latest RBI guidelines on Credit cards

The RBI on has warned banks and financial institutions to strictly follow its guidelines on credit cards regarding transparency in charging interest rates and levying other fees on customers or face penal action.
"All banks are once again advised to strictly adhere to the guidelines... both in letter and spirit," an RBI circular said, adding that the violation would invite penal action. 

The RBI has issued fresh directives in view of the numerous complaints from credit card holders, especially with regard to excessive finance charges and issuance of unsolicited cards, it said. 

Besides, complaints like charging annual fee on what were being offered as free cards, issuance of loans over phone, disputes over wrong billing, difficulty in accessing the credit card issuers and poor response from the call centres, it said. 

Giving detailed guidelines for credit card operations, the RBI had earlier asked the banks to declare upfront the interest rate, various charges and the methodology of calculation of finance charges with illustrative examples. 

As per an RBI circular issued in 2007, card companies should prescribe a ceiling rate of interest, including processing and other charges in case of small value personal loans and loans similar in nature. 

There should be transparency in levying differential interest rates, it had said, adding, the banks should publicise through their website and other means, the interest rates charged to various categories of customers. 

The circular also advised banks to indicate to the credit card holder upfront, the methodology of calculation of finance charges with illustrative examples, particularly in situations where only a part of the amount outstanding is paid by the customer. 

RBI had also asked banks to ensure that wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank 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, the circular had said. 

There are host of banks, which issue credit cards, including ICICI Bank, HDFC Bank, SBI Cards, Punjab National Bank. Besides, many foreign banks like Standard Chartered, HSBC, Citibank also offer them. 

There are about 1.9 crore credit card users in India.
moreRBI guidelines on Credit Card

SBI Card - now the most trusted Credit Card

SBI Card has received the title of the most trusted brand in credit card segment. The title was conferred by Reader's Digest Asia Trusted Brands Survey. SBI Card has been voted as the best since the last three years.

The card mainly focuses on customer directed activities. The 250 service camps laid recently had been a part of this move. The camps helped SBI Card reach 2,10,000 customers across 31 Indian cities.

Which Low interest Credit Card to Apply?

SBI Card in the only credit card in India which facilitates its customers with 13 different modes of payment.

Last year, SBI Card won several Indian and Asian awards including the most trusted brand in credit card category in the Reader's Digest Asia Trusted Brands 2009 Survey, a consumer choice award from CNBC Awaaz and ‘Asia's Best Mature Captive Services Delivery' award from the Shared Services Outsourcing Network (SSON).

Reader's Digest Asia Trusted Brands Survey was came into existence in 1999 and has successfully been carried out so far.

back to Credit Card News

"Pay with Points" from American Express

American Express, through its Membership Rewards program, has introduced ‘Pay with Points’, a feature that makes booking flights easier and faster than before for its Platinum cardmembers and the Platinum Reserve credit cardmembers. Pay with Points feature allows cardmembers to instantly redeem membership rewards points for all or part of the cost of any leading airline ticket without blackout dates or restriction when booking travel through American Express Membership Travel Services. 

Which Airline Credit Card to apply?

In the past, American Express cardmembers were able to convert rewards points to frequent flyer miles with Membership Rewards partner airlines. Now in addition, with this ‘Pay with Points’ feature, the cardmembers have an option to use their membership reward points to fly on any leading airlines free of blackout dates or restrictions or memberships to Frequent Flyer programmes.


Cardmembers can call American Express Membership Travel Services to book tickets availing of a choice of airlines to fly including leading domestic and over 50 international airlines. Cardmembers can pay for tickets by combining points with part payment on their American Express Platinum Cards as well as pay fully with the points earned. 

back to Credit Card News

Credit Card Information - Fetches Big Money

While economies went into a tailspin in 2009, credit card information, wrongfully extracted by hackers, commanded a huge premium in the grey market — more than double the price they did a year earlier. 

In some cases, data encrypted on the magnetic strip of credit cards were being sold at six times more. The username and password of sites like PayPal that accountholders can withdraw cash from, were up by $600 per account. 

On the other hand, bank credentials — account numbers, net banking transaction access codes and personal account passwords — appear to have become a little cheaper over the past one year. So are e-mail passwords over the past one year. 

Card Protection Program FAQs

For instance, leading web security firm Symantec says credit card information — along with the card verification value (CVV) — was $30 per card during 2009 against $12 in 2008. CVV is the three-digit number on the opposite side of the card and is a must for making online transactions. 

Data encrypted on the magnetic strip of a credit card, referred to as credit card dumps, contains the primary account number and the expiration date as well as card-holder’s name. Each credit card issuer has its own standards for encoding this information. The highest price for such information was $140 per card in 2009 against $25 per card in the previous year. 

User name and password of sites, including PayPal, referred to as cash-out services, were selling at 50% of the total value of the cash that could be siphoned off from a single account during 2008. During 2009, the prices increased $600 flat. 

Credit Cards during foreign travel - Points one must take care

Bank account information, however, dropped from $1,000 in 2008 to $850 in 2009. Over the same period, e-mail accounts sold at $20 on the higher side during 2009 against $30 in the previous year. Credit card info and bank accounts still top advertised items in the underground economy. However, credit card dumps saw a marked increase in advertisements.

Popularly called underground economy, there are a set of hackers who deploy various malicious methods to extract sensitive data from unsuspecting PC users. Having extracted a sizeable volume, they advertise on various sites to sell them. The potential of financial gain from these data determines the price for any set of information. 

There is another set of hackers who use such stolen information to extract money,  The ones that steal the information may not always want to use them and, therefore, remain unidentified. Hence, they are satisfied with selling them in the underground economy. The ones that buy them are capable or intend to take more risks than the ones that steal the information... Interestingly, there are two distinct sets of people. 

Prices of credit card information have gone up because credit limits offered were raised over the past one year. Prices of bank account information have declined because it is becoming increasingly difficult to use bank information to siphon off funds. 

Card Protection Program India

Prices are also dependent on factors like average credit limits on cards in specific countries. For example, credit card information in the US will fetch higher prices than those in India or Bangladesh. In contrast, bank account or debit card information from countries like India will fetch more money than in the US since Indians have a propensity to save and, therefore, likely to have more funds in their bank accounts than an average US citizen.

back to Credit Card Security articles

Credit Card default settlement - with the help of BCSBI

ABOUT BCSBI

The Banking Codes and Standards Board of India is an independent and autonomous watch dog to monitor and ensure that the Banking Codes and Standards adopted by the banks are adhered to in true spirit while delivering their services.

BCSBI is a boon for Indians under financial stress and who are credit card/loan defaulters. If anybody approaches BCSBI, the board will carefully examine one’s case and then recommend a workable solution to the applicant as well as the Nodal officer of the bank. However, you should be genuine with your information.

Procedure for settling your Credit Card / Loan Default:

Þ    Collect the defaulting Account details

Þ    Write a brief cover letter marked to the Officer BCSBI, Mumbai on why you have defaulted; what was your original amount, how much interest has accumulated over it, explaining your case.

Þ    Download and Print the BCSBI Credit Counselling Form [PDF]

Þ    Fill the BCSBI Form and send all the documents to Banking Codes and Standards Board of India C-7, 4th Floor, Reserve Bank of India Building, Bandra Kurla Complex Bandra (East)Mumbai – 400 051.

BCSBI will examine the case and guide you with its advice, and it will also recommend the Bank to consider your case for settlement.  You can also refer our Credit Card Default Settlement - Step by Step Guide also.

back to Credit Card Default Settlement

Credit Card default settlement - A helping hand from BCSBI

By opting for counselling, borrowers can amicably settle the dues they owe the banks through debt restructuring.

If you are juggling with multiple credit cards that you happily accepted from aggressive banks without giving a second thought during the good times between 2003 and 2007, and are now hard-pressed to repay the outstanding dues, then you are not alone.

About 40 per cent of the retail borrowers who have approached the Banking Codes and Standards Board of India's (BCSBI)credit counselling wing to sort out debt woes are those who have outstanding ranging from a few thousand to a few lakh rupees on multiple credit cards.

Credit Card Default Settlement - Step by Step Guide

Individuals, who fell for the marketing spiel of direct marketing agents (employed by banks to push credit cards) about the utility of credit cards, may be keen to get out of their debt trap. By opting for credit counselling, they can amicably settle the dues they owe the banks through debt restructuring.

Banks, to a large extent, are obliging by agreeing to convert the credit cardholders' outstanding dues into personal loans, which carry a lower 18-20 per cent rate of interest.

Between 2003 and 2007, when India's GDP growth averaged 9 per cent, banks sold credit cards to all and sundry by diluting their credit appraisal standards. However, when the growth story turned awry following the global financial meltdown in 2008, the chickens came home to roost for banks in the form of credit card defaults.

Credit Card Default and Settlement

The number of credit cards in circulation in India has come down by about 56 lakh to 2.11 crore as of October-end 2009 compared with 2.67 crore as of October-end 2008, according to Reserve Bank of India statistics.

Member-banks, currently numbering 83, will, by and large, heed the advice of the credit counselling cell of the Board, which was established in 2006 as an independent and autonomous watchdog to monitor and ensure that consumers of banking services get what they are promised by the banks.

Though BCSBI started its credit counselling wing in Mumbai almost two months ago, only about 40 borrowers in the retail segment (credit cards, personal loans, vehicle loans, and home loans) had approached it so far for availing themselves of its services, which are rendered free of charge.

Faced with funds constraint, there is only so much that the board could do in terms of creating awareness about the utility of its new service for the masses.

BCSBI's credit counselling services are also available to micro and small enterprises whose credit exposure does not exceed Rs 50 lakh.

back to Credit Card Default Settlement

Get a Business Credit Card and Organize your Business

If you're a small business owner, there's always something that needs to be done and you are often the only person available to do it. From delivering your product to customer service and even the paperwork behind the scenes, you're responsible for all the steps that have to be taken to get your business from point A to point B.

Imagine being able to add a couple of shortcuts to the paperwork side of things. That would give you more time to focus on the part of the business that you love, and less on mundane, behind-the-scenes items that need to be done but are certainly no fun. A business credit card may help you do just that. There are a number of credit card companies who understand that small businesses have the same kinds of needs as larger businesses, and sometimes need a little extra buying power to remain at peak operating efficiency.

Which Business Credit Card to apply?

 

Many small business owners never realized that a business credit card will actually help them keep their records in order. Once you've gotten a business credit card, it should be used for all of your expenses. By doing so, you'll no longer have to sort through a large pile of receipts at the end of the month. Your credit card statement will have a list of all the vendors you paid and how much they received, in one easy-to-read and organized list. You can also do away with the aggravation of trying to read blurred or 'not quite printed' receipts.

A business credit card will also allow you to keep a tighter hold on where your organization's money is going. Every time the statement arrives, you can take a close look at just where your money is being spent. With everything clearly documented you may start seeing where expenditures are higher than you'd like and find ways to cut down, thereby affecting your company's bottom line.

Additionally, the card may be able to make your regular monthly bill-paying go a bit more smoothly. Many utilities and service companies allow regular payments by credit card. So, instead of being inundated with a steady stream of bills for which you'd have to physically write a check and pay, you can set them up on an auto payment plan through your credit card. Then you'd only need to write one check a month – to the credit card company.

There are also other bonuses that your business might benefit from by having a credit card. Depending on the card you choose, you could earn air travel miles, gas rebates or even cash back for the purchases you make. If your company normally has a significant amount of expenses, it could add up quickly and reward you with a little bit back. While many people think that lines of credit are nothing more than an additional burden, using your card in the right way can actually help make your operation run more smoothly as well as offer a few perks along the way.

back to Credit Card Help

Calculation of Finance Charge by HDFC Credit Cards

Many of you still don't quite understand how Finance Charge is calculated on balance amount by credit card companies. We found that HDFC Credit Card is one of the better ones which can explain it very clearly.

Here is a step by step guide on how Finance Charges are calculated.

• Assume you have Zero balance on your card to begin with.
• You now make a Biz Bazaar household purchases worth Rs 15,000 on April-10th. Then on 18th April you buy a Mobile Phone worth Rs 5,000. Lets say your billing cycle ends on the 18th of every month. So your April-18th credit card statement lists Total Dues as Rs 20,000 and Minimum Payment of Rs 1,000.
• Due Date for making entire payment or at least minimum payment is May-2nd.
• Lets assume you miss the May-2nd deadline. This is very bad to your credit history. Creditors think you don't even have the money to make minimum payment. Missing Minimum Payment will attract you additional fees known as Late Payment Fees.
• If you make minimum payment by May-2nd then their is no Late Fees in your next credit card bill.
• Assume you have not made a minimum payment by May-2nd and on 12th May you pay Rs 2,000.
• You purchase groceries worth Rs 1,000 on May-14th.
• On May-15th you make a payment of Rs 15,000
• Thus on your May18th Bill you will see the following,

1. Late Payment Fees of Rs 350
2. Interest on Rs 15,000 @ 2.95% pm [whatever your APR is] from 18th April to 12th May.
3. Interest on Rs 13,000 @ 2.95% pm from 13th May to 15th May
4. Interest on Rs 5,000 @ 2.95% pm from 18th April to 15th May
5. Interest on Rs 3,000 @ 2.95% pm from 16th May to 18th May
6. Interest on Rs 1,000[Fresh Purchase] @ 2.95% from 14th May to 18th May

Add Service Tax on Late Payment Fees + Interest.

Total outstanding = Rs 4,000 [Rs 3,000 from Previous Bill and Rs 1,000 Fresh Purchase] + Service Tax+ Late Fees + Interest = Rs 5,000 say.

Thus you are un-necessarily paying a hefty fees of Rs 1,000 to credit Card company on just Rs 4,000 outstanding balance.

Always pay at least minimum fees by due date. Still better, pay off the entire debt by due date to avoid any FEES!!!!

back to Credit Card Finance Charges

CashBack Credit Cards -- Consumer Tips Part-I

How does a little extra cash in your pocket sound? Maybe you could use it for a nice dinner out on your birthday, a movie night with that special someone, a rainy day shopping spree, college savings for you or your child, or even to pay down your mortgage. Keep dreaming because if you had a little extra cash you could use it for anything--donate it to your favorite charity, compensate for high gas prices, pay down other debt, or buy a discounted airline ticket. For all these reasons, and the thousands of others you can dream up, a cashback credit card may be the perfect fit for your wallet.

CashBack Credit Cards are great IF...

...you don't carry a balance from month to month. Credit cards offering cash back tend to have a higher interest rate, which usually wipes out any reward you might receive if you carry a balance. According to CNNMoney.com statistics, interest rates on reward credit cards are, on average, approximately 1% higher than standard no-frill platinum credit cards. So if you plan to carry a balance your best deal is to look for the credit card with the lowest interest rate. Keep your financial health in mind and don't be lured by cards offering rewards that end up costing you more money.

President of Money Magic, Inc. and money educator Mary Ann Campbell (CFP) says, "The way for cash back to be a good option is if you are truly managing your credit cards where you are literally earning cash back but not turning around and paying it back in any other form." The cash you receive from a rebate card should be viewed as a reward for all the hard work you have done in lowering your credit card debt and paying your balance in full each month.

Which Cash Back Credit Card to apply?

And if you happen to be wondering how credit card companies can pay you cash for free, here's the answer-the merchants you shop at are charged a fee for every credit card purchase. So let them pay for you to get a well deserved reward!

You don't carry a monthly balance BUT...

...not all cards are created equal either. You will need to do some shopping around and maybe even pull out your calculator or utilize our online calculators to determine the best card for your spending habits and lifestyle. Consider it an investment of your time with the payout being a little monetary freedom. Here are some things to keep in mind:

Is there an annual fee? This is a huge red flag. With all the different cash back reward cards that do not charge an annual fee, you should not have to settle for one that does. If a card with an annual fee seems too good to resist, then it is time to do some calcuations in order to compare the rebate to other cards without an annual fee.

Which Credit Card to apply?

Does the card require you to carry a balance or offer enhanced rebates if you carry a balance? This is another red flag because any interest you pay will most likely be more than the amount of cash you get back. Determine how much you will charge for the year, how much it will cost you in interest, how much you will pay in fees, and how much you will receive in cash. If you do end up still receiving more cash than you pay in interest and fees, then you need to compare it to other cards to see which will give you the greatest rebate. But remember, reward cards tend to have higher interest rates and carrying a balance on any credit card is generally not advisable.

back to Credit Card Help                                                  CashBack Credit Cards -- Consumer Tips Part-II

LIC Credit Card and Credit Card Protection program

LIC credit card holders can now report loss of any of their cards from anywhere in the world to a 24-hour helpline launched by LIC Cards Services. 

LIC Cards Services Ltd has launched Card Protection Plan for its credit card customers in partnership with CPP Assistance Services which will safeguards all of the LIC cardholder's payment cards - credit, debit and ATM cards. 

The members can also be able to register their non-financial cards such as store cards, loyalty and membership cards. 

Credit Card Security

Besides these, customers will be able to retrieve important details on lost/stolen documents like passport, PAN and driving license also 

To avail the new service, customers would need to purchase a membership plan offered by LIC and register their cards with CPP.

back to Credit Card News

Deutsche Bank Airline/World miles credit card

Deutsche Bank is set to launch a credit card that will allow the users to redeem points — or flight miles — accumulated by booking flight tickets using the card — named WorldMiles credit card — against airline tickets. The WorldMiles credit card is offered in two variants, Platinum and Signature. 

To use the service, card holders need to log on to their accounts — created automatically once the card is issued — on myworldmiles.com and buy tickets from any airline (international, domestic, full service as well as low cost) through the portal. 

In addition to ‘FlightMiles’ accumulated on tickets purchased on the portal, the user also earns ‘SpendMiles’ for booking the tickets through the card. These SpendMiles, too, can be redeemed against flight tickets. Spends made on the card for purposes other than air travel also yield ‘SpendMiles’. On the Signature variant, every Rs 100 spent will fetch you three SpendMiles — two in the case of Platinum. These miles can be collected in addition to the points you would earn as per the airlines’ frequent flyer programmes. 

While such schemes offered by airlines restrict the redemption to their tickets bought from the carrier, this one is airline-agnostic — you can redeem the miles accumulated against tickets of any airline. It also allows you to accumulate miles when you fly low-cost airlines which, barring a few, do not run frequent flyer schemes. You can accumulate the miles if you use the card to book tickets for your family members, friends or associates as well. 

Which Airline Credit Card to apply?

There are certain limitations, though. Since the miles earned can be redeemed only against flight tickets, those looking for a diverse rewards programme may not find this offering appealing. The points earned on an airline’s frequent flyer programme cannot be clubbed with the miles earned via this credit card. That is, assuming a traveller has accumulated 500 points on the airline’s frequent flyer programme and another 500 miles on the WorldMiles credit card — and assuming, hypothetically, that 1000 miles entitle a card holder to one free ticket — the two cannot be clubbed together to buy one ticket. The miles accumulated from the card and the airline’s scheme will have to be redeemed separately. 

While the joining fee for the Platinum variant is Rs 5,000, one will have to shell out Rs 7,500 for the Signature card. In addition, the annual maintenance fees amount to Rs 1,500 and Rs 2,500, respectively. 

The card and the programme are operational on a pilot basis, and the bank is planning a full-fledged launch shortly.

back to Credit Card News