Card closure (and the one-year inactivity rule)
Short answer
Two RBI rules govern card closure. Ask to close, and the issuer must complete it within 7 working days — with a penalty of ₹500 per day of delay payable to you after that (if dues are clear). Separately, a card unused for a year triggers a closure process: the bank notifies you, and absent a reply within 30 days it may close the card. Closure is your right, not a negotiation.
What it means
Closure used to be where card relationships went to stall — retention calls, lost requests, a fee cycle later. The RBI Master Direction on credit cards put hard edges on it: 7 working days to honour a request, ₹500 per day to you beyond that, and a defined process for cards dormant a year.
The common mistake
Cutting up the card and calling it closed. An account with no plastic is still an open account — annual fee still billable, still on your report, still a fraud surface. Closure is a status the bank records, not a thing you do with scissors.
The subtlety worth knowing
The inactivity process cuts both ways. It protects you from forgotten open accounts — but if you keep an old free card alive purely for its limit and age, one tiny transaction every few months keeps the one-year clock from ever starting.
Related
All figures on this page are indicative and dated. Rates and fees differ by bank and change over time. Always verify with your bank's official schedule of charges.
Frequently asked questions
Will closing my old card hurt my credit score?
It can, through two doors: your total limit shrinks, so the same spending becomes higher utilisation; and if it was your oldest account, your average account age eventually shortens. If the card is free, keeping it open with a small occasional purchase is often the score-friendlier move. If it charges a fee you do not recover - close it and let the score absorb a small, temporary dip.
The bank keeps offering retention deals instead of closing. What do I do?
One clear written instruction - app request, email, or letter - stating the date. The 7-working-day clock runs from your request, not from the end of their persuasion. Log the reference number; the daily penalty exists precisely for closures that drift.
Sources
The regulation and official pages this page is checked against. If one of them disagrees with us, it wins.
- Master Direction — Credit Card and Debit Card (Issuance and Conduct) Directions, 2022 — Reserve Bank of India
Keep learning
Written and checked by the CardSamajh editorial desk · Last reviewed: · How we check this