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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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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Check on high Credit Card Interest

High interest rate charged by credit card companies have caught the attention of law makers and they have set up a key Parliamentary Standing Committee.

The committee has suggested that all credit card charges levied by credit card companies should not be left at the discretion of banks, urging RBI to regulate the credit card market closely.

"The RBI should review this matter and re-formulate their guidelines or norms governing credit card services with a view to providing the much-needed relief to the general public," the committee said in its report.

Most credit card companies charge interest rates around 3 percent per month for a credit card which on annualizing comes out to be more than 40 percent.

In its report the committee notes: "Banks have been given complete freedom to charge any rate of interest regardless of their benchmark prime lending rates, thereby enabling them to charge exorbitant/usurious interest."

Do's and Dont's with your Credit Card

Credit card companies defend their stand of charging high interest rates by saying that credit is totally unsecured and therefore pose a greater risk to the credit card companies.

The recommendations of the committee are not mandatory but the government has to present an action taken report to justify its action in case it does not accept the recommendation.

Defaults in the credit card segment are over 15 percent for most lenders, highlighting the risk associated with the business. Risks are higher because companies depend on internal due diligence before giving out cards.

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Credit Card Payment Due Date

According to a senior banking ombudsman official, card customers are “unofficially’’ given “a grace period’’ of about three days after their due date if they choose to make a cheque payment, to allow the amount to get credited into their account. In other words, no late-payment charges are levied. 

In sharp contrast, heads of leading card-issuing banks say their terms and conditions, bill statements and websites clearly mention that cheque payment must be made three to five days (in case of outstation cheques) before the due date so that it comfortably reaches their account by the deadline.

Now, suppose there is a string of bank holidays and weekends between cheque deposit and its clearance. If a cheque does not get cleared for reasons over which a consumer has no control, he/ she would still end up paying penal charges.

A senior Mumbai banker admits that due date-related disputes are common and consumers have been demanding clarity on the issue. K Unnikrishnan, deputy chief executive, Indian Banks’ Association, seconds that there is a need to bring in uniformity in cheque deposit norms with reference to due date.

Till the time banks come up with clear guidelines, customers are advised to pay way ahead of the stated due date. Besides, if they end up paying closer to the payment deadline, they must avoid depositing their cheques in drop boxes.

As mentioned earlier, the Reserve Bank of India rules specify that banks must accept all cheques at counters and provide an acknowledgment receipt to the customer. This would serve as a proof of deposit in case of a dispute, if any.

Alternatively, banks are increasingly introducing “cheque deposit machines, which work like a screener and give you a receipt, which is a replica of your cheque with all the details,’’ says a bank executive. Other than the convenience of not having to queue up at a counter, they provide the relevant proof. Consumers must know that dispute resolution relies on documentary evidence.

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Pay Telephone bill, Insurance premium on time to GET a LOAN

Have you been paying your telephone bills on time? Do you consistently forget the due date for your insurance premiums? You better watch it! If you ever intend to apply for a loan in future all these aspects are going to count!

These are a few of the spruce up elements planned to be implemented in your current credit reports. What's more from next year (2010) there will be a system in place through which you can have access to your credit reports!

Such spruce ups have been made possible through a recent move of the RBI (Reserve Bank of India), which has granted an approval for the registration of CIBIL and a few other credit agencies namely, Equifax, Experian and Highmark under CIC Act (Credit Information Companies (Regulation) Act.

Why a credit report?

The concept of credit reports came into existence to ramp up the credit system and ensure banks have an evaluation system in place to decide if a prospective borrower is credit worthy enough to lend huge sums of money to, in the form of a home loan, car loan, personal loan, etc.

Once the RBI approval comes into effect formally, more credit information on individuals can be accessed, which includes telephone bill payments, insurance premiums etc. This should provide a well rounded study of how an individual manages finances, how they repay their debts, how timely they are with their bill payments, etc.

Access to credit reports - Advantages

There are several advantages to the enhancements set to happen with the existing credit information system. Here are a few of them.

Prevents Identity theft

If an individual's credit card or bank account is being misused, keeping track of one's credit report will help the individual take corrective action before it comes too late or before debts start mounting to unreasonable levels. It can help prevent identity theft and instances of fraudulent transactions to a large extent.

Creates discipline and improves money management skills

Often people opt for loans due to its ready availability without giving thought to their current lifestyle, other commitments and debt liabilities. Also, they fail to account for an emergency fund and a savings plan. All these could fall into perspective once a summary of a person's credit repayment is available in a single log with a score spanning 300-900 points providing a measure of an individual's creditworthiness.

More comprehensive credit reports

RBI's approval is the first step towards more comprehensive credit reports, where more periodic transactions involving money inflow and outflow can be tracked to analyze if an individual adopts a careful and methodical approach to his finances and eventually serve as a financial goal map for an individual who wishes to improve his credit score.

The proof of the pudding is in the eating

The very fact that individuals will soon have access to their credit reports can come as a sigh of relief to loan applicants.

If they have a very good repayment track record and an excellent credit score their chances for bargaining for a better interest rate on the basis of their credit report is a viable option. It would also help banks significantly decrease the percentage of defaults by opting to choose a better customer for a more competitive interest rate.

After all it makes better business sense for banks to have a higher percentage of customers who repay on time, every time, at lower interest rates compared to a higher percentage of defaulters with high interest rates.

More credit agency options

Now that they are more credit agencies to choose from, better systems that weed out errors and streamline the existing information systems will be given high priority.

Establishing a reputation for being the most accurate credit agency will provide the impetus for credit agencies to overcome the several bottlenecks that will emerge in setting up the infrastructure and the actual process.

Knowledge is Power

Access to credit reports is wonderful news for individuals who wish to apply for a loan but are unable to get one due to a faulty credit report or missing information.

Currently, rejected applicants who have been informed by their banks that CIBIL reports were the reason, would need to request for the control number of their credit report from their bank and approach CIBIL for a clarification. This can be a complicated process, especially if the bank does not provide a valid reason for the reject.

With direct access to their credit reports, individuals can directly contact CIBIL for a clarification or correction, even before they approach a bank for a loan. Verification and correction of credit scores can be far easier with such transparency.

The Flip Side

Such intensive credit tracking systems can also stir up a new set of problems to deal with. More often than not technology would play a key role in setting up systems that can source huge volumes of information of a large number of individuals.

Credit information is also very sensitive and personal to an individual, which in the wrong hands could prove dangerous. So credit information sourcing could be a new addition to the number of tracking systems that are slowly but surely evolving in all spheres of our lives.

In light of such developments could breach of privacy be one of the key issues we would need to battle in the future?

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Gift a Gift Card

Ever spent hours wandering from store to store, looking for a gift for someone that would be useful yet not commonplace? Consider an option that’s been around for quite a while, but is still relatively unknown – a prepaid gift card.

Fashioned after a gift voucher and a debit card, a prepaid gift card is worth a fixed sum of money and can be swiped at any store. The value of – or the amount loaded on – the card is entirely up to you.

For instance, if your gifting budget calls for a spend of Rs 1,000, you can buy a gift card worth that amount. The person you gift it to will be able to make purchases up to Rs 1,000.

Features

A gift card is unique in terms of the flexibility it gives to the receiver in relation to what they can shop for, and where they can shop. It looks much like a debit or credit card, with a magnetic strip and signature panel on the back, which must be signed by the person who is to use it.

A gift card can be used multiple times, at different establishments, for varying amounts until the amount loaded on the card is exhausted. Any establishment that accepts a debit or credit card will accept gift cards as well. The card can even be used for online purchases.

But keep in mind that a gift card may be used for purchases only. Cash cannot be withdrawn from the card; inserting it into an ATM will show you only the balance on the card.

The card cannot be topped up either – meaning, once the amount loaded has been exhausted, more money cannot be loaded onto the card.

These cards come with an expiry date, which can range from a year to five depending on the issuing bank. If there is any amount left on the card at the time of expiry, the bank usually returns that amount after deducting bank charges.

Banks impose a time period after the date of expiry within which the card must be returned in order to collect the outstanding balance. If the amount on the card has been exhausted before expiry, simply return the card to the bank.

It may be a tedious task to keep track of the amount already spent and the balance remaining on the card. Therefore, each card comes with a net banking user name and password, as well as an ATM pin. The balance may be checked either through the issuing bank’s net banking services or its ATMs.

Purchasing a card

Not all banks offer prepaid gift cards; there are only a handful that do, namely, Axis Bank, IDBI, HDFC Bank, ICICI, IndusInd Bank, SBI and a few others. Purchasing a card is a fairly simple process done over the counter.

To begin with, you are not required to hold an account in the bank in order to purchase a gift card, given that card is paid for before issue of the card. But you do need to carry copies of proof of identification and address as well as photographs. Of course, if you hold an account in the bank, these proofs aren’t necessary.

You also need to carry the amount you intend to load onto the card, either in cash or via a cheque.

If you are an account holder in the bank, the amount will most likely be transferred directly out of your account, dismissing the need for cash or cheque.

Purchase of the card simply requires the filling out a form and handing over the money. You will receive the card immediately, but activation of the card will take at least a day. In case the payment is made through a cheque, the cheque must be realised before the card is activated.

Fees and limits

Processing your card application requires a fee, but these are usually minimal at Rs 100 to Rs 200. It is higher in some banks such as Axis and IDBI, where fees are one per cent of the amount loaded onto the card if the value of the gift card is more than Rs 10,000.

A gift card can be got for any denomination, starting from Rs 500 in most banks. The ceiling on the gifting amount, though, varies widely depending on the bank. The cap ranges between Rs 10,000 (HDFC Bank) and Rs 50,000 (ICICI and Axis).

Potential hassles

Though the procedure for purchase is simple and, theoretically, requires an hour at most, you can run into unforeseen trouble. So don’t try to get a gift card at the last minute.

For one, the cards are meant to be available at all branches, but this is not always the case. Smaller branches may not stock cards at all times and may direct you to a bigger branch. Two, your cheque may take a couple to days to be processed and the card will be activated only after that.

If the gift card has been presented to the benefactor and if that person uses it immediately, the transaction will be declined.

Other prepaid cards

Gift cards are only one type of prepaid cards offered by banks. Other types include forex cards, such as those offered by SBI and HDFC, which can be used for purchases and cash withdrawals in the required foreign currency overseas.

There are other prepaid cards also, but these are primarily meant for corporates and not individual consumers.

Another form of a gift card is those issued by retail establishments instead of banks. In this case, a retailer will give you a card instead of a voucher and you can use the card more than once as long as it is in the same establishment.

This type of card is one step above a gift voucher, as multiple transactions can be carried out, even if purchases are restricted to that establishment. Landmark, for example, has cards such as these.

A gift card is a hybrid between a gift voucher and a debit card. It offers the advantage of the former with the flexibility of the latter.

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Register your Credit card for Online shopping

Are you planning to shop online in the near future? Or is there any other online transaction, involving the use of plastic money, high on your agenda?

If yes, better get registered with your bank, otherwise you won’t be able to use your credit or debit card online just after a week’s time. For, the RBI has made it mandatory for all online transactions to have an ‘extra’ level of authentication from August 1, 2009 onwards. And some banks have already started complying with this mandate.

Although lots of ecommerce players are concerned about losing their business in the short run, as they believe that many shoppers, who are still not aware about the RBI mandate, may simply ditch the buying decision at the checkout process, bankers view this as one more step towards moving closer towards a fraud-proof world of online transactions.

“This is just to add an additional layer of security for online transactions. This requires that a password in addition to information available on the credit card itself be given to ensure that it is the card holder himself who is authorizing the payment,” says Harsh Roongta, CEO, ApnaPaisa Pvt Ltd, adding, “typically even as you are shopping, the payment gateway will allow you to verify your credit card under the ‘Verified by Visa’ or ‘Verified by Mastercard’ programme by providing details that are not stored on the credit card.”

Thus, anyone shopping online from August 1 onwards will be required to first register one’s existing card for this service. One can do this either by visiting the website of one’s respective bank or by choosing to accept the registration process on the merchant websites. In case of the former, a customer can create a password and a shared secret instantly. However, for getting registered while shopping online, you need to select the goods or services you want from a Verified by Visa/ MasterCard SecureCode online store and proceed to the payment page. There you will have to enter your card number and the online store will connect with your bank to check whether your card is enrolled for this service.

The users who are registered for this service will be asked to put their password, while the users who are not registered for this service will be prompted to activate the same by creating the password and shared secret on the merchant website itself. Once the identity is verified, the transaction will be completed. Based on the authentication provided by the issuer, the transaction will be processed and the user will get a confirmation.

“This service, thus, assures cardholders of additional security while shopping online using their existing Visa or MasterCard credit card. It confirms the cardholder’s identity through a simple check process when he/she makes online purchases,” says an SBI Card spokesperson.

In other words, this registration will make the online transactions more secure as in order to process the payments, the merchant website will
ask for the password to be input. And transactions will not be processed without the password. Thus, even if your card gets stolen, one won’t be able to make any online purchase in the absence of the password.

“Incidentally, even for shopping transactions offline where the card is ‘not present’ will now require that the bank send an SMS to the credit card holder for amounts larger than Rs 5,000,” says Roongta.

On the flip side, however, the service of card authentication will only be eligible/applicable to merchant websites who are also compliant with this service. This means that this authentication will not be required for transacting on portals which are not compliant with this service or those based outside India. This has left many big ecommerce players worried as they believe that this may affect their business, at least in the short run. Bankers, however, think otherwise and say that online transactions will not be affected much as the customers would, sooner or later, be aware that this is for the security of their own card and hence for their own benefit.

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Credit Card Options

The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s in the United States, specifically to sell fuel to a growing number of automobile owners.

With the advancement of banking systems, credit cards have evolved from a simple way of doing cashless transactions to multiple types with different interest rates, fees and reward programs.

Irrespective of the credit card issuer, credit cards come in the following types:

• Standard Credit Cards
• Reward Credit Cards
• Specialty Credit Cards

Standard credit cards

These credit cards are the most common and are readily available from most banks and financial groups. These cards provide the basic functionality of a credit card — doing cashless transactions and nothing more.

For e.g. Mr Kumar uses the card to purchase fuel on the card. However, he is charged fuel surcharge since he is using a standard credit card.

Reward credit cards

These types of cards have become popular in recent times. These cards allow users to earn incentives for making purchases with their credit card. Points accumulate for the amount charged on the card, and cardholders can redeem these points for various rewards. These cards can be sub-divided into:

Cash back credit cards

This type of credit card allows you to earn cash rewards for making purchases. The more the card is used, the more cash rewards you receive. Most cash back cards earn users around 1 percent of total purchases, excluding interest and finance charges.

For example, Sameer purchased a couple of books online for Rs 10,000. He got Rs 100 credited back to his credit card account.

Hotel or Travel credit cards

These credit cards are specific to hotels and travel. Some of these cards are co-branded with hotels. These credit cards allow you to earn points for all purchases, in addition to bonus points for the money spent on stays at the respective hotel. You can redeem your points for free nights and discounts on food and beverage services.

For example, Mr Sahni used his credit card to stay at a hotel and when he redeemed the points accumulated on that card, he stayed one night at the hotel, free of charge.

Retail credit cards

These credit cards are co-branded with major retailers and points are accumulated by making everyday purchases, though cardholders are awarded with double or triple points for making purchases from the co-branded retailer.

For example, Sam paid some purchases at the major retail brand he frequently visited and on redeeming his points he was able to purchase an item free of charge.

Airline/Frequent Flier credit cards

These cards are associated with one airline. Typically, the cardholder accumulates points from both making purchases with the card and by flying on the specified airline. A user can fly a certain amount of miles free of charge by redeeming the 'miles' accumulated.

For example, Mr Bhatia uses the points on his card to fly free the first leg of his journey when he is going on a business trip.

Specialty Credit Cards

These types of cards are for consumers with unique needs for their credit use. Examples of such speciality cards are:

Business credit cards

A business credit card offers the business owner the opportunity to keep business and personal expenses separate. The credit card may offer special business rewards and saving opportunities that go above and beyond what the individual credit card owner may have. Since money management is essential in successfully running a business, the card may offer an expense management service that will allow you to keep track of the outgoing money.

Prepaid Debit Cards

Prepaid debit cards has grown significantly in usage in recent years. Although they work like a traditional credit card, with prepaid debit cards, you have actually prepaid and set the credit limit by depositing money onto the debit card.

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Big Credit Card Purchase requires ID proof

In an effort to curb fraudulent use of credit cards, cardholders may be asked to furnish proof of identity while making big-sum purchases.

The move has been encouraged by banks issuing credit cards and associated merchants, like Visa Inc., MasterCard Worldwide to check deceptive use of credit cards.

Indicating the loss burden due to fraudulent transactions, a banking official said, “The fraud to sales ratio in India is at 0.12 which means of every Rs100 spent 12 paise is lost,” said the senior official from a payments processing company quoted in the first instance.

Hit hard by the mounting losses due to increasing number of credit card frauds, most banks have asked merchants to ask for proof of identity for verification when a customer makes a high-value purchase using a credit card.

Praveen Bansal, deputy general manager, transaction banking department, Union Bank of India, said, “written to all our credit and debit card holders to register their mobile phone numbers with the bank. For transactions over Rs500 on credit or debit cards, we send an SMS to the customer giving details of the transactions”.

ICICI Bank the largest credit card issuer in the country with a base of around 8.5 million has asked its customers for cooperation, informing them they might be required to furnish their ID for verification, when making high-value purchases using bank’ credit card.

Another bank, IDBI Bank has instructed the merchants to ask customer making purchases on credit cards of amount exceeding Rs10,000, to furnish ID proof.

The head of personal banking group, IDBI Bank, C.S. Jain, said, “IDBI Bank debit card holders receive SMS alerts for any transaction over Rs10,000. These are the steps the bank takes to check frauds.”

According to RBI, on May 31, 2009 there were 48.42 million credit cards in use in India, with outstanding amount of Rs. 9,748.31 crores, but the overall credit card business is on downside.

A senior official with Axis Bank, explained - “Fraudsters usually rob cards and make purchases of electronic items and jewellery as they have resale value.”

Axis bank has a base of 600,000 credit card customers and 125,000 point-of-sale (PoS) terminals across the countr

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