The free credit card fraud

Most banks in India have now shifted to giving free credit cards for life and promising a whole lot of freebies ranging from add-on cards to your pet dog to free entry into some shady pubs.

This is probably another paradigm thrift in the retail banking industry.

Most credit card owners used to convince one bank to give a credit card for free in the first year which most banks used to agree. Next year when asked to pay the yearly fees they used to approach another bank and manage a free card from them. To the banks chagrin, they used to use the credit card more like a debit card unlike the USA by paying the entire bill promptly before the due date. Thus the banks were saddled with unprofitable cribby customers.

But look before you leap into this free card jamboree. There are enough clauses that would make banks make money. They are

1. An absolute amount ranging from Rs.250 to Rs.500 as late fees instead of a percentage of the bill amount. So even if you forget to pay a small bill of Rs.200 you will end up paying more than that as late fee.

2. A non-usage fee of Rs.150-250 for non-usage. So if you forget to use this free credit card for a period of 6 months, then again you have to pay up.

Plus some things would never change like the lousy customer service where you have to actually press a wrong button on the menu like ' lost my credit card' to actually be able to speak to some customer service agent in the limited time you have. In fact I have noticed that sometimes half a days work is lost in assessing the customer service desks of these banks, reminding you of the good old days where a Mrs.Lele at a PSU bank would handle all your problems if you went between 9am to 1 pm there.

Thus using the ruse of a free credit card, the banks are trying to gain atleast Rs.500 worth of non-bill related income from us. Foretold is forewarned.