By Ketul Shah

In this plastic money age, more people have turned to credit cards because of its convenience, facility and other advantages. With the growth of credit card usage, we have also seen the number of problems related to credit cards going up. It’s true that it is a duty of bank / NBFC (Non Banking Financial Company) to manage credit card operations in a better way and provide good service to a card user. But at the same time, it is also a duty of card users to understand and follow some basic rules for credit card operations. Here are the basic rules in reference to Reserve Bank of India guidelines dated November 21, 2005.

Selection and application of credit card

All banks / NBFCs are making attractive offers to attract customers towards their credit card. With this, they also have some strict conditions for non-repayment, penal interest and late payment charges. While selecting a credit card, one needs to check and analyze this criteria.

All credit cards carry different types of fees, namely joining fee, annual fee, renewal fee, add on fee, card replace fee, photocard fee etc. Waiver of one fee doesn’t not necessarily means waiver of other fees. Before selecting credit card, facts relating to all fees should be checked and compared. (Click here to know how exactly a credit card works?)

RBI says, “The terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language to a card user. The most important terms and conditions should be highlighted and sent separately to the customer.”

RBI further directs that “The bank / NBFC should not levy any charge that was not explicitly indicated to the card user at the time of issue of the card and getting his / her consent.” It has been found several times promises are being made by credit card agent at the time of application that is not fulfilled later on or those promised turn out to be false. To prevent such situation, a printed copy of all such commitments should be taken. Alternatively, you should note down the name and phone number of credit card agent for any future reference.

Problem with credit card operations and grievance redressal 

In case of any problem, card user should log an immediate complaint. In case of a complaint registered at the call center, please note complaint number, date – time of complaint and name of the person with whom you registered complaint. In case of any complaint registered personally to bank, it should be given in writing and acknowledgement should be taken for future reference. RBI has also directed all banks / NBFCs to constitute grievance redressal machinery within the bank. Hence, card user can contact designated grievance redressal officer also. Normal time limit available for banks / NBFCs to resolve complaint is 30 days.

RBI says,  “The card issuing bank / NBFC should constitute grievance redressal machinery within the bank / NBFC and give wide publicity about it through electronic and print media. The name and contact number of designated grievance redressal officer of the bank / NBFC should be mentioned on the credit card bills.”

RBI further adds, “If a complainant does not get satisfactory response from the bank / NBFC within a maximum period of thirty (30) days from the date of his lodging the complaint, he will have the option to approach the office of the concerned banking ombudsman for redressal of his grievance/s. He can also ask for the loss of his time, expenses, financial loss as well as for the harassment and mental anguish suffered by him.”

Handle billing problems 

Apart from general problems, main type of credit card complains are relating to billing. Card user should get the bill at least 15 days before payment date. Even in case of any wrong item in bill, card user can ask for documentary evidence from bank. Bank can’t charge in excess of amount, which was mentioned at the time of issuance of card.

RBI Says, “Card issuers should ensure the customer has sufficient number of days (at least one fortnight) for making payment. In case, a customer protests any bill, the bank / NBFC should provide explanation and, if necessary, documentary evidence to the customer.” RBI further adds, “Changes in charges may be made only after giving notice of at least one month. Card user can surrender his card without the bank levying any extra charge for such closure.”

Unsolicited cards, calls and loans 

In case of repeated unsolicited calls from banks, you can register your name in DNCR (Do not call registry). In case of receiving unsolicited credit card, customer should return it and lodge a complaint to cancel the same. If customer receives bill for such unsolicited credit card, he can file complaint and ask for compensation also. In case of unsolicited loans, banks can be penalized if customer logs complaint.

RBI says, “If an unsolicited card is issued and the latter is billed for the same, the card issuing bank shall reverse the charges and also pay a penalty to the recipient twice the value of the charges reversed.” RBI further adds “The card issuing bank / NBFC should maintain a DNCR containing the phone numbers of customers and non-customers.

Other items 

• One or two credit cards are enough for a normal person, so customer should check the various features of credit card and select accordingly.
• In absence of any special scheme of bank, interest rates and late payment charges cumulatively is costlier than personal loan. So before going for any borrowing from credit card, customer should check other options.
• To cancel credit card, card user should stop using card well before expiry term, cut card into pieces, cancel its CVV number and return it to bank with a cover letter bearing all details of card. It should be sent by registered post. Card user should also ensure the payment of last bill received.
• Check reward point scheme of credit card, as it is important for customer who uses credit card frequently. (How many reward points have you accumulated? Know more about reward points)
• If possible, always prefer a credit card with photograph on it.
• Subscribe for SMS alert for credit card use if fee for this service is affordable. It will reduce risk of misuse of credit card.

The author is a Chartered Accountant and MBA specialising in banking, finance & insurance. Write to him at ketul.shah@moneycontrol.com

Disclaimer: The contents of the article or are for information purpose only and are in no way meant to be advisory in nature. The author does not claim responsibility for actions taken by readers on the basis of the Article. Please consult your financial advisor for your personal money management.

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