Why Cancelling a Credit Card Doesn’t Erase Your EMI Debt

A consumer who cancels a credit card while an EMI is still running may face a surprise demand for the full outstanding amount, plus foreclosure charges. The repayment obligation does not disappear with the card.

Nicky Sehwani, chief business officer at InstaMoney, stated the rule plainly. “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.” He advised closing a card only after clearing all EMIs, unbilled transactions, and dues, then obtaining formal closure confirmation.

Siddharth Mehta, co-founder and chief operating officer at Kiwi, echoed that view. “Cancelling a credit card doesn’t mean the outstanding EMIs get cancelled along with it,” he said. If a transaction has been converted into an EMI, the repayment obligation continues until the full amount is repaid. Consumers may have the option to foreclose the outstanding amount, though that could come with applicable charges. Mehta stressed checking the outstanding balance and EMI terms carefully before cancelling. Missing payments after closure can damage the credit profile.

Ashish Lath, founder and chief executive officer at SaveSage, added a regulatory angle. Reserve Bank of India rules require banks to close a card within seven working days, but only once all dues are paid. “Your EMI counts as a due,” Lath said. “So the bank can simply refuse to close the card until you clear or foreclose it.”