If you’ve faced a credit card fraud or are considering closing your card, it’s crucial to understand the difference between blocking a card and closing one. Let’s break it down with an example and some key points!
Key Differences Between Blocking & Closure
1. Meaning:
- Blocking: Done when you detect suspicious activity or lose your card.
- Closure: Happens when you decide you no longer want the card.
2. Temporary vs Permanent:
- Blocking: A temporary action to prevent misuse.
- Closure: Permanently shuts down the card and its account.
3. Impact:
- Blocking: Does not affect the credit card account itself.
- Closure: Terminates the credit card account entirely.
4. Credit Score:
- Blocking: No impact on your credit score.
- Closure: Can impact your score, especially if it affects your credit utilisation ratio or credit history.
5. Account Clearance:
- Blocking: No need to clear dues to block the card.
- Closure: All outstanding balances must be cleared before the card is closed.
Why Would You Close a Credit Card?
- You no longer need the card.
- The card comes with high fees or unfavorable terms.
- The bank closes it due to inactivity or other reasons.
Pro Tip:
Blocking a card is an immediate safety measure, but don’t confuse it with closure. If you’re considering closing a card, assess how it may affect your credit score and overall financial profile!