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.

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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.

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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.

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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!!!!

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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.

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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.

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