Interest is charged on cash withdrawals using credit cards from day one, till it is paid back in full.Money Matters Nupur Pavan Bang
I have known Sethu since at least a decade. A manager at a multi-national company, Sethu always had strong opinions against the growth of internet, internet banking, credit cards etc. He is the kind of person who feels that these developments compromise on security and lack personal touch. I was surprised when he recently pinged me on Google talk to discuss credit cards! He was contemplating taking up a credit card finally.
Sethu: Nicky, I know you are going to say that I have finally converted. Well you can say so. Credit cards have become so popular now a days that I am forced to rethink my beliefs. And honestly, I have also started to feel that it is safer to carry a credit card than cash. Since you carry many credit cards, I thought you would be the best person to tell me a bit more about them.
Nicky: You are right. Credit cards are not only safer, but they also provide credit facility for as much as 50 days if you time your purchases well. A number of banks also offer cash back, discount, bonus and reward benefits on the purchases using their card.
Sethu: The banks offer either VISA or MATER CARD mostly. Isn’t there an Indian gateway?
Nicky: Ah…the swadesi! You are in luck. The National Payments Corporation of India launched the indigenous RuPay in March 2012. You can take up a RuPay card through banks like SBI, BoB, BOI, Axis Bank, etc. RuPay is all set to give tough competition to VISA and MASTERCARD in India and abroad.
Sethu: Oh that’s nice. But how do I decide the bank?
Nicky: Compare factors like joining costs (if any), annual maintenance cost, interest rate on rollover, cash withdrawal limits and charges, reward points, special benefits etc. Credit limit being offered by the bank may also be a deciding factor. Different banks adopt different policies in calculating limits extended to the customers. Steady income, income range, good credit history, etc. are some the factors the banks look at.
Depending on these, they will offer to you an appropriate card. It could be gold, platinum, titanium, classic, world, etc
Sethu: I have heard that the rollover facility come with very steep interest rates?
Nicky: That’s right. But you should not use your credit card as a means for longer term loans. You must have the discipline to pay on time.
Also, you should not use your credit card for cash withdrawals. As the free credit period is not available on cash withdrawals and interest is charged on them from the day of withdrawal, till it is paid back in full. These facilities are available, but they should be used only in the banker event of an emergency requirement, not regularly.
Sethu: Thanks Nicky. I think I am now ready to apply for a credit card, albeit, after some research!
CIBIL and TransUnion launch ‘CIBIL TransUnion Score 2.0’
Credit Information Bureau (India) Limited (CIBIL) and TransUnion have launched latest version of the credit score — CIBIL TransUnion Score 2.0. This advanced scoring model will enable credit institutions to predict risks more powerfully and make confident lending decisions, which in turn will help improve asset quality and credit penetration.
“This scoring model will enable banks to better identify good customers, thereby enabling them to provide credit to more consumers and increase credit penetration and financial inclusion in the country,” said Arun Thukral, managing director, CIBIL
Rajesh Kumar, executive vice president and head — debt management, HDFC Bank, said, “CIBIL TransUnion Score 2.0 will help drive inclusive financing by allowing us to make sharper lending decisions even on customers with limited credit history. This will help in credit penetration and will benefit credit institutions, consumers and the industry.”
CIBIL TransUnion Score 2.0 also provides a risk index for consumers with less than six months of credit history.
Consumers who earlier obtained a score value of ‘0’, owing to less than six months of credit history on their credit report — will now be graded on a risk index ranging from 1 to 5, where 1 would mean highest risk and 5 would mean lowest risk of default. The higher the numerical value of the score, the lower is the risk profile of the individual.
The credit institutions that have adopted the new scoring model will now decide on customer’s loan application based on this new score.