New Credit Card Closure Rules: Banks Must Close Credit Cards In 7 Days Or Pay Rs 500 Daily Penalty

If you have multiple credit cards , you may be considering closing some of them to cut down on unnecessary expenses. While holding a credit card with no annual fee isn’t much of an issue, keeping one that charges an annual fee and isn't being used can cost you money without any real benefit. This is because unused cards still charge you fees, and without using them for purchases, you're missing out on rewards points or other perks. Closing such a card could save you from these unnecessary costs.

However, some banks tend to be reluctant when customers request to close a credit card. Fortunately, the Reserve Bank of India (RBI) has introduced new rules to ensure that cardholders can close their credit cards quickly and easily. But what exactly are these rules, and how can you close your credit card? Let’s explore.

RBI’s Rule for Closing Credit Cards

The RBI has laid out clear instructions regarding credit card closure. According to these rules, when a customer submits a request to close their credit card, the bank or card issuer must process the request within 7 days. If the card is not closed within this timeframe, the bank or issuer will face a penalty of Rs 500 per day until the closure is completed. This penalty must be paid to the customer.

It’s important to note, however, that your credit card must have no outstanding balance at the time of the closure request. The card issuer is not obligated to process the request if you still owe any amount on the card.

How to Close Your Credit Card : 5 Simple Steps

Closing a credit card isn’t complicated. By following these five steps, you can ensure that the process goes smoothly:

Pay Off Any Outstanding Dues

Before you can close your credit card, you must pay off any remaining balance. Even if the amount is small, the card won’t be closed until all dues are cleared.

Redeem Your Reward Points

Before rushing to close your card, don’t forget to redeem your reward points. These points were earned from purchases made with the card, so take advantage of them before the account is closed.

Check for Standing Instructions

Make sure you don’t have any automatic recurring payments, such as insurance premiums or monthly subscriptions like OTT services, linked to your credit card. If you fail to remove these standing instructions, your payments may stop once the card is closed, potentially causing issues like missed insurance payments.

Contact the Bank

Call your bank’s customer service to inform them that you wish to close your credit card. The bank will ask for some basic information and may inquire about the reason for closing the card. Once this is done, they will process the request. In some cases, the bank might ask you to send an email or a photo of your cut-up card for security purposes.

Cut the Card Diagonally

After your request is processed, don’t just throw the card away. To ensure it can’t be misused, cut the card diagonally before disposing of it. This prevents anyone from accessing your personal information or using the card fraudulently.

By following these steps, you can effectively close your credit card and avoid any future charges. The new RBI rules ensure that the process is quick and hassle-free, helping customers avoid unnecessary fees while providing protection against delays from banks.