Credit Cards - The pitfalls

Credit card: Devil is in the details

SUDEEP JAIN Mumbai, 30 September
When Sandeep Lakhotia met with a road accident last year and broke his leg, he was secure in the knowledge that the medical expenses would be covered under the accident insurance provided free with his credit card issued by a foreign bank.
However, when he made an accident claim with the bank, he was in for a major shock.
He learnt that according to the terms of the insurance policy, he could make claims for accident insurance if only he had been traveling on a ticket purchased using the credit card of that particular bank - effectively ruling out any claims in this case.
And Lakhotia’s is not an isolated case. Most of us, while filling up a credit card form, ignore going through the details.
A typical situation is like this. After being inundated by calls from a direct selling agent (DSA) or after approaching a bank for acard, someone from the agency/bank comes to get your form filled.
There are several places in the form where you simply sign. The rest, the agent assures, will be filled properly.
There are several clauses in that document - those innocuous boxes which are tick marked by the agent. And the devil lies in those details.
Here is a list of things you should watch out for in your credit card document.
Free insurance cover: Like in Lakhotia’s case, a majority of such policies will have a large number of riders attached to them, rendering them quite ineffective in times of need. For you are traveling by air.
“A lot of these sops with credit cards are simply an eyewash. There are so many conditions attached with them that they are rendered ineffective,” said Suresh Sadagopan, a certified financial planner.
Approaching your boss: Don’t be surprised if your credit card-issuer comes calling at your workplace - something that is new and banks have inserted this clause in the credit card form. Usually the clause reads: “I authorise the bank to contact my employer to obtain any information. to maintain my acplays along, dues could be deducted from your basic salary.
Credit card cancellations: Most credit card terms contain a clause in which the customer agrees to the condition that the bank can cancel his or her credit card at any time without assigning any reason.
Marketing calls: Customers inundated with marketing calls would be surprised to know that they might have actually consented to receiving those calls.
A lot of credit card agreements ask if you consent to receive marketing calls. However additional features: When Jignesh for it. He was told by the sales executive that the phone call was being recorded and that would itself serve as a proof. However, the credit card company started charging him for the insurance premium. When he called up to protest, he was told that there was no recording of the phone conversation.
“A lot of banks advertise additional features such as insurance to lure customers. However, customers should insist on awritten proof whenever they are offered additional features,” said Gaurav Mashruwala, a certified financial plann

The above is from the Business Standard.

I think most of you who have credit cards must have faced these problems.
My son Ajay faced it.
He was told that he would get a free medical insurance against his credit card with Citibank.
However, when he got his statement from Citibank, he saw that premium for the insurance had been debited.
After creating a ruckus and informing the matter to the banking ombudsman, the entry was reversed..
I was advised by an agent of HDFC Bank that I should take a credit card and there were no charges for it.
However, after one year, during which time, I never once used the card, the bank debited my account for some Rs 700.00.
This too was reversed after I took up the matter strongly with the bank.
It is advisable that people should avoid credit cards as far as possible.
If however, your job requires that you have to use a credit card, you should maintain strict discipline.
Clear all your dues, not part dues on minimum dues, within due date by sending your cheque at least three days before due date.They charge interest at rates which would put Shylock to shame.
I NEVER USE A CREDIT CARD and God willing, I hope I don't have to use it.
I also thank God that our heritage has not allowed credit cards to penetrate deeply into our lives.
Hardly 10% of the population use credit cards.
This is what saved us in the recent meltdown.