Credit Cards to Reward your Health - Part.II

HDFC Health Plus Credit Card
This health reward credit card from HDFC comes with a free cashless Mediclaim cover of Rs.50,000 plus a critical illness cover of Rs.1.5 lakhs. The critical illness cover includes open heart surgery, cancer, kidney failure and vascular stroke. You can avail cashless mediclaim facility at any of more than 3000 networked hospitals of the Third Party Administrator (TPA) across the country. HDFC has a tie-up with TTK Health care services for this purpose. The hospitalization benefits viz. the Rs. 50,000 Mediclaim and the critical illness cover of Rs.1.5 lakhs can be extended to 2 add-on card holders and thus can be used to cover your near and dear ones also. The add-on cardholders can also avail the discounts at participating hospitals.

Every Rs. 150 spent on this credit card earn you 1 reward point, which can be redeemed for exciting gifts and offers from the credit card provider. The credit card holders can also avail a 30 percent cash back on all domestic airline ticket bookings on Cleartrip.com up to 25 December 2007. This cash back offer is valid on a maximum base fare of Rs.3500.

The HDFC Health Plus credit card has an interest rate of 2.95 percent per month. A joining fee of Rs.300 and an annual fee of Rs.700 is charged on this credit card.

Health reward credit cards are a great way to put that plastic pay for your healthcare needs. However, as it with all other reward credit cards, the terms and conditions, especially pertaining to the reward programs, their eligibility, limitations, preferred partners and way the rewards can be redeemed should be given special attention and all the facts should be clarified before you start using the credit card. As the variety of offerings increase with increasing competition, we should expect a number of banks coming up with more health and fitness related credit cards.

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Credit Cards to Reward your health - Part.I

Think of the word 'credit card reward' and immediately the idea formed in your mind is that of cash back, airline rewards, shopping discounts, slashed fares on hotel reservations etc. Do health rewards strike a chord? For most of us, the answer could be a simple 'No' or 'I don't think that there are credit cards with such rewards'. Don't stretch your imagination, there are credit cards, which earn you benefits related to hospitalization or better know as 'health rewards' as you spend with that piece of plastic. The health costs are all set to rise dramatically and since, most of us have little time in our busy lives to pay proper attention to our health, its high time our credit card expenditure earn us health rewards. Here we review two such credit cards, which promise great health rewards.

ABN AMRO Wellness Card
This credit card from ABN Amro has a special tie-up with Max Healthcare and provides health rewards in more than one ways. This credit card has great health care offers from Max Healthcare and also carries a complimentary health screening voucher. The healthcare benefits can be extended to other members your family because up to two Add-on Cards can also be availed for your spouse, parents, dependent brothers or sisters and children over 15 years of age.

Staying fit is the additional benefit you get with the ABN Amro Wellness Credit Card. At Esporta gym it offers a 25 percent off on all printed tariffs and at Fitnesolution gym, the cardholders can get 1 month free on 3 months enrollment, 2 months free on 6 months enrollment and 3 months free on 1 year enrollment. In addition to these discounts a 10 percent off is also given on personal training sessions.

This credit card also offers Spa and Massage benefits. Cardholders can avail 15 percent off on Rs.1000 or above billing at Reeta Juneja Aromatherapy & Spa. If you want to avail membership at the Spa, the credit card will get you a 30 percent off on half yearly membership and 40 percent off on annual membership. Cardholders can also get 2 year subscription of Asia Spa Magazine - health, wellness, beauty, luxury and lifestyle magazine at a special offer price of Rs.400 and there is also a free gift waiting for all those subscribing it.

Every Rs. 50 spent on the card earns you 1 Bonanza Reward Point. and these reward points can be exchanged for exclusive gifts. However, you must accumulate 500 Bonanza Reward Points before they can be redeemed.

This MasterCard issued by ABN Amro charges an interest rate of 1.49 percent per month and has a joining fee of Rs.295. This credit provides the above mentioned offers at an annual fee of Rs. 750 and add-on cards can be availed by paying an add on card fee of Rs. 395 per card.

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How to lodge Credit Card Complaint

India's banking ombudsmen received as many as 3,087 credit card-related complaints against foreign banks and 7,020 such charges against Indian banks in the financial year 2007-08.

The number of credit card-related complaints against foreign banks and Indian banks stood at 2,187 and 5,501, respectively, during the previous year, according to Finance Minister P Chidambaram.

The finance minister said in Rajya Sabha recently that the Reserve Bank of India had undertaken a study on the credit operations of banks, which also included issue of unsolicited calls.

*Credit Card Goof-ups by Banks

In the wake of the global economic crisis, it is important to note that banks in India are not very stringent in terms of assessing the credit worthiness of people before doling out plastic money. The credit card outstanding dues with all banks amounted to Rs 26,596 crore (Rs 265.96 billion) as on May 13, 2008.

It's only when defaults start rising that banks sit up and take notice. Many a times, a card may be misused by someone else taking the 'defaulter' by surprise. Despite the RBI's strict guidelines on issuance of credit cards, the problem persists and complaints continue to pile up against banks.

The central bank guidelines provide that any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing bank only and the person in whose name the card has been issued cannot be held responsible for the same, Chidambaram said in the Rajya Sabha.

He added that an RBI circular issued earlier advised banks that unsolicited credit cards should not be issued.

"In case an unsolicited credit card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank shall not only reserve the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed," the RBI circular stated.

The International Consumer Rights Protection Council states that ICICI Bank issued a credit card to a person who passed away 12 years ago. This card was misused and the statement was sent to the person's son for payment of Rs 36,000.

Recently, after a family of four committed suicide in Mumbai, it was found that two members of the family had 72 credit cards! How did they manage to secure so many cards? Who will pay up in cases like this?

The number of complaints received by the banking ombudsman offices has constantly increased, with more than a three-fold increase in 2005-06 from the previous year after the Banking Ombudsman Scheme 2006 was notified.

The increase was also observed in the year 2006-07 with a 22 per cent rise over the year 2005-06, said the Reserve Bank of India's annual report on banking ombudsman.

*Credit Card Operations of banks- RBI Guidelines  

In 2006-2007, SBI Cards topped the list of complaints from credit card-holders, with the banking ombudsman receiving 2,654 complaints against it. There were 1,451 complaints against ICICI Bank.

In 2005-06, the ombudsman offices received 31,732 banking-related complaints. In 2006-07, the number of complaints received was 38,638.

The RBI had first introduced the Banking Ombudsman Scheme in 1995 to provide expeditious forum to customers resolving their complaints relating to banking services.

The complaints often related to deposit accounts, deficiency in servicing of loans and advances and delay in collection of cheques/bills.

In 2006-07, the largest share of complaints received were credit cards complaints, which accounted for 20 per cent. Among the complaints received, there were 7,688 credit card-related complaints and complaints on deposit accounts stood at 5,803.

The non-issue of credit cards, issue of unsolicited cards, non-despatch of account statements on time, levy of excessive service charges, levy of late fees despite payments being done on time are some of the common complaints.

Many people also face the problem of banks refusing to cancel credit cards, freezing of cards without informing the cardholder and harassment by recovery officers.

Here's how can you get your banking-related problems solved...

The RBI states that in the case of any banking-related complaint, the customer has to first try to get a solution from the bank. He can file a complaint before the Banking Ombudsman if a reply is not received from the bank within one month of the bank receiving his complaint. He can also move the Banking Ombudsman if the bank rejects the complaint or if he is not satisfied with the reply given to him by the bank.

The complainant can file his/her complaint in any form, including online. You can file your complaint onlinehttps://secweb.rbi.org.in/BO/compltindex.

The customers can also appeal to the Reserve Bank of India against the awards given by the Banking Ombudsman

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Credit Card Balance Transfer

Today all banks try to induce potential customers to switch from one credit card to another by offering balance transfer that too at a cheaper rate. It is generally known that low interest rates or sometimes even zero interest rates are available for balance transfer. But you should know that these rates are for introductory period only (say 3-6 months) and once this grace period is over, it returns to the normal rates, that is, what your previous credit card company charged you.

Even still the rate of interest which you might be paying for your outstanding credit dues will always be higher than the balance transfer interest rate.

What does balance transfer mean?
Balance transfer is a facility offered by all the credit card issuing companies to cardholders which enables them to transfer the existing outstanding or debt of one credit card to another one that is less used or even new.

The credit limit of the new card or less used card on which you want to transfer the balance amount reduces proportionately to the balance transfer amount. Say the credit limit of your card is Rs 25,000 and you have opted for a balance transfer of Rs 10,000, then the credit limit on your original card will be reduced to Rs 15,000.

But here too you must remember that your balance transfer amount should not exceed 80 per cent of your credit limit. That is, if your credit limit is Rs 10,000 then the maximum balance transfer you can have will 80 per cent of this amount which is equal to Rs 8,000.

Balance transfer process
Before entering into balance transfer, it is important for you to know the process involved.
As a first step, you have to inform the credit card issuer from whom you would avail of a balance transfer that you want to avail of the balance transfer facility.

The credit issuer will then send an officer with a balance transfer form. Here you have to fill in all the details of your old credit card and also attach your latest bill statement.

Normally after 7 to 10 working days, the credit issuer will send a demand draft (DD) to your residence which will be in the name of your old credit card issuer. After you submit this DD to the old credit card issuer your outstanding gets cleared. Now you have to pay the transferred amount to the new credit card issuer.

Credit Card Balance Transfer - Few Tips

What to watch out for...
On reading the above process carefully, you will find that there are certain things on which you have to keep a very close watch.

As you know that the entire process takes 7 to 10 working days or even more, here you need to sense the catch here. While you are waiting for the balance transfer amount there are high chances that you may miss the due date of your existing card's payment.

If you miss this due date then you have not paid even the minimum amount due on your card thus defaulting on your monthly obligations. This can have an adverse effect on your credit report.

Thus it is always advisable to keep on paying the minimum due amount till you receive the DD of balance transfer amount.

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With Times Card now, watch movies at 25% flat discount

Times Card, India’s first ‘Entertainment Credit Card’ from TimesofMoney and Barclays provides a unique proposition for all movie- buffs. It offers 25% flat discount on movie tickets -anytime, any movie, any day. This discount can be availed at all multiplexes like Fame Adlabs, Fun Cinemas, and Cinemax across the city. Card holders get to watch a movie at 3/4th of its cost. With the purchase of a couple of movie tickets, the card holder earns discount, thus saving enough to enjoy popcorn. All a customer needs to do is; check the theatre details at www.timescard.com and book the tickets at the counter to avail the discount.

Along with this discount offer, Times Card holders are also eligible for special discounts on the latest movie blockbuster releases, concerts , high profile shows, top brand apparels, footwear, furniture, holiday resorts, weekend destinations and special packages, beauty salons, spas, fitness centers, health clinics, dance academies and many more.

Times Card holders can also surprise their loved ones with the best discount offers this festive season. They can now enjoy up to 25% discount in more than 50 restaurants and hotels in Mumbai. These discounts are valid till Jan 31, 2008.Times Card holders can earn points on swiping their card which can be redeemed for gift vouchers.

So if you are an IndianResident and aged between 18 and 70, you can apply for the exclusive Times Card from Barclaycard and TimesofMoney.

Card Protection Program. CPP

Here is a Great news for Credit Card Holders in India. Under pressure from regulator to introduce cover on lost card, fraudulent transactions etc - Kotak Credit Cards and Citibank have introduced Card Protection Programme.

What is Card Protection Programme - CPP ?

As a credit card holder, you are protected from liabilities arising from your credit card loss / theft on transactions before and after. Additionally, it covers fraudulent transactions without you losing the card [say a -commerce site gets hacked which has stored your credit card details and they are misused]

CPP comes at a small fee of Rs 950 p.a and can get coverage of upto Rs 50,000 on fraudulent transactions and for Rs 1,250 fee th coverage goes upto Rs 100,000. It also covers upto Rs 10,00,000 for transactions done after reporting of credit card loss / theft.

Kotak Bank has introduced CPP facility for its Platinum and signature card holders for FREE.

*Credit Card Protection Program FAQs

We recommend users to sign-up for CPP facility if their bank is offering the same. This comes for FREE in the US with your credit card. However, in India banks are charging a fees and we feel its OK to do so in the beginning and later the fees can be reduced. Share your experiences.

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Kotak Credit Cards wins the Product of the Year Award for 2009

Kotak Credit Cards, from Kotak Mahindra Bank, one of India’s leading financial institutions, has won the country’s Product of the year award in the innovative products category on Saturday, Jan 17, 2009.

Speaking on the occasion, Mr. Subrat Pani, Business Head - Kotak Credit Cards said, “We are indeed very happy to be the proud recipient of the country’s Product of the Year Award. We consider this award special as Kotak Credit Cards has been designed on the basis of customer feedback which helped us form the three core tenets of our product – Relevant benefits, Simplified credit and transparent communication. This recognition fortifies our belief and endeavour of providing our customers with innovative and valuable services.”

Product of the Year, (POY) an independent survey on product innovation, has forayed into India to announce the country’s Product of the Year on January 17, 2009, at an event in Mumbai. Product of the Year is a global consumer recognition standard that celebrates and rewards the best innovations in retail products done through an independent consumer survey of consumers across the country.

The agenda for POY is providing a platform for consumers to identify the best innovations in the market to manufacturers and showcase them effectively. The concept has been running in 28 countries for the last 20 years. In India, the management has extended its scope to cover mobiles, electronics, durables, appliances and credit cards.

SBI Card - Travelguru Dream Holiday Offer

Travelguru, India’s Largest Hotel Network, has entered into an exclusive arrangement with SBI Card. Under the Offer, SBI Platinum Credit Cardholders can avail Flat 15% discount while all other SBI Credit Cardholders can avail Flat 10% discount on domestic hotel & holiday bookings done through Travelguru by using SBI Credit Card.

Customers can book a Hotel/ Holiday from 5th January 2009 till 31st March 2009 for any travel/stay date by logging onto www.travelguru.com or the Travelguru reservation centre (8 am – 10 pm) by calling on 022 – 40304878 or any of the Travelguru retail outlets across India (Mumbai, Pune, Bangalore, Indore).

Sharing the broad construct of the offer, Ashwin Damera – Founder & CEO, Travelguru said “We are pleased to introduce the Dream Holiday Offer in association with SBI Card. Through Travelguru’s recent travel research, we discover that an Indian travels at least twice in every six months for leisure and at least four times in every six months on business. It is to make this Hotel or Holiday experience much more affordable and fun-filled that Travelguru is offering upto 15% discount on all domestic bookings done by any SBI credit cardholder.”

Commenting on the tie-up, Manish Jain, Chief Marketing Officer, SBI Card said “At SBI Card we are always looking at opportunities to provide more value to our customers, and to make their life simple. The tie-up with Travelguru provides our Cardholders a great opportunity of booking hotels and holidays across various cities at an exclusive discount, and that too through an extremely simple tele-booking and online process”.

CIBIL The Gateway

The truth is today people spend more than our grandparents or parents ever did. Increasing incomes, desire to own a house in one’s early twenties, availability of variety in lifestyle and brand choices, a booming economy, growing number of enterpreneurs, new business establishments etc., are leading to a tremendous amount of money outflow. Money rotation is a key factor in a progressive economy and this means there is a lot of lending. How does one keep a tab on all the credit lent and how does one identify defaulters and refrain from lending to them again and again?

The government of India and RBI got together to bring CIBIL into existence. Currently Banks, Financial Institutions, State Financial Corporations, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies are Members of CIBIL.

The idea behind setting up CIBIL is to gather all exisiting consumer and commercial credit information and pool it in a one point source for reference. As in an individual or commercial establishment could have accounts in several banks and credit from different lending institutions. All such data can be pulled out for a quick reference check on the individual or commercial establishment, seeking loans, to be aware of the repayment track record of the loan seeker and quickly decide on loan eligibility.

CIBIL acts as weeding mechanism, that helps identify poor repayment track records. It helps protect lenders from giving credit to people and establishments who are unlikely to repay what is lent. Even if credit is provided, it is done so at a very high rate of interest, thereby ensuring that the bank is able to recover a considerable sum of money even if a default happens some time into the loan tenure.

CIBIL to maintain Fraud database

On the flip side, if you have an impeccable repayment track record, you can reap benefits from it! Banks provide a lower interest rate for sound credit profiles and these `Credit Information Reports’ can work to your advantage. It also helps lenders and Banks quickly process a loan, without wasting valuable time on research and background check of the loan applicant.

To protect creditors information CIBIL has stringent security measures in place. Only members of CIBIL can access the info and even they can do so only on a requirement basis.

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ABN AMRO Cards Pic-1

ABN AMRO One Credit Card

ABN AMRO Freedom Credit Card

ABN AMRO Barista Credit Card

ABN AMRO Adlabs Credit Card

ABN AMRO Card

ABN AMRO Freedom Credit Card

• PetroPlus
• Megadeals
• Photocard Option

ABN AMRO Smart Gold Credit Card

• Get Unlimited Cash Back
• Travel the world with your Smart Gold Credit Card
• Smart Miles
• Smart Redemption
• Smart Privileges: Gold Life Offers
• Smart Payments - Easy Pay on your Favourite Brands
• Guaranteed Higher Credit Limit

ABN AMRO Wellness Credit Card

• Ensure good health for yourself and your family.
• Max Healthcare Offers
• Complimentary Health Screening Voucher
• Emergency Cash
• Stay active
• Rejuvenate yourself
• Adventure Holidays-add the zing to your life.
• Exceptional Financial Benefits
• Earn every time you Spend
  

ABN AMRO Barista Credit Card

• Instant Rewards. Never ending delight.
• Celebrate yourself - with a cup of coffee.
• Exceptional Financial Benefits.
• Earn every time you Spend.
  

ABN AMRO Adlabs Credit Card

• Stretch every Rupee
• Instant Exclusive Benefits - Because stars deserve special treatment
• Goodbye Queues
• Last minute ticket assured
• Exclusive shows for the exclusives you
  

ABN AMRO One Card

• Cash Back on everything, everytime…
• Earn Extra Cash Back …
• Cash Back Boosters…
• Flexilimit
  

ABN AMRO Titanium One Card

• Cash Back on everything, everytime…
• Earn Extra Cash Back …
• Cash Back Boosters…
• Global Calling Card - free Global Calling Card that allows you to make international calls at extremely competitive rates. This calling card is to be used overseas only.
  

ABN AMRO MakeMy Trip Go Card

• Flexilimit
• No–stress Repayment – Pay per your convenience
• Global Calling Card -that allows you to make international calls at extremely competitive rates. This calling card is to be used overseas only.
• Year End Statement Summary (YESS) and Active Alerts.
  

ABN AMRO Platinum Gateway Card

• A designer card by fashion designer Rohit Bal
• Witness the best of leisure and luxury
• An exclusive Montblanc Generation fountain pen
• Round-the-clock concierge service
• Exclusive Priority Pass gives you your own haven of comfort in the midst of your hectic travels.
• An insurance cover of up to Rs. 1 crore ensures
  Platinum Temptations, there is a varied range of world-class products to choose from our exclusive selection of merchandise.
  

ABN AMRO Platinum Voyager Card

• Rediscover the magic in travelling
• A complimentary ticket to either Singapore, Kuala Lumpur or Bangkok
• A true gourmet experience with Taj InnerCircle's Epicure Card, which offers you unmatched benefits at Taj properties across the world
• Platinum Miles programme, your every purchase will add up to make travelling a far more rewarding experience.
  

ABN AMRO Platinum Greens Card

• With a Platinum Greens membership, experience a comprehensive range of benefits, every time you tee off on the golf course.
• Platinum Greens membership with a complimentary TaylorMade golf club of your choice.
  Complimentary membership to Golf Fee Card, we are pleased to offer you the privilege of discounted access to 2,400 courses across the world and a waiver of up to 50% at 3,500 golf hotels and resorts.
• You also get access to the services of a Golf Concierge
• You receive attractive offers on exclusive spas, golf equipment, golf holiday packages and golf clinics.

Credit Card Issuers cut Basic Facilities

Credit cardholders are having a tough time as most card issuers are becoming stringent in their norms and reducing on the benefits availed by the customers.

Besides reducing the credit limit on the credit cards, card issuers are retaining the basic cash withdrawal facility, or lowering them. They are also restricting the reward programme connected with the credit cards. They are making a cautious move in this phase of slowdown because the delinquency rate is increasing in the industry.

Lenders including HSBC have reduced the credit limit and the amount of cash a card holder can withdraw, by more than 50% for some of its customers. Even the card arm of the Barclays group, Barclaycard has notified to some of its cardholders that the cash limit has been reduced to zero "to help manage the credit situation". The issuer has informed its customers through text messages and a customer care executive said that all the cardholders will witness a reduction in their credit limit.

Even, the largest credit card issuer in India, ICICI Bank is expected make similar moves in its credit card division. The bank is likely to lower cash limit and cash withdrawing limit in the coming weeks. Besides the issuer is also cutting back the rewards programme offered to its cardholders and it has already informed its customers about the withdrawal of certain benefits through the monthly statements. The Bank informed that ‘Xpress Rewards Programme' has been withdrawn for all credit cardholders but the basic reward programme can be still availed by the customers.

Similarly HDFC Bank has also informed its customers that ‘MyRewards programme' will be updated from next month. This information was too displayed through the monthly statements.
Following the slowdown, banks are calculating their unsecured loans again which comprise mainly of credit cards and personal loans and this is the reason credit card issuers are coming with such norms.

Banking analyst at Brics Securities, Deepak Agrawal said, "By reducing the credit and cash limits, the banks want to ensure that their exposure to unsecured loans is kept at a minimum and the risk of rising defaults is mitigated. As the chances of job losses increase, the customers are likely to go for aggressive spending on credit cards going forward. This raises the chances of higher non-performing assets (NPAs) in the banks' loan books, which urged the credit-card issuers to lower the credit limits."

The high level of delinquency in the segment may also induce banks to reduce the interest-free period on credit cards, said another analyst in the industry. From the past one year, the delinquency rate in the industry has more than doubled to over 10%. Also the banks are worried about a high degree of hike in the credit card rollover. The total credit outstanding increased by around Rs 13,500 crore to Rs 29,000 crore at the end of August 2008.

India has an overall credit card base of around 27 million and out of this over 9 million credit card holders belong to ICICI Bank alone.

Credit Card transacition Processing by Indian Firm

The card transactions in the country which are presently being processed overseas will soon be processed within the country in the coming few years.

The activity which is controlled abroad is expected to carry domestically as India Pay, a domestic payment system is likely to take over the charge in this regard. However the processing will take another four to five years, India Pay will be launched in the coming year.
The system will start its operations by focusing on ATM transactions. Thereafter over next four to five years, processing of credit card transactions will also be transferred to India.

Sources from Indian Banks' Association (IBA) informed that India Pay will take care of all the domestic transactions where as international transactions undertaken by Indian cardholders or by foreigners visiting the country will be controlled by working together with payment networks like Visa and MasterCard.

The processing cost connected with the card is expected to come down, once the processing is done in the country. Also the fee that would be earned by the firm will add on as savings in foreign currency. Presently the fee charged by Visa and MasterCard are relatively very high.

Even a company named National Payment Corporation of India has been registered to control the local processing of the cards. Deputy Chief Executive of IBA, K Unnikrishnan said the firm will control on three stands including electronics payments, ATM transactions and processing of card payments. The electronic payment systems such as electronic fund transfer that are presently handled by the RBI may also come under its control, said an official with IBA.

The company is expected to start with a capital base of Rs 100 crore and an authorized capital of Rs 300 crore. Some banks including State Bank of India, Bank of India, Bank of Baroda, Punjab National Bank, ICICI Bank, HDFC Bank, Citi Bank and HSBC have come forward to take a stake in the company. Meanwhile more banks are expected to come to as shareholders once the firm starts its operations.

The entity is also in the course of appointment of its chief executive officer and a management team.

Bonus Points or Rat Race

My friend holds a customer card at a bookstore that will entitle him to accumulate 1,000 bonus points for certain value of in-store purchases. He can redeem the bonus points for a free book from a list of recent arrivals. He frequented the bookstore at least twice every week during the previous month to accelerate the bonus points from 925 to 1,000. Why did he display such behaviour?

‘Goal-gradient hypothesis’
An experiment conducted in 1930s on rats throws some light on my friend’s behaviour. Clark Hull, the researcher, found that rats run faster as they move closer to the food box. Knowing that the reward was closer motivated the rats to run faster. He called this phenomenon “goal-gradient hypothesis”. My friend, though not a rat, behaved in a similar way!

To appreciate this better, consider an experiment conducted recently at a coffee pub inside a university campus. Each customer was provided a card with 10 slots. The card would be stamped each time the customer had coffee. After 10 such stamps, the patron was entitled to a free coffee.

Closer to the reward
The study found that customers consumed more coffee as they neared the 10 mandated stamps. These customers slowed their speed after they finished the first card and received the second one. Why?

The distance to reward on the second card was now 10 coffees. As the distance narrowed due to normal coffee consumption, they accelerated their visits again!

With coffee, you need to visit the pub several times, as you cannot consume three lattes during each visit. But that is not the case with books. So, why did my friend not buy enough books to gather 1,000 points in just one visit after he collected 925 points?

The reason is that it is difficult to convince the mind to buy books for Rs 3,750 during one visit than to buy books for Rs 750 on five different visits.

You and I experience “goal-gradient” hypothesis as well. Think of it when you use your credit card the next time to gather bonus points.

Banks offer card protection schemes to attract customers

Faced with increasing credit card losses and a shrinking card base, some banks are offering schemes that provide customers coverage of fraudulent transactions in case of loss or theft of credit and debit cards.

In India, two banks currently offer the scheme — Citibank and Kotak Mahindra Bank — jointly with CPP Assistance Services Pvt Ltd, a UK-based firm. Card Protection Programme (CPP) is one that assists customers by blocking all cards — debit and credit — in case of theft and loss, both before and after reporting. CPP also assists customers with emergency cash, travel and hotel assistance, thus taking care of all their needs in any exigency.

Coverage

Customers can sign up for any number of cards and of any bank for the programme.
Under the two plans offered by CPP, for an annual fee of Rs 950, customers can get coverage of up to Rs 50,000 of fraudulent transactions before notification. For Rs 1 lakh coverage, the annual fee is Rs 1,250. Once the cardholder signs up for the scheme, transactions done seven days prior to the date of reporting, are covered.

In case transactions occur after notification of the theft or loss, the coverage is as high as Rs 15-20 lakh.

Kotak Bank launched the scheme about two weeks ago as a pilot project and over 1,000 of the bank’s existing cardholders have already registered for the scheme, said Mr Subrat Pani, Business Head (Cards), Kotak Bank.

e-Commerce frauds

The bank already offers a protection programme for its Platinum and Signature credit cards, he said.

Kotak Bank is looking at a card base of 2.5 lakh by 2009. The next step for the bank is to cover e-commerce frauds that happen in internet transactions.

Citibank also launched a similar scheme earlier this month. A press release announcing the launch of the programme had quoted Mr Sandeep Bhalla, Business Manager (Cards), Citibank India, as saying, “Regulators have strongly recommended that banks introduce a cover to take care of the liabilities arising out of lost cards, and Citicards has provided such a solution to our customer base”.

Banks cutting credit card limits for Satyam staff

The Satyamites, who were amongst the most pampered employees in the industry till recently, are feeling the pinch of the Satyam fiasco not only in office but also outside.

Banks seem to have brought their rating down by significantly bringing down the cash/credit limits on their credit cards.

At least two banks, ICICI Bank and HDFC Bank, have cut down the credit limits on the cards of the ill-fated Satyam’s employees in the recent past while reports sayHSBC and Citibank have followed suit.

“To complete uncertainty over our job and salary, the message on cut in credit limit on Credit cards has added insult to injury of Satyam employees.”

“While we have nothing against Satyam employees, it is true that the credit has been cut,” said an ICICI Bank official over phone from Mumbai adding that it is a “precautionary” measure.

“We are also answerable to our shareholders. Credit card is an unsecured loan. If there is a possibility of default between a housing/auto loan and a credit card payment, the latter will be stopped,” he said.

It is the prudence of any banker to be sceptical while the source of income (job) itself is doubtful, he added.

Another senior Satyam staffer, who did not want to be identified, said that HDFC Bank had brought down his credit card limit from Rs 3 lakh to less than Rs 2 lakh and informed him about it.

Mr Paramesh (name changed) has a more painful experience when his HSBC Card declined honouring a payment at a supermarket this morning.

“I have no intimation on this and am shocked how things can go wrong all of a sudden,” he said. When contacted, HSBC officials declined to comment on the issue.

According to sources, the banks operating the salary accounts are also instructing their staff to “keep in view” any outstanding payments on advances from the employees before crediting the next salary.

Must Know about CIBIL - Flip Side

As with all mass processing systems that are not dependent on a single source for information, there are quite a few things that could be incorrectly recorded in the credit information reports, which are stored with CIBIL.

Here are a few instances, detailed for your understanding:

Lack of updated info:
You might have defaulted on a sum of money, say Rs 12,000 but repaid the sum later, maybe well past the due date for the payment. There could be instances where CIBIL did not get the updated info for its records. This will show up as a default and will affect the calculation of a good credit score.

Confusion of names:
There can be thousands of names that are similar in the CIBIL database. Things can go haywire if a person who shares your name has defaulted and all his defaults get recorded in your file. There was this one instance, which a loan applicant reported. Her name, Anju Jadeja, was confused with Anjum Taneja. Turns out Anjum Taneja passed away tragically in a freak accident, with nobody able to identify her until bank authorities decided to investigate the applicant after CIBIL corrected and ratified Anju Jadeja’s credit report. Till that point in time, the bank had put down Anjum’s bouncing cheques, as defaults on loan payments in Anju’s credit report. Today, Anju is a relieved woman.

Human input error:
The information that goes from the banks to CIBIL on a loan or credit card payment default may have been erroneous due to a simple input error by one of the bank employees. There was this instance when there was an accidental default of a month overdue payment of Rs 18,000 of one Tanushree Omkar. She cleared it the next month. However, the record that went to CIBI, had two additional zeroes, which made the default amount to Rs 18 lakh (Rs 1.8 million)!

Identity theft:
This is the most serious of all causes of errors and can have a disastrous impact on a person’s credit profile.

In recent times, identity thefts are on the rise. Right from a petty shopkeeper who swipes your card several times to sneak in an unofficial payment, to a terrorist who wants to access a billionaire’s account in a remote corner of the world, identity theft is becoming a serious crime that needs to be checked.

If you are a victim of identity theft, like Anupam Shekar was, then it is time to get your financial log in order. Keep track of all the cards that you use or do not use. In Anupam’s case, an impostor had captured his PAN card details using a clever ploy. Anupam recalled that someone had wanted to deliver a mail from his local bank only on the basis of identification and had been examining the PAN card given with great curiosity.

It was then that it struck him that anyone could access his mailbox in the huge apartment complex he resided in. The impostor then went on to open an account with a bank entering all the details he had gathered on Anupam by accessing his mailbox. Anupam did not know for a long time about this until he decided to apply for a new credit card and his bank rejected him outright, labelling him a defaulter. Anupam had to go to great lengths, spending precious time and energy, to clear his name.

Apparently, the impostor had directed all bank communication to another address, got a credit card on that account and spent indiscriminately until the card was locked by the bank due to several defaults on repayment.

The account was frozen but the impostor walked away scot free to scout for his next victim, but not before Anupam Shekar’s credit report was tarnished beyond repair.

*CIBIL the Gateway

Fixing an incorrect CIBIL record

If you need to seek clarifications in your credit report, here are the steps you should follow:

a. Contact the bank that declined a credit card or loan application on the basis of your poor credit score. Ask them for a clarification on the poor credit score and request them to provide the control number for your credit report.

b. The bank will provide you with the control number of the credit report and also share the information on the credit report that is responsible for your poor credit score.

Get in touch with CIBIL by calling their help desk numbers at 1800 - 224 / 245 or +91 22 6638 4600 / 2281 7788 provided on their Web site, http://www.cibil.com/.

You could also drop in an email at info@cibil.com referring your credit report’s control number. When attempting to clarify the information on your credit report, you need to inform CIBIL about the exact nature of the discrepancies in the report that you have been made aware of, by the bank.

The importance of the control number

The control number is a nine-digit unique number that helps CIBIL track an individual’s credit t report from its database.

Banks feed in borrower data and personal information, which the CIBIL systems pool together. The control number is generated when banks pull out your credit report on a requirement basis.

The control number is generated every time any bank or credit institution pulls out a credit report on you. CIBIL requires this number because it enables them to view the exact details that the bank has seen when they drew a report on you. Hence, it is important for you to request the bank to provide you the control number.

Dealing with an uncooperative bank

When the bank is uncooperative you could post a complaint on the bank’s Web site and if the bank does not respond within 15 days, you can register a complaint with the banking Ombudsman, presenting a copy of the complaint posted on the bank’s Web site as proof.

You can either register this complaint through their Web site, http://www.bankingombudsman.rbi.org.in/ or locate the nearest branch office through this link, http://rbidocs.rbi.org.in/rdocs/Content/PDFs/68033.pdf to register your complaint.

Need for direct access to credit reports for borrowers

It is the need of the hour for CIBIL to allow borrowers to access their respective credit reports not only on cases when the information needs to be verified but also as a way for individuals to keep a tab on their money inflow and outflow.

This will help them weed out errors, clarify facts and more significantly, identify impersonations before it is too late.

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Must Know about CIBIL

This is the era of high spending. The truth is today people spend more than their grandparents or parents ever did. Increasing incomes, the desire to own a house in one’s early twenties, the availability of variety in lifestyle and brand choices, a booming economy, a growing number of entrepreneurs, new business establishments, etc, are leading to a tremendous amount of money outflow.

Money rotation is a key factor in a progressive economy and this means there is a lot of lending. In the event of such rapid money outflow from bank coffers, several questions — like how does one keep a tab on all the credit lent, how does one identify defaulters and refrain from re-lending to them — began to crop up.

To seek a solution to these queries, the government of India and the Reserve Bank of India got together to bring CIBIL (Credit Information Bureau India Ltd) into existence.

Currently banks, financial institutions, state financial corporations, non-banking financial companies, housing finance companies and credit card companies are members of CIBIL.

The idea behind setting up CIBIL is to gather all existing consumer and commercial credit information and pool it in a one-point source, for reference.

As in, an individual or commercial establishment could have accounts in several banks and credit from different lending institutions. All such data can be pulled out at one single point, for a quick reference check on the individual or commercial establishment seeking a loan.

This helps the lender, be aware of the repayment track record of the loan seeker and quickly decide on loan eligibility. According to the nature of the track record, a borrower is given a credit score. A poor credit score will make getting a loan, a difficult proposition for the borrower.

CIBIL acts as weeding mechanism that helps identify poor repayment track records. It helps protect lenders from giving credit to people and establishments who are unlikely to repay what is lent. Even if credit is provided, it is done so at a very high rate of interest, thereby ensuring that the bank is able to recover a considerable sum of money even if a default happens some time into the loan tenure.

On the other hand, if you have an impeccable repayment track record, you can reap benefits from it! Banks provide a lower interest rate for sound credit profiles that have excellent credit scores and such ‘Credit Information Reports’ can work to your advantage.

It also helps lenders and banks quickly process a loan, without wasting valuable time on research and background check on the loan applicant.

Well, this is the brighter side of things.

There is a flip side to this, too. CIBIL- Flip side

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Cannot handle credit cards go for cash or prepaid cards

Puneet Lakhotia, 27 year old bank employee had signed up for an ICICI Bank credit card. He used his card to book tickets online but none of the ticketing websites accepted his regular bank’s net-banking facility.

But instead of only booking tickets online, his expenses splurged. Within a year, he was in a debt trap. “Due to the convenience it offered, I used the credit card to pay bills and shop online for books, movies, music CDs and even bought a cell phone,” says Lakhotia. After facing this hardship, he has surrendered his credit card and keeps Itzcash, a pre-paid card for online transactions.

It is very common to hear that credit card was used for convenience. Many of them pay their restaurant and hotel bills as using a debit card involve punching the four-digit identification number. Then there are other advantages are attached to the credit cards like cash-back benefits or points that attract more expenses.

ICICI Bank, the country’s largest private sector bank has compiled a data in which it has mentioned top five expenses that consumers make through credit cards include travel and related activity (including tickets and hotel bookings), fuel refilling, consumer durables, apparel and garments and jewellery. Payment of utility bills is also fast catching up.

“Around 8-12 per cent of business comes from the top five areas. At least, 10 per cent of card-holders pay at least one of their utility bills every month through cards,” said a banker from a private sector bank.

Usually consumers do not keep up to a few expenses, but always start over-spending. For those, who cannot control their expenses from splurging, to use an alternative-payment mechanism is a better idea.

For instance, for online ticket booking pre-paid cards are best option. Three – such cards are currently available in the market — Itzcash, OxiCash and Done Cards.

These three cards can be used for a host of other purchases as well. With these cards you can do online shopping, insurance purchases, mobile recharge and many others.

Similarly to credit cards, these cash cards are also levied with cost, but only for a few transactions like railway bookings and bill payments for public sector utilities because government-owned companies do not give any commission to cash card companies. “The charges are either a maximum of Rs 15 or 1.5 per cent of the value of these transactions, whichever is higher,” said Naveen Surya, managing director, Itzcash.

On petrol bill payments, credit card companies give bonus points and a waiver of fuel surcharge of 2.5 per cent.

Substituting them with pre-paid cards from oil companies will get you the same benefits. All the three major oil companies have their own branded cards. For instance, Bharat Petroleum has a Petro Card and Hindustan Petroleum has HP-Smart 1. None of these cards attracts a surcharge and offers similar loyalty bonuses.

The customers who are enthusiast for clothing and consumer durables, most retailers on Thursday have started loyalty program that give discounts for cash purchases. The persons who can’t control their spending should go for options that require the use of more cash. It will save them from the trouble as well as a high interest payout.

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Credit card holders get protection against exorbitant charges

Supreme Court ruling has brought a big relief for credit card users for the moment. The Supreme Court gave this ruling while refusing to stay a national consumer forum directive that banks cannot charge more than 30% interest per annum on defaults on card payments. After this ruling the card holders have got protection from exorbitant charges, which are as high as 49% in some cases.

Bankers had filed an appeal in Supreme Court against the consumer court order and asked for a stay on it. The appeal was filed by MNC banks — HSBC, American Express, Citibank and Standard Chartered Bank — challenging the consumer forum order. A Bench comprising Justices B N Agrawal and G S Singhvi has issued notice in this regard to Reserve Bank of India and the NGO 'Awaz', on whose petition the limit on interest rate was imposed.

What is enlightening the banks have listed as many as 27 factors why they needed to charge higher interest rates and these include calls made from service centre to seek new customers. From the list it appears that almost all costs involved in banking activities over telephone and internet are being charged from the hapless credit card holder, going by the banks' submissions to the SC.

When banks requested for a stay on the ground that they are regulated by the RBI regulation guiding interest rates, the Bench just issued notice on their applications and have asked for responses within three weeks.

But the risk of a higher interest has not gone away as the banks — HSBC, American Express, Citibank and Standard Chartered Bank — have come together to persuade the SC of what they said were their compulsions in charging between 36% and 49% interest.

While in the July 7, 2007 order the National Consumer Disputes Redressal Commission (NCDRC) had ruled that "charging of interest rates in excess of 30% per annum from credit card holders by banks for the formers failure to make full payment on the due date or paying the minimum amount due, is unfair trade practice".

It had also stated that punitive interest can be levied only once for the period of default and should not be capitalized, and also termed the practice of computing interest on monthly basis as "unfair trade practice". In the list of factors given by the banks for justifying the exorbitant rates was the cost of calls. In other words, calls made randomly by the bank's authorized call centers relentlessly to convince people to take a credit card, has been taken into account for understanding through charging of penal interest from a defaulting card holder.

The other notable factors listed by the banks are:

• Processing charges for creating a new card in operating system
• Courier cost and cost of embossing the card
• Charges for providing phone banking service
• Charges for couriering monthly statements
• Charges for providing internet banking facility
• Cost of waiving charges for service reasons
• Charges for marketing a product and promotional offers
• Charges of reward programs and loyalty program

"The National Commission has failed to appreciate that the rate of interest on defaulted or partial payments of dues is determined by taking into consideration various factors, including the risks of default, and therefore, this commission may not determine the issue as to whether the interest at the rates of 36% to 49% per annum is excessive," the banks said.

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Credit Repair Free of Cost – How Can You Gain the Knowledge?

Acquiring knowledge about how to do credit repair without any cost is not as difficult as it seems. However, it would require a little bit of time and a zeal to know. One of the most suitable methods to know about free of cost credit repair is through becoming a member of a credit repair forum. Usually, membership of these forums is available without any fees, but there may be one or two forums which can ask for a membership fee.

Even though there are numerous websites that are ready to impart free credit repair education to you, the most advantageous attribute of a credit repair forum is that the members of such forums create the content and they do not have any commercial purpose. Majority of the members are present there either to assist you or are looking for replies to the queries that they have.

One more positive aspect regarding credit repair education offered by a credit repair forum is obtaining different types of views. You would normally have an idea on how the majority of people think about a particular subject matter while you inquire about something at the credit repair forum. The queries that are more elaborate in nature typically get one or two replies. You should constantly keep in your mind that you must analyze and judge the consultation that you receive from a forum prior to executing it.

On the contrary, for those people who want to study a book on credit repair, going to the local library would be of tremendous help for getting the knowledge on repairing credit. There are multiple modes to acquire knowledge about how to better your credit and they even come to you free of cost. The most significant factor is to save time for doing it and ensuring that it is learnt comprehensively since making a start for credit repair without having an idea what you are going to do may spoil your credit even more.

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Spending with credit card is a concept of mental accounting

When doing shopping have you ever thought why you find easier to shop with credit or a debit card than actual cash? Why is it much easier to spend with plastic money?

You will get answer for your question in a concept called mental accounting, a term coined by Richard Thaller, a pioneer of behavioral economics.

According to Thaller the term can be defined as “the inclination to categorize and treat money differently, depending on where it comes from, where it is kept and how it is spent.”

As Gary Belsky and Thomas Gilovich mentioned in their book, Why Smart People Make Big Money Mistakes and How to Correct Them, “In fact, credit cards and other types of revolving loans are almost by definition mental accounts, and dangerous ones at that. Credit card dollars are cheapened because there is seemingly no loss at the moment during the purchase, at least on a visceral level. Think of it this way: If you have $100 cash in your pocket and you pay $50 for a toaster, you experience the purchase as cutting your pocket money in half. If you charge that toaster though, you don’t experience the same loss of buying power that your wallet of $50 brings.”

In other words spending cash to buy things give more pain to individuals. “In fact, the money we charge on plastic is devalued because it seems as if we’re not actually spending anything when we use cards. Sort of like Monopoly money,” Belsky and Gilovich add.

But one thing that every card holder does not keep in mind is that money spent through a credit card is more expensive in case of failure to repay the amount during the credit period because high interest is charged for on the payments.

Moreover, individuals paying with credit card cannot see the money they are spending so they end up spending more. As Belky and Gilovich point out, “But you may be surprised to learn that by using credit cards, you not only increase your chances of spending to begin with, you also increase the likelihood that you will pay more when you spend than you would if you were paying cash.”

Therefore next time going for shopping and do not have enough money leave the credit card at home pay shopping bills in cash.

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