Due to poor literacy rate in India, the ordinary public could not resist the temptation of having Credit Cards by so-called Modern Bankers like:
- HSBC Bank Ltd
- Barclay’s Bank Ltd
- Deutsche Bank Ltd
- HDFC Bank Ltd
- Axis Bank Ltd
- ICICI Bank Ltd
- Yes Bank Ltd
- Kotak Mahindra Bank Ltd
Most of these private Banks issued Credit Cards recklessly to the existing customers of PSU Banks like State Bank of India, Punjab National Bank, and other Banks just to increase their customer base. These Banks issued the Credit Cards without verifying the Income Tax Returns and Sources of income. Only yesterday one of the Private Banks issued a Credit Card of the Value of more than 5 Lacs without verifying the ITR and Source of Income and even their Credit Card Sales executive advised my friend to just declare and fill in the income as 6 lacs per annum in the Credit Card application and she also told him that it will not be verified. The Credit Card issuing Banker exclusively relying upon the CIBIL Credit Report issued the elite Card for Rs.5 lac to my friend.
In case a thorough research and study are carried out in India, these private banks issued the Credit Cards to illiterate people and less educated people without educating them properly about the uses and misuses of the Credit Cards. As I meet a good number of people while dealing with their CIBIL Problems, I am of the confirmed opinion that a large portion of the Credit Card Holders was ignorant about the dangers of having Credit Card without any purpose. The public at large is paying a heavy price for the unethical practices being followed by these private banks as the unaware public is trapped in Credit Card related Debt and it will not be a wonder if such people, caught in Debt Traps due to Credit Cards, are driven to Suicide Tendencies similarly as farmers are making suicided in India after getting trapped under rural indebtedness.
When I asked them a few questions as under I was stunned to listen to their answers:
My Question: Do you need Credit Card and Why did you get the Credit Card issued?
Reply by affluent People: When the Bank people opened my Saving Account and Fixed Deposit I have been issued the Credit Card as complimentary. I have neither opened the Envelop nor I ever use the Credit Card. When asked if some SMS were landing on your mobile the reply was in affirmative and when investigated further the Annual Maintenance Charges on the Card had piled up to the tune of several thousands of rupees resulting into Bad CIBIL Report and Poor Credit Score making the person ineligible for any loan, Guaranteeing any Loan, Getting Employment in Financial Sector, Obtaining Visas and Taking part in the e-tendering process of Government and Big Companies etc etc.
Reply by Kite Flyers: Sir, I have got issued the Credit Cards for about Rs.50000 from 4-5 Banks and every Bank provides 45-50 days interest-free credit. I swipe the Cards at POS or Petrol Pumps and take Cash from the Merchant who deducts small amount. I use the Cash for 40 days, Swipe the other Bank Card just to repay the Previous Card Payment and the Circle goes on.
My Question: Do you know what is CVV Number and its importance?
Reply by All: Though they knew that CVV Number is a 3 digit number at the Back of the Credit Card to complete the Transaction but none of the Card Holders had erased the CVV Number to protect against the misuse of Card in case it was lost.
My Question: How do you check your Credit Card Statement and Repay the outstanding amounts?
Reply by All: Most of the Card Holders (More than 80%) had no access to their Credit Card Statements online and they were making the repayments either in Cash or through Checks at the fag end of the due date without checking if the payment was credited before the due date or not. Moreover, the Card issuing Bankers send SMS like, just for example – Minimum Due: Rs.536-00 Total Due Rs.12485-00. None of the Card Holders was able to tell the difference between the 2 and they were casually depositing the Minimum Due without realizing that even a small amount of default in Credit Card Dues can pile up into a big amount of liability.
My Question: How do you Dispose Of your Credit Card?
None of my clients could provide a satisfactory reply to this million dollar question and that’s why I have come up with this article with the title: “7 Precautions while Disposing of Your Credit Cards”
During my CIBIL Investigation and Solution Process, I have encountered one of the Card Holder who used the Cards to the tune of Rs.40000 (Sanctioned Limit) in 2006 and lost the Card just to notice after a gap of 12 years the Bank was had reported an outstanding of about Rs.9.80 lacs to CIBIL in 2018. During the intervening period of 12 years, the Card never appeared in the CIBIL Report and the Bank had written off the dues amounting to Rs.70000 approx in the years 2008 due to the untraceable card holder. The Bank did not prefer to file suit and the outstanding Loan was Time-Barred. The concerned Bank sold their outstanding Credit Card Dues to some Asset Reconstruction Company, who got the data updated in CIBIL updated with outstanding overdue of approx Rs.9.80 Lacs in 2018. It was a bolt from the blue for the customer.
There are thousands of such cases in which CIBIL Reports of few people are damaged by their own faults but in the majority of the cases, the CIBIL Reports are damaged due to unethical practices being followed by the issuing Bankers to illiterate, unqualified and ineligible persons who were issued Credit Cards beyond their means and capacity to repay.
7 Precautions while Disposing of Your Credit Cards: (Total: 15 Precautions)
Treat your Credit Card, even if it is for a small amount, very carefully as its wrong disposal can not only damage your Credit Reputation but it can eat away all your lifelong savings as elaborate above when a Credit Card with Limit of Rs.40000 swindled into a liability of about Rs.10 lacs as Credit Card outstanding, if not paid on or before due date, attract interest at the rate of 36% to 48% per annum and the outstanding amount gets Tripled in 2 years, Multiplies by 9 times in 4 years in Geometrical Progression. Interest Rates and Charges can be changed by Card Issuing Bankers at short notice of up to 2 weeks. Please keep in mind the following
points while dealing with Credit Cards and Disposing of them.
- As per one of the Research Article published in the Financial Express on March 24, 2018, it has been established beyond doubt that while you can pay off your personal loan in EMIs of 36 to 60 months, it may take even decades to clear your credit card dues if you keep paying only the minimum amount due? According to one rough estimate, if your credit card outstanding balance is Rs 2 lakh and the interest charged is 40%, then it will take about 15 years to clear your dues if you continue paying only the minimum amount due each month. And if you keep delaying this payment just by a few days (on which late charges are levied every month), then you may not be able to clear the dues in your lifetime also! Use the Credit Card Judiciously and Clear all the Dues Before Due Date.
- Keep the Copy of the Physical Application or Online Application as a Personal Record so as to know the basic Terms and Conditions of the Credit Card.
- Once you get the SMS that Card has been issued – Track the Card carrying courier till you actually receive it and make sure that the envelope containing the Credit Card is not tampered with.
- While applying please ensure that you have given only Non-Generic Email ID with 2-Step Security enabled and Post Paid Mobile Number as Prepaid Mobile Numbers can be Recycled Mobile Numbers. If not, change it before using or activating the Credit Card.
- Inform your Legal Heirs about your Credit Card Holdings so that they can get the Credit Card Account closed immediately on the death of the Card Holder.
- Memorise the CVV – a three digit number on the back of the Credit Card and erase it from the Card so that in case you lose the Credit Card, it can not be misused as CVV (Card Verification Value) is the lifeline of any Debit or Credit Card.
- Keep the Credit Card in Safe Custody and do not waste even a minute to report its loss to the Card Issuing Bank with Proper Complaint Number, Date and Time. It is always better to report the Loss through online Banking Portal of the concerned Bank from which you access the Transaction Details of your Credit Card.
- Check your Credit Card Statement regularly for any unwanted and unauthorized debits of Charges, Interests or failed Transactions.
- Foreign Currency Transactions attract Mark up Fees ranging from 2% to 3.5% along with GST. As the Mark Up fees are recovered late please co-relate each entry with the main transaction.
- Do not use Auto Payment of Bills Facility as Bills issued by 3rd parties like Mobile Operators, Electricity Boards may get automatically paid from Credit Card even if the service provider issues an inflated bill. Once the payment is made it becomes difficult to get the refund but the inflated bill can be got rectified before its payment.
- While making online payments through Credit Cards never save the Card Particulars for future use as online websites provide free trial services for 1-2 months if you provide and save your credit card numbers. After the expiry of the Free Period, the annual service charges get paid automatically if you forget to cancel the Free Trial Period before the expiry date.
- Subscribe to Silver Credit Health Checkup Plan offered by CIBIL Consultants to check the Status of your Credit Card in the reported outstanding in the CIBIL Report on the fortnightly basis.
- While getting the Credit Card account Closed, Never surrender the original Credit Card in full. First of all, see that CVV is erased and Credit Card Number and Expiry Date is defaced. Then cut the Credit Card into 2-3 pieces in front the Bank Officer and throw away the pieces of the Credit Card in Dust Bins at least 2 different places so as to avoid misuse by reassembled Credit Card with the full length of the Black Magnetic Tape which can be read by the Card Readers.
- Insist for Digital No Dues and Closure Letter of the Credit Card in your registered email with the official confirmation that the Credit Card has been deactivated and closed.
- Now the Credit Cards come with Dual Chip and PIN technology to be used at POS Machines. Change the PIN regularly to safeguard your interests.
- After closing the Credit Card account Check your CIBIL Report again next month so as to ensure that the data is updated in CIBIL and the Bank has properly closed the Card Account as Banks are in the habit of keeping the account in ACTIVE status with Zero Balance which can be very Risky.