Credit Card Guide for different types of cards Part-I

Before we apply for a credit card it is always better to know what type of credit card is best suited to our profile. Catering to different type of consumer needs, credit card companies issue several types of credit cards. Each type has its own benefits. Here we present a brief description of popular types of credit cards issued banks and financial institutions in India.

Regular Credit Cards
This is the most basic type of credit card. It has a low credit limit and the most basic status among various credit cards. Credit card companies can club various other reward programs like travel rewards, cashback offers etc to enhance its value and appeal to customers.

Silver Credit Cards
Silver credit cards have higher eligibility criteria than regular credit cards. They bring more card member benefits to the customers, and have higher credit limits than regular credit cards. For example the ICICI bank Silver credit cards have the following income requirements Rs. 60,000/- p.a. for salaried individuals and Rs. 50,000/- p.a. for self-employed persons. The credit limit on these credit cards range from Rs. 40,000 to 80,000.

Gold Credit Cards
Gold credit cards have a higher status and credit limits than silver credit cards. Needless to say these types of credit cards have higher income requirements as their eligibility criteria. For example ICICI Bank Gold cards have income requirements as Rs. 1,20,000/- p.a. for salaried individuals and Rs. 1,00,000/- p.a. for self-employed people, while HDFC bank gold card are issued to those with a minimum income of Rs 2,00,000/- p.a. if you are salaried and Rs. 150,000/- p.a. if self employed. In addition to the regular benefits banks extend special privileges to their gold credit card holders.

Platinum or Titanium Credit Cards
These types of credit cards bring more benefits to credit card holders than regular, silver or gold credit cards. These credit cards generally have platinum or titanium hue and are issued to a select class of clients who have excellent financial background and good income levels. Platinum credit cards have personal concierge services, in addition to exclusive platinum benefits.

Signature Credit Cards
A league of its own, The Signature Credit Cards usually have no pre-set spending limits, personal concierge service, signature travel, lounge and membership benefits. Offered to a very elite group these credit cards, requires an excellent financial status. On June 9, 2007 ICICI bank introduced the Visa Signature Card and became the first credit card issuer in India to launch a premium credit card. This credit card has a joining fee of 25000/- and an annual fee of 2500. The exclusivity of this signature card is exemplified by the statement "The ICICI Bank Visa Signature Credit Card allows the card member to experience a life like no other, the Signature life. Card members can enjoy an exclusive bouquet of offers and benefits valued in excess of Rs. 50,000/- including an attractive Tag Heuer watch or travel vouchers for destination of your choice, besides a Rs. 3 crore air travel insurance cover".

Credit Cards by Invitation Only
The elitest of the elite, no one can apply for these credit cards. For example, the American Express Black Credit Card, popularly called the Centurion Card, is issued by invitation to the most exclusive and elite, to those who spend a certain minimum amount (which can run into crores of rupees). These cards have huge annual fees and minimum spending levels. In fact these credit cards are so exclusive, that they have an aura of mystery surrounding them and are considered as status symbols.

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Credit card recoveries: and Your Rights Part-III

Tracking consumer ignorance
Lodging a police complaint did cross Amit Khanna\'s mind, when he first started getting threatening phone calls from a collection agent. Khanna is a thirty-year old banker who got into this turmoil, because his office and billing address shifted eight months ago. His credit card issuer, ABN AMRO Bank, was notified about the change, but he still received an overdue payment after two months, for Rs 3000. When he informed the bank of the statement, they asked him to pay up first, and the matter would be sorted out later.

Khanna told "I refused. After three to four months, they started making calls both at my home and in office. Then, about one to two months back, the calls became abusive, and they started harassing my family members. They were very rude and you could tell they were gundas."

The state of consumer helplessness is apparent when it is clear that even someone like Khanna, who is in the banking profession, is not aware of the PIL before the Bombay High Court. He says, "I did consider taking them to court, but I did not in the end, because of a lack of both time and contacts. I don’t plan to waste any money on this. If something is already going on, however, I do not mind taking a part. Thankfully, the calls have stopped now. The main thing I am worried about is that I now have a spoilt credit history, perhaps with other banks as well."

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Credit Card Recoveries: and Your Rights Part-II

A code that works?
H N Sinor, CEO of the Indian Banking Association, IBA, says that the IBA is working with the RBI on a comprehensive code of conduct for the proper recovery of dues by banks. "The key thing for credit card issuers is to upfront tell the customer how we will behave with the customer, so that customers are not taken by surprise later on and there are no hidden costs. The code will say that we will be following some fair practice and we will inform the customer of the positives and negatives of a product upfront. It says, that we will deal with customers with dignity and respect with respect to debt collection and follow the persuasive method, not the coercive method," he told.

Proposals to clear the mess:

1. More stringent credit risk analysis by banks.

2. Get the Code of Conduct in shape

3. Get it enforceable by the RBI and the courts

4. Draft a comprehensive law based on the US FDCPA

5. Authorise the banking ombudsman to mediate in collection disputes.

6. appoint more judges and speed up the judiciary process for speedy redressal of disputes

The recovery of credit dues is a delicate problem, because of the phenomenal growth the sector has seen since 1999, when Citibank first started issuing credit cards in India, to the present day, when there are more than 10 million cards circulating throughout the country. While the credit card market is estimated to be growing at a rate of 30%, by 2010, it is expected that there will be more than 35 million cards in the country.

Sarvesh Swarup, Country Business Manager, Global Consumer Group, Citigroup told Moneycontrol.com, "The RBI has set up a working group with the IBA on credit cards. A regulatory body did not happen much earlier, because the market was very small to begin with, there were less players (banks) and cards were still considered elitist."

New ways to make collection easier
The IBA and the RBI are now also considering getting the banking ombudsman in the act. Sinor said, "Apart from the channel within each bank to redress grievances, we are trying to work out whether the role of the banking ombudsman, who was earlier not taking up these cases, can be extended. So perhaps in a short time we will see the banking ombudsman as an agency where a customer can take their grievances to, apart from the bank itself."

However, if the state and central governments step in to speed up the civil judicial procedures, this would also prompt banks to approach the courts for claiming recoveries, rather than appoint a recovery agent, Manshinde says. "This can be done by speeding up the machinery appointing judges. There are so many state-controlled banks out there, so the government should take corrective measures to speed up legal recoveries. Then there would be a summary procedure for recoveries in place," he said.

Till such a time, it would seem that banks should carry out their risk-analyses on prospective customers more exhaustively, to reduce the occurrence of such future default-and-chase scenarios. Manshinde says, "The banks are very keen to get into the credit market, and that is why we receive so many calls from them, chosen to be lucky ones who benefit from their cards. When they get their customers, they should be more careful to verify their risks. But they are not careful then, and give \'free cards\' to everyone. We are seeing the result of that."

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Credit card recoveries and Your Rights! Part-I

It may seem like a bad movie, but when you start getting calls threatening your life and security, it seems unfeasible that a credit card could bring you so much grief. With banks getting tougher on credit card defaulters, it is a surprise that consumers have not yet woken up to the fact that they can take action against banks that cross the line between getting their dues back and plain harassment.

How to react if you've received a call:
1. call up the bank and complain bitterly.
2. Threaten litigation if need be.
3. Go to the nearest police station and file a complaint.
4. Take precautions against further calls - keep a tape recorder handy. In the tape, try to get the agent to clearly say what he wants from you, what bank he is from.
5. you can sue the bank individually, if you have the resources.
6. If you do not want to get involved personally, approach a consumer action group.

Criminal lawyer Satish Maneshinde says, "I would call this extortion. What is the difference between banks going to recovery agents and businessmen going to underworld, then? No law permits any bank to appoint people to recover their loans through these methods. All they can do is shift their account, or initiate legal action to recover dues. Receiving a threatening call is a criminal offence. The person threatened must go to the nearest police station and lodge a threat complaint."

According to Maneshinde, in case of harassment by a recovery agent, hired by a lender, a person may approach the courts. But this rarely happens. "It is very difficult for individuals to come to the courts and take the issue. In a large number of these recovery companies, there are retired police officers of the rank of Inspector-General on the board or their relatives are employees of these companies. So there is a direct nexus. If a person claims there have been threats against him, beyond the law, he must be able to prove it. Individuals must record the calls and get evidence. But there is the infrastructure lacking. There is the greater visibility a consumer action group has," he says.

Currently, a public interest litigation case filed by Mumbai-based Consumer Action Network, CAN, is pending in the Bombay High Court, which wants it declared illegal and criminal for lenders to employ "outside agents" to recover dues using strong-arm methods. The court directed the banks against which the PIL is aimed at to submit a list of their collection agents. Coming into the petitions' net are several majors, like Citibank, Standard Chartered Bank, American Express Bank, ICICI Bank and even the RBI.

Other than to approach the courts, a harassed consumer has little recourse, in the absence of a comprenhesive law or a strong regulator, and only 'guidelines' by individual banks to deal with recoveries. Collection is governed in part by laws like the Banking Regulation Act, the Negotiable Instruments Act and the Contract Act, but there is no specific law at play. While the IBA has had a 'guideline' in place for the proper collection of debts for the last two years now, which forbids the use of threats, this has not held much sway.

In the US, the Fair Debt Collection Practices Act, FDCPA, clearly lays down the ground rules for collection agencies and attorneys, though it says nothing about the lender. An agent is prohibited from inundating you with phone calls at your workplace or at home, publicising the debt situation, threatening you, or spreading falsehoods about you.

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Credit Card Operations of banks- RBI Guidelines II

5. Protection of Customer Rights

Customer’s rights in relation to credit card operations primarily relate to personal privacy, clarity relating to rights and obligations, preservation of customer records, maintaining confidentiality of customer information and fair practices in debt collection. The card issuing bank / NBFC would be responsible as the principal for all acts of omission or commission of their agents (DSAs / DMAs and recovery agents).

i. Right to privacy

a.Unsolicited cards should not be issued. In case, an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank / NBFC shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.

b. Unsolicited loans or other credit facilities should not be offered to the credit card customers. In case, an unsolicited credit facility is extended without the consent of the recipient and the latter objects to the same, the credit sanctioning bank / NBFC shall not only withdraw the credit limit, but also be liable to pay such penalty as may be considered appropriate.

c. The card issuing bank / NBFC should not unilaterally upgrade credit cards and enhance credit limits. Prior consent of the borrower should invariably be taken whenever there are any change/s in terms and conditions.

d. The card issuing bank / NBFC should maintain a Do Not Call Registry (DNCR) containing the phone numbers (both cell phones and land phones) of customers as well as non-customers (non-constituents) who have informed the bank / NBFC that they do not wish to receive unsolicited calls / SMS for marketing of its credit card products. The DNCR should be set up within two (2) months from the date of this circular and wide publicity should be given to the arrangement.

e. The intimation for including an individual’s telephone number in the Do Not Call Registry (DNCR) should be facilitated through a website maintained by the bank / NBFC or on the basis of a letter received from such a person addressed to the bank / NBFC.

f. The card issuing bank / NBFC should introduce a system whereby the DSAs/ DMAs as well as its Call Centers have to first submit to the bank / NBFC a list of numbers they intend to call for marketing purposes. The bank / NBFC should then refer to the Do Not Call Registry (DNCR) and only those numbers which do not figure in the Registry should be cleared for calling.

g. The numbers cleared by the card issuing bank / NBFC for calling should only be accessed. The bank / NBFC would be held responsible if a Do Not Call Number (DNCN) is called on by its DSAs / DMAs or Call Centre/s.

h. The card issuing bank / NBFC should ensure that the Do Not Call Registry (DNCR) numbers are not passed on to any unauthorised person/s or misused in any manner.

i. Banks / NBFCs/ their agents should not resort to invasion of privacy viz., persistently bothering the card holders at odd hours, violation of "do not call" code etc.

(ii) Customer confidentiality

a. The card issuing bank / NBFC should not reveal any information relating to customers obtained at the time of opening the account or issuing the credit card to any other person or organization without obtaining their specific consent, as regards the purpose/s for which the information will be used and the organizations with whom the information will be shared. Banks / NBFCs should satisfy themselves, based on specific legal advice, that the information being sought from them is not of such nature as will violate the provisions of the laws relating to secrecy in the transactions. Banks / NBFCs would be solely responsible for the correctness or otherwise of the data provided for the purpose.

b. In case of providing information relating to credit history / repayment record of the card holder to a credit information company (specifically authorized by RBI), the bank / NBFC may explicitly bring to the notice of the customer that such information is being provided in terms of the Credit Information Companies (Regulation) Act, 2005.

c. Before reporting default status of a credit card holder to the Credit Information Bureau of India Ltd. (CIBIL) or any other credit information Company authorized by RBI, banks / NBFCs may ensure that they adhere to a procedure, duly approved by their Board, including issuing of sufficient notice to such card holder about the intention to report him/ her as defaulter to the Credit Information Company. The procedure should also cover the notice period for such reporting as also the period within which such report will be withdrawn in the event the customer settles his dues after having been reported as defaulter. Banks / NBFCs should be particularly careful in the case of cards where there are pending disputes. The disclosure/ release of information, particularly about the default, should be made only after the dispute is settled as far as possible. In all cases, a well laid down procedure should be transparently followed. These procedures should also be transparently made known as part of MITCs.

d. The disclosure to the DSAs / recovery agents should also be limited to the extent that will enable them to discharge their duties. Personal information provided by the card holder but not required for recovery purposes should not be released by the card issuing bank / NBFC. The card issuing bank / NBFC should ensure that the DSAs / DMAs do not transfer or misuse any customer information during marketing of credit card products.

(iii) Fair Practices in debt collection

(a) In the matter of recovery of dues, banks / NBFCs may ensure that they, as also their agents, adhere to the extant instructions on Fair Practice Code for lenders (circular DBOD. Leg. No. BC. 104 /09.07.007 / 2002–03 dated May 5, 2003) as also IBA’s Code for Collection of dues and repossession of security. In case banks / NBFCs have their own code for collection of dues it should, at the minimum, incorporate all the terms of IBA's Code.

(b) In particular, in regard to appointment of third party agencies for debt collection, it is essential that such agents refrain from action that could damage the integrity and reputation of the bank / NBFC and that they observe strict customer confidentiality. All letters issued by recovery agents must contain the name and address of a responsible senior officer of the card issuing bank whom the customer can contact at his location.

(c) Banks / NBFCs / their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the credit card holders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.

6. Redressal of Grievances

a. Generally, a time limit of sixty (60) days may be given to the customers for preferring their complaints / grievances.

b. The card issuing bank / NBFC should constitute Grievance Redressal machinery within the bank / NBFC and give wide publicity about it through electronic and print media. The name and contact number of designated grievance redressal officer of the bank / NBFC should be mentioned on the credit card bills. The designated officer should ensure that genuine grievances of credit card subscribers are redressed promptly without involving delay.

c. The grievance redressal procedure of the bank / NBFC and the time frame fixed for responding to the complaints should be placed on the bank / NBFC's website. The name, designation, address and contact number of important executives as well as the Grievance Redressal Officer of the bank / NBFC may be displayed on the website. There should be a system of acknowledging customers' complaints for follow up, such as complaint number / docket number, even if the complaints are received on phone.

d. If a complainant does not get satisfactory response from the bank / NBFC within a maximum period of thirty (30) days from the date of his lodging the complaint, he will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievance/s. The bank / NBFC shall be liable to compensate the complainant for the loss of his time, expenses, financial loss as well as for the harassment and mental anguish suffered by him for the fault of the bank and where the grievance has not been redressed in time.

7. Internal control and monitoring systems

With a view to ensuring that the quality of customer service is ensured on an on-going basis in banks / NBFCs, the Standing Committee on Customer Service in each bank / NBFC may review on a monthly basis the credit card operations including reports of defaulters to the CIBIL, credit card related complaints and take measures to improve the services and ensure the orderly growth in the credit card operations. Banks / NBFCs should put up detailed quarterly analysis of credit card related complaints to their Top Management. Card issuing banks should have in place a suitable monitoring mechanism to randomly check the genuineness of merchant transactions.

8. Right to impose penalty

The Reserve Bank of India reserves the right to impose any penalty on a bank / NBFC under the provisions of the Banking Regulation Act, 1949 for violation of any of these guidelines.

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Credit Card Operations of banks- RBI Guidelines I

Pursuant to the announcement made in the Annual Policy Statement 2004-05, the Reserve Bank of India had constituted a Working Group on Regulatory Mechanism for Cards. The Group has suggested various regulatory measures aimed at encouraging growth of credit cards in a safe, secure and efficient manner as well as to ensure that the rules, regulations, standards and practices of the card issuing banks are in alignment with the best customer practices. The following guidelines on credit card operations of banks have been framed based on the recommendations of the Group as also the feedback received from the members of the public, card issuing banks and others. All the credit card issuing banks / NBFCs should implement these guidelines immediately.

Each bank / NBFC must have a well documented policy and a Fair Practices Code for credit card operations. In March 2005, the IBA released a Fair Practices Code for credit card operations which could be adopted by banks / NBFCs. The bank / NBFC's Fair Practice Code should, at a minimum, incorporate the relevant guidelines contained in this circular. Banks / NBFCs should widely disseminate the contents thereof including through their websites, at the latest by November 30, 2005.

Guidelines for Implementation

1. Issue of cards

a. Banks / NBFCs should independently assess the credit risk while issuing cards to persons, specially to students and others with no independent financial means. Add-on cards i.e. those that are subsidiary to the principal card, may be issued with the clear understanding that the liability will be that of the principal cardholder.

b. As holding several credit cards enhances the total credit available to any consumer, banks / NBFCs should assess the credit limit for a credit card customer having regard to the limits enjoyed by the cardholder from other banks on the basis of self declaration/ credit information.

c. The card issuing banks / NBFCs would be solely responsible for fulfillment of all KYC requirements, even where DSAs / DMAs or other agents solicit business on their behalf.

d. While issuing cards, the terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language (preferably in English, Hindi and the local language) comprehensible to a card user. The Most Important Terms and Conditions (MITCs) termed as standard set of conditions, as given in the Appendix, should be highlighted and advertised/ sent separately to the prospective customer/ customers at all the stages i.e. during marketing, at the time of application, at the acceptance stage (welcome kit) and in important subsequent communications.

2. Interest rates and other charges

a. Card issuers should ensure that there is no delay in dispatching bills and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged.

b. Card issuers should quote annualized percentage rates (APR) on card products (separately for retail purchase and for cash advance, if different). The method of calculation of APR should be given with a couple of examples for better comprehension. The APR charged and the annual fee should be shown with equal prominence. The late payment charges, including the method of calculation of such charges and the number of days, should be prominently indicated. The manner in which the outstanding unpaid amount will be included for calculation of interest should also be specifically shown with prominence in all monthly statements. Even where the minimum amount indicated to keep the card valid has been paid, it should be indicated in bold letters that the interest will be charged on the amount due after the due date of payment. These aspects may be shown in the Welcome Kit in addition to being shown in the monthly statement.

c. The bank / NBFC should not levy any charge that was not explicitly indicated to the credit card holder at the time of issue of the card and getting his / her consent. However, this would not be applicable to charges like service taxes, etc. which may subsequently be levied by the Government or any other statutory authority.

d. The terms and conditions for payment of credit card dues, including the minimum payment due, should be stipulated so as to ensure that there is no negative amortization.

e. Changes in charges (other than interest) may be made only with prospective effect giving notice of at least one month. If a credit card holder desires to surrender his credit card on account of any change in credit card charges to his disadvantage, he may be permitted to do so without the bank levying any extra charge for such closure.

3. Wrongful billing

a. The card issuing bank / NBFC should ensure that wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank / NBFC should provide explanation and, if necessary, documentary evidence to the customer within a maximum period of sixty days with a spirit to amicably redress the grievances.

b. To obviate frequent complaints of delayed billing, the credit card issuing bank / NBFC may consider providing bills and statements of accounts online, with suitable security built therefor.

4. Use of DSAs / DMAs and other agents

a. When banks / NBFCs outsource the various credit card operations, they have to be extremely careful that the appointment of such service providers do not compromise with the quality of the customer service and the bank / NBFC’s ability to manage credit, liquidity and operational risks. In the choice of the service provider, the bank / NBFCs have to be guided by the need to ensure confidentiality of the customer’s records, respect customer privacy, and adhere to fair practices in debt collection.

b. The Code of Conduct for Direct Sales Agents (DSAs) formulated by the Indian Banks’ Association (IBA) could be used by banks / NBFCs in formulating their own codes for the purpose. The bank / NBFC should ensure that the DSAs engaged by them for marketing their credit card products scrupulously adhere to the bank / NBFC’s own Code of Conduct for credit card operations which should be displayed on the bank / NBFC’s website and be available easily to any credit card holder.

c. The bank / NBFC should have a system of random checks and mystery shopping to ensure that their agents have been properly briefed and trained in order to handle with care and caution their responsibilities, particularly in the aspects included in these guidelines like soliciting customers, hours for calling, privacy of customer information, conveying the correct terms and conditions of the product on offer, etc.

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Helpline for Credit Card Customers- A Special Feature

Credit card customers in India are now better off
Credit cards are now available free with lots of features in addition to the payment convenience & credit period. To promote the usage of card, most banks offers certain reward points and cash-back schemes.

However, some people are still skeptical about a credit card’s usefulness. The first thing they think of is the hidden costs attached to it, harassement by the card issuer’s staff on non-payment of bills, and unsolicited calls on their mobiles as their personal information is shared across a database.

‘Hidden fees’ is an issue that keeps oneself from getting into the credit card hassles. All credit cards carry different types of fees, namely joining fee, annual fee, renewal fee, add on fee, card replace fee, photo-card fee etc. Waiver of one fee doesn’t not necessarily mean waiver of other fees.

It is important to note that Reserve Bank of India (RBI) has clarified most of these issues in its guidelines released in November 2005. These guidelines ensure that the systems of the banks / non-banking financial companies (NBFCs) are aligned with the best customer practices.

In the case of issuing cards, RBI says that while issuing cards, the terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language (preferably in English, Hindi and the local language) comprehensible to a card user. The Most Important Terms and Conditions (MITCs) termed as standard set of conditions should be highlighted and advertised/ sent separately to the prospective customer/ customers during marketing, at the time of application, at the acceptance stage (welcome kit) and in important subsequent communications.

Also, it is the responsibility of the card issuers to ensure that there is no delay in sending bills and that there is a sufficient period given to customers before charging the interest on it.

About the hidden charges, RBI clarifies that the bank / NBFC should not levy any charge that was not explicitly indicated to the credit card holder at the time of issue of the card and getting his / her consent. And any changes in the charges should be informed to the customer one month in advance.

It is good news for consumers that the Do Not Call Registry (DNCR) is now in force. The RBI can now take action on the bank / NBFC if found that their DSAs call any of the customers listed in this registry.

Customers can now hope that there will be less harassment by the issuing company - as the RBI has also enforced a clause on fair practices in debt collection and made it mandatory for the card issuers to constitute a grievance redressal officer in their institution. This redressal officer’s contact details are to be printed on the credit card bills.

We are providing with the detailed guidelines of RBI, which can be of great help to the harassed customers.

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Life/Disability Insurance from Credit Cards

Have you ever read the service guide that comes along with your new credit card? If not then you should go through it carefully because there are various insurance covers that are extended to the cardholder. In fact there are covers that provide insurance to both the applicant and the card issuer in case of an unfortunate demise of the cardholder.

There are various credit card insurance benefits that are available in the market but you might not be aware of them. Here are some of the credit card insurance benefits that you can avail and remain safe.

Credit Life Insurance
In case the cardholder expires, the insurance company will pay off the debt you owe. However the amount that would be covered will vary from bank to bank and also depend on the type of the credit card. For instance in case of accidental death, there is a cover from Rs 2 lakh to Rs 40 lakh that is provided to the beneficiary. But to claim this benefit, you need to provide a death certificate and inform the insurance company within 30 days of the cardholder's death. The claim must be made within two months of the death due to an accident.

Credit disability insurance
This insurance protects your credit rating by paying your monthly minimum payment if you become medically disabled. There is a set time period for which the payments will be made and purchases made after the disability will be not covered.

Lost baggage insurance
You are also covered for the checked baggage that is lost due to theft or loss during domestic and international flights. This cover is provided if the baggage is not found after 48 hours of arrival at the destination.

Purchase protection
Some card companies provide free purchase protection where stuff purchased through the credit card is insured against damage or loss due to fire or theft or other incidents listed in the policy of the company. Normally this cover is provided for a 180 day period from the date of purchase. However this period may differ from insurer to insurer and also the amount that can be claimed may vary.

Involuntary unemployment credit insurance
This insurance will pay your minimum monthly payment if you are laid off by the employer or you lose your job. Again purchases after the involuntary unemployment would not be covered.
In additional to the above mentioned insurance, there are covers such as hijack, loss of passport and others that are available to the cardholder. But one should understand how it is marketed or sold to consumers. While some of these insurance are genuinely free, companies also offer a free service that is valid only for a specific time but later it may cost you heavily and that too for something that might not be important or useful for you.

For paid insurance options with Credit Cards, it is always better to decide if the insurance is meant for you or not. Considering your current and future financial needs may help you in determining the benefit of credit insurance. Further if you think that the credit insurance is necessary for you, then it is important to know about the policy you are buying. Make sure you are not paying for something that you don't require. For instance, some credit life insurance policies are limited to age restrictions and the credit insurance sales person may not inform you about the same but rather insist on a policy that may not provide you any cover. Hence research well of all the requirements carefully before accepting the policy.

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Cards in Black - Strictly by Invitation

Rakesh sent a goldfish to his son in India for his birthday. Mr Rakesh was away in Chicago working on his overseas project. Still he made his presence felt. A multinational bank through its exclusive services for its high-end credit card customers made it possible for him.

Gone are the days where flashing a gold credit card was considered to be a status symbol. Now, what’s in vogue is the colour-coded plastic or a metallic black among the affluent Indians. Platinum and black are the new names of premium credit cards, which account for half a million as against the total base of 25 million credit cards in the country. Holding these credit cards means getting passes for a sold-out Zubin Mehta show, or owning an expensive Longines watch as a free gift from your credit card company.

“When income levels of people rise, they also want to upgrade their credit card with relevant features,” says TR Ramachandran, head, retail bank, Citibank India.

While companies might offer free credit cards, these affluent cards come for a price — aiming to meet the needs of its high-end customers.

Services and charges

Most of the premium credit cards have a steep fee structure. Credit card companies like Citibank and American Express charge a one-time joining fee of Rs 50,000 for their high-end cards while Standard Chartered and ICICI Bank charge a lower fees over and above the annual fees. These charges are, however, subject to changes and ongoing offers, say bank officials.

What you pay as fees often comes back to you, say company officials. There are attractive gifts to be won or a lucrative reward point structure. For instance, AmEx has a welcome package worth Rs 70,000.

“This includes a Longines Watch and two Kingfisher Class round-trip tickets. Besides, we offer a host of partner benefits and privileges that add up to more than Rs 90,000 in value,” says Amit Datta, vice-president, marketing, American Express.

There are upgrades and discounts for luxury travel, concierge services for 24X7 travel bookings around the globe, hotel accommodations and even personal shopping services.

Says Sachin Khandewal, general manager, cards product group, ICICI Bank: “We are now launching ‘hand-picked rewards’, an exclusive rewards catalogue for our premium card members with a specially-tailored collection of premium brands. Each product has been carefully hand-picked to complement the evolved lifestyle and preferences of our premium card members.”

Gate crashers not entertained

The most distinguishing feature of these cards is that they are available by invitation only. “These cards are not meant for mere transactional needs. These cards cater to specific lifestyle or travel needs of the affluent, which is different from the mass,” says Mr Datta.

What’s your ideal pick?

Identify areas of your maximum spend: If you are an active international business traveller, you should look at cards, which offer concierge services and 24-hour travel bookings around the globe. You could also sign up for a charge card, which has no pre-set credit limits.

However, the condition is that you have to pay off your monthly charges in full — there is no “minimum payment” other than the full balance.

Your lifestyle needs: Similarly, if you are a domestic traveller and enjoy a good lifestyle, you could sign up for a card that offers host of benefits like tie-ups with the Taj Group across the country, fitness stations and premium restaurants.

You can also look for a co-branded card with a domestic airline, as higher spends on your credit card could earn complementary flight tickets for a round trip.

These cards come either with a joining fee or some have an annual price tag. These joining fees keep changing with ongoing offers, but they could be in the range of Rs 50,000-75,000.

The credit card companies say these fees are nothing compared to a host of privileges and benefits that come along with these cards. Often these fees are redeemable in the form of some expensive gifts or complementary tickets, which varies from bank to bank. Do a cross-check to find if these gifts of any utility to you. Otherwise, you know the answer.

Co-branded credit cards - Pros and cons

If you’ve observed, of late, the proportion of photographs, identity cards, debit cards and credit cards in most people’s wallets has changed. These days, it is skewed in favour of credit cards, the plain vanilla ones as well as the ‘specialised’ co-branded cards meant for specific purposes. These could range from travelling and shopping to dining and fuel recharge.

Elaborates T R Ramachandran, business manager, cards, Citibank India: “The core proposition of co-branded credit cards is to provide an easy and convenient payment mechanism, which also offers some extra value to the customer, in areas of his / her preference (like retail, airlines and telecom).” The value could mean rewards, discounts, special offers, etc. While some cards come at a cost, some may not entail any such charges.

The trend of maintaining several credit cards, especially of the specialised variety, seems to be catching on, as it is not uncommon to see people flaunting such credit cards and the points accumulated by using the same.

Informs ICICI Bank’s head, card group, Sachin Khandelwal: “The trend is indeed catching on. In the past couple of years, significant value additions and benefits have emerged. Also, out of the thousands of merchants and a dozen broad categories like dining, air travel, hotels, consumer durables and jewellery, for most customers, the maximum spends on cards are usually on just one or two specific categories. Hence, they would like to see better rewards, not only in terms of more points, but also benefits like quicker miles, free room nights and so on, which are more tangible. With co-branded cards you get all these at a much accelerated pace, hence a preference has been seen.”

The upside

So what is it about such credit cards that has resulted in the demand shooting up? Answers financial planner Gaurav Mashruwala: “People opt for such cards to get focused benefits. All cards offer some kind of loyalty benefits.” For example, if you’ve been flying a particular airline or shopping at a particular store, it makes sense to go for a card meant for such purposes that enables you to avail of associated discounts and gift vouchers.

Every time you use the card, you gather points, which act as indirect discounts. The points can be redeemed in return for some tangible benefits. The logic is simple: You would be paying visits to petrol refill outlets anyway, why not use a fuel-recharge credit card and collect points, which would help you cut down on your petrol bill?

Moreover, in case of certain cards, every time you swipe the card, a specific sum goes towards charity; you can choose a credit card that serves your purpose and also aids the cause of the charity you wish to extend support to. Some cards also cater to hobbies and interests. Use of such cards could enable you to free tickets to music concerts or cricket matches.

A word of caution

“Use of co-branded cards calls for close scrutiny of the benefits that you receive,” points out Mr Mashruwala. For instance, for purchases worth Rs 10,000, one co-branded credit card promises 200 points that translate into goods worth Rs 200, which means that the total discount is 2%; on the other hand, for the same amount of purchases, another credit card promises 200 points that entitles you to a free gift, which may not be worth more than Rs 100. The effective discount here is just 1%. Making such a thorough comparison is essential to ensure that you get a good deal.

Mr Khandelwal feels the users should meticulously track their usage and know where they are spending. One also needs to make sure that if he / she has more than one card, he/she is using the right card, that is, the one that provides better offers or more rewards.

“While choosing a card, it is important that you opt for a card that not only best serves your needs, but also adds maximum value to your spending. These value additions could either be in the form of cash through a cash-back card or in kind through aviation points, petromiles, free talk time etc,” says Mr Ramachandran.

“Users need to be aware that in case of co-branded credit cards, eventually, it is the credit card issuer, the bank, that will handle the complaints, and the not the co-brand partner,” states Mr Mashruwala.

This apart, the general rules for use of any kind of credit card apply to specialised cards as well: keep your identification number under the lock and key, do not exceed your credit limit, go through your credit card statement carefully and touch base with the issuer immediately if you come across any discrepancy.

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India's first virtual credit card by HDFC

Reliance Communications and HDFC Bank on Tuesday announced the launch of country's first virtual credit card.

The virtual card will do away with the need to physically carry the credit card and would allow mobile phones to double as a payment instrument.

Reliance mobile customers can now participate in the mobile credit card evolution. This is another step towards making mobile commerce a reality in India, Mahesh Prasad, President, Applications Group, Reliance Communications told reporters here.

Presently, the facility would be available to HDFC Bank credit cardholders, who are also Reliance mobile subscribers.

A top bank official said HDFC bank has about 35 lakh cardholders and given that RComm has about 40 per cent market share in the mobile market an estimated 15 lakh people would be able to use the new facility.

The tie-up between the bank and Reliance is not exclusive and over a period of time other banks and other mobile operators would also launch this facility.

It could become a preferred way of making payment in future as it does away with the risks associated with carrying cards and revealing its details at merchant establishments.

Security and convenience are two major benefits of the new facility, he said. Internationally, this technology was introduced only a couple of years ago and has been a great success in countries like South Korea, Japan and Philippines, Prasad added.

SBI Cards in Loss

The rising default rate in the country is likely to affect the growth of the second largest card issuer in the country, SBI Cards. The company is expected to report a loss for the second time in a row.

In a recent report by credit rating agency, CRISIL, it was stated that SBI Cards & Payment Services Ltd is expected to report some more losses in the 2008-09 because of credit costs and lower fee income. Similarly, the largest card issuer, ICICI Bank has also been facing defaults that have been mounting in the recent past. As a result both the issuers have been tightening salary and other norms of their credit cards. SBI's credit checks have increased and the minimum salary criterion for issue of cards has been revised from Rs 1.44 lakh to Rs 2-2.4 lakh per year.

Defaults for ICICI have also been rising but the rate is still low. Sachin Khandelwal, Head-Credit Cards, ICICI Bank, said: "In 2007-08 the credit cards business grew by 20 to 25 percent. We had done 1.5 million cards in 2007-08 which has been reduced by 60 percent in the first 10 months of 2008-09. The credit losses have increased by more than 1 percentage point (of the spread between lending rates and cost)."

As on September 30th 2008, SBI Cards reported a loss of Rs 60 crore on total income of Rs 440 crore. During the last fiscal, SBI Cards suffered a loss of Rs 150 crore and it is expected to continue the trend. "We have consciously slowed down sourcing customers by more than 50 percent from a peak of 1 lakh cards a month last year to 20,000 to 30,000 a month now to ensure a good portfolio. It's a difficult market. We have consolidated this year and are better placed to tackle losses," said a senior official of SBI Cards.

In its latest report, rating agency ICRA said that SBI Cards would need to expand its capital in order to meet the regulatory norms.

SBI Cards is 60% owned by State Bank of India (SBI) while US-based GE Money has its control over the remaining 40%.

SBI Card's Har Din Jackpot Offer

SBI Cards has introduced another contest or jackpot sort of offer namely Har Din Jackpot, where you will have a chance to win Maruti Suzuki A-star cars, holiday to Mauritius sponsored by Thomas Cook, or even Samsung 22” LCD TV by way of lucky draw conducted every day. All you need to do is to use your SBI Card to shop for Rs. 2500 or more during this offer period to be entered into this lucky draw to choose the winner automatically without doing any other calculations or entering in any contests, etc.

With this offer, every Rs. 2500 you spend using your SBI Card will let you enter in the lucky draw that is being conducted every day during this offer period to win Samsung 22 inch LCD TV everyday or other prizes. Hence even if you shop for Rs. 5000 will make you to be entered into the lucky draw twice for the given day. If you spend for 7500 on any given day, you will be entered into the lucky draw thrice on that day. But your single purchase should be a minimum of Rs. 2500.

You will have a chance to win a Samsung 22 inch LCD TV everyday. A Thomas Cook Holiday to Mauritius for a couple every week and also a chance to win the latest Maruti Suzuki A-Star every fortnight. Hence you will get a chance to win 6 Maruti Suzuki A-Star, 12 Thomas Cook Holiday or 90 Samsung LCD TV during this offer period.

To make it simple, to be entered into this draw automatically, all you have to do is to use your SBI Card whenever you shop for Rs. 2500 and more and that’s all.

Unfortunately, this offer is not valid in Tamil Nadu, i.e., in Chennai. ;-) This is because lottery or jackpots are banned in Tamil Nadu. And the above contest is purely a jackpot or lottery sort of offer without giving the option like completing a slogan or answers to complete to decide the winner.This offer is valid from January 10, 2009 to April 9, 2009. To know more about this offer visit this page.

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Savings A/Cs Raided - To settle Card Dues

Many banks are invading the savings accounts of customers with delinquent credit card bills, increasingly invoking a rule that was once rarely used as they try and limit defaults on credit card debt.

Several banks that issue credit cards have agreements with customers giving them the right to tap into their savings accounts with them to set off overdue credit card debt. But the right was seldom exercised in the past, with banks preferring to negotiate with customers and giving them extra time to pay.

Now, because of the economic slowdown, rising job losses and the declining ability of customers to pay on time, banks have begun to adopt a sterner stand. One of those affected by the banks’ aggressive new approach is Manish Dabral, (name changed to protect identity) a senior executive with a Delhi-based real estate firm.

Mr Dabral, who owns a credit card issued by HDFC Bank and has a savings accounts with the same bank, recently found that India’s second-largest private sector lender had deducted Rs 72,000 from his savings account to set off dues against his credit card.

Mr Dabral says his credit card debt was under dispute and he expected the bank to at least inform him before withdrawing money from his savings account. “Had I issued a cheque for an amount higher than the balance in my savings account, who would have been legally liable if it had been dishonoured?” he asked.

HDFC Bank told Mr Dabral that that a notice was served on him before his savings account was invaded. The customer has now approached the banking ombudsman. An HDFC Bank spokesman defended bank’s action. “Banks have every right to exercise the ‘Right to Lien’ at any point in time, even without notice, if it has exhausted all options of making the customer pay for his credit card dues. These include reminders and notices. The card member agreement says this clearly,” he said.

It is estimated that consumers in India spend an average of around Rs 4,000 per month on their credit cards. There are currently 25 million credit cards in the country, but only 40% of these are actively used.

It is not clear how many banks take money from savings accounts to set off credit card debt, but industry executives said there are several banks which have a ‘Right to Lien’ clause in credit card agreements with customers.

Citibank Platinum Select Credit Card - Launched

Citibank India has announced the launch of the Citibank Platinum Select Credit Card, which offers customers a powerful combination of preferential privileges, priority service and superior protection.

The key differentiators of the Card are its best-in-class rewards program with superior earn rates, low interest rates, a service platform dedicated exclusively to its cardmembers and enhanced security and fraud covers. Citibank Platinum Select aims to provide cardholders a highly individualized experience based on the key themes of gourmet dining, rewarding shopping, recreational family time and peace of mind.

The Card will be launched initially in New Delhi and Mumbai and will carry an annual fee of rupees Four Thousand. Globally, Citibank Platinum Select is a well-established and popular credit card platform. India is one of only two countries in Asia-Pacific - the other being Thailand - to offer the Citibank Platinum Select Card.

Announcing the launch, N. Rajashekaran, Country Business Manager, Global Consumer Group, Citi India, said, "The Citibank Platinum Select is a fine demonstration of our strategy to offer the right product propositions for maximum customer engagement and activity on our products, supported by strong customer experience and service initiatives.

" Speaking on the occasion, Sandeep Bhalla, Business Manager, Cards, Citi India, said, "Recent research has revealed that a strong majority of Indians believe that money can't buy happiness, ranking peace of mind, good health and a happy family life over money. It is such decisive insight that has contributed to the design of the Citibank Platinum Select proposition. Each element of the package is carefully selected to make customers feel indulged. We are confident that the bouquet of preferential privileges, priority service and superior protection will make the Platinum Select the card of choice in the customer's wallet."

The Citibank Platinum Select Card benefits include: Preferential Privileges

-- Accelerated Earn Rates: Customers earn 5 times the reward points on lifestyle spends such as those on apparel, dining and books. Reward Points earned on the Citibank Platinum Select Card can be redeemed in-store; from the rewards catalogue; converted to airline miles; for customized holiday packages or against any purchase on the statement.

-- Exclusive dining privileges: Citibank Platinum Select Cardmembers will be placed on priority for table reservations at over 150 of the finest outlets besides being offered complimentary beverages and desserts and a year-round discount of upto 20%.

-- Complimentary access to swimming pool, spa and health club: Customers can enjoy weekend experiences centered on complimentary access to the swimming pool, spa and health club at some of the best hotels, and complimentary golf lessons. Customers with substantial spends on the Card will be eligible to enjoy the complimentary services of a chauffer-driven sedan or free tickets to a movie show at select multiplexes.

-- Discounted access to signature golf courses: Cardmembers and a companion can enjoy golf at 15 signature domestic golf courses at upto 50% discount on green fees with no black-out days, advance payments and cancellation charges.

-- Citibank Platinum Select Card members will be able to enjoy a 50% discount on weekend stays at Taj Properties and a 50% discount on buffet lunches at any Taj property for up to six persons at a time.

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Credit Card Reward Points

How to accumulate points?
Every time you swipe your credit card to make a purchase, you collect reward points. Typically, you get one point per Rs 100-250 spent. This, however, depends on the card and the bank. For instance, banks offer more points on co-branded cards. State Bank of India gives one point per Rs 40 spent on its Gold Card and eight points per Rs 100 on its co-branded Tata Card.

The value of each reward point also varies across credit cards and banks. Says Sachin Khandelwal, head (cards), ICICI Bank: "The value of a point can be anywhere between 30 paise to a rupee and is also a function of the merchant partner in case of co-branded cards." For example, the value of one point on the SBI Gold Card is 70 paise, while it is Re 1 on the SBI-Tata Card.

The limitation with most accelerated reward points on co-branded cards, however, is that they can be redeemed only against products and services of the partnered establishment.

One also needs to remember that points get accumulated against spends (that too, not all of them), not for cash withdrawals.

How to redeem points?
What to redeem on. Earlier, banks offered a limited catalogue of products. Plus the prices were very high and one couldn't negotiate on them. But now there is a laundry list of what you can do with the points.

For starters, there is the conventional catalogue that includes apparel, gadgets, jewellery, luggage items, and the like. You can also encash your points against gift vouchers. For instance, with HDFC Bank's Gold Card you can get gift vouchers from Domino's, Cafe Coffee Day, Pantaloons, Westside, Lee, Music World and Landmark.

Going a step further, some banks have tie-ups with certain merchants where you can redeem points instantly. You don't have to contact the bank and get vouchers; you can pay using the points.

When the card is swiped, the reward points get reflected on the machine. So, if you have accumulated points worth, say, Rs 500 and you buy goods worth Rs 1,000, the merchant will offer you the choice of using your points for payment.

Some banks now offer air tickets on reward points, a feature that was earlier limited to co-branded cards. For instance, HDFC Bank has tied up with Jet Airways, Indian and Kingfisher Airlines to allow its card users to convert their reward points into air miles. The value of one air mile is usually equal to one reward point.

"The air miles required to get complimentary tickets would depend on the airline and the travel sector," says Parag Rao, executive vice-president, head (product and portfolio management), credit cards, HDFC Bank.

Some banks, like Bank of Baroda, also let you redeem your reward points against cash. That is, cash corresponding to your reward points are credited to your account. Deutsche Bank does the same on its Gold Card, but also offers a gift catalogue.

Procedure. You can redeem your points by filling up a redemption coupon which is there on banks' website. You could also use the phone banking option. For web-enabled credit card holders redemption can happen online. The banks can take anywhere between a week to a month to redeem the points.

How to bag the best?
With so many cards, each with multiple features, how do you know which one to pick. Figure out what you want. If you are a frequent air traveler, then an airline-bank co-branded card may work for you.

Another thing to note is the value of points. Says Nirupam Sahay, chief marketing officer, SBI Cards: "Points accumulated and their value is important, in addition to the wide choice of redemption options." For example, the co-branded ABN AMRO MakeMyTrip Go Card offers three reward points per Rs 100 spent. But, on purchases made on MakeMyTrip, the points range from 10 to 30. The reward points can be redeemed as cash back into your account.

Now, more cards are offering the cash-back option on reward points. Choose the card that offers you maximum cash-back on your frequent spends and offers an array of redemption choices.

• All banks display their products online and have compare tools to help you pick the best.
• Use these to compare the features and find the card that suits you best.
• Don't forget the expiry date. All your hard work would go waste if your points expire.
• However, most banks have started doing away with the expiry period.
• For the smart shopper, the credit card is worth more than just what it buys

SBI Card and AVA the Dream Merchants Offer

Very similar to that of ICICI Bank Credit Card and AVA offer, even SBI Cards have entered into a special deal with AVA Merchants to come up with an offer where you get various products from AVA Merchandising at special discounted price exclusively for the SBI Card holders and available only for them. This is also a limited stock offer and hence will need to hurry if you are planning to buy them.

To start with, you can get the Swatch Irony Black Chrono watch which is said to be worth Rs. 6300 for a special SBI Card price of Rs. 2990. You can also buy them using the EMI option available with SBI Cards at Rs. 534 for six months. The product code of this product is B023 (to make it easier for you to order through phone). This watch also comes with two year international warranty.

Philips cordless phone can be brought for Rs. 1990 as against the original price of Rs. 2990. The product code is B025. This comes with an one year warranty.Some of the other products which you can buy using this AVA and SBI Card offer are: (original price in brackets).

Verona Strolley Bag – Rs. 2290 (Rs. 4990) (Product Code: B027)

Blumax Mono Headset – Rs. 1300 (Rs. 3990) (Product Code: B024)

Coby 2 GB MP4 Player – Rs. 3990 (Rs. 7999) (Product Code: B026)

Victoria watch & Jewelry Set – Rs. 1290 (Rs. 2990) (Product Code: B028)

Berg Tandoor – Rs. 1750 (Rs. 2750) (Product Code: B029)

5.1 CH Home Theater – Rs. 5290 (Rs. 9980) (Product Code: B030)

You will need to call AVA at their toll free numbers 1800-1800-300 or 1800-11-4344 or their regular number at 0124-4697999 to place your order during regular working hours on all days except Sundays. You can also place your order through SMS by sending a message “AVA SALES” to 55050. You can order only through the above options and cannot order it online anywhere.

This offers is valid till March 31, 2009 or till stocks last. You will need to contact SBI Card helpline at 1800-180-1290 to convert your purchases into EMIs. You will get the product within 21 days of your ordering.

Although the prices seem somewhat reasonable to me, since I have not tried any products from AVA Merchandising yet and hence cannot comment on the quality of the products, unlike Deals4all offers where I have used their service and hence have commented about the product quality in my previous posts here. Hence buy them if you are not too concerned about the product quality and are satisfied with the discounted price mentioned above.

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