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Essential Checklist Before You Close Your Credit Card
- •Evaluate how closing a card impacts your credit utilisation ratio and overall credit score.
- •Check your reward points balance and redeem them before closing the account to avoid losing them.
- •Clear all outstanding bills, settle pending transactions, and update automatic payment arrangements.
- •Submit a formal closure request through the bank's approved channel and obtain written confirmation.
- •Reserve Bank of India guidelines require banks to close cards within seven working days of a request or pay compensation for delays.
Key Questions Answered
Closing a credit card reduces your total available credit limit while your outstanding balance remains the same, which increases your credit utilisation ratio. A higher utilisation ratio can negatively impact your credit score, depending on your overall credit profile.
Under the Reserve Bank of India's credit card directions, issuers must close a card within seven working days of receiving a formal closure request, provided there are no outstanding dues. If the issuer misses this deadline without valid reasons, a compensation of Rs. 500 per calendar day of delay is payable.
Before closing a card, you should clear all outstanding bills, check for unbilled transactions, redeem your reward points, and switch any automatic subscription or insurance payments to another method. Always submit a formal closure request through the bank's approved channel and obtain written confirmation.
