Hit by credit card blues? Don't stay mum

Nivedita Mookerji

Credit card blues: Is there a way out? A recent finding recommends that education and awareness about plastic money is the only way to make credit cards ``a moving ally and not a snake in the pocket''.

First, the blues:

6 a.m. The phone rings. No it's not the MTNL wake-up service call. It's a recovery agent screaming at you that your cheque to the credit card issuer (Citibank in this case) has bounced. Not only that, he's threatening to come over to your place right away to recover the amount. You wake up fully, and tell him to wait till the next day. He agrees. You call up the concerned bank to find out about the status of the cheque in question. The bank informs you that the cheque has been cleared. It's another matter that the recovery agent never showed up after that.

You've gone out shopping to your favourite store -- in this case, Weekender at Greater Kailash in New Delhi. After an hour of looking around, you've picked up just the right things. It's time to pay the bill. The cash counterguy looks at your credit card (issued by Stanchart) and says sorry. Only Amex cards accepted here, he says. You try telling him that you've always bought on the Stanchart card at the same outlet. No point, he's not ready to listen to you.

It's festival season and most stores are offering some discount or the other. But as soon as you begin to pay by credit card, the discounts fall. The list could go on and so the feeling that credit card is a pain.

But no, says Vijay Mehta, Chief Consultant, Credit Card & Management Consultancy (CCMC). ``It's a highly useful instrument in the modern day living, and it depends on the user, to a large extent, to make the best of it,'' he says.

In a study conducted by the CCMC recently, which involved a survey of 10,000 customers holding credit and charge cards in 15 cities across the country, it was found that most cardholders in India are ignorant about credit card usage. For instance, consider this:

Out of those questioned, 65 per cent cardholders areunaware of the high interest rates charged on outstanding card balances and so they pay more than what they believe they are paying, says Mehta.

Also, 78 per cent of the cardholders are unaware of the difference between credit and charge cards.

Another revelation is that 67 per cent of the cardholders are unaware of the financial loss they could suffer in case of loss of card.

And 84 per cent of cardholders believe that they are entitled to an interest-free period of 30 days or more in all situations, whereas in reality interest-free period is applicable only in those few cases where the monthly bills are settled in full.

Even as rewards/points programmes are considered a major value by customers around the world, 80 per cent of cardholders do not have this benefit on their cards.

70 per cent of the cardholders are not aware of a charge on outstation cheques.

Mehta, who was earlier a senior banker in ANZ Grindlays, states: ``It is surprising that a majority of the 3million cardholders, in the Rs 70,000-million Indian card industry, are ignorant of the fundamentals of card products such as interest rates being charged on outstanding balance.''

He adds, ``Through this study, we have come to realise that there is a wide discrepancy between what card customers know and what the reality is. Therefore, there is an urgent need to educate cardholders. Our study will provide individuals with the right knowledge to enhance card literacy and help create a well informed card base in the country.''

So the onus is on the card issuers to educate its customers about the various facets of credit card, according to Mehta. And it's on the customer to learn more about his rights in this context, and put it to use, he adds.

Education and awareness is all fine, but what when the customer is helpless despite his knowledge of what is right? Like in the case cited above, when a cardholder is woken up one morning by a recovery agent. Replies Pushpendra Mehta, another consultant at CCMC:``There's a clear code of conduct laid out by credit card issuers (banks) to the effect that recovery agents should not resort to any unruly measures.'' However, banks are outsourcing this service and are not directly responsible for the conduct of the recovery agents, says Pushpendra. ``Since the rate of commission is quite high (between 2 and 10 per cent on the recovered amount) for the recovery agents, they sometimes cross limits,'' he adds.

But what does the credit card holder do in a situation like this? ``Inform the issuing bank immediately,'' answers Pushpendra. And his reply is the same, whether it's an unlawful tactic by a recovery agent, a merchant refusing a credit card, or a shop lowering a discount on credit card purchases. Pushpendra's logic is simple: ``No bank will like to be in news for nefarious activities.'' So, if the customer informs the issuer about his inconvenience, it will make an attempt to rectify the aberrations. If it doesn't, speak up again. Unless the customer takes up theissue on a war-footing, nothing will work. And we'll fall into the same trap as many developed countries. Their mistake was they began their credit card education campaign late in the day, says Pushpendra. If we make a beginning now, our education campaign is sure to succeed, he asserts.

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