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Primer

A quick brush-up on the basics of why a card, before we get into details. Cash is always riskier to carry, and ofcourse there is a limit to the amount you can carry in your wallet. If you are looking for an alternative to cash, you could choose between various types of cards - credit, charge, debit (See our article on credit, debit or charge card).

This article focuses some of the value added features of cards. The basics are explained in "How to Select a Credit Card" , the primer on the debit card and on the charge card. Briefly, apart from the cash angle, there are perks like personal accident cover, lost baggage cover, the ability to use a card globally, discount at shops, restaurants and airline tickets etc. Nowadays, you can also issue cheques against your card limit and order drafts over the phone.



Some of the perks are detailed here in this section:

startred.gif (865 bytes) GLOBAL ACCEPTANCE

A Global Card enables you to use your credit card when you are overseas. It is therefore very convenient for those who travel abroad frequently.You can spend in dollars or any other foreign currency and settle the dues in your local currency. Your credit limit is based on the Basic Travel Quota (BTQ) entitlement, and if this is more than your assessed credit limit, you could buy travellerís cheques. You can also withdraw cash up to US$ 500 against the card.

Another advantage is that banks are not charging extra for the card over the local credit card.

startred.gif (865 bytes) TRAVEL DISCOUNTS

This offers a facility whereby cardholders get exclusive discounts upto 3.5 % on basic domestic air fares and upto 6.5% on basic international air fares. This is applicable only when the amount is charged to your credit card & booked through the associates (like M/s Cox & Kings India Ltd) of your card company.

startred.gif BUY-ON-THE-SPOT

A facility for availing Equated Monthly Installment (EMI) billing options for a wide range of high value purchase items – like consumer-durables, computers, 2-wheelers, cellular phones etc. The cardholder has to ensure that the outlet he/she is purchasing from has a tie-up with your card issuer

startred.gif (865 bytes) REVOLVING FACILITY

Under this offer, one needs to pay only the "Minimum Payment Due" which is normally 5% of the outstanding balance amount, while the balance can be carried forward to the next month's statement . As a policy, it is advisable for the cardholder to pay the whole amount on the due date as interest charges for the balance could edge around whopping 36%p.a .

But as most of the card holders do not, this facility actually becomes a major revenue earner for the card company.

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startred.gif (865 bytes) FREE CREDIT PERIOD

Your Statement is generated every month on a specified date called Statement Date. The Payment Due Date is generally 20days from the Statement Date. If any transaction is billed to your card account one day after your statement date & therefore reflects only in your next statement, you enjoy a maximum of 50 days of free credit. In any case, since your Payment Due Date is always 20 days after your statement date, you always get a minimum of 20 days of free credit.
Consequently, on an average, your card provides you with 35 days of interest free credit period.

Again the card holders here have to read the fine print. The free credit of 20 days is available provided the Total Payment Due shown in the previous Statement is settled in full. Otherwise you will be charged interest on the outstanding balance right from day one.

startred.gif (865 bytes) INSURANCE

Credit card companies offer their members a comprehensive insurance cover, which includes

Personal accident insurance-This covers air accidents, road accidents or otherwise .The amount insured differs across the categories and again varies from one player to another. Citibank Silver card gives an Air insurance of Rs 10,00,000 and General insurance of Rs 5,00,000.

Insurance for spouse/supplementary card holder- This includes the above mentioned Personal accident insurance for spouse/supplementary card holders. ICICI Bank Sterling Silver card gives an add-on cover of Rs 4,00,000.

Baggage Cover-This provides cover against the loss of one’s baggage while travelling. This feature is not standard on every credit card and frequent travellers may find this feature useful. The baggage cover for Canara Bank Mastercard is Rs 25,000.

Purchase protection -The purchase protection feature automatically insures all items bought on the credit card from damage or loss due to fire or theft, upto a certain some of money. This generally works out to around Rs 40,000 worth of cover.

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startred.gif (865 bytes) GLOBAL ATM ACCESS

Within India, you could have access to any time cash withdrawals from ATM's of the card company.
In case of Standard Chartered bank, you can also withdraw cash from all ATMs in India which are participants in the Visa/MasterCard domestic ATM Networks.
When travelling abroad, you can access cash from any one of the 450,000 ATMs bearing the Visa / Plus logo ( in case of Visa cardholders), or anyone of the 400,000 ATMs bearing the MasterCard /Cirrus logo (in case of MasterCard cardholders). Other players like Citibank, HSBC, ANZ Grindlays also provide similar facilities to their members.

./images/startred.gif (865 bytes) PRIVILEGES AT SELECT HOTELS/RESTAURANTS

These include exclusive offerings like dining programs at specially selected restaurants across India, offering discounts upto 25%. Special discount on room tariff, free stay for spouse, express check-in and late check-out at no extra charge are some of the benefits .

startred.gif (865 bytes)  REBATE ON IBTC MEMBERSHIP

For overseas travellers, you can also avail of a 55% discount on the regular membership fee of the International Business Travellers Club (IBTC) which allows you to save upto 50% in over 3500 star hotels worldwide and upto 15% on rentals of cars like that of Hertz Rent-a-Car at over 4700 worldwide locations.

startred.gif (865 bytes) AIRPORT LOUNGES

Access to business lounges and to fax, telephone, telex and secretarial services at domestic airports in leading metropolitan cities like Calcutta, Chennai, Delhi, Mumbai.

startred.gif (865 bytes) CASH ADVANCE LIMIT

Normally the cash advance limit is set as a percentage of your credit limit which is around 40%. The cash advance fee taken through ATMs in India and overseas is very high nearing 2.5% ( watch out as this is charged on a daily basis at monthly compounding ). Mind it that’s not all, there is also a transaction fee that might be slapped on the card holder if the ATM used is not that of the card conpany.

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startred.gif (865 bytes) TELEDRAFT
Card members can order bank drafts through telephone and even have them delivered to their doorstep. Again nothing comes free, as there is a teledraft fee which is around 2.5% of the teledraft value, subject to a minimum fee.

startred.gif (865 bytes) PETROL AGAINST CARD

Your Card will be accepted at all petrol pumps across India with whom the card companies have a tie-up. A transaction fee of around 2.5%, which is the industry practice, will be levied. This fee is waived for Co-branded cards like Citibank Indian Oil Mastercard.

startred.gif (865 bytes) SUPPLEMENTARY CARDS

If you opt for two or more cards (Additional/Supplementary), your combined credit limit will now be available across all your cards. No worrying about exceeding your credit limit on any one card as long as you do not exceed your combined Credit Limit.

startred.gif (865 bytes) RAILWAY TICKET BOOKINGS

Indian Railways provides a separate booking counter for credit card holders which allows them to book railway tickets using their credit cards. So you can say adieu to serpentine queues and sleepless nights near the railway counter.

startred.gif (865 bytes) EXPRESS RETAIL LOANS

Some banks like ABN AMRO bank offer a cut in interest rate upto around 1.5% on their retail products like auto loans and consumer loans. Processing time is also reduced as your credit worthiness is already appraised. This strategy has been used by various players to cross sell other products to the existing customers.

startred.gif (865 bytes) PAYMENT OF ELECTRICITY AND TELEPHONE BILLS

Some banks like Citibank allow you to pay electricity and telephone bills and even your children’s school fees using your credit card. Check out for the ECS( Electronic Clearing Service) facility whereby the bills will be automatically debited to your Bank account.

startred.gif (865 bytes) RAILWAY CREDIT CARD COUNTERS

These special counters for railway tickets at key cities in India normally have shorter queues. A processing fee, as per industry practice and as applicable, will be levied for this facility.

startred.gif (865 bytes) OVERSEAS PURCHASING

You can use your card to subscribe to your favourite foreign magazines like the Economist, Harvard Business Review.

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