Cards Accepted, but with higher charges

Recently, Banknet had conducted a customer survey on Payment Products (i.e. Internet / Mobile Payments, Credit/Debit Cards, ECS and the likes).

Banknet survey showed that most people who have an ATM-cum-Debit card still use cash for making payments. Survey tried finding the reasons.

Survey found that when paying for Railway Bookings or at petrol pumps, banks charge 2.5% of the transaction value to the customer. In case of smaller merchant establishments, the merchants do not seem to afford paying transaction fees of 2% to card issuers/banks. So they pass on this cost to the customer so that their small margins are not affected.

The end customer thus prefers withdrawing cash from ATMs rather than paying 2 to 2.5% extra by swiping their cards, especially for higher value payments.

Hope these findings give banks/RBI some insights..

Soft Recovery Agents - A Matter of Ethics?

We all know that banks hire recovery agents to, well, recover outstanding dues from customers. However, the term 'recovery agents' did not take much time to become synonymous with 'goons'. The people hired by these banks and credit companies often threaten the customer into paying up money. They do not seem to be trained to work as per their hiring company's image. It is not hard to guess that these are third-party contractors and banks wouldn't care to spend on training, as long as the system gives results.

Sure, banks have given loans to people, and they do have the right to recover them. But it does not mean they can threaten and abuse their clients.

The Reserve Bank of India had to step in to control these unethical practices. Following a consideration of a ban on recovery agents (if found using abusive language) by the RBI, banks are taking other routes (read: other routes to hire recovery agents, not other routes for recovery). State Bank of India, for starts, is looking for 'soft' recovery agents, whose job profiles wouldn't include threats and abusive language. They claim to they would train them to also handle other paper-work required at the customer end.

So following their prior abuses, will the customers now co-operate? Will the recovery be effective? Or is it just another marketing gimmick?
Submit your views.

Smart Cards, Stupid Spends

How many times do we over-spend our credit cards? Nearly everyone has had an experience with that. The number of 'reckless' spends are are no less either. Ever swiped the plastic and ended up paying up within just eight days for that special gift you bought for your mother? Which is why, here's a primer on 'How to use that piece of plastic wisely so that I don't end up in a mess'.

I won't be discussing on capturing these companies' latest offers to the fullest, nor about stupid cash-back offers, but really how the whole system works - You see, a background of it all would give us a fair idea of what separates the we-know-we-have-spent and what-the-credit-companies-think-we-have-spent. I shall talk about the bare essentials that you need to know, without straining your eyes scrolling through the whole gamut of fine print on the forms that you signed months ago.

Sure, credit cards give us a fair reason to use them - they're accepted at most merchant outlets, give us freedom from carrying loads of cash, and mini-loans virtually available to us at any time are always welcome.

However, there's a fine print to it. ALL of these cards come with a credit period and a credit limit. Isn't too hard to guess what these are. But from the company's point-of-view, these are interpreted slightly differently. They claim their credit limit is of 45 days. But wait. Their systems are fully computerised. No matter how well a computer could fly and land an aeroplane without human interference, for credit companies, they're inherently dumb. They're deliberately kept dumb (is that to exploit us consumers? Dunno). The billing cycles of credit companies are fixed. Which is why the credit period that we get is (usually) calculated from the 1st of every month. This is what separates automated systems from the human way of thinking.

Come to think of the gift example above, didn't you buy that gift on the 29th of the month? And then guessing that the period that you'll get is supposedly the 14th day, two months hence? Hey! Its in this month's bill! Where is my credit period? You said 45 days, innit?

Well, then lets get things straight. We'll start from the company's view: You buy something on the 2nd day of the month. The company wouldn't print the bill until the 30th. That gives you a fair credit period of 28 days. On this bill, it is mentioned that the due date for payment is the 15th of the next month. Add 15 days to your credit period. You pay by cheque, which the bank takes two days for 'debiting your account'. Now add 'em up: 28+15+2 = Voila!

So on a time line, this edge-to-edge calculation will let you enjoy the actual credit period. Feel cheated? Well, that's the way it works, especially when you don't want to squint for the fine print. Now its time to turn the tables. Go ahead and buy your stuff in the first week - to enjoy their full free credit period. Reduce your burdens and get-it-all.

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