How to get your Credit report?

Nowadays when you apply for a Loan, the Bank/Institution may or may not approve it depending upon your credit score from CIBIL. But the question you may have is.. From where will I get this Credit report?. Don't worry now you can have the credit report from any financial institution for a nominal fee of Rs.50/-. If they refuse to give the report take a print out of the below RBI order, attach with your application and demand for the report.

RBI/2008-09/507

DBOD.No.DL.BC. 138/20.16.042/2008-09

June 24, 2009

i) All Scheduled Commercial Banks (excluding RRBs and LABs) and
ii) Notified All-India Financial Institutions

Dear Sir

Access to own credit report

Please refer to our circular DBOD No.DL.11590/20.16.034/2007-08 dated February 27, 2008 advising banks/FIs in the context of Credit Information Companies (Regulation) Act, 2005 to urgently initiate steps to build up database and be in readiness for effective exchange of credit information without any loss of time.

2. Of late, Reserve Bank has been receiving a number of complaints, including under the Right to Information Act, 2005, that customers are unable to get their own credit report from banks.
   
   
3. In this connection we invite your attention to the provisions of sub section (1) of Section 21 of the Credit Information Companies (Regulation) Act, 2005, which provides “any person, who applies for grant or sanction of credit facility, from any credit institution, may request such institution to furnish him a copy of the credit information obtained by such institution from the credit information company”. Further, sub-section (2) of the said Section also specifies that every credit institution shall on receipt of request, as indicated in sub-section (1), shall furnish to such person a copy of the credit information subject to payment of charges specified by the Reserve Bank under the Regulations.
   
   
4. You might be aware that Reserve Bank, in Credit Information Companies Regulations,2006, framed under the Act, has already prescribed in Regulation 12(3) a maximum fees of Rs.50/= (Rupees fifty only) for the purpose.
   
   
5. Banks and Financial Institutions are, therefore, advised to ensure strict compliance with the provisions of the Credit Information Companies (Regulation) Act, 2005 as well as the rules and regulations framed thereunder.

Please acknowledge receipt.

Yours faithfully
(Vinay Baijal)
Chief General Manager

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Is your Credit card really Free?

A card company has offered you a lifetime free card. No processing fee, no annual fee.

Great! Especially if you always spend within your credit limit and pay your bills on time.

If you constantly revolve (only settle the minimim payment on your bill and carry forward the rest) on your card, never pay your bills on time and frequently take cash advances on your card, though, you may be in for a not-so-pleasant surprise.

Remember, the processing and annual fees are not the only costs that come with a credit card; there are other costs that have to be considered as well.

Cost of revolving credit

Every bank allows you pay a minimum amount, generally 5%, of your bill if you so choose. You can carry forward the rest of the amount on your bill to the next billing cycle. But this facility does not come for free.

You are charged a rate of interest on the outstanding balance amount; this could either be 2.5% or 2.75% per month. On an annual basis, this works out to 30% or 33% -- a very steep loan indeed!

If you revolve your credit often, check out the interest rate on revolving credit; the higher the percentage, the greater the soup you will land yourself in.

Cost of a cash advance

Do you often find yourself walking into an ATM to take a cash advance on your credit card?

The fee, generally a percentage on the amount withdrawn, could be around 2.5% of the withdrawn amount or a minimum of Rs 100. This minimum fee could rise to Rs 200 if you are using the ATM of a different bank.

Let's say you have an HDFC Bank credit card. You walk into an HDFC ATM to withdraw Rs 1,000. The fee is 2.5% on Rs 1,000, subject to a minimum of Rs 100. Since the fee in this case amounts to Rs 25, you will have to pay a fee of Rs 100.

If you instead used another bank ATM to make a withdrawal with your HDFC Bank card, you would probably have to pay a minimum of Rs 200.

Cost on late fees

Let's say the last day to pay your bill was October 1 but it totally slipped your mind, so you paid it later. A late payment fee will be slapped on you. This will be around 25% of the minimum amount due.

If your bill was Rs 5,000, you will have to pay a minimum of 5%, which works out to Rs 250. Your late payment fee will be 25% of Rs 250; this works out to Rs 62.50.

Unfortunately, the bank would have stated that the minimum late payment fee must be Rs 250. So there you go -- another Rs 250 to dole out.

Cost on exceeding your limit

You will have a credit limit laid by your bank. This depends on your income and repayment pattern. A good repayment pattern will result in the limit being increased over time.

But if you exceed your limit in a billing cycle - time period from one bill to the next, the 'extra' cash does not come free. You are charged a fee on the amount by which you overshot your limit.

Let's say your limit is Rs 5,000 but you spend Rs 6,000 this month. You will be charged a fee on the extra amount; Rs 1,000 in this case. This could be around 2.5% of Rs 1,000, which works out to Rs 25. Here, too, there will be a minimum amount which could be Rs 250. So you don't pay Rs 25, but Rs 250.

Other charges

There could be a surcharge levied on the payment you make at a petrol pump, on the purchase of a railway ticket or even for utility payments. Do look at all these.

There will be a cost if you lose your card or it gets stolen or damaged and you want a new card. In some genuine cases, the bank might agree to waive these charges.

If you lose your statement and ask for another, a charge will be levied.

So the next time you are offered a free card, make sure you check these rates with another card to ensure you are getting the same deal. Else, you may not pay the fees but you could end up shelling out dearly on other costs.

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Traffic Challan recovery with Credit Cards

The State Transport Authority plans to increase the revenue earnings from the traffic challans by deploying electronic payment system, involving use of debt and credit cards.

Commenting on the deployment of system by the authority, Vandana Disodia, secretary, STA, said "This is a step forward in adopting high-end technology and moving with the changing times," Disodia said.

Under the proposal, officials at the check-posts would be given debit and credit card reading machines, where commercial vehicles owners can swipe their cards for the payment of challans.

Explaining the need and advantages of such a system, Disodia said, "Normally, there are more defaulters from other cities than Chandigarh. For heavy offences, the STA impounds the vehicles as confiscating the documents does not make any difference to the defaulters."

"Also, if the vehicles are not impounded, the defaulters apply for duplicate documents from their respective state authorities and evade challans," he added.

The challan on commercial vehicles varies from a minimum of Rs 300 to Rs 10,000 or more, with an incremental rate of Rs 1,000 per ton for extra/over loading.

The officials reason, the introduction of electronic card payment system will enable the vehicle owners to pay on-spot challans, without surrendering their vehicles or documents, as the case was earlier in case of non-payment due to lack of cash-in-hand.

In lines with the objective of the set proposal, the authority has already raised the target for revenue collection to Rs 14.75 crore against the earlier target of Rs 13 crores set for FY 08-09.

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Rent DVDs with Credit Card

BIGFlix.com, the online venture of Reliance BIG Entertainment has joined with HDFC bank to offer DVD rental services to net-banking customers of the bank.

With this tie-up, BIGFlix.com becomes the first entertainment partner in the DVD rentals space of the bank.

The tie-up will enable the customers to order DVDs of their favorite movies, simply by logging on to the website. The DVDs will be delivered and picked up, at the doorstep of the customers.

The company will initially offer all the net banking customers of the bank a free trial offer for the online move rental service of BIGFlix.

To avail this offer, the bank customers need take one-month disc plan of Rs 375 of BIGFlix.com using their HDFC Net Banking accounts. This includes a trail period of 14 days. If the customer cancels the subscription within the trail period, BIGFlix.com will refund the entire subscription amount.

If the booking is made via credit card, BIGFlix.com will credit the amount at the end of the free trial period. If the customer pays using the debit card, the amount will be directly reversed in the customer's account.

BIGFlix.com is the largest online and offline movie rental service in India. The company offers access to a collection of over 20,000 titles in Indian and international languages.

The company has a base of around 80,000 customers and offers films and other digital content through via its retail stores, online home delivery service and call centre services. The company has more than 50 standalone stores and 52 shop-in-shop stores with Reliance Web World, spread across 10 cities- Delhi, Mumbai, Indore, Pune, Chandigarh, Hyderabad, Ahmedabad, Bangalore, Chennai and Kolkata.

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Avoid Credit card agent's Harashment

The credit card collection agent comes knocking at your door and you are not home. Ever faced such a situation?

This happened with my friend Anil. Actually, he was in his office when the credit card collection 'agent' called. "You have a credit card outstanding of Rs 19,000 and you need to pay it soon," he threatened.

"No way," Anil replied firmly. "Not till you guys show or courier me the documents I signed while getting this card." This was not the first time he was being threatened by this particular bank's collection agents.

Seeing that he was not relenting, the agent used another trick -- he passed some obnoxious comments about Anil. Anil, who is a tough nut, returned in kind.

Anil did not know the agent was standing outside his building and making that phone call. The agent went upstairs and threatened Anil's old parents (both heart patients) with dire consequences if their son didn't cough up the dues outstanding on his card. He was so audacious that he called Anil again and made him listen to this entire conversation. He also threatened Anil again.

This scared Anil. He called his mother and told her to call the police.

Before the police could arrive (surprisingly, they did arrive within 10 minutes of the call), the agent had vanished. In order to scare the agent, Anil's mother had told him she had made a complaint and the police were on their way.

In the evening, while on his way home, Anil lodged a non-cognisable offence complaint against the agent and the bank. Ironically, the inspector in charge dissuaded Anil from taking his grievance further.

"The next logical step," he told Anil, "would be to go that agent's office and arrest him. This would then lead to you filing a court case against the agent, his superiors and the bank. Don't you know how the courts function in India?"

The inspector knew perfectly well that this particular comment would dissuade Anil from taking further action. The inspector did not have a vested interest in not taking the case further; he just wanted to save himself some trouble.

Anil now decided to settle the matter once and for all. He went to the bank's collection office and met with the person in charge of his credit card account. He, too, was as rude as the collection agent and refused to hand over a copy of documents Anil had signed while filling his account opening form.

Now, here's a flashback. The bank in question had approached Anil to open a credit card account when he was working with a reputed company in Mumbai. Though he was a bit reluctant initially, he gave in after the agent told him it was a lifetime free credit card.

He would not be charged the annual maintenance charges that other credit card companies levy to keep a card active. The lure of saving some Rs 750 finally made Anil put pen to paper and sign on the dotted lines without reading the fine print and the clauses just above his signatures.

Remember that Anil was in his office and had no time to read the papers or ask the agent any questions. It was this error that resulted in the trouble he was facing now. Little did he know he was signing under a clause that allowed the bank to auto-debit his account in case if he failed to pay the minimum amount due on his credit card.

Auto-debit is a facility whereby the customer's bank account is linked his credit card account; if the customer fails to pay the amount by the due date, then the credit card company automatically debits the customer's account for that amount.

Oblivious to this fact, Anil was shocked one day to see his credit card bill showing an auto-debit of Rs 800. He would still not have noticed it had it not been for the auto-debit return charge, late payment fee charge billed on his account.

He was penalised since his bank did not have the requisite amount to pay the minimum amount due on his account; the credit card company had made an effort to collect the amount and failed to do so. This is the auto-debit return charge.

Since he had missed paying the minimum amount due on his card before the due date, he was charged with yet another penalty: the late payment fee.

When he called on the customer service executive, the female voice (they are just that; sometimes you are connected to an executive in Hyderabad and sometimes in Mumbai. There is no systematic way of making notes on an account like they do in America) told him that, since he'd failed to make payments for the minimum amount due on his account, the credit card company made use of the auto-debit facility.

As per the practice followed by collection companies in the US, each collection agent calling on a customer has to maintain a written note about the conversation between the agent and the customer. This helps other customer care or collection agents know the exact status of the customer's account.

So, if some other agent calls on the customer the next time, s/he knows what exactly the matter is. This had not happened in Amit's case for he had no idea if the agent he was speaking with was located in Mumbai or Hyderabad. Besides, he had already had a number of such conversations regarding the matter.

The agent told him that since there were no money available in his bank account, the auto-debit could not go through so he was charged an auto-debit return charge. As the payment was not made before the due date, they had also charged him a late payment fee.

Anil demanded a copy of his account opening documents; he did not think he had given the credit card company the right to auto-debit from his bank account.

The executive at the other end told him she couldn't do so as she did not have the documents. Even her senior, who finally came on the line, refused to promise he would send those documents.

Anil was adamant and said he would not make any payment on his card unless he saw the account opening form and his signature below the auto-debit clause (Wasn't it the agent's duty to tell Anil about this clauses at the time of opening the account? Of course, it was also Anil's duty to ask the agent about it, which, unfortunately, he didn't).

Interestingly, both the customer care agent and her senior refused to give Anil their employee ID numbers. Employee ID numbers help customers locate the person s/he spoke with (In the USA, for example, it is mandatory for the customer care/ collection agents to give their employee IDs under the Fair Debt Collection Practices Act, if the customer demands it).

After this, whenever the collection agent would call Anil for his outstanding dues, he would ask them to show him or courier the documents first. This went on for about two months. Finally, the credit card collection agent knocked on Anil's door.

Not the kind to get easily bogged down after his disillusionment with the inspector, Anil decided to seek recourse with the banking ombudsman. The ombudman, who is appointed by the banking regulator in India, the Reserve Bank of India, canredress customer complaints against certain deficiency in banking services. S/he can be reached atwww.bankingombudsman.rbi.org.in. This website contains all the details about how to approach this authority and how to file complaints against banks in case of any grievances. It is a one-stop shop for people having grievances against banks and the method of redressal.

The ombudsman did send a notice to the bank. The bank replied that no such incident had ever taken place. Following this, the bank's credit card manager from Hyderabad called up Anil's mother and apologised, even as he said the person must not have been the bank's agent. The bank also sent a complimentary haversack to Anil to assuage his feelings.

Finally, the bank did send Anil a scanned copy of his account opening form. Anil did indeed see his signature below the auto-debit clause and promptly paid the outstanding balance. Of course, he asked for cancellation of all the late payment charges.

Remember, most penalties are reversible and the customer care agents do show promptness in canceling them if you have a good case.

As of today, Anil's case is still pending with the banking ombudsman. Here are certain points to keep in mind so that you do not suffer the same misery Amit did.

1. Always ask questions to anyone who offers you a credit card, bank loan, personal loan, etc.

Do not take them at face value. Double-check the information they provide with a couple of other agents belonging to different banks.

Finally, if you are not satisfied don't buy their products or services.

2. Ask them about the finer points. More often than not, they may themselves don't know about it. In that case, ask them for their product's official brochures.

3. Don't sign blindly on the dotted line (remember Anil whenever such an impulse strike you!). Scan through the various clauses under which you are putting your signatures.

Ask these agents for their ID cards. Even if most of them are third parties (that is companies appointed by banks to get these formalities done), they do have a proper ID card. Take down their employee ID number, their telephone number and the address of their office. You may need them in case of any problem with their product or service.

4. Finally, read through the fine print on your own. No one else can do this for you.

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CIBIL and Law

The Reserve Bank of India has stated that banks and finance companies issuing credit cards should not resort to intimidation or harassment to recover dues.

"The banks or non-banking finance companies (NBFCs) and 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," the RBI said in its draft guidelines on Credit Card Operations.

When banks outsource credit card operations, they had to be extremely careful that the appointment of such service providers did not compromise with the quality of the customer service and the bank's ability to manage credit liquidity and operational risk.

In the choice of the service provider banks had 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.

Before reporting default status of a credit card holder to the Credit Information Bureau of India Ltd (CIBIL) or any other credit information company authorised by the RBI, the banks might ensure that they adhered 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.

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SBI Card Offer on Reebok

SBI Card and AVA Merchants have come together with an offer exclusively for the SBI Card holders on Reebok merchandise. Where you can get the Reebok products and unbelievably more than 50% discount from the original price if you use your SBI Credit Card to buy them. This is a limited period offer and is valid only till the stocks last or till July 15, 2009. It is not available online but only via the special phone numbers with which you can order them.

The first is the Cool Combo Offer or Reebok Combo Offer in which you get a Reebok duffle bag, Reebok sports shoes, and Reebok T-shirt combo for a special SBI Card price of Rs. 2799 as against the original price of Rs. 5798. This price supposedly includes the shipping charges as well. The shoe sizes available with this offer are 6, 7, and 8. The T-shirt size is L. There will not be any exchange or return available in this offer and hence buy it with caution in case the size does not fit you, etc. The product code for this product is B054 (size 6), B055 (size 7) B056 (size 8).

The other offer on Reebok is that you can get the special Reebok sunglasses worth Rs. 4990 for just Rs. 990 which is the special price only for the SBI Card holders. The product code is B053. This will help you while ordering the product via phone. This is indeed a whopping discount if it is indeed a Reebok sunglass.

To order you will need to call the special call center numbers 1800 11 4344 or 1800 1800 300 or 0124 4697999. The number will be open from 9 a.m. to 7:30 p.m. and till 6 p.m. on Sundays. This offer is available only in select cities and hence call to confirm whether your city is listed in that

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Credit card as your Best Friend - Simplified

You're in the midst of something urgent and the phone rings. You drop everything to take the call. There's a stranger at the other end. "Do you want a new credit card?" You're justifiably annoyed but, before you can slam the phone down, the salesperson at the other end dangles the freebies.

Currently, the hottest one is: No fee. No membership fee when you apply. No annual fee when you renew. Now that is something to consider (actually, anything free is!).

1. Use the card as a money management tool

Ever noticed how money vanishes into thin air leaving you desperate for the next paycheck? With a credit card, there is no vanishing act. The billing statement is a reality check.

Instead of blindly settling it, study your monthly statement closely. You will get a fairly good idea of your spending pattern. You may be spending too much money on books or eating out or shopping.

The next step, of course, is to decide whether or not to change that pattern.

2. Avoid cash payments

To add weight to the previous suggestion, avoid using cash for any payment. Take advantage of the fact that you can instantly access interest-free credit.

For instance, during the middle of the month you may want to purchase a frost-free refrigerator. But you may not have the necessary amount of money in the bank. Buy it on your card. By the time your credit card bill arrives, your salary check will be in the bank.

In this case, you did not delay your purchase nor did you pay any interest on it (you would have if you had taken a loan). Tap into your savings only when it's time to pay your credit card bill.

3. Time purchases wisely

Buy big-ticket items in such a way that you get a longer credit line.

Translation: Make heavy purchases at the start of the billing cycle.

The reason: Banks generally prepare the bills a couple of days before the bill date. Purchases made at the fag end of the billing cycle or at the immediate start of the next billing cycle will give you a longer credit line. Which means you get more time to pay the bank.

Confused?

This should help clear the clouds. Say your next billing is from 21 September to October 20 and your due date to settle the bill is November 11.

Purchase that home theatre system you fell in love with on October 21, give or take a day or two. You will get free credit till December 11 (around 51 days).

Working on the similar principle, if you feel the need to own more than one card, try and ensure the bill date and due date do not fall within the same period. Ideally, they should be around 15 days apart. In which case, you can decide which card you want to use depending on which one is close to settling time.

4. Use it for official purposes too

Do you travel a lot on work? Then make all your payments on your card -- airline tickets, hotel bills and entertainment.

On presenting the bill to your company, you will probably be reimbursed in a day or two. Take the reimbursed money and put it in a fixed deposit (you can deposit your money for as low as seven days). When it is time to pay your credit card bill, your paycheck should be in your hand, enabling you to make the payment. Or, if you choose a one-month fixed deposit, you will be able to repay the bill when the deposit matures.

Not convinced?

Assume your travel bill totals Rs 75,000, including airfare, travel, entertainment and the hotel bill. Settle it on your card. Either you get a hefty advance or the company will settle the bill the moment you return.

But the due date on your credit card bill is still around a month away. Rs 75,000 in a 30-day deposit will earn around Rs 312 at a measly five percent per annum. Even if you make seven trips a year, you stand to earn around Rs 2,184.

The icing on the cake: you don't spend a pie from your pocket.

Your bank makes the payment, your company reimburses the money and you earn interest.

Of course, this makes sense only if you spend huge amounts traveling.

5. Make bonus points to pay your annual fee

If you do use your card a lot, you are definitely going to accumulate bonus points on it.

Let's use an example. Say you have a credit card with Bank X. If you spend Rs 100, they will give you 1 reward point.

To get 1 point, you spend Rs 100.

To get 10 points, you spend Rs 1,000.

To get 100 points, you spend Rs 10,000.

Let's say the bank fixes 500 reward points to be worth Rs 1,000 (the renewal fee).

To get 500 points, you will need to spend Rs 50,000 over the year (that's a little over Rs 4,000 a month).

You can then redeem your points against the annual renewal fee.

Of course, if you have a card that has no renewal fees whatsoever, then you can use these points against whatever the bank offers. Probably a voucher, a free gift or a free meal.

Either way, you win.

You can be pretty sure, though, that they won't exchange the points for "free cash". That's where they draw the line.

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When Cards become Foes

It was Diwali/Eid -- you could not really resist the temptation.

So you went berserk -- shopping, eating, entertaining, all on your credit card.

You're not really to blame -- after all, how often does one get to celebrate a nice, long festive weekend?

But, as the proverbial saying goes, good times have to come to an end. Reality sets in. Mundane tasks clamour for your attention. As will your credit card bill, when it lands on your doorstep.

Now, for the million-dollar question: What if you cannot pay it?

Well, you don't have any option but to 'revolve credit'. This means you pay part of your bill (five percent is the compulsory minimum) now and pay the rest later. It may sound convenient, even good, but remember -- revolving credit is not cool.

Here's why.

Let's assume you've run up a bill of Rs 25,000.

Since you don't have the necessary cash at the moment, you decide to use the revolving credit option and pay five percent of the amount -- Rs 1,250 -- now.

The balance (Rs 23,750) is carried forward and will be added to your next bill.

This is where the good news ends because the bank will charge you an interest of 2.95 percent on the pending amount.

Before you heave a sign of relief, remember this interest is charged on a monthly basis; per year, it works out to a whopping 35.4 percent!

At 2.95 percent per month, your interest on Rs 23,750 works out to Rs 700 a month.

So, if you don't use your card in the coming month, your next credit card bill will be Rs 24,450 (Rs 700 + Rs 23,750).

However, in that month, you happen to go out for dinner and the bill comes to Rs 1,000. You pay for it with your credit card.

Unfortunately, you are no longer enjoying the benefit of 'free credit'.

Earlier, you spent money through your credit card and paid up when the bill came at the end of the month.

From the time you spent the money till the time you paid the bill, you were enjoying free credit; when the bill came, you paid just what you spent (You do have to pay the annual fee as your cost for owning a credit card, but that's a minimal amount. There are, of course, reward points that work to your advantage, but that is something we will talk about another day.)

Now that you owe the bank money, you don't have the privilege of free credit anymore.

The Rs 1,000 you spent is added to your outstanding balance of Rs 23,750. You are now expected to pay interest on Rs 24,750. As a result, your total interest now works out to Rs 730. This means you now owe the bank Rs 25,480 (Rs 730 + Rs 24,750).

So

The more you spend, the bigger the principal amount you have to repay.

The more you spend, the faster your debt mounts.

The month after, your credit card bill is Rs 25,480. You still don't have enough money, so you use the five percent pay back option and pay the bank Rs 1,274. You now owe the bank Rs 24,206 on which they will charge you interest�.

And, until you clear your loan, every single payment you make using your card will be added to your loan amount and you will be charged interest on it.

This will go on till every single rupee has been repaid.

With barely any effort on your part, you have just entered a debt trap in which you end up spending more than you make and more than you can afford to pay.

Lesson to be learnt: Use your card only as a convenience. If you use it to spend more than you can afford, all you do is end up losing a lot of money.

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Do's and Dont's with your Credit Card

How often have you missed out on that 'cash back' offer on your credit card?

Weren't you surprised when you were sent a pre-approved loan on your credit card at a discounted rate of interest?

While such gimmicks let credit card companies laugh their way to the banks, it is you who end up feeling miserable. To avoid such mistakes, here are some tips you may find useful.

Go through the various offers made by your credit card company carefully. Many people forget to do this and hence lose out good opportunities.

For instance, some periods are earmarked for cash back or reward offers. If you keep track of these dates and postpone or advance your purchases, you can reap those benefits. Credit card companies often send mailers or advertise such offers through different media, including their own websites.

Sometimes, if you book air ticket/s from a particular airline through your bank's credit card, you get a certain amount of cash back; this is usually as a percentage of the total amount you spent on the ticket/s. However, if you are not aware of this benefit, you may buy the same ticket through other means and not be able to avail of this offer.

Again, you need to keep your eyes and ears open to avail of such offers. The means to advertise them remains the same.

Very often, you will be told by your card company that you can have a DD or a cheque mailed to you as a loan since you are a 'chosen' or 'esteemed' customer. They also tell you that the interest rate for this loan would be less than the interest rate charged for a personal loan. Read the fine print thoroughly, and ask questions about it, before going for such offers.

For instance, the processing fee on this loan plus the service taxes and other undisclosed factors may nullify the 'less interest' charged on this loan.

In case if you've made a large payment on your credit card for any big purchase you may have made, say a television set or some new furniture for your home, you may get a phone call from your card company. They may say they'd be pleased to convert that particular payment into a 'flexi-pay' scheme in which you can pay the money back in installments.

Again, don't forget to check the cost of the processing fee and the eligible rate of interest. It could be considerable. In that case, if you have the money, just pay the credit card bill.

If your credit card bill and some other commitments are due around the same time, don't think twice... pay the card dues first. Take withdrawals from PF/ PPF or break that FD with your bank if possible. Don't get into a debt trap with the credit card company.

Try to always have your money (or be sure it's coming by way of your salary or in any other form from your employer) before you spend through your credit card. Maintain a record of the goods you buy on your card and keep aside (mentally) that much money in your savings bank account.

You could even tell your bank to pay the card bills through electronic clearing system, ECS. This is a mechanism whereby you instruct your bank to debit a fixed sum from your savings account on a particular date. The bank does it for you, provided you have enough money in your account.

This will ensure the first payment is made to the card company before the due date. As a result, you will maintain a good track record with your credit card company. You will also save the money you would have otherwise paid as the late payment charge because you missed paying your bill by the due date.

Read the card statement carefully (you could check it online if possible). Check if the 'cash back' amounts (if you are eligible for it) are credited; find out if you have got petrol surcharge reversed; if not, do alert the credit card company and get the error rectified.

I was once surprised to find that a sum of over Rs 150 was not credited to my credit card account. This was because the 'cash back' that was due to me was not reflecting in my bill statement. I called the help line official, who quickly corrected the error.

Some card companies advertise their 'toll free' help line numbers. Some don't. Try to find those phone numbers. Otherwise, for most of your queries, the hold time and talk time put together crosses several minutes. Without realising it, you may increase your phone bill if you're not using the toll-free line.

Don't ask for a duplicate statement (unless it's free). Check it online at the company site and take a printout for yourself.

In the US and the European Union, customers who pay their bill on time regularly get a reward for not being a liability for the company. If you pay your credit card bills promptly, you must check periodically with your company about increasing the credit limit or cash limit.

Last but not the least, DON'T withdraw cash from the ATM unless it is a real emergency since you will be charged the standard 2.5 per cent interest from the time you withdraw the money. Besides, you will also be charged a cash withdrawal fee. Instead, try to pay through a bank cheque or borrow cash from a friend that you could return soon.

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Choosing the Right Credit Card

Now a days it is difficult to come across a person who doesn't own a credit card. With the rise in standard of living, banks are coming out with increasing number of cards offering number of innovative features.

While it increases the number of options open to the customers, this innovation can also confuse the person looking to own his first credit card. As a result, it is very important for you to choose the right credit card so that you can get the best out of credit card.

Here are the answers for some of your questions on how to select the right credit card for your needs.

What card is ideal for me?

As the features offered by each credit card varies, it is essential for you to understand which features will benefit you a lot. If you are shopping regularly at a particular store, go for a credit card that offers your reward points or cash back or discount when you shop at that store.

Don't select a card that offers you free air miles on usage, if you are not a regular flier. Do you use the credit card to pay your utility bills? Then choose a card that provides you benefits for paying your bills. Besides rewards, also take a look at the interest charged.

If you intend to carry outstanding balances each month, then it is advisable to choose a card offering a low interest rate. But if you can manage to pay off the balance in full at the end of each month, it is advisable for you to go for a card with high interest rate but with low or nil joining and annual fees.

If you are traveler, check out if the card has widespread acceptance.

What are the important features my card should have?

Though cards contain many important features, some are the more important than others. While we all like to be rewarded for using the card, it should not be the sole criterion affecting your decision. Instead here are some essential features to look at when choosing a card.

• Annual/joining fee: While most banks offer entry level credit cards for free, these fees are still levied on the high end credit cards meant for businessmen. If you happen to pay your card balance each month, then these fees will make it expensive for you to use the card. In this case, it makes more sense to opt for the card that doesn't charge any such fees.
• Credit limit: If you are a heavy shopper, always select the card offering you the highest credit limit. It will prevent your card from being rejected due to insufficient credit limit.
• Cash limit: Do you always swipe your card to withdraw cash in case of emergencies? If yes, then you must always take a look at the cash withdrawal limit available on the card.
• Interest rate: Do you always like to carry unpaid balance each month? If yes, then always select a card charging lowest interest rate, as high interest can very easily land you in debt.
• Acceptability: Is your card accepted across wide range of establishments? Is it accepted internationally? While Visa and MasterCard are universally accepted, Diners and American Express have limited acceptability.
• Other charges and penalties: Besides fees and interest, remember the bank also charges you various other fees like late payment fees, cheque bouncing fees, over limit fees etc. Watch out for these fees, as they are very high.
• Quality of service: Not all banks provide the same level of customer service. Check out if the bank offers 24x7 customer service for its credit card customers. This is helpful if you have to report stolen card, check your credit limit or want to discuss any billing problem with the customer service.

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RBI's Step to Check Credit Card Fraud

From August 1, you need not think twice before letting your credit card out of sight at a restaurant, petrol pump or any other merchant establishment. The details printed on your card including the card number, expiry date and three-digit card security code (popularly known as the CVV) will not be enough to make fraudulent online transactions.

A RBI directive has ensured that from August, credit and debit card-issuing banks must provide for additional authentication of information over and above what is visible on the physical card. In other words, the cardholder must key in an extra security code or some other data to complete a online transactions.

This consumer-friendly instruction, issued by the RBI on February 18, also mandates a system of online alerts to the cardholder for all `card not present' transactions that exceed Rs 5,000. The circular adds that banks would be penalised for non-adherance to the directive under the Payment and Settlement Systems Act 2007.

In an email response to TOI, RBI though specifies, "Banks are free to decide on the technology they wish to use to fall in line with these instructions.'' On their part, banks have been beefing up their online security. Virtual cards, which have been around for a while, are a secure option offered by the likes of HDFC Bank, ICICI Bank and Kotak Mahindra Bank. HDFC's NetSafe, for one, creates a code that can be used for one-time transaction. "It is a limited period validity number,'' says Sanjeev Patel, EVP and head, direct banking channels, HDFC Bank.

Virtual cards create a code separate from your CVV number so you don't have to key it in on the merchant website. Any unused amount from the card is credited back to the credit or debit card account.

Banks also offer increased security via MasterCard's Securecode and Visa's Verified by Visa, which offer personalised passwords. T V Seshadri, vice-president and country general manager, South Asia, MasterCard, says, "Much like the authentication process required for payment card use at ATMs, SecureCode requires cardholders to enter their personal code in an online window on their PC before a transaction can be processed. Even if someone knows their credit or debit card number, the purchase cannot be completed without their SecureCode at a participating merchant.''

But these initiatives can work only if the cardholder is prompted to enter the code by the merchant site. Says Seshadri, "The card-issuing bank, the retailer and the retailer's acquiring bank will all have to participate. Even if one of these entities does not participate, the cardholder is not prompted to enter the SecureCode.'' Seshadri, though, adds that a number of banks in the country no longer allow their cardholders to transact on e-commerce sites without entering such the code.

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Multi Currency Card from Reliance Money

Anil Ambani Group firm Reliance Money said it has launched a multi-currency card which would offer facility of purchasing goods and services through Visa enabled point-of-sale terminals and ATMs globally.

Reliance Money Travel Currency Card has been launched in collaboration with Citibank and targets overseas travellers, as a superior alternative to travellers cheques, Reliance Money said in a statement.

"Issued by Citibank, the card offers all the conveniences of plastic money by allowing customers to purchase goods and services by swiping the card over 13.5 million Visa enabled point-of-sale terminals worldwide and 900,000 Visa ATMs across the world," Reliance Money said.

According to the company, travel currency card would be a multi use, prepaid (ATM access & point-of-sale-enabled) card, loadable in US dollar, euro and British pound.

"We plan to use our wide distribution network of over 10,000 outlets across 5,000 cities and towns in India to reach out to both retail and corporate clients," Reliance Money CEO (OTC Business) Jhuma Guha said.

According to the firm, although the card may be denominated in dollar, euro and pound, but it can be used in the local currency of any country of visit.

"This form of payment method provides ease of use, removes hassles of cashing traveller cheques and gives access to funds, anytime and anywhere," Citibank India Business Manager (Cards) Sandeep Bhalla said.

Electronic Cards from ICICI

ICICI Bank has come out with electronic cards for its customers in association with mChek, India’s one of the leading mobile payment solution provider. These cards will be issued to the mChek application on the customer’s mobile phone.

Visa International, the leading international electronic payment network had earlier approved mChek as a platform to which the issuer can issue an electronic mChek Visa card to deliver the convenience of mobile transaction with added security.

The customer can use the mChek Visa Credit / Debit card to perform various transactions like bill payments (postpaid, other utilities), prepaid recharge, money transfers, pay insurance premiums, buy air tickets, movie tickets or perform any other merchant transactions using their ICICI bank debit card or credit card account.

The card data is stored in a fully encrypted form on the phone which ensures full security and reduced risk of fraud for card based transactions