Nowadays, most people use credit cards, but very few understand the true rules. Especially when it comes to blocking, deactivating, or closing a card. People often think that if a card is blocked, the account is automatically closed, but RBI rules state the exact opposite.

The RBI has clarified that blocking a credit card does not mean account termination. This means the card's relationship with the bank remains intact. Many people make this mistake and assume that blocking the card means the card is closed. The downside is that your card account remains active, charges continue to accrue, and your CIBIL score may be affected.

What is blocking a credit card?

No transactions will be possible with the card.
But the card account will remain active between the bank and you.
The card number and account will remain active in the system.
Charges may apply (such as late fees, interest, etc., if any are outstanding).
According to the RBI, blocking only stops transactions, not closes the account.

What is card closure?
When you close your card, it means:

Your card account is permanently closed
The relationship between the bank and the cardholder ends
No further charges or billing
The bank must complete the card closure within 7 working days
The bank must report to CICs (credit bureaus) that the account has been closed

RBI's full rule: Card Blocked = Card Closed
Card Block/Deactivation = Card Closure
Transactions Stopped
Permanently Closed
Account Remains Active
Charges May Be Charged
Closed in CIBIL Report
Account Shows Active
Closed
Immediately Processed
7 Working Days
Blocking Can Be Done Even If Outstandings Are Not Cleared
Outstandings Must Be Cleared

Why Do Banks Close Cards Within 7 Days?
According to the RBI Master Direction, banks must close cards within 7 working days of receiving a card closure request. However, if there is any outstanding balance on the card, the bank will bill immediately. The 7 days will not be counted until the customer makes the payment.

The biggest mistake many people make is blocking their card and thinking the account is closed. Months later, they see late fees, interest, and charges, which then impact their CIBIL score. This is because blocking is merely a security feature, not a true closure.

When should a card be blocked, and when should it be closed?
Block a credit card when it's lost, a fraud suspect, or you won't be using it for a while. Close it when it's no longer useful. However, if the annual fee is too high, you have too many cards, or you want to reduce your credit exposure, close the card.

Step-by-step process for closing a card
Call customer care
Submit a card closure request.
Clear the outstanding balance
The bank will immediately notify you of the outstanding balance.
Receive a confirmation email confirming that the closure process has begun.
Refer to the 7-working day period; it will only begin once the funds are cleared.
Shred and destroy the card. Don't just throw it away; cut the strip and chip.
Check CIBIL to see if the account is closed.

What misconceptions arise after blocking a card?
People think the card is closed.
Charges appear months later.
The CIBIL report shows the account as active.
The bank shows it as overdue.
New loans and cards may be rejected.

How is reporting done in CIC?
The bank must report to the credit bureaus (CIBIL, Experian, CRIF, Equifax) whether the card is closed or simply blocked. If the card is closed, the status is "Closed." If it is simply blocked, it is "Active."

Conclusion
There is a significant difference between blocking a credit card and closing it. Blocking only prevents transactions, but the account remains open. Whereas card closure terminates the balance, relationship, and all charges between the bank and the customer. The RBI has clarified that card closure must be completed within 7 working days, but outstanding balances must be cleared first. Therefore, if you truly want to close your card, blocking it won't work; you'll need to submit a formal closure request.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.