How is closure of credit card different from the blocking of card?

If you have faced a credit card fraud, the immediate reaction is to call up the banker to get the card blocked. Does it mean that your card has been closed? Well, it does not. Closure of card is quite different from the blocking of card. Let us understand with an example.

Suppose, you realise that your credit card is not in your wallet and around the same time, you come to know that the same card was recently used by someone you don’t know for ₹5,000.

You instantly call up the phone banking official and get the credit card locked to avoid further misuse. Even after getting blocked, the card card account remains active. This is because the credit card was ‘blocked’ but not closed.

Here, we give the key differences between the two:

1. Meaning: Blocking of card is done when you face a suspicious transaction in your account whereas closure of card is required when you don’t need to use the card anymore.

2. Temporary versus permanent: Blocking of card is a temporary phenomenon whereas closure of card is permanent.

3. Impact: After blocking is done, there is no impact on the credit card account. On the other hand, closing of card leads to closure of credit card account.

4. Credit score: There is no impact on credit score while the card is blocked whereas the closure of account may impact your credit scoring on utilisation.

5. Clearing of account: You don’t need to clear your credit card account for blocking of card, whereas before closure of account, the card user is supposed to clear any outstanding balance.

Reasons for the closure of card:

These are some of the reasons for the closure of credit card:

1. Cardholder no longer needs the credit card.

2. You feel that the card carries high fees or unfavourable terms.

3. Bank closes the account due to inactivity or other policy reasons.