The good news: there’s not too much mis-selling when it comes to credit cards. The bad news: consumer credit is a potential minefield that can blow up even without help from unscrupulous sales agents. Free cards, no joining fee, no service charge, freebies, discounts… the sales agent is bound to offer you any or all of these if you’ll just take the card. What’s the harm, you might say. After all, it’s a free card. And I get a fancy free gift. And air miles or whatever’s in season.
Go right ahead—but don’t have a breakdown when your bill comes full of all kinds of obscure charges and fees the agent assumes you will know about (assuming you can find the agent when the statement comes to you).
45% a year is the interest you pay if you roll over the balance on your card |
Though most cards are now free and there’s no annual fee, unwary customers can still walk into a trap if the offer has not waiver of the annual fee if they accept the card. What they don’t realise is that the waiver is only for the first year. The next year they are slapped with an annual fee.
Moral of the story: Don’t believe what a sales executive says to you while making a “special offer” on the basis of “your excellent track record”. Ask for the offer in black and white, without allowing any scope for ambiguity in the wording.
Then there’s the whole issue of missed payments. When you sign up, the agent doesn’t tell you that the penalty and interest charges for every missed payment could erode any other concession or freebies offered. Worse, missed payments or delays can ruin your credit rating, jeopardising your plans to take loans. A Delhi-based senior manager found this out when his home loan application almost got rejected because of a disputed credit card payment of Rs 2,000 four years ago.
Sales agents often go overboard in their bid to sell credit cards. Abhinav Ajay never applied for a credit card but Axis Bank sent him two—one for him and another for his younger brother. There are hundreds of such cases where the sales staff issue unwanted cards just to inflate the numbers to achieve their sales target.
It is hardselling if the sales agent... • Tells you that the credit card is a big convenience
• Says that there is no joining fee on the card • Tells you that the card gives you complimentary insurance cover • Points out the cash withdrawal limit you get on the card • Promises waiver of surcharge on certain transactions |
But it is mis-selling if he... • Doesn't explain the way a credit card works
• Doesn't clarify if the waiver is only for the first year or for life • Does not spell out the numerous exclusions in the small print • Does not tell you the high costs of cash withdrawals • Does not explain the terms and conditions of this waiver |
Questions to ask before taking a credit card
1. Will I have to pay a joining fee for taking this card?
2. Is this card free for life?
3. What are the conditions applicable on the complimentary insurance cover?
4. What are the various charges applicable on the card?
5. Will I be liable if the card is stolen and misused even if it has my picture?
-8.jpg "Abhinav Ajay")