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.

back to Credit Card Help

Credit Card Rewards.. are no more rewarding

Even as credit card companies rush to raise rates and fees before a reform law takes effect in February, they are moving to reduce one thing

-- rewards.

Card issuers struggling with huge credit losses are making it more expensive and less attractive to redeem rewards. And it could get worse ahead of possible legislation to reduce so-called interchange rates, the fees banks charge to merchants.

Issuers use the proceeds from the fees to finance their rewards, so any haircut in those charges would trim loyalty programs, analysts said. For customers, that means having to use their cards more often to earn the points they need to fly somewhere, or get cash back.

"To the extent that interchange is cut, you will see a pretty lineal impact on rewards," said Scott Valentin, an analyst at FBR Capital Markets. "You could see rewards being 10 or 15 percent more expensive for consumers."

The discussion in Congress promises to be long and slow as retailers fight to cut costs, while card companies try to boost revenue as loan losses soar.

Last year, interchange fees rose 14 percent to about $48 billion, ranging from 1.6 percent to more than 2 percent of total purchases.

"You either cut rewards or raise fees, because you have to have a credit card industry that is viable and generates a reasonable return," said Morningstar Inc analyst Michael Kon.

Credit card companies -- from American Express Co to JPMorgan Chase & Co and to Citigroup Inc -- enjoyed hefty profits in recent years due to an explosion in credit, but they are now losing billions as debt-burdened Americans lose jobs and default on loan payments.

Analysts even estimate the industry will not make money until 2011.

Earlier this year, Citigroup modified its "Thank You" rewards program to require many more points to be redeemed for domestic flights.

JPMorgan, meanwhile, has limited the spending categories from which customers receive cash back on Chase Freedom cards.

Such steps could intensify in coming months.

"If you have a 25,000 reward points for an airline ticket, it might go to 35,000 or 40,000," Valentin said.

Bill Hardekopf, chief executive of Lowcards.com, a credit- card comparison website, also said that, even if reward targets do not change, customers might have problems redeeming points.

"Even though you may be getting the rewards, it may be harder to redeem the rewards," he said.

Credit Card loyalty programmes

Credit cards come with the convenience to shop now and pay later. But credit cards are more than just a payment tool. If used wisely, they can help you get up to 10 per cent return on your spend. Before we learn how to choose the right loyalty programmes, let’s understand what these schemes are and how they work.

Most loyalty programmes give card members reward points for spending on their credit card. The points can be redeemed (or “burned”) for travel, shopping, dining and entertainment benefits.

Many of us dismiss these schemes as marketing gimmicks; but the fact is that these programmes are designed to work for the benefit of the card members, merchants and credit card companies.

It is easy to be confused by the proliferation of loyalty programmes in the marketplace. A wrong choice more often than not will not give you the intended benefit due to unimaginative or needless redemption choices. Invest a little time to understand which Credit Card provides you the best returns and helps you “earn while burning”.

Rate of Earning

Normal Earn: As a part of the product value proposition, most credit card companies offer reward points for spending through cards. Typically, a card member can get one point for Rs 40 to Rs 200 spent. This, however, depends on the card and the bank. For instance, American Express gives one point per Rs 40 spent on its cards. Some programmes don’t give reward points on certain categories of spending, like fuel-purchase transactions. Customers should carefully study the exceptions and check the value (the earn/burn ratio) of these points.

Bonus Points: Some programmes offer bonus points, allowing customers to earn double, triple or even 10 times the points for the same spend. Check if restrictions apply, such as a limited period offer, for all spend or limited to selected merchants and try to maximise your earnings.

Don’t forget to check the lasting power of your points. All your hard work would go waste if your points expire. Therefore, customers should select programmes offering non-expiry points. As non-expiry points allows customers to accumulate points from year to year.

Rate of Burning

Redemption potential: Compare the value of reward against spends.

The value of a point can be calculated by checking the worth of the reward against spends made, to earn that reward. Therefore, customers should choose a programme offering higher reward earning potential.

Reward categories: Most programmes have started offering a range of redemption options, including garments, home appliances, cosmetics, gift vouchers and donation, to charities. However, you should choose the programme that offers maximum number of redemption options that suit your lifestyle needs.

Air miles: Some banks now offer an option to convert reward points to air miles, enabling their customers to buy air tickets using their reward points.

Also, compare the minimum number of points required for rewards.

A scheme that offers one point per Rs 100 spent and rewards starting from 2,000 points, for example, is a better deal than one that offers two points per Rs 100 spent and rewards starting from 20,000 points.

Understand reward fulfilment: Customers should look for a programme that offers easy-to-use rewards redemption processes and faster delivery of rewards. Some loyalty programmes provide convenience of Web-based redemption, home delivery and online order tracking.

Reward delivery time can be anywhere between three days to two months.

One must avoid long delivery time by choosing the right programme.

Flexible points plus pay option: To speed up redemption of rewards, some loyalty schemes give points plus pay option whereby customers can simply use their accumulated points and pay the balance to get their desired reward.

Using points optimally: Now that you know how to choose the right loyalty programme, let’s understand how to use them optimally. To make loyalty programmes work best to your advantage, you need to plan a bit. Here are few simple steps to earn your rewards faster.

Consolidate your spending: Consolidate your spending with a single credit card so that you can accumulate your points faster. Big ticket items (especially family-related spending) should always be consolidated into one single card.

Everyday spends: Make it a habit to charge all your spending and purchases on the card, especially daily spending such as at supermarkets, gas stations and cinemas. One can earn more than one can think of by purchasing intelligently.

Paying utility bills: You can earn valuable reward points simply by paying your electricity bills, insurance premium and phone bills using your credit card. These bills, which are always seen as liability, may earn you a free trip.

Several card companies provide bonus points to members for giving standing instructions to pay utility bills such as electricity, phone and insurance premium.

Savvy consumers are aware of the various reward programmes and intend to patronise merchants who can help maximise their spending power.

However for card members to fully utilise all the credit card benefits, they must use the cards responsibly and pay the minimum monthly amount before the scheduled date to enjoy the unending benefits of owning a credit card.

Happy earnings through happy spending.

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.

back to Credit Card Help

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.

back to Credit Card Help

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.

back to Credit Card Help

Helpline for Credit Card Customers- A Special Feature

Credit card customers in India are now better off
Credit cards are now available free with lots of features in addition to the payment convenience & credit period. To promote the usage of card, most banks offers certain reward points and cash-back schemes.

However, some people are still skeptical about a credit card’s usefulness. The first thing they think of is the hidden costs attached to it, harassement by the card issuer’s staff on non-payment of bills, and unsolicited calls on their mobiles as their personal information is shared across a database.

‘Hidden fees’ is an issue that keeps oneself from getting into the credit card hassles. All credit cards carry different types of fees, namely joining fee, annual fee, renewal fee, add on fee, card replace fee, photo-card fee etc. Waiver of one fee doesn’t not necessarily mean waiver of other fees.

It is important to note that Reserve Bank of India (RBI) has clarified most of these issues in its guidelines released in November 2005. These guidelines ensure that the systems of the banks / non-banking financial companies (NBFCs) are aligned with the best customer practices.

In the case of issuing cards, RBI says that while issuing cards, the terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language (preferably in English, Hindi and the local language) comprehensible to a card user. The Most Important Terms and Conditions (MITCs) termed as standard set of conditions should be highlighted and advertised/ sent separately to the prospective customer/ customers during marketing, at the time of application, at the acceptance stage (welcome kit) and in important subsequent communications.

Also, it is the responsibility of the card issuers to ensure that there is no delay in sending bills and that there is a sufficient period given to customers before charging the interest on it.

About the hidden charges, RBI clarifies that the bank / NBFC should not levy any charge that was not explicitly indicated to the credit card holder at the time of issue of the card and getting his / her consent. And any changes in the charges should be informed to the customer one month in advance.

It is good news for consumers that the Do Not Call Registry (DNCR) is now in force. The RBI can now take action on the bank / NBFC if found that their DSAs call any of the customers listed in this registry.

Customers can now hope that there will be less harassment by the issuing company - as the RBI has also enforced a clause on fair practices in debt collection and made it mandatory for the card issuers to constitute a grievance redressal officer in their institution. This redressal officer’s contact details are to be printed on the credit card bills.

We are providing with the detailed guidelines of RBI, which can be of great help to the harassed customers.

back to Credit Card Help

Co-branded credit cards - Pros and cons

If you’ve observed, of late, the proportion of photographs, identity cards, debit cards and credit cards in most people’s wallets has changed. These days, it is skewed in favour of credit cards, the plain vanilla ones as well as the ‘specialised’ co-branded cards meant for specific purposes. These could range from travelling and shopping to dining and fuel recharge.

Elaborates T R Ramachandran, business manager, cards, Citibank India: “The core proposition of co-branded credit cards is to provide an easy and convenient payment mechanism, which also offers some extra value to the customer, in areas of his / her preference (like retail, airlines and telecom).” The value could mean rewards, discounts, special offers, etc. While some cards come at a cost, some may not entail any such charges.

The trend of maintaining several credit cards, especially of the specialised variety, seems to be catching on, as it is not uncommon to see people flaunting such credit cards and the points accumulated by using the same.

Informs ICICI Bank’s head, card group, Sachin Khandelwal: “The trend is indeed catching on. In the past couple of years, significant value additions and benefits have emerged. Also, out of the thousands of merchants and a dozen broad categories like dining, air travel, hotels, consumer durables and jewellery, for most customers, the maximum spends on cards are usually on just one or two specific categories. Hence, they would like to see better rewards, not only in terms of more points, but also benefits like quicker miles, free room nights and so on, which are more tangible. With co-branded cards you get all these at a much accelerated pace, hence a preference has been seen.”

The upside

So what is it about such credit cards that has resulted in the demand shooting up? Answers financial planner Gaurav Mashruwala: “People opt for such cards to get focused benefits. All cards offer some kind of loyalty benefits.” For example, if you’ve been flying a particular airline or shopping at a particular store, it makes sense to go for a card meant for such purposes that enables you to avail of associated discounts and gift vouchers.

Every time you use the card, you gather points, which act as indirect discounts. The points can be redeemed in return for some tangible benefits. The logic is simple: You would be paying visits to petrol refill outlets anyway, why not use a fuel-recharge credit card and collect points, which would help you cut down on your petrol bill?

Moreover, in case of certain cards, every time you swipe the card, a specific sum goes towards charity; you can choose a credit card that serves your purpose and also aids the cause of the charity you wish to extend support to. Some cards also cater to hobbies and interests. Use of such cards could enable you to free tickets to music concerts or cricket matches.

A word of caution

“Use of co-branded cards calls for close scrutiny of the benefits that you receive,” points out Mr Mashruwala. For instance, for purchases worth Rs 10,000, one co-branded credit card promises 200 points that translate into goods worth Rs 200, which means that the total discount is 2%; on the other hand, for the same amount of purchases, another credit card promises 200 points that entitles you to a free gift, which may not be worth more than Rs 100. The effective discount here is just 1%. Making such a thorough comparison is essential to ensure that you get a good deal.

Mr Khandelwal feels the users should meticulously track their usage and know where they are spending. One also needs to make sure that if he / she has more than one card, he/she is using the right card, that is, the one that provides better offers or more rewards.

“While choosing a card, it is important that you opt for a card that not only best serves your needs, but also adds maximum value to your spending. These value additions could either be in the form of cash through a cash-back card or in kind through aviation points, petromiles, free talk time etc,” says Mr Ramachandran.

“Users need to be aware that in case of co-branded credit cards, eventually, it is the credit card issuer, the bank, that will handle the complaints, and the not the co-brand partner,” states Mr Mashruwala.

This apart, the general rules for use of any kind of credit card apply to specialised cards as well: keep your identification number under the lock and key, do not exceed your credit limit, go through your credit card statement carefully and touch base with the issuer immediately if you come across any discrepancy.

back to Credit Card Help

Citibank Platinum Select Credit Card - Launched

Citibank India has announced the launch of the Citibank Platinum Select Credit Card, which offers customers a powerful combination of preferential privileges, priority service and superior protection.

The key differentiators of the Card are its best-in-class rewards program with superior earn rates, low interest rates, a service platform dedicated exclusively to its cardmembers and enhanced security and fraud covers. Citibank Platinum Select aims to provide cardholders a highly individualized experience based on the key themes of gourmet dining, rewarding shopping, recreational family time and peace of mind.

The Card will be launched initially in New Delhi and Mumbai and will carry an annual fee of rupees Four Thousand. Globally, Citibank Platinum Select is a well-established and popular credit card platform. India is one of only two countries in Asia-Pacific - the other being Thailand - to offer the Citibank Platinum Select Card.

Announcing the launch, N. Rajashekaran, Country Business Manager, Global Consumer Group, Citi India, said, "The Citibank Platinum Select is a fine demonstration of our strategy to offer the right product propositions for maximum customer engagement and activity on our products, supported by strong customer experience and service initiatives.

" Speaking on the occasion, Sandeep Bhalla, Business Manager, Cards, Citi India, said, "Recent research has revealed that a strong majority of Indians believe that money can't buy happiness, ranking peace of mind, good health and a happy family life over money. It is such decisive insight that has contributed to the design of the Citibank Platinum Select proposition. Each element of the package is carefully selected to make customers feel indulged. We are confident that the bouquet of preferential privileges, priority service and superior protection will make the Platinum Select the card of choice in the customer's wallet."

The Citibank Platinum Select Card benefits include: Preferential Privileges

-- Accelerated Earn Rates: Customers earn 5 times the reward points on lifestyle spends such as those on apparel, dining and books. Reward Points earned on the Citibank Platinum Select Card can be redeemed in-store; from the rewards catalogue; converted to airline miles; for customized holiday packages or against any purchase on the statement.

-- Exclusive dining privileges: Citibank Platinum Select Cardmembers will be placed on priority for table reservations at over 150 of the finest outlets besides being offered complimentary beverages and desserts and a year-round discount of upto 20%.

-- Complimentary access to swimming pool, spa and health club: Customers can enjoy weekend experiences centered on complimentary access to the swimming pool, spa and health club at some of the best hotels, and complimentary golf lessons. Customers with substantial spends on the Card will be eligible to enjoy the complimentary services of a chauffer-driven sedan or free tickets to a movie show at select multiplexes.

-- Discounted access to signature golf courses: Cardmembers and a companion can enjoy golf at 15 signature domestic golf courses at upto 50% discount on green fees with no black-out days, advance payments and cancellation charges.

-- Citibank Platinum Select Card members will be able to enjoy a 50% discount on weekend stays at Taj Properties and a 50% discount on buffet lunches at any Taj property for up to six persons at a time.

back to Credit Card Security articles

Credit Card Reward Points

How to accumulate points?
Every time you swipe your credit card to make a purchase, you collect reward points. Typically, you get one point per Rs 100-250 spent. This, however, depends on the card and the bank. For instance, banks offer more points on co-branded cards. State Bank of India gives one point per Rs 40 spent on its Gold Card and eight points per Rs 100 on its co-branded Tata Card.

The value of each reward point also varies across credit cards and banks. Says Sachin Khandelwal, head (cards), ICICI Bank: "The value of a point can be anywhere between 30 paise to a rupee and is also a function of the merchant partner in case of co-branded cards." For example, the value of one point on the SBI Gold Card is 70 paise, while it is Re 1 on the SBI-Tata Card.

The limitation with most accelerated reward points on co-branded cards, however, is that they can be redeemed only against products and services of the partnered establishment.

One also needs to remember that points get accumulated against spends (that too, not all of them), not for cash withdrawals.

How to redeem points?
What to redeem on. Earlier, banks offered a limited catalogue of products. Plus the prices were very high and one couldn't negotiate on them. But now there is a laundry list of what you can do with the points.

For starters, there is the conventional catalogue that includes apparel, gadgets, jewellery, luggage items, and the like. You can also encash your points against gift vouchers. For instance, with HDFC Bank's Gold Card you can get gift vouchers from Domino's, Cafe Coffee Day, Pantaloons, Westside, Lee, Music World and Landmark.

Going a step further, some banks have tie-ups with certain merchants where you can redeem points instantly. You don't have to contact the bank and get vouchers; you can pay using the points.

When the card is swiped, the reward points get reflected on the machine. So, if you have accumulated points worth, say, Rs 500 and you buy goods worth Rs 1,000, the merchant will offer you the choice of using your points for payment.

Some banks now offer air tickets on reward points, a feature that was earlier limited to co-branded cards. For instance, HDFC Bank has tied up with Jet Airways, Indian and Kingfisher Airlines to allow its card users to convert their reward points into air miles. The value of one air mile is usually equal to one reward point.

"The air miles required to get complimentary tickets would depend on the airline and the travel sector," says Parag Rao, executive vice-president, head (product and portfolio management), credit cards, HDFC Bank.

Some banks, like Bank of Baroda, also let you redeem your reward points against cash. That is, cash corresponding to your reward points are credited to your account. Deutsche Bank does the same on its Gold Card, but also offers a gift catalogue.

Procedure. You can redeem your points by filling up a redemption coupon which is there on banks' website. You could also use the phone banking option. For web-enabled credit card holders redemption can happen online. The banks can take anywhere between a week to a month to redeem the points.

How to bag the best?
With so many cards, each with multiple features, how do you know which one to pick. Figure out what you want. If you are a frequent air traveler, then an airline-bank co-branded card may work for you.

Another thing to note is the value of points. Says Nirupam Sahay, chief marketing officer, SBI Cards: "Points accumulated and their value is important, in addition to the wide choice of redemption options." For example, the co-branded ABN AMRO MakeMyTrip Go Card offers three reward points per Rs 100 spent. But, on purchases made on MakeMyTrip, the points range from 10 to 30. The reward points can be redeemed as cash back into your account.

Now, more cards are offering the cash-back option on reward points. Choose the card that offers you maximum cash-back on your frequent spends and offers an array of redemption choices.

• All banks display their products online and have compare tools to help you pick the best.
• Use these to compare the features and find the card that suits you best.
• Don't forget the expiry date. All your hard work would go waste if your points expire.
• However, most banks have started doing away with the expiry period.
• For the smart shopper, the credit card is worth more than just what it buys

Global Credit Card by PNB

India's second largest public sector lender, Punjab National Bank (PNB) has launched a global credit card. The international credit card of the bank has been launched in collaboration with VISA.

The card was launched on Friday, February 6th by the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia. PNB mentions that this card would be acceptable in more than 29 million merchant establishments and 1 million ATMs across the world. Moreover it will also be accepted at a host of online shopping sites.

Dr. Ahluwalia said that the PNB card will widen the customer service network. It comes with a range of features like free credit period of up to 50 days, no annual fee and attractive reward points. It is a fully loaded photo credit card that will also enable the facility of SMS alerts to all its customers in case of e-commerce and high value transactions.

PNB Chairman K C Chakrabarty informed that, "To start with we are launching two varieties of credit cards - Global Gold and Global Classic, which will meet the needs of its customers and will cater to the requirement of different income groups."

He said that earlier in November, the bank had done a soft launch but with the commercial launch this card will be available across 1,200 PNB branches across the country.

The finance charges and cash advance charges attached to the card are one of the most competitive in the industry.

Besides, the bank had also announced completion of 100 percent core banking implementation at all its branches and extension counters. This will be done through the Finacle universal banking solution from Infosys Technologies.

PNB had declared 2008-09 as a financial inclusion year and therefore has taken moves to expand its product portfolio in order to further add to the customer convenience.

Petro Cards - A Review. Part-II

Bharat Petroleum Corporation and Standard Chartered Bank also have a globally valid co-branded debit card, Smartfill, in association with Visa International. Smartfill features include:

• Free fuel through the rewards program, savings on fuel and ‘aXcess plus' benefits.
• Customers earn one reward point for every Rs 125 spent which they can redeem at par for free fuel at BPCL outlets.
• There are also discounts up to 5 % for purchases at In-and-Out department stores located at Bharat Petroleum's petrol stations.

Citibank Maruti Suzuki AutoCard is another credit card that you can get easily if you own a Maruti vehicle. The card can be used to buy petrol from Indian Oil Pumps without paying any surcharge. You get points for purchases made at Indian Oil Pumps and Maruti Service Centers. Also you can earn 20,000 points as additional rewards when you exchange your car for your next Maruti Suzuki car.

Plain Credit Cards
You can also get your normal credit card swiped for fuel at any fuel station. This helps you in saving time in searching a retail outlet of a particular petrol company. There are additional benefits like free insurance, balance transfer, revolving credit, global calling card among others that be enjoyed through using your plain vanilla card. Your plain credit card may also be eligible for surcharge wavier provided you pay a minimum bill value.

SBI Gold/Silver/Platinum Cards are accepted world-wide and provide a 0% fuel surcharge for single transaction spend between Rs. 400 and Rs. 3,000.

HSBC Silver/Gold cards also give a surcharge wavier for amounts between Rs 400 and Rs 2,500.

Make your choice
Plain Credit card or Pre-paid petro card
A credit/debit card may charge an annual fee where as a pre-paid petro card will charge a one-time membership fee, which is non-refundable. But today most credit cards do not have an annual fee so in that case a credit card is always better than a pre paid card. Again in case of pre-paid petro cards you have to pay the oil company in advance for future petrol spends but if you use a credit card you can get up to 45 days to clear your petrol bills. A pre-paid card can be used on a retail outlet of specific company whereas a credit card can be use at all fuel stations. However your pre-paid card is subject to a surcharge waiver but even your credit card may provide you a facility of 0% surcharge.

If you visit a particular retail outlet of BPCL or HP to tank up your car then you can use a pre-paid petro card offered by that company. This would enable you to earn reward points that can be redeemed for free fuel or gifts along with the surcharge wavier. Or else your credit card is always the best option for you.

Pre-paid or Co-branded petro card
The pre-paid petro card may help to keep your spending under control but if you do not want pre-pay for your purchases you can opt for a co-branded credit card that gives a dual advantage of a standard credit card and fuel without surcharge. Both the cards provide a relaxation on surcharge to the user and can be used on petrol pump of the specific company. A pre-paid card is very restricted in its use and a co-branded card is flexible. You can use the later for purchases other than fuel as well. That way your co-branded card has an upper hand over your pre-paid card.

Co-branded / Pre-paid cards or Plain credit cards
In case you do not patronize a single petrol pump/brand or don't feel like carrying too many cards, you always use your usual credit card. Although a co-branded or pre-paid card do provide with a surcharge wavier sometimes even the plain credit cards are subject to multiple benefits including surcharge wavier at certain times.

back to Credit Card Help

Petro Cards- A Review Part-I

Using Credit Card for fuelling up your vehicle is now as common as it can get. All credit cards floating in the market can be used to purchase petrol in any petrol pump.

However a fuel surcharge is imposed on the consumer if he uses a credit card option to buy fuel. When payment of fuel at petrol pumps are made by cards, a fuel surcharge of some percentage is levied by these outlets over and above the cost of fuel.

There are principally three ways of plastic payment for fuel purchase: pre-paid petro cards, co-branded petro cards and plain vanilla credit cards.

Pre-paid Petro cards
Pre-paid fuel cards allow you to load certain amount of money in the card and when it is swiped for fuel, the bill amount is debited from the card. It has an electronic chip which stores information about the amount of money that you have loaded in your card. Every time you use this card to make a purchase, the amount is deducted from the card. You also earn rewards points while using such cards. The reward points can be redeemed for petro miles or rewards that are decided by the issuer. Also there always is a surcharge wavier on using a pre-paid petro card of a particular company.

Presently there are two types of pre-paid cards in the market named as HP Smart 1 and BPCL Petro cards.

HP Smart 1 provides you with following features:

• 5% rewards on total spend at any Hindustan Petroleum retail outlet.
• All petrol and diesel fills, lubricants, servicing, and even your shopping bill at HP Speedmart Stores (convenience store) will be eligible for reward points, provided you use the HP Smart 1 card to pay for these services.
• Thes accumulated reward points can be redeemed for free fuel.

The card can be loaded for minimum amount of Rs 250 and in multiples of Rs 50 thereafter.

The BPCL Petro card offers you:

• Reward points called petro miles earned for all purchases from any retail outlet of Bharat Petroleum in India. However the reward points in this case differ based on what products are purchased.
• These reward points can only be redeemed for gifts at BPCL outlets or through its website.
• The minimum loading amount for this card is Rs 500 and subsequently you can load the amount in multiples of Rs 100.

Indian Oil offers an XTRAPOWER fleet card program. Fleet Card is a smart card, which can be used by the card holder to make purchases of fuel/ lubricants at designated retail outlets of IndianOil. The card includes the features like:

• There are two variants of XTRAPOWER fleet card Prepaid & Credit.
• On prepaid cards, the pre-loading facility is available at designated Retail Outlets of Indian Oil. You can also deposit the desired amount in Central Cash Management System (CCMS) through designated of HDFC bank.
• Attractive rewards on purchase of fuel & lubricants through the Card.
• Personal Accident Insurance Cover and Medi-claim for fleet owner, driver, co-driver and helper.
• Opportunity for earning additional rewards on purchase of J.K. Tyre and Exide Battery.
• Facility to track each vehicle.

Both pre-paid petro cards of HP and BPCL are available for a one time fee whereas the IOC fleet card does not any annual fee but there is no surcharge waiver in case of a fleet card.

Co-branded petro cards
A co-branded petro card is a credit card which is sponsored by both the credit card issuing company and the participating fuel company. One can also use a co-branded petro card to pay for his fuel. This card provides an advantage of getting a surcharge waiver, apart from being a usual debit/credit card. The surcharge levied is on fuel is 2.75 % or Rs 10, whichever is higher. The co-branded petro cards also earn reward points over and above the surcharge waiver.

Co-branded credit cards floating in the market include some like IOC-Citibank and HPCL-ICICI Bank and Smartfill, a card by BPCLand StanChat Bank.

IOC-Citibank co-branded card offers:

• Savings of up to 5% to cardholders on their petrol spends at select Indian Oil retail outlets across the country.
• Customers using this card will avail two reward points per use at an IOC retail outlet and one point each at other outlets, on every purchase worth Rs 100.
• The reward points can be redeemed for free petrol, Servo engine oils and lubricants at IOC petrol pumps.

HPCL-ICICI Bank co-branded earn reward points named as ‘Speed `o' miles' and these points can be redeemed for free fuel at HPCL Petrol Pumps or against gifts available in the ICICI rewards redemption catalogue. Some other features of the card include:

• It is eligible for 5% discount on tyres, batteries and auto accessories sold at select HPCL petrol pumps.
• 15% discount on P-UC (pollution under control) check, labour charges on servicing and minor repairs at HPCL petrol pumps.
• Minimum assured Cash Back per transaction of 1%.
• 1 reward point earned on every Rs.200 spent on all purchases except on fuel purchases at HPCL outlets.
  
  
  back to Credit Card Help

Compare Credit Cards - The Right way part-2

Credit card companies charge fees on balance transfer. This fee can be anything from 3% to 5% of the outstanding balance transferred. Alot of times this fee is capped by an upper limit. Again, a credit card with no upper limit on balance transfer fee can offset any savings we were going to make. So, it is better to have a credit card with an upper limit on the fee. For example. A credit card with balance transfer fee at 3% of the outstanding amount with Rs.100 as minimum and a maximum of Rs.750 is definitely better than one with balance transfer fee at 3% of the outstanding amount with Rs.100 as minimum and no upper limit. Transferring a big amount to the latter credit card can cost more than doing it with the former. So, a credit card with lowest balance transfer interest for the longest period along with low balance transfer fee with an upper limit cap on balance transfer fee is a better choice.

Rewards
Reward credit cards bring additional savings to a credit card holder as cashback, reward points, gift certificates and other privileges. The credit card which offers maximum rewards along with minimum restrictions and no limits on reward redemption definitely scores over a credit card with higher reward qualifications, lots of restrictions and rewards which are difficult to redeem. Also when you evaluate the rewards, always keep in mind how the benefits will affect you. For example getting a Fuel reward credit card from Hindustan Petroleum is only useful if there is a HP petrol pump nearour office or home or on the way to office.

These parameters should be kept in mind while comparing different credit cards. Remember, there are lots and lots of traps in credit card fine prints. A credit card offer which appears lucrative can cost a lot if proper attention is not given to the hidden fine prints. Carefully acquainting oneself with the credit card terms and condition and knowing every fact that affects the credit card usage will be of a great help to the credit card holder.

back to Credit Card Help

Credit Card Statement - How to read it.

You receive a statement every month reflecting the transactions on your credit card account. Your billing statement is a complete record of your account activity during the past month. Your statement is in two parts, separated by a perforation. The upper (also lower in some cases) smaller portion is the payment coupon, which you can enclose with your payments. The lower portion lists out the transactions on your credit card. When was the last time you read through your credit card bill? How confused were you by the time you finished? Here’s what to look in your statement.

• Your name & address: This is your name and address as per Bank’s records and you need to notify bank in writing if there is any change as soon as possible.

• Reference number: you should quote this number when you have a query on any charge listed on your statement.

• Your Card number: Please write on your cheque/draft when making payments, or any correspondence. You should also write your name and contact number on the back of the cheque / DD as it gives the collections agency a chance to get in touch with you in case there are any problems with the instrument.

• Statement period: This is the period for which charges incurred on your card are listed in the statement.

• Statement Date: This indicates the date on which your billing statement was generated.

• Payment Due date: To maintain a good payment history, please make sure that payment reaches the bank before this specified date.

• Total Amount Due: This is the total unpaid accumulated amount outstanding in your account.

• Minimum Amount Due: This is the minimum amount you are required to pay to keep your account in a good credit standing. This amount is 5% of your Total Amount Due.

• Annual Percentage Rate (APR): The Annual Percentage Rate (APR) is the yearly interest rate or percentage rate that you pay on an outstanding balance in the form of interest. Interest is charged as a percentage of your outstanding balance (purchases and charges reduced by payments or credits posted).

• Payment Details: When making payments please indicate the following details in the assigned boxes on the payment coupon:

1. Cheque number
2. Cheque date.
3. Cheque amount.
4. Bank & Branch on which the bill is drawn.

• You need to detach the payment coupon and send it along with your payment.

• Credit Limit: A credit limit is the maximum amount of credit that a bank or other lender or the maximum that a credit card company will allow a card holder to borrow on a single card.

• Available Credit Limit: This is the difference between your credit limit and the total amount due.

• Available cash Limit: This is the amount of cash you may actually withdraw as of your statement date, and is the difference between your cash limit and the amount of cash you have already withdrawn (subject to your available credit limit).

• Previous Balance: This is a one-glance account summary of the current financial status of your card account as of the statement date.
OTHER CHARGES include:

1. Renewal Fees.
2. Penal Charges for dishonored cheques.
3. Service Charges.

• Sale Date: This refers to actual date of purchase on you card.• Amount: This lists the corresponding amount against each purchase or cash advance or any other charge.

• Rewards Summary: This is the record of the rewards points you have earned/ redeemed. Above explained are the points that are visible on your credit card statement, but there are various other Key points you need to be aware of.

In the Bank’s terminology any credit card holder can be one of the following:

• Transactor
• Revolver
• Defaulter

Transactor is a person who makes 100% payment for his credit dues every time as per his credit card statement, i.e. the previous balance for every next statement is NIL and the Total Amount Due is paid by the cardholder before the due date.

Revolver is a cardholder who pays between 5% or 99% of the Total Amount Due (Minimum Amount Due is 5% of the Total Amount Due).

Defaulter is a person who does not pay even the Minimum Amount Due as per his credit card statement.

Here is an Example

From the given diagram, we have made an attempt to explain you that how do banks bill your transactions.

The above example explains the type of customer who pays more than his Minimum Amount Due and less than Total Amount Due. This type of customer is called a REVOLVER. And a bank earns the maximum from a revolver.

If, as per the above example the credit card holder pays the Total Amount Due (Rs.13, 000) after 25th January and before 10th January (due date) then the card holder will be called TRANSACTOR, because he is enjoying the maximum credit period with no additional interest cost.

And if the card holder pays after the due date, then he is liable to pay the following:

• Late Payment Charges

• Default Charges

• Processing Fee

• Service Tax

• APR

And all of these are payable from the date of transaction and also on the full amount of the transaction. This category of card holder is termed as a DEFAULTER.

A person can be a transactor in one month and a revolver in the next and a defaulter in the month after. It is a function of the payment made for that monthly cycle.

Some Tips On how you should plan your transaction to pay less on your credit card bills:

• Firstly know the billing cycle of the credit card you are holding. Eg. If your billing cycle is from 1st to 30th of every month and you get a GRACE PERIOD of 15 days then your due date comes out to be 15th of the next month.

• After this you need to plan your purchases accordingly, only then you will be able enjoy the maximum interest free credit period. Eg. If your cycle is like the given above then you should plan your purchases from 1st to 10th of every month to be a smart customer.

• You not only need to plan your purchases early, but also you need to plan purchases involving heavy expenditures earliest of all other transactions. This is because banks knock off the transactions as they have occurred as per their records. Therefore, when you will make payments then your bigger transactions would be nullified before your other transactions.

• Always remember that banks charge interest on the full amount of the transaction whether is half paid or partly paid, so clear all your dues as early as possible.

• To be a SMART customer you should always pay the Total Amount Due on your credit card statement and that too after your billing cycle but before your due date, that ways you can enjoy the maximum interest free credit period.

• So now I am sure you are aware as to why you have so much interest charged on your credit cards transactions and also how it is charged. I hope from now you can read your statement smartly and use your card more efficiently by remembering