Blocked Your Credit Card? RBI Rules Reveal Why Your Account Still Stays Active

Many credit card users believe that once they block their card, the account associated with it is automatically closed. However, the Reserve Bank of India (RBI) clearly states that blocking a credit card is not the same as closing it. This misunderstanding often leads to late fees, rising interest charges, and a damaged credit score. Here’s a detailed look at what RBI’s rules actually say — and how you can avoid costly mistakes.

Blocking vs. Closing a Credit Card: What’s the Difference?

A large number of people use credit cards daily but are unaware of the difference between blocking, deactivating, and closing a card. As a result, many users simply block the card and assume their credit account is shut down. RBI’s regulations make it clear that this assumption is incorrect.

What does blocking a card mean?

Blocking or deactivating your card only stops transactions from happening.
However:

• The credit card account remains active in the bank’s system.

• Your card number and account details continue to exist.

• If there is any outstanding balance, the bank continues to apply:

  • Interest

  • Late payment fees

  • Other applicable charges

In simple terms, blocking a card is just a security action — not an account closure.

This is why even after blocking the card, customers sometimes continue to receive monthly statements, penalty charges, and overdue reminders. Many people first realize the issue months later when their credit score has already dropped.

What does closing a credit card mean?

Card closure is a completely different process.
When a card is closed:

• The account is permanently shut down by the bank.

• The relationship between the customer and the bank ends.

• No further bills or charges can be generated.

As per RBI guidelines:

• Banks must complete the closure process within 7 working days.

• They must update the credit bureau (CIBIL, Experian, etc.) with a “Closed” status.

This ensures that your credit report accurately reflects that the account no longer exists.

Why is the 7-day rule so important?

RBI introduced the 7-day rule to ensure banks do not delay the closure process.
However, one critical condition applies:

👉 The 7-day timeline begins only after all outstanding dues are cleared.

This is where many users go wrong. People block their card and assume it is closed. Later, when unpaid charges accumulate, the bank marks the account "overdue", which negatively affects the credit score. In many cases, users discover the problem only while applying for a loan or a new credit card.

When should you block a card — and when should you close it?

Block your card if:

• It is stolen

• It is lost

• You suspect fraudulent activity
  Blocking stops unauthorized transactions but does not end your financial obligations.

Close your card if:

• You don’t need it anymore

• Annual fees are too high

• You want to reduce your overall credit exposure
  Closure ensures no charges accumulate in the future.

How to properly close a credit card

Here is the correct procedure to close your card:

1. Call customer care and request account closure.

2. Clear all outstanding dues, including interest and fees.

3. The bank will start the closure process and send a confirmation email.

4. Within 7 working days, the card will be officially closed.

5. Cut and destroy the physical card.

6. Check your credit bureau report to ensure the status is updated to “Closed”.

Final takeaway

Blocking and closing a credit card are completely different actions.

• Blocking = Stops card usage, but account stays active

• Closing = Permanently ends the account and stops all future charges

To avoid unnecessary penalties and protect your credit score, always submit a formal closure request if you want to end the card relationship. Blocking alone is never enough.