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Thursday, August 30, 2007
Tuesday, August 14, 2007
Independence from Credit Cards
I've finally achieved a milestone of sorts while managing my finances. I've got rid of all my credit cards, all the cut pieces are on their way to the respective banks.
The reason for this desperate measure is a serious cost-benefit analysis. Some of the factors that influenced this:
1. First and foremost, no matter how bad the risk is for a CC company, it simply doesnt justify an interest rate of 3%-4% per month!
2. The banks have non-standard days of billing, hence its' sometimes difficult to keep track of which bill is due when, especially when the number of credit cards you hold reaches double digits.
3. There is no graded interest payment schemes, so if you default by a day or 30 it will still carry the same penalty! At 3%-4% its' quite a crime that such a system is allowed to be practiced in India.
4. The eagerness with which Credit Cards are issued, only goes to show that this product operates via a PUSH model, rather than a person actually needing to own one. I realised this late, but eventually, that ever since I joined a business school, credit cards have been pushed into my wallet under the guise of "lifetime-free" schemes.
5. Many shops and establishments in Mumbai charge an extra 2% for purchases made using credit cards, so do fuel-stations, but under the guise of service tax.
6. Now, for the most important reason, I'm really not comfortable with the idea that some goons are gonna come looking for me asking me to repay paltry sums like 10K odd. That is the ugliest side of Indian Banking Industry, many thumbs down to ICICI and likes which have employed these tactics (see citation below).
ICICI Bank Credit Card - Terms & Conditions (Retrived on Independence Day-2007)
(d) DEFAULT AND CIRCUMSTANCES
(i) If the Cardholders fails to pay at least the Minimum Amount Due as mentioned in the Statement on or before the Payment Due Date, ICICI Bank shall be entitled to disclose information relating to days past due (“dpd”) of the Cardholder to credit information bureaus / agencies (specifically authorized by RBI). A notice shall be deemed to have been given to the Cardholder by ICICI Bank by informing the Cardholder of the disclosures of information relating to dpd status of the Cardholder through Statements. The time period between statement date and the payment due date of the credit card shall be construed to be the notice period for such reporting of the Cardholder.
(ii) ICICI Bank reports the credit/repayment history of the Cardholders to bureaus/agencies in terms of the dpd. The dpd status will indicate the number of days the Cardholder has not cleared his dues to ICICI Bank beyond the due date. The updated status of the Cardholder will be sent to the bureaus/agencies on pre decided regular intervals and thus there will be no withdrawal of the default report except in the case of disputes having been resolved in favor of the Cardholder.
(iii) Recovery procedure in the case of default: ICICI Bank shall be entitled, at the sole risk and cost of the Cardholder, to engage one or, more person(s) to collect the Cardholder’s dues and/or to enforce any security provided by the Cardholder, and ICICI Bank may (for such purposes) furnish to such person(s) such information, facts and figures pertaining to the Cardholder and the security as ICICI Bank deems fit. ICICI Bank may also delegate to such person(s) the right and authority to perform and execute all acts, deeds, matters and things connected therewith, or incidental thereto, as ICICI Bank deems fit.
(iv) Recovery of dues in the case of death/permanent incapacitance of Cardholder: The whole of the outstanding balance on the Card Account, together with the amounts of any outstanding Card transactions, effected but not yet charged to the Card Account, shall become immediately due and payable in full to ICICI Bank, by the Cardholder, his/her successors, nominees, legal heirs in the event of his/her death (after adjustment of credit shield benefit if subscribed by the Cardholder) or insolvency or winding up of the business of the Cardholder.
(v) Insurance cover for Cardholder (optional) and date of activation of policy:
The Cardholder may be offered various Insurance Benefits from time to time by ICICI Bank through a tie up with the Insurance Company, only upon the Cardholder opting for such a benefit. The date of activation of such policy will be communicated through the website. The Cardholder specifically acknowledges that in all cases of claim, the Insurance Company will be solely liable for settlement of the claim, and he/she will not hold ICICI Bank responsible in any manner whether for compensation, recovery of compensation, processing of claims or for any reason whatsoever.
Fcuk You!
The reason for this desperate measure is a serious cost-benefit analysis. Some of the factors that influenced this:
1. First and foremost, no matter how bad the risk is for a CC company, it simply doesnt justify an interest rate of 3%-4% per month!
2. The banks have non-standard days of billing, hence its' sometimes difficult to keep track of which bill is due when, especially when the number of credit cards you hold reaches double digits.
3. There is no graded interest payment schemes, so if you default by a day or 30 it will still carry the same penalty! At 3%-4% its' quite a crime that such a system is allowed to be practiced in India.
4. The eagerness with which Credit Cards are issued, only goes to show that this product operates via a PUSH model, rather than a person actually needing to own one. I realised this late, but eventually, that ever since I joined a business school, credit cards have been pushed into my wallet under the guise of "lifetime-free" schemes.
5. Many shops and establishments in Mumbai charge an extra 2% for purchases made using credit cards, so do fuel-stations, but under the guise of service tax.
6. Now, for the most important reason, I'm really not comfortable with the idea that some goons are gonna come looking for me asking me to repay paltry sums like 10K odd. That is the ugliest side of Indian Banking Industry, many thumbs down to ICICI and likes which have employed these tactics (see citation below).
ICICI Bank Credit Card - Terms & Conditions (Retrived on Independence Day-2007)
(d) DEFAULT AND CIRCUMSTANCES
(i) If the Cardholders fails to pay at least the Minimum Amount Due as mentioned in the Statement on or before the Payment Due Date, ICICI Bank shall be entitled to disclose information relating to days past due (“dpd”) of the Cardholder to credit information bureaus / agencies (specifically authorized by RBI). A notice shall be deemed to have been given to the Cardholder by ICICI Bank by informing the Cardholder of the disclosures of information relating to dpd status of the Cardholder through Statements. The time period between statement date and the payment due date of the credit card shall be construed to be the notice period for such reporting of the Cardholder.
(ii) ICICI Bank reports the credit/repayment history of the Cardholders to bureaus/agencies in terms of the dpd. The dpd status will indicate the number of days the Cardholder has not cleared his dues to ICICI Bank beyond the due date. The updated status of the Cardholder will be sent to the bureaus/agencies on pre decided regular intervals and thus there will be no withdrawal of the default report except in the case of disputes having been resolved in favor of the Cardholder.
(iii) Recovery procedure in the case of default: ICICI Bank shall be entitled, at the sole risk and cost of the Cardholder, to engage one or, more person(s) to collect the Cardholder’s dues and/or to enforce any security provided by the Cardholder, and ICICI Bank may (for such purposes) furnish to such person(s) such information, facts and figures pertaining to the Cardholder and the security as ICICI Bank deems fit. ICICI Bank may also delegate to such person(s) the right and authority to perform and execute all acts, deeds, matters and things connected therewith, or incidental thereto, as ICICI Bank deems fit.
(iv) Recovery of dues in the case of death/permanent incapacitance of Cardholder: The whole of the outstanding balance on the Card Account, together with the amounts of any outstanding Card transactions, effected but not yet charged to the Card Account, shall become immediately due and payable in full to ICICI Bank, by the Cardholder, his/her successors, nominees, legal heirs in the event of his/her death (after adjustment of credit shield benefit if subscribed by the Cardholder) or insolvency or winding up of the business of the Cardholder.
(v) Insurance cover for Cardholder (optional) and date of activation of policy:
The Cardholder may be offered various Insurance Benefits from time to time by ICICI Bank through a tie up with the Insurance Company, only upon the Cardholder opting for such a benefit. The date of activation of such policy will be communicated through the website. The Cardholder specifically acknowledges that in all cases of claim, the Insurance Company will be solely liable for settlement of the claim, and he/she will not hold ICICI Bank responsible in any manner whether for compensation, recovery of compensation, processing of claims or for any reason whatsoever.
Fcuk You!
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