Whether you’ve upgraded to a better credit card, no longer use an old one, or simply want to reduce the number of cards you manage, closing a credit card is a straightforward process. However, doing it incorrectly could mean losing reward points, missing subscription payments, or even affecting your credit score.
In this guide, we’ll explain when it makes sense to close a credit card, the steps to follow before submitting a closure request, and your rights under RBI regulations if the bank delays closing your account.
TL; DR
Closing a credit card is more than just cutting it up. Before cancelling, clear your dues, redeem your rewards, and remove recurring payments. If it’s your oldest or a lifetime-free card, keeping it open may be the smarter choice for your credit score. This guide walks you through the closure process, its impact on your credit score, and your rights if the bank delays closing your card.
Should You Close Your Credit Card?
Brief explanation followed by:
Consider closing if:
- Annual fee no longer worth it
- Upgraded to a better card
- Poor rewards
- Simplifying finances
You may want to reconsider closing your card if:
- It’s a lifetime-free card with no annual fee.
- It contributes significantly to your overall available credit limit.
- Closing it could increase your credit utilisation or reduce the average age of your credit accounts.
- You’re planning to apply for a loan or another credit card in the near future.
Before You Close Your Card
Before submitting a closure request:
- Clear all outstanding dues.
- Redeem reward points or cashback.
- Cancel recurring payments and subscriptions.
- Download your statements for future reference.
How to Close a Credit Card
Once you’ve redeemed your rewards, cleared all outstanding dues, and removed any recurring payments linked to your card, you’re ready to begin the closure process. While the exact steps may vary slightly between banks, here’s what you can generally expect:
Contact Your Bank
Raise a credit card closure request through your bank’s preferred channel, such as customer care, net banking, the mobile banking app, email, or by visiting a branch.
Complete the Verification Process
The bank will verify your identity before processing the request. This may involve an OTP, security questions, or verification using your registered mobile number and date of birth.
Obtain a Service Request Number
Ask for a service request number or written confirmation that your closure request has been registered. Keep this safely until your card is officially closed, as it can help if you need to follow up or raise a complaint.
Confirm the Account Has Been Closed
Once the bank confirms the closure, check that the card has been deactivated and download the confirmation email or acknowledgement for your records.
You may also request a No Dues Certificate (NOC) as a proof that the account has been closed without any outstanding dues. While not mandatory, it can be useful if you ever need to resolve a dispute or verify the closure.
Destroy the Physical Card
After your account has been closed, cut through the EMV chip and magnetic stripe before disposing of the card securely. Simply cutting the card without submitting a closure request does not close the credit card account.
How Long Does Credit Card Closure Take?
As per RBI guidelines, banks and card issuers must process a valid credit card closure request within 7 working days, provided there are no outstanding dues or pending disputes.
If they fail to do so, they’re required to pay ₹500 per calendar day of delay until the account is closed.
Great.Cards Tip: Keep your closure request number and confirmation emails. They’ll help if you need to escalate the matter to the bank or the RBI Integrated Ombudsman.
Will Closing a Credit Card Affect Your Credit Score?
Keep only the important points:
- Your credit utilisation may increase.
- Your average credit history may reduce.
- Your overall credit limit decreases.
In many cases, keeping a lifetime-free card open is better than closing it.
FAQs
Can I close a credit card with outstanding dues?
Generally, no. Banks usually require you to clear all outstanding dues, including any interest, fees, and EMI balances, before they process your closure request.
Is there a fee for closing a credit card?
Most banks don’t charge a fee for closing a credit card. However, you’ll still need to pay any outstanding dues before the account can be closed.
Will closing a credit card affect my credit score?
It can. Closing a card may increase your credit utilisation ratio or reduce the average age of your credit accounts, which could temporarily impact your credit score. The actual impact depends on your overall credit profile.
Should I close a lifetime-free credit card?
It depends. If the card has no annual fee and doesn’t create any issues, keeping it open may help maintain your overall credit limit and support your credit profile. If you no longer need it, you can choose to close it.
How long does it take to close a credit card?
As per RBI guidelines, banks are required to process a valid credit card closure request within 7 working days, provided there are no outstanding dues or disputes. If they fail to do so, they may have to compensate you ₹500 per calendar day of delay.
Can I reopen a credit card after closing it?
In most cases, no. Once a credit card is closed, it cannot usually be reactivated. If you want the same card again, you’ll generally need to submit a fresh application, subject to the bank’s eligibility criteria.
How can I confirm that my credit card has been closed?
Ask your bank for a written confirmation or closure acknowledgement. You can also check your credit report after a few weeks to verify that the account is reported as Closed.
Final Thoughts
Closing a credit card isn’t just about cutting it up. Clear your dues, redeem your rewards, cancel recurring payments, and obtain written confirmation from the bank. If the card is lifetime free or your oldest account, think carefully before closing it, as keeping it open may benefit your credit score more than cancelling it.