Credit Cards
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    • Credit Cards
    We have heard innumerable times that credit card accumulates debt and is quite disadvantageous to common man but it has lots of vantages that’s why innovations are being made in this plastic money. According to certain news report by the end of July 2011, the number of credit card in circulation is drastically reduced. Going by statistics circulation has declined by 7 percent i.e. from 1.89 crore to 1.76 crore. Simultaneously, debit card holders in our country has amplified greatly as there were 23.95 crore debit card holders as on June 30,2011 and earlier there were 19 crore which clearly signify there is increase of 25 percent. The reason behind decline in credit card circulation is delinquencies made by customers and therefore the issuing bank suffered a lot and even banks were on verge of recession. So, the banks also discontinued many unused dormant cards which they had thrust on consumers.

    But this declining trend in plastic money will surely take a U turn i.e. banks are now aggressively marketing these credit cards and they proffer innumerable features and attractions that may be a valid reason to lure a customer. Banks are learning fro m fallacies or mistakes that they had made like now before issuing credit card they check credit worthiness of customers and try not to offer a dubious card without any details or proof. Some banks have issued credit card with built in safety net. The leading private sector bank, ICICI has cards which work similarly as prepaid card. Under this scheme customers are asked to open fixed deposits which may commence from Rs 25000 with varying maturity period. After opening an FD it is linked with credit card with spend limit upto 80 percent. It is really an innovative way to play safe on part of bank. In case customer make any delinquency bank can break their FD to recover outstanding amount.

    Certain person also commented that these linked cards do have certain limitations but still they are safer for credit card holders as he/she won’t be caught in debt trap. IDBI Bank has also brought new innovation in credit card segment like their IDBI Magic Card has features of both debit cards as well as of credit card. The card is offered to eligible salary account holders of IDBI bank, with credit limit in multiple of monthly salary earned by card holder. Now lets see how this card will work, the card will work as a debit card till account holder has balance in it and once it is exhausted any further withdrawal will act as credit card. The cap is that there is no free credit period and once the limit exceeds all transaction card will attract interest. Further, IDBI claimed that interest charged will be minimal as compared to other banks. HDFC bank has also launched Infinia ultra premium card which has no limit on spending aimed for HNI. According to statistics there are 62000 rich Indians but still bank will issue only 5000 credit cards.

    Thus, all these new innovations are aggressive way to increase credit card circulation in market.
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