your debt load
What To Do Before Closing Out Your Credit Card Account
You may have a valid reason for cancelling your credit card. But before you do, there are a few things you should do first:
Pay Off What You Owe On Your Card
If you are still carrying an outstanding balance on your HSBC credit card, you will first need to pay off what is still owed before cancelling. If you don’t, the outstanding balance could be listed as a default on your credit report, which could pull down your credit score.
Spend Your Points
If you have a rewards credit card from HSBC, such as the HSBC World Elite Mastercard, HSBC +Rewards Mastercard, or HSBC Premier Mastercard, make sure you’ve spent all the points you’ve accumulated thus far before closing your account. If you don’t, you’ll lose them.
Inform Other Account Users Of Your Intention To Cancel The Account
If your spouse or children are listed as authorized users of your credit card account and have their own cards, make sure to let them know that you will be cancelling the account. Once you’ve officially cancelled the card, ask them to dispose of their cards safely, or else collect the cards and dispose of them yourself.
Cancel Recurring Payments Made With The Cancelled Card
Many services can be paid automatically every month using your credit card. Simply put your credit card information on file, and the service provider will automatically bill your card every billing period. When you cancel your HSBC credit card that’s on file with these providers, you will need to update your credit card information on file in order to avoid any interruptions in services.
Check Your Final Statement Carefully
Before you officially close your account, closely assess your final statement to make sure there aren’t any wrong charges on the account. Everything on your final statement should be in order before you cancel your credit card; otherwise, you will have paid for transactions unfairly and unnecessarily.
Put The Card Away
Don’t be tempted to make one more transaction right before the account is closed. To resist the temptation, take the card out of your wallet and put it away.
Can You Close Your HSBC Credit Card Account Online?
You may be able to initiate the account closing process online by logging into your HSBC account and going to the Credit Cards Online section. From there, you can complete a credit card closure request form by entering your credit card number, an explanation of your desire to cancel your credit card, and the reason why you want to close your account.
You may be contacted by a customer support representative who will inform you of what your next steps may be. If you cannot complete an online cancellation of your credit card, you may also contact them via telephone at 1-866-406-4722.
If you cancel by phone, be sure to make note of the person you spoke with and the time and date of the conversation. Also, ask for a written confirmation of the cancellation for your records, and make sure to cut up the card and dispose of it securely to avoid the chances of anyone else getting their hands on the card and attempting to use it fraudulently.
How Does Cancelling A Credit Card Affect Your Credit Score?
Your credit score is an important number that plays a key role in your credit health. A good credit score will open up many opportunities for you to be approved for credit and loan products, including mortgages and credit cards. But a low credit score can make it difficult for you to secure such financial products.
Having a credit card and using it responsibly can help you maintain a high credit score. But if you must cancel your HSBC credit card, it’s important to understand that this could have a negative impact on your credit score.
Every time you make a payment on your credit card — or miss a payment — the payment information will be reported to the credit bureaus and will be marked on your credit report, which affects your credit score. Timely payments positively affect your score, while missed payments do the opposite.
Credit Utilization Ratio
The credit bureaus determine your creditworthiness by looking at a variety of factors, including your credit utilization ratio. This ratio refers to the amount of credit you have versus how much of that credit you use.
For instance, if your credit limit on your credit card is $5,000 and you spend $500 of that available credit, your credit utilization ratio would be 10% ($5,000 divided by $500). But if you spend $4,000 of that $5,000, your credit utilization ratio would be 80%.
Low credit utilization ratios are recommended to help keep your credit score up. Generally speaking, a credit utilization ratio of less than 30% is recommended. But if you use too much of your available credit, your credit utilization will spike, which can be detrimental to your credit score.
Cancelling a credit card account — especially one with a high credit limit — will effectively increase your credit utilization ratio, which isn’t a good thing for your credit score.
Number Of Accounts
You will also be reducing your total number of credit accounts and lowering the average age of these accounts, both of which are also bad for your credit score. Lenders like to see borrowers who have a mix of different types of credit accounts and accounts that have been open for a long period of time. But eliminating a credit card will leave one less account on the books and reduce the average age of all your accounts.
Despite the potential for your credit score to dip after closing your HSBC account, you may still be better off cancelling your card if you are unable to make timely payments every month. A string of late payments will have a negative effect on your credit score, which can be worse than actually cancelling your credit card.
Closing your credit card account should only be done after careful consideration of the reason for cancelling and what effect it will have on your credit score. If you do decide to go ahead with cancelling your card, you may be able to initiate the process online by logging into your HSBC account. However, you may have to complete the process by eventually speaking with an agent from HSBC.