New Delhi: With a high percentage of Indians going on a spending spree, more and more Indians are using credit cards today. However, many people do not fully understand the usability of the product, leading to major problems and financial losses at times.
Two experts in this field – Roopam Asthana of SBI Card Services and Bejon Mishra of Consumer Voice – shared some tips to make your credit cards work for you on the CNN-IBN Money Special programme, Swipe Smart-2. The interaction was moderated by Fatima Karan.
Roop Kishan Chowdhary from Hyderabad asks: Why are credit cards less secure than debit cards?
Roopam Asthana: The two products are fairly different from each other. It is important that we understand the difference between the two. When you use your debit card, charges are debited straight away from your bank account whereas when you use your credit card, you get a bill at the end of the month.
In my point of view, the debit card is a little more risky than the credit card because if you lose it, the account balance actually gets cleaned out.
Basically there are two concepts that underline these two cards. The concept for the debit card is - buy now pay now and the concept for the credit card is – buy now pay later when your monthly bill comes to you.
Rishab Gupta asks: I want to know the difference between Master Card, Visa card and other forms of cards.
Roopam Asthana: Let me talk about this from a consumer’s point of view, and from a consumer point of view what really makes a difference is acceptance of these marks when you carry them into a merchant outlet.
From our point of view on what we have seen in the market is that it is that, most terminals which accept Master Cards also accept Visa cards and vice and versa.
As for some of the other marks that are available on credit cards, the acceptance is not good as a Master Card or a Visa card.
On a consumer level, what do you have to say about this Mr Misra?
Bejon Misra: Let me first tell you that whether it is a debit card or a credit card, the security of all these products is of paramount importance for the consumer.
The second point is that the consumer looks at the promise- the label, which indicates that the merchandiser is going to accept the next category of cards.
When you walk in with a Master Card, Visa or others, it is mandated that they must accept them. They can’t say at that point of time that they can’t use Visa even when they are showing Visa.
Mr Asthana just said that Master Card seems to be widely accepted. What about those consumers who have Diner’s Card or American Express?
Bejon Misra: They are widely accepted but they are not accepted at times.
So what should one do when they are not? In case you have a sticker and it is not accepted, what should you do?
Bejon Misra: In that case, there has to be a strong penalisation to the merchandiser so that he loses his authority to represent that bank and that is very important.
Roopam Asthana: I think from a consumer’s point of view, what consumers need to do when they come across instances where it is been indicated that such and such is being accepted but actually not accepted, is that they need to go to the issuer and put in complaint in writing.
What is the difference between Gold Cards, Classic Cards and Platinum? Whenever you have given an upgrade, it is always a good idea to take it?
Roopam Asthana: There are a few differences between them. You get a higher limit in a Gold Card. In terms of features and benefits- you have a higher level of reward point available in a Gold Card as compared to a Classic Card. Besides there could also be some other benefits including a few surcharge benefits, which could be more in a Gold Card as compared to a Classic Card. However, the upgraded cards come with a higher annual fee.
What makes one eligible for an upgrade?
Roopam Asthana: Your usage, your credit history, income levels and cash flows determine your eligibility.
Should a consumer always go for an upgrade?
Bejon Misra: As a consumer it is good to upgrade yourself but you should be able to understand your capacity in terms of upgradation. It is extremely important for consumers to know whether he/she will be able to match the standards of upgradation that is being offered to them. This is the way he/she can evaluate his capacity. You should not over stretch your limitations.
What are these Free-For-Lifetime Cards? Are they ever totally free?
Roopam Asthana: Let me just clarify what Free-For-Lifetime Cards as it is advertised means, is that the annual fee which was earlier on being levied on credit cards is not being levied on Free-For-Lifetime Cards. However, all other fees and charges are being levied on them.
The other thing that you need to keep in mind when you go for Free-for-Lifetime Cards are the terms and conditions that could possibly be attached to them.
Even though there is no annual fee there could be a fee for non-usage or less usage of the card. And that is what the consumer needs to look out for.
Bejon Misra: We always want to tell the consumer that nothing is free so they should not get into that trap of thinking that it is free. It is important to understand all the nitty-gritty’s.
Sabrish from Bangalore asks: I have been using credit cards for five years. Recently I noticed that the credit card company was deducting additional charges from my account. When I approached them to close my account, they asked for a Rs 20, 000 charge to do that. They also deducted Rs 25, 000 from my account without my consent. What should I do now?
Bejon Misra: The first step you have to take is go to the service provider and demand that the redress should be given, as it is not genuine, and they should be able to resolve the problem.
Incase you are not able to resolve the problem with the provider then you must go the regulator or the Reserve Bank of India and write directly to the governor about the problem. They will bring clarity on this issue.
The next step would be to go to the ombudsman and then finally the consumer court as per the Consumer Protection Act. However, going to the consumer court should be the last resort because you must resolve all the mechanisms that are there firstly. And while you are following this process, consumer groups can always help you in taking the right path to resolve the problem.
So what has happened with him is wrong?
Bejon Misra: It is not fair for a person to get a deduction in his account without his consent. His consent has to be taken.
If the usage has been in an irresponsible manner then the consumer must be told about it.
Basically the consumer should be aware of his rights, Mr Asthana do you agree that what happened in this case is wrong?
Roopam Asthana: Looking at the amount that have been charged, it is not just a question of fees and charges, there is obviously more behind the problem and one will need to look at more details before one can really comment on it.
But as Mr Misra has pointed out, you have to go to your provider first and get it resolved.
What must happen for a credit card payment to be valid?
Roopam Asthana: For a credit card payment to be valid, the card needs to be swiped at an electronic terminal. There should be an electronic authorisation that should be obtained by the merchant and the charge slip that has the approval code on it needs to be signed by the consumer, and the same signature must appear at the back of the card.
The merchant needs to confirm the signature as on the charge slip with that on the card and the authorisation gets completed after that.
But the experience is that nowadays signatures don’t seem to be much needed.
Bejon Misra: Yes, it doesn’t happen the way Mr Asthana has explained because many a times you do it online. And when the card gets lost or misused you see that you have been charged because somebody has forged your signature. And it also blatantly becomes clear that the signature as on the reverse of the card is not the same.
So what must you do as a consumer, keeping in mind that it is not a safe world out there?
Bejon Misra: You have to be very careful with the credit card or the charge card. You need to keep it very safely and ensure that it doesn’t get stolen or displaced. It is very important.
The consumers shop at many places. They go to restaurants and go to many places and people are exposed to their three digits and their full digits, is it safe to do that?
Roopam Asthana: My belief is that credit cards have been in business for hundred of years. I think that it is a really safe product even today. The amount of safety on a card is being enhanced everyday by security features that are coming in. I completely believe that consumers should continue to go out and use their cards but be careful. At the end of the day it is a financial product and you need to be careful about the way you use it.
Treat it like cash and don’t lose it. Be aware of where it is and don’t keep your pin and password along with your card.
How safe are credit card transactions Online? We see Online shopping booming and at the same time there are lots of Online crime – how safe is it?
Bejon Misra: I think it is safe. As soon as you get a product, the consumer feels that it has all security dimensions. But we need to understand how we can bring in the new technology to make sure that it is safer than before. And we also have to understand that the moment the transaction is done, the consumer has to get protected and there has to be some kind of mechanism.
But how can you secure Online transactions?
Roopam Asthana: When a consumer wants to make a transaction Online, couple of thins that consumers always look at:
1. Only transact on reputed websites
2. See that the website in which he is transacting has a payment gateway. What that (the gateway) ensures that your card number and details do not go to the merchants.
D K Agarwal from Delhi asks: I was told by a friend of mine, who is in California, that I can play on International Free Lotto free of cost and you can win upto $10 million. And I am fond of games of numbers, so I played some sets of numbers and it clicked. They told me you have won $1 million. For three months now, everyday I am receiving on my e-mail, a cheque number of $1 million by name and address printed and they are asking me to fill a form to claim that amount. In the form, what their ultimate objective is to get the International credit card number along with the three-four digit printed at the back of card, which I refused.
Roopam Asthana: It sounds like a scam to me right away. The fact is – as Mr Mishra told earlier – there is no free lunch. This is absolutely a con game that is going on and this is happening not only in India but across the globe. Please, please, please do not give the card number and your security ID as well as the three-digit number at the back of your card to anybody you do not know. And if it is not a reputed website, you should not be passing all the information.
So don’t touch these kind of offers with a large poll.
Bejon Misra: Absolutely. It shouldn’t be touched and moreover such information should be immediately shared with police, government or consumer groups so that we can take immediate action on such things which are going on in terms of attracting our customers in India. So it is extremely important.
How wise are EMI schemes and what should consumers really watch out for?
Bejon Misra: Consumers must ensure:
1. They are able to absorb the amount of interest burden, which is gong to come in with the EMI scheme. Some the card service providers do say that there will be zero interest in case of EMI too, but again there will be service charges – people have to understand that.
2. EMI means you agree to pay on a particular date. And if you don’t pay on that particular date, you are liable to pay again a very high rate of interest. So, you should only agree to an EMI only when you know you can pay on time on that particular date.
What sort of insurance do you recommend with credit cards?
Roopam Asthana: There are two forms of insurance that are available on credit cards. One, what we call is the free insurance, which is largely the personal accident insurance and some travel related insurance like delayed flights, lost passport or the delayed luggage.
The other form of insurance, which is available with credit card, is paid insurance. Which includes payment protection, medical insurance and personal accident plans.
These are two separate form of insurance, which are currently available on credit cards.
Bejon Misra: Well, they are available, but most of the consumers do not know about them. It is very important for the service provider to make sure that all the insurance coverage, which are there, people know about it. And that’s very important. I heard a news recently that some people, who are victim of blasts, have got paid because they are card holders. That was a very good news, people must know about it.
Are there dearth of information?
Bejon Misra: There is absolutely no information to card holders in terms of such coverages – whether they are free or not free; or whether they are charged or not charged, we need to know that.
Roopam Asthana: These are the extra benefit that are available on credit cards and I think it makes sense for people to read terms and conditions that come to them because that gives lot of information about the benefits that are available.
How safe are credit cards to use abroad? Are there any major benefit to it?
Roopam Asthana: Use of credit cards abroad is a very very safe means of transacting. But, I think the most important point is really to do with RBI regulations on use of credit cards overseas. I want consumers know that, according to RBI, there is actually no limit on the amount that you can use overseas on your credit card. Unlike in case of travelers cheque or currency, where there is a limited amount that you carry outside with you, on credit card, you can actually use unlimited amount.
If I have an Indian credit card, which got stolen abroad – what should I do?
Bejon Misra: You should report it to the service provider right away, without delay and the nearest police station, if you can. But, let me tell you here, in international credit card safety, you also have to understand that there are instances when your card abroad also gets hacked. You got to be very careful, which outlet you are using and which country you are using.
Roopam Asthana: Just to add to what Mr Mishra is saying – another mean of communicating is through Visa and Master Card helplines, which are available across different countries. You should carry those numbers when you go overseas. In case you are not get to your service provider, which is based in India, call Visa and Master Cards, and they are going to help you.
In case things go wrong here back on the ground (India), where should consumers ultimately go if they get into trouble with their service providers?
Bejon Misra: Well, there is 24x7 consumer voice helpline – 012439898080, that’s the place where I think we all wait to hear from people.
Is there any other institution?
Bejon Misra: National Consumer Helpline, RBI – RBI is the regulator. The Governor of RBI should know if somebody is not doing the job.