I agree with Dr SA Rao’s review. The only way to punish these unreasoning banks, which treat customers as milch cows is, to stop using their cards.
In a recent incident with my Stanchart credit card, I got hit with a late fee charge + interest, blah, blah even though I paid up before the due date. (I deposited the cheque in the dropbox at the bank on the 6th when my due date was 9th. My following statement showed the credit on the 9th.)
I called up the bank and queried their late fee charge.The bank justified it by saying that I must make the payment before "3 working days." My stand was that I deposited the payment 3 days before the due date & the fine print was not my concern.
What if, for reasons unknown, (like a bankers strike or a glitch in the settlement system or a RBI clearing house strike) it took more than 3 days for the credit to them, to materialise? Would they still charge me a late fee? After much hemming & hawing, the telecaller agreed to waive the charge when I finally threatened to stop using their card.
I have been with Stanchart since the day they launched their credit cards in India, that is, more than 10 years ago. I have always used itas a charge card, that is, paid up in full 100% before due date. You’d think for such loyal customers, these banks would show some consideration. No way !
Reason: the banks lose. They don’t need customers, like me, who pay up fully on or before due dates. To make money, they need people to pay "minimum amounts due" or delay payments, so they can charge them usurious rates of interest (36% p.a. or more)or late fee charges of Rs. 500/- or more. They then justify these horrendous charges / interest rates saying that "we are taking a huge risk as we consider this as an unsecured or uncollateralised loan." In layman’s terms, these loans are not backed by any security. (I wonder why the RBI, which is the apex regulatory body for banks in India, does not lay down the minimum/maximum rates of penal interest & other charges that the banks levy for these kind of transactions)
See, the best part of having a credit card, is you can pay for practically anything using your credit card including your electricity, landline, mobile, gas bills, your travel tickets - air/rail etc. But, people, use your card/s with care & don’t go overboard. That little piece of plastic can seriously ruin your life !
As an experienced (!) user of credit cards, here are a few of my tips on credit card usage:
Take full advantage of their max free credit period & pay up. Do this with all your credit cards. Rather, use them as charge cards.
Never ever delay your payment.
Never get into the "minimum amount due" payment trap. You end up paying delayed interest on your unpaid portion + late fees + service tax & this can be huge.
Never go for auto debit from your bank account unless it is 100% on due date & check for the transaction in your statement regularly. Keep an eagle eye on your bank statement for any sudden debits for "charges." (Actually, try to avoid this option of auto debit totally.)
5.Try paying by cheque - at least you have a record. If you pay by net banking, confirm that your savings /current account has been debited, immediately.
Never draw cash from the bank or ATM using your credit card. Beware the interest cost trap.
Oh, and this is for people who have more than 1 card - never ever try to close out the outstanding in one card by paying off from another. You end up in the high interest trap.
Finally, across the credit cards that you own, try to time your purchases with the billing cycle to maximise your free credit days. for e.g. if the billing date for one of your cards is, say, 15th of the month & the due date is the 7th of the following month, use your card between the 16th & the 7th - the max credit days you get will be 52 days and min will be 31 days.
BTW, I am sure that you will find many more of these tips on every financial website, pink paper etc, but still it never hurts to share....my 2 cents worth.
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