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.
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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.

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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.

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.

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Which Credit Card to apply?

In Indian credit card market there are 12 major types of credit cards being provided by banks and financial institutions. These cards provide a wide variety of financial benefits to holders. 

Major India Credit Card Types

 
Following are various types of credit cards available in India:

Þ    Premium Credit Cards

Þ    Cash Back Credit Cards

Þ    Gold Credit Cards

Þ    Airline Credit Cards

Þ    Silver Credit Cards

Þ    Business Credit Cards

Þ    Balance Transfer Credit Cards

Þ    Co-branded Credit Cards

Þ    Low Interest Credit Cards

Þ    Lifetime Free Credit Cards

Þ    Rewards Credit cards

There are some additional credit cards that are available in India as well. Rewards credit cards available in India can be subdivided into six categories – Points, Hotels and Travels, Retail, Auto and Petro cards. 


How to apply for a Credit Card

Travel Credit Cards

A travel card is like having cash with you everywhere and that cash is acceptable almost every part of world. And you don't need to convert the cash after going to conventional money exchange centers. And travel credit cards are offered for this purpose to the travelers and tourists. They are easy to use and the tourist and traveler can also earn different types of points and rewards on these cards on every purchase. And afterwards he can use these travel rewards in his tour or he can take back these rewards in the shape of cash.

 Credit Cards  during  foreign  travel - Points one  must take care

Hence a travel credit card also serves as travel reward card and a tourist or traveler can use this travel reward which he gets from different ways in his shopping and in air mile discounts. The best travel credit card which has travel credit is either travel mastercard or travel visa cards because of the fact that American Express Travel credit card is not acceptable everywhere in the world.

Most ATM machines have the MasterCard and Visa Card logos so it is easy for the traveler to use these cards and get rewards if he's using travel reward credit card. He can simply use these rewards later on in his journey to get points or to get discount.

Card Protection Program FAQs

There is another type of travel credit cards which are available for business personnel and executives of different companies to use them in their travel. And these cards have special features for such prestigious people around the world. These cards are well known by their name Travel Business Cards. And traveling while someone has these travel credit cards in his pocket is the best credit card travel or at least if not best than it is one of the best ways to use these cards.

Though express card which is backed by American Express Card system is not acceptable all over the world but it is acceptable in major parts of the world and in almost all free countries so it is not a bad choice even to use this card. But its acceptability is not as wide as Visa or Master Cards.

 Beware of VISA cards

Many travel credit card providers also offer credit card travel insurance to their credit card holder however this insurance doesn't apply to their cardholder when he has reached his destination but some credit card providers also give this facility and a travel credit card holder can find these types of card providers for a safer journey.

In this way travel credit cards work and there is another plus points in these travel credit cards and that is their acceptability in some major and famous money exchangers. This can help the traveler if he needs to have cash in liquid form. Then it is another opportunity for him to use his travel credit card because they are acceptable to currency exchangers so a traveler does not need to look around for the ATM machine in this case.

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Loans for Credit Card defaulters

If you have a large outstanding on your credit cards and are paying the usual high interest on the same, here is an opportunity to convert it from credit card loan to a lower interest bank loan on a long tenure. 

Credit Card Default Settlement - Step by Step Guide

Many banks are offering lucrative schemes to card holders in order to pare down their credit card exposure following a sharp increase in bad assets linked to them. Almost all major banks, including ICICI Bank and Citibank, are offering similar schemes but don’t want to publicise them, which could increase the risk of more card users defaulting on regular obligations and opting for these easier settlement options. 

So, if you have an outstanding loan of around Rs.2 lakh and are paying an interest as high as 18%, you can convert this into a regular loan, spread over a period of three years, where your interest rate may be as low as 12%. There is a retention-oriented, assistance-based collections process, and if there is a genuine inability to pay, the bank will work closely with customers to offer repayment solutions based on his or her cash-flows. 

Citibank has around 2.5 million card holders. A spokesperson for CIBIL said that when a bank reports a restructured loan it gets captured as such in the CIBIL records and is reflected similarly in the credit report. 

Banks have refused to reveal their bad loan, but it is evident that they are very cautious about the business now. 

The credit card base had dropped 21% to 21.1 million by the end of October 2009 from 26.7 million a year ago. Credit card outstanding has also declined by 12.13% to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago. 

According to a research report from Venture Infotek, all banks are pruning their credit card business. ICICI Bank alone has brought down the number of card holders from 9 million in 2008 to 7 million in 2009.

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Credit Card Default Settlement - Step by Step Guide

Here is how you have to deal with it. When you have queries on credit card defaults and delayed payments which has taken the payment obligation of the banker to few Lakh rupees.

Talk to the bank who issued the card and tell them you would like to settle off in good faith and ask for concession and negotiate hard, yes put all your negotiation skills to work here.

Once you both settle on some amount these are the steps you MUST and Should follow. It is better to negotiate with the bank itself rather than the collection agent because Bank Pays to the Collection Agent commission as high as 15% of the recovered amount and he will haress you until you pay it to the bank because the agent is awaiting his comission.

§         Get a letter from the bank in which they mention "Final Settlement of Outstanding dues" with your complete name, address and credit card number on which you have defaulted.                                                                                                      

§         Make your payment by CROSSED CHEQUE only

§         As soon as the payment is done, close this credit card account by giving writing instructions saying w.r.t Final Settlement, I have cleared all the dues and want this account to be closed. [Keep a proof of closing this account, say banker stamps on the second copy of the lettr or send it by registeredA.D]

• Preserve all this documentation for the next 5 years, atleast.
• Chances are the your name will be in the CIBIL defaulters list, give time of 6 months before you apply for another loan so that the bank clears your name off defaulters list.

§         Work and Plan your finances well before you opt for any other form of credit - card, personal Loan, auto loan etc

§         Next time when you apply for any kind of credit, if your name is still in the defaulters list, then you have every right to know on which account you have defaulted. If this is the same as the credit card account on which you have defaulted, then all those documents of Final Settlement, crossed Cheque payment will come in handy here. Attach attested photocopies and try to get your name cleared off the defaulters list. Don't submit the originals you have.

§         And finally you have to live with this painful process.

If Settlement Amount is as Large as Rs 300,000 [3 Lakh] ? Hire a lawyer because the deal is big and in any case save all the documentation.

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