3 weeks ago
Closing Credit Card With Outstanding EMI: Hidden Charges, Rules Explained
Some people use a plastic card called a credit card to buy things and pay the money back later.
Sometimes they split the repayment into smaller monthly parts, called an EMI.
If someone decides to cancel their credit card, the money they still owe does not go away.
The EMI payments must still be made until everything is paid off.
Banks and credit card companies have rules about this.
In India, the central bank says the card must be closed within seven working days after all dues are paid.
If you want to pay off the whole EMI early instead of monthly, you might have to pay extra charges.
If you miss payments, it can hurt your credit score, which is like a report card for borrowing money.
So the best idea is to check everything you owe and talk to your bank before closing the card.
Cancelling a credit card does not cancel EMIs linked to it; repayment obligations continue until the outstanding amount is cleared.
Consumers may have the option to foreclose the outstanding EMI amount, though this could come with applicable charges depending on the issuer and terms.
RBI rules say banks must close a card within seven working days, but only after all dues, including EMIs, are paid.
Missed payments on pending dues after card closure can negatively affect a consumer's credit profile.
Experts advise clearing all EMIs, unbilled transactions and dues, and obtaining formal closure confirmation before closing a card.
- Who
- Credit card holders, along with experts Nicky Sehwani of InstaMoney, Siddharth Mehta of Kiwi, and Ashish Lath of SaveSage.
- What
- The rules and hidden charges involved in closing a credit card that still has outstanding EMIs and dues.
- Where
- India, implied by the reference to RBI (Reserve Bank of India) rules.
- When
- Not specified in the article.
- Why
- Because outstanding EMIs remain repayment obligations after card closure, and consumers need to avoid unwanted charges and damage to their credit profile.
Key facts
- EMI obligation after closure
- Continues until the full outstanding amount is repaid
- Foreclosure option
- Available depending on issuer and EMI terms, may include applicable charges
- RBI closure rule
- Banks must close a card within seven working days once all dues are paid
- Expert advice
- Clear all EMIs, unbilled transactions and dues before closing the card
- Consequence of missed payments
- Can negatively affect the consumer's credit profile
- Recommended step
- Discuss pending payments and discrepancies with the card issuer's customer support
Quotes
Unknown Speaker
“Cancelling a credit card does not cancel the EMI attached to it. Any outstanding amount remains a repayment obligation and, depending on the issuer’s terms, may continue through a repayment arrangement or become payable along with applicable charges. Consumers should ideally close a card only after clearing all EMIs, unbilled transactions and dues, and obtaining formal closure confirmation.”
livemint.com
Unknown Speaker
“Cancelling a credit card doesn't mean the outstanding EMIs get cancelled along with it. If a transaction has been converted into an EMI, the repayment obligation continues even after the card is closed, until the full amount is repaid. Depending on the issuer and the terms of the EMI, consumers may have the option to foreclose the outstanding amount, though this could come with applicable charges.”
livemint.com
Sources
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