28 January 2010

Sample Credit Card Cancellation Letter

Since our PM announced on the Service Tax of credit card in the Budget 2010. I believe most of us starts to cut on the number of their credit cards. Most of the bank requires you to write in an official letter in order to cancel your credit card. Calling the bank alone wont be enough. So I browse through the internet to look for some sample on the cancellationletter. Below are 2 samples I found on the internet.

Sample 1 (More Formal Approach)

Cancellation Letter Company]

Cancellation Street]
Cancellation City, Cancel 12345

Re: John Doe; Account No. 0987654321 (“My Account”)
Cancellation of Account

Dear Sir or Madam:

Please allow this 
letter to serve as my request to immediately cancel my account with your company. I have included my check No. 1234 in the amount of $10.00 as full and final payment due on My Account. As a result, all of my obligations related to My Account have been satisfied and I expect that no future charges will be authorized on My Account. Immediately upon your receipt of this letter, please confirm the foregoing. Please be advised that in the event I do not hear from your company to the contrary within ten (10) days from your receipt of this letter, I will assume that the facts set forth in this letter are correct and will close my file accordingly.


Signature Here____________________

Cancelling Member

Address of Cancelling Member

Phone Number of Cancelling Member

Account Number of Cancelling Member

Info Barrel

Sample 2 (Simpler Approach)

[Your name]
[Your address]

Dear Sir or Madam:

Please let this 
letter serve as notice that I am terminating my credit card account effective immediately. Please close the following account:
Credit Card Company: ____________
Account Number: ________________

Please send me written confirmation that my account has been closed. Also, please confirm that you have notified all appropriate 
credit card bureaus that this account was closed at my request.

Thank you for your prompt attention to this matter.

[Your Signature]


What to do when you want to cancel your credit card?

Since our Prime Minister announced the RM 50 service tax for credit card in the new Budget 2010, a lot of credit card user has been cancelling their credit card. I have shared some Sample Credit Card Cancellation Letter in my other post since some of the bank may ask you to write in letter to cancel your credit card. However, before you want to cancel your credit card, there are something that you may want or required to do first.

Below are some of the things you are required or might want to do before you submit your cancellation form or letter.

Redeem your credit card reward points/cash rebates
Since you've earned all those reward points or cash rebates, you don't want to waste it all when you cancel your card. So make sure you use all your points/cash to redeem something before you cancel your card.

Inform your merchant about the cancellation
I'm sure we do use our credit card for auto debit or standing instructions where the merchant or company will charge the amount to your credit card on a monthly basis such as your insurance premium, your telephone bill or even your Astro bill. If you do have such auto debit, you must cancel it by writing or by calling them.

Clear outstanding balance/full settlement for flexi installment plan
This is definitely a required thing to do if you want to cancel your credit card. Any outstanding balance or installment plan must be settle in full before you can cancel the card.

After all of the above has been done, then you can either write-in / walk-in / call-in each credit card center to cancel your card. My suggestion is to try call-in first as it is the most convenient way. Write-in or walk-in only if you're required to. The customer service phone number of the bank will be at the back of your credit card.

Lastly, you will need to follow-up on the cancellation. This is also important especially when you did not receive any confirmation from the bank regarding your cancellation. Call the bank to ask about your cancellation status to make sure the process has been done.

After all of the above has been done, you can breathe a sigh of relief as you will have saved yourself RM 50.

FAQs on Credit Card Service Tax

This FAQ was provided by UOB and I share it to help clear some of the common questions that most of us should/would want to know.

What is this Credit Card Annual Service Tax?
In the 2010 Budget announcement , the Government proposed to impose an annual
Service Tax of RM50 for all Principal Credit Cards & Charge Cards and RM25 for
Supplementary Cards effective 1 January 2010. The objective of this proposal is to
promote prudent spending to all Credit Cards and Charge Cards users.

Will I be charged for this Service Tax?
The Service Tax is applicable to all Malaysian Credit Cards after 1 January 2010.

Can UOB waive this Service Tax?
Since this is a Government Service Tax, banks are not allowed to waive it. However,
cardmembers are encouraged to use their UNIRinggit Rewards Points or Smart$
Cash Rebates to pay for the Service Tax.

I have 2 Cards. Will I be charged twice for this fee? Per card or per customer?
The 2010 Budget proposed imposition of an annual Service Tax of RM50 per
Principal Card and RM25 for every Supplementary Card.

I am currently being charged annual fee. Will I also be charged for this fee?
The Service Tax is a fee imposed by the Government while the Annual Fee is
charged by the bank.

I have a cancelled card with outstanding balance. Will I still be charged for the Service Tax?
No, UOB will not charge you with the Service Tax when your cancelled card with
outstanding balance crosses into the next card anniversary date i.e. when the Service
Tax is due.

How will the Service Tax be imposed? Via card statement or pay to LHDN?
The Service Tax will be debited into your Card Statement and UOB will then forward
the Service Tax to the government.

Is this a confirmed Service Tax or only a proposal by the government?
The Service Tax was proposed in the Budget 2010 and is scheduled to be gazetted
in Parliament before 1 January 2010.

Although the above mentioned is for UOB Credit Card holder but most of it applies to all other banks as well. Using your rebates to pay for the service tax is only applicable to UOB Credit Card and other Credit Card will have to refer to corresponding banks.

To view the original document of the FAQs, please click here

Credit Card vs Commercial Card vs Charge Card vs Debit Card

There are basically four types of cards in the market namely Credit Card, Commercial Card, Charge Card and Debit Card.

Since there are so many types of cards available, how do you know which type is better for you? I believe some of us don't even know what are the differences between these cards. Thus, here I hope to provides the differences and some benefits between these types of cards to help you find the right card.

Credit Card
Credit Card is the type of card that allows you to make purchases using the credit available which you will be billed later. This means that you can make any purchases without paying in real cash until your bill arrives. You have the options of either paying the total billed in full or any amount as long as the amount is not less than a minimum amount. The minimum amount is usually a percentage of the total balance of your card. However, since they allow you to carry a balance in your card, they charge you interest on the balance.

Commercial Card
Commercial Card is the same as credit card but is often issued for business use which includes corporate card, purchase card, business card, travel and entertainment card. Commercial card often offers business oriented rewards and is a mean of separating business expenses from personal expenses.

Charge Card
Charge Card is very similar to credit card where you can make purchases using the card which will be billed later. However, when the bill arrives, you will have to pay the total amount in full which means you are not allowed to carry a balance. This means that you will not be charged any interest since you do not carry any balance in your card. Using a charge card will help you to control on our spending.

Debit Card
Debit Card is the type of card that allows you to make a purchase by deducting the total amount of the purchase directly from your bank account. This means that you can only use this card to make a purchase if you have available balance in your bank account. No interest will be charged as you are using your own money.

Before you decide on which card to choose, bear in mind that according to the new Malaysia Budget 2010, all credit card, commercial card and charge card is eligible for the RM 50 Service Tax. However, Debit Card is not included in the list and thus by using Debit Card you do not need to pay the RM 50 Service tax.