Credit Card Blocking vs Closure: Key Differences Explained!

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?

  1. You no longer need the card.
  2. The card comes with high fees or unfavorable terms.
  3. 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!