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Head Scratchers

Its said "confusion is the sign of wisdom".Are you wise enough not to get confused?
we have tried to provide answers to common head scratching questions. If however, you have any specific query, please contact us and we will try and get back to you.

Frequently Asked Questions
1. What is a credit card, charge card or debit card? How does one differ from the rest ?
2. How many types of cards are there in India?
3. What is the difference between a gold, silver and a standard card?
4.What are the advantages of using a credit card?
5. What are the various types of insurance cover available through credit cards?
6. What is the procedure for owning a credit card?
7. What is the minimum salary required for taking a credit card?
8. What are reward points ?
9. How much does it cost to own a credit card?
10. What needs to be done in the event of losing the credit card?
11. Is it prudent to pay through a credit card even though I might be having cash ?
12. How can I protect my credit card from misuse?
13. What are the eligibility norms to get a credit card?
14. What is the life insurance feature provided by credit cards?
15. What kind of insurance is given for a spouse/supplementary card holder?
16. What is baggage cover?
17. What does the purchase protection feature of credit cards mean?
18. What is a credit shield?
19. What is a supplementary or an add-on card?
20. What is the entrance fee for a credit card?
21. When do I have to pay the annual fee?
22. Is it advisable to use the cash advance facility?
23. How much risk iam exposed in the event of losing the credit card?
24. How are the fees levied when I delay my repayments?
25. What is a Global Card?
26. What are the advantages of owning an international credit card?
27. Can a bank issue a single credit card usable throughout the world?
28. Should I pay in foreign exchange for using the card in India?
29. Can I use my card to buy foreign exchange for my foreign travel?
30. Can I obtain foreign currency notes against my card?
31. Can I retain the unspent forex on my return back to India?
32. Can the international credit card be used to make dollar payments in Nepal and Bhutan?
33. What is PIN?
34. What happens if I lose my PIN?

 

1. What is a credit card, charge card or debit card? How does one differ from the others?
A credit card, as the name suggests, gives you credit - obviously for a charge. The days of credit one gets could range from 20 - 50 days depending on the date when one made the purchase. You can choose to pay your entire dues at one go, or stagger them after paying the minimum amount due every month. Besides this, it entitles the member to plethora of benefits like travel discounts, discount on retail loans.

A charge card is pretty similar to a credit card with one major difference. With a charge card you have to pay the entire dues within the credit period and cannot carry over any balances like a credit card.

A Debit card is basically like an ATM card on the move (or like your bank account on the move). It enables you to access your bank account for payment. When you make any purchases using a debit card, then your bank account is instantaneously debited to the extent of the purchase amount.

2. How many types of cards are there in India?
In India there are basically three types of cards namely Visa, Master Card and Amex. Participating banks like ANZ Grindlays, BoB then issue these cards to the subscribers. Both Visa and Master Card have been popular in India and Amex a relatively new player in India as it issues its cards only through American Express Bank.

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3. What is the difference between a Gold, Silver and a Executive Card?
Gold, Silver and Classic/Executive are the terms used by issuing banks to differentiate between the levels of services offered on each. On the premium segment is the the gold card which gives higher insurance covers, more privileges and discounts. Here an element of prestige does form an important factor for subscribing to such cards. But it does come at a cost as these cards have the highest fees and service charges associated with them.

4. What are the advantages of using a credit card?
Cash is always riskier to carry, besides the limit to the amount you can carry in your wallet. That's where credit cards come handy. Not only can you spend upto your given credit limit without having to worry about carrying cash, nowadays you can also issue cheques against your card limit and order drafts over the phone. Credit cards entitle you to other benefit like discount at shops, restaurants and airline tickets. Most credit cards also offer personal accident cover, lost baggage cover, etc. You get interest free money for 45 to 50 days. A global card assures you of spending in any currency and settling your dues in your home currency. But for a shop-a-holic, a card could be akin to a drug. The hard fact is that a credit card can only postpone payment, not waive it! The charges for carrying over the outstanding balance amount over and above the free credit period can touch around 36% on an annualised basis.

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5. What are the various types of insurance cover available through credit cards?
A useful feature, which is now standard for credit cards is an insurance cover, both personal and on the articles purchased on the credit card. The amount and the type of insurance cover provided is largely determined by the type of credit card owned (whether gold, silver or executive). Gold cards typically carry the highest insurance cover for its members.

Among the types of insurance are: Personal accident insurance - this covers air accidents, road ac cidents etc. The amount insured differs across the categories and again varies from player to player. Some cards cover insurance for spouse/supplementary card holder as well.
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.
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 sum of money. This generally works out to around Rs 40,000 worth of cover.


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6. What is the procedure for owning a credit card?

Get in touch with an issuing bank like Standard Chartered, Citibank, or Bank of Baroda and ask for an application form. Submit the application form along with documents that basically verify your income, age and place of stay. If the bank is satisfied with your credit worthiness, the bank will send you your card by mail.

7. What is the minimum salary required for taking a credit card?
Minimum salary criteria differs on the type of card you are applying for and is always higher for a Gold card. But one could say that you need a salary of at least Rs. 70,000 per annum for an ordinary card and Rs. 1,80,000 per annum for a gold card.

8. What are reward points ?
To encourage frequent usage of cards, the card companies introduced the concept of reward points. For Citibank card holders, every 100 rupees worth of purchases made through the card, the card older gains one point. These points could be redeemed for gifts, select product purchases and even for paying the annual fees. So every point would be equivalent to one rupee. For Standard Chartered card holders, every 125 rupees worth of purchase made through the card makes one reward point.

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9. How much does it cost to own a credit card?
The basic cost involved in applying for a card comprises the joining fee and the annual fee. Typical joining fees (a one time payment) vary between Rs 100 and Rs 1,000. The annual fee is levied each year to continue membership on the card. For example, Standard Chartered Classic card charges Rs.800 as the annual fee. The lower annual fees are around Rs 400 while the higher ones are around Rs 2,000. These fees are payable in advance, and the issuing banks automatically bill these to your credit card in the first monthly billing statement, and thereafter, each year.

10. What needs to be done in the event of losing the credit card?
Inform the bank immediately in the event of losing your credit card. The bank then immediately freezes your card to prevent any fraud. You are protected from settling any expenses on your card the moment you inform the bank. (Watch out some card issuers do put the risk on the customer even after the event of loss is intimated). But you will have to pay for all the purchases fraudulently made on your card, before you report the loss of your card. Normally, after reporting the loss, your liability is restricted to Rs. 1,000. Besides this, you will be expected to pay for the issue of a replacement card.

11. Are there advantages in paying through a credit card even if I have cash handy?
With a credit card, you can delay payment of the bill by up to 50 days. Also, most card issuers give you a discount on the next year's annual fees if you make purchases over a certain specified amount on your card.

12. How can I protect my credit card from misuse?
Check out our section on how to combat credit card frauds, we stacked it with tips.

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13. What are the eligibility norms to get a credit card?
Any credit card issuer looks for a minimum income level, which serves as the starting point while applying for a card. It also looks for a regular and steady source of income, as the crux of the decision in giving a credit card is whether or not the holder will be able to repay the expenses incurred through the credit card. (Of course, there is a whole issue of can repay, apart from will be able to repay, but we'll leave that for later).
Income requirements vary across players, ranging between Rs 60,000 per annum and Rs 2,00,000 per annum, depending on the type of card you choose.

14. What is the life insurance feature provided by credit cards?
Every credit card holder is insured for a certain sum of money, which is paid upon the death of the individual. The insurance cover varies between bank to bank and depends upon the type of card owned. For example, each member of ANZ Grindlays Gold Card is insured for a sum of Rs 500,000 (in case of a general accident) and for 1,000,000 (in case of an air accident).

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15. What kind of insurance is given for a spouse/supplementary card holder?
Card issuing companies provide an insurance cover for the holder of a supplementary or add-on card or for one's spouse. The amount and the type of insurance cover provided is largely determined by the type of credit card owned (whether gold, silver or executive). Gold cards typically carry the highest insurance cover for its members. The insurance cover can very between Rs 50,000 to Rs 500,000 depending on the issuing bank and the type of card owned. This feature however is not standard on all credit cards and users may well check this out before making their decisions on the card they would like to own.

16. What is baggage cover?
The baggage cover provides the safety of insurance in the event of losing one's baggage while travelling, useful for frequent travellers .This cover is a normal feature of Gold cards and International Credit cards and generally not available for other credit card types.

17. What does the purchase protection feature of credit cards mean?
A member of the card if provided this cover automatically insured against all items bought on the credit card. The insurance is for damage of the product purchased, its loss due to fire or theft up to a certain sum of money.

18. What is a credit shield?
Sometimes due to death of the card holder, the onus of payment of the card bills falls on his/her spouse or parents. The credit shield feature provides for a waiver of payment of outstandings on the card up to a certain limit of such card holder.(This could be around Rs. 25,000 worth of cover)

19. What is a supplementary or an add-on card?
The Supplementary card/add-on card fee is the fee payable per additional card that a member may request for his close family member like father, brother, sister or spouse. Any card under this head come at a fee, which varies between Rs 150 to Rs 800. One thing noteworthy in a supplementary card is that your credit limit remains the same. To be precise, your credit limit gets divided between the main card and add-on cards since an add-on card does not get additional credit limit. On the statement date, you are given a comprehensive bill which includes the payment made through both the cards.

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20. What is the entrance fee for a credit card?
The entrance fee or the joining fee is payable on approval of your application form. Again this fee varies depending upon the issuing bank and the type of card requested and is somewhere between Rs 100 to Rs 400. More often than not, this fee is waived.

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21. When do I have to pay the annual fee?
After approval of your application form, the card company bills the annual fees into the first billing statement.. The annual fee is not paid for in cash and is payable in advance. The annual fee and could be as low as Rs 400 or could go as high as Rs 1,600.

22. Is it advisable to use the cash advance facility?
Cash advance facility should be used only when absolutely necessary. The interest rate is very high, usually around 36%. Cash advance fees are chargeable on a daily basis. That's not all, besides this the card company charges in the range of 2.5% per transaction as a transaction fee.

23. How much risk iam exposed in the event of losing the credit card?
You are protected from settling any expenses made through your card the moment you inform the bank about the theft. (Watch out some card issuers do put the risk on the customer even after the event of loss is intimated for around 30 days). But you will have to pay for all the purchases fraudulently made on your card, before you report the loss of your card. Besides this, you will be expected to pay for the issue of a replacement card.
Normally, after reporting the loss, your liability is restricted to Rs. 1,000. So in the event that you lose your credit card or it is stolen, inform the bank immediately. The bank then deactivates your credit card to prevent any fraud.

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24. How are the fees levied when I delay my repayments?
It is prudent to pay off at least the minimum amount due on out standings every month. This because the late payment fees are very high around 15% of minimum payment due or 2.5% of the total outstanding balance. Late payment fees are chargeable after the stipulated 'interest-free period'..

25. What is a Global Card?
A Global Card enables you to use your credit card even when you are overseas. You can spend in dollars or any other foreign currency and still settle the dues in your local currency. Point to note here is that your credit limit will be based on the basic travel quota (BTQ) entitlement.

26. What are the advantages of owning an international credit card?
A Global/International Card enables you to use your credit card even when you are overseas. You can withdraw cash up to US$ 500 against the card You can spend in dollars or any other foreign currency and still settle the dues in your local currency. Point to note here is that your credit limit will be based on the basic travel quota (BTQ) entitlement.

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27. Can a bank issue a single credit card usable throughout the world?
Yes, a bank can issue a single credit card which you can use throughout the world - the global card. Its just that the limits of the money that you can spend in foreign currency is determined by the RBI based on certain norms.

28. Should I pay in foreign exchange for using the card in India?
No. The entire rupee related payments made through the credit card has to be settled in rupees.

29. Can I use my card to buy foreign exchange for my foreign travel?
Yes. This could be had from an authorised dealer or a money changer. This can be used for meeting your business travel expenses or your basic travel quota. However, no forex can be taken when travelling to Nepal or Bhutan.

30. Can I obtain foreign currency notes against my card?
Yes, you can obtain notes upto US$ 500 or its equivalent when going abroad. The rest of your entitlement can be obtained in the form of travellers' cheques denominated in foreign currency.

31. Can i retain the unspent forex on my return back to India?
Yes but upto a certain amount.It is permisible to retain foreign currency notes upto US$2,000 or its equivalent and any currency notes exceeding this amount hasd be surrendered to an AD (Authorized Dealer) within 90 days of your return to India.

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32. Can the international credit card be used to make dollar payments in Nepal and Bhutan?
One has to make payment in these countries in rupees only. Forex liability should not be incurred using the credit card in these countries.

33. What is PIN?
PIN or the Personal Identification Number is unique to every card and is a combination of numbers. It is normally a 16 digit number with the first 8 digits reserving information about the card issuer and the country. The next 8 stores customer information like the category of the member ( whether is a businessman, individual or NRI ). The PIN serves as a key, which allows you to avail certain services like cash withdrawal from automatic teller machines. This number is very important and must be stored carefully. Most credit card issuing banks instruct their clients to write the PIN in a very safe place or better still, to simply memorise the digits.

34. What happens if I lose my PIN?
If you lose the PIN get in touch with the bank as soon as possible. The bank will replace your credit card and issue a new PIN. This replacement process comes at a cost and gets billed in your next statement.

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