Many people find using credit cards very convenient but can bring inconvenience if you are not satisfied with the services of your credit card company. In such cases many people want to close that credit card but if there are some dues to be paid off then you can’t close the card. Here you can use balance transfer option.
The balance transfer facility is offered by credit card issuing companies in which they allow transfer of any outstanding balance on a credit card to a less-used or a new credit card of another company. Generally, banks encourage such a practice and offer either a low-interest or interest free period as incentives to customers who use balance transfer facility.
However the credit limit of the less used card or the new card from which the facility is being used is reduced proportionately to the balance transfer amount. For instance, if your credit limit on the new card is Rs 1,00,000, if you have opted for a balance transfer of around Rs 40,000, your credit limit will be reduced to Rs 60,000. Moreover the balance transfer limit cannot exceed 80 per cent of the credit limit.
When to use this option?
In India interest on credit cards are quite high therefore, if you find a card which has low interest rate in comparison to your current card you can use this option. The interest cost will reduce by transferring the outstanding balance on to a new credit card.
If you are not satisfied with the services provided by the current card company like improper billing, non-receipt of bill, etc, you can get rid of the company using the balance transfer facility.
In case the outstanding balance on your current credit card is quite huge and you are unable to finance it, the balance transfer can offer temporary relief. In case of short-term liquidity crunch or there is an exorbitant debt to pay off the credit cardholders can use this option.
To attract customers, banks offer low interest rate or sometime zero interest on balance transfer for specified period. But these so-called attractive rates are offered for a limited period. Introductory period is usually between 3 and 6 months. After this, bank charges the normal rate of interest, which currently is between the range of 38% and 425. On this processing fee is also charged which can range between 2% and 5% of the total amount.
How to do balance transfer?
Contact the credit card company to whom you would want your outstanding debt to be transferred to.
Get the form and fill in the details of your old credit card along with a copy of your latest credit card bill and submit it with the company.
Within 7 to 10 working days, the new credit card will send you a demand draft (DD) in the name of your old credit card issuer. Give this DD to your old credit card company, who will in turn clear your outstanding payment and the same will be transferred to the new credit card issuing company.
Monday, July 26, 2010
Monday, July 19, 2010
Individuals can directly access their credit information report
The Credit Information Bureau (India) Ltd (CIBIL) is an independent organization which has the database of credit information of individuals and commercial establishments. All the banks and financial institutions, housing finance companies, credit card issuing companies and other lending institutions who are members of cibil provide information of loan borrowers and credit card holders to it, to which it collates, and circulates, on request.
Cibil has become an important tool for banks and housing finance companies as they are able to get credit history of applicants.
Up till now only lenders had access to the information provided by Cibil but individuals could not verify their credit ratings.
Now individuals can access their credit information reports from Cibil. The home loan seekers can access their credit information details prepared by Cibil.
There have been instances where lenders have not notified dues to borrowers, (especially credit card payments and personal loans) and such loan accounts becoming irregular, which therefore regarded customers as defaulters.
But now individuals can access their credit information as analyzed by Cibil and also can get the mistake rectified, if any.
Earlier when borrower applied for home loan he used to get credit information from the bank and his loan application was rejected if his credit report is negative or poor scoring by Cibil.
The lenders directly never provided the CIR to borrowers. If the borrower found that his credit information is incorrect and requested the lender to provide the credit details, then lender would provide him a nine-digit unique borrower control number.
On obtaining the nine-digit unique control number the borrower used to contact Cibil to get the exact details related to the negative or poor scoring details. It has been noticed, most of the times the report of the borrower sent by the member organization to the Cibil was wrong due to which the Cibil report was incorrect.
And to get the mistakes rectified, the borrower had to go through a long process.
Now borrower will have direct access to his CIR. A CIR is a record of the credit payment history complied from information received from credit institutions.
This will enable the processing of credit applications faster in order to help provide quicker access to credit at better terms.
The individuals to get the report, one need to fill up a requisition form available on Cibil’s website. Along with the form, it has to provide self-attested copies of some documents such as identity proof and address proof to Cibil.
The CIR can be obtained by paying Rs 142. It must be paid through a demand draft favoring 'Credit Information Bureau (India) Ltd.', payable at Mumbai and sent to CIBIL. The documents can be sent either through email, post or fax. On receiving the documents and fees, CIBIL will process the request and send a copy of the CIR.
Name and address of borrower Identification and PAN numbers Passport details Date of birth Records of all the credit facilities availed by the borrower past payment history Amounts overdue Number of inquiries made on that borrower by different members Suits filed and their status.
In CIR report does not have Income and revenue details Amounts deposited with banks Details of assets Details of investment. It is expected with the introduction of new base rate system the home loan borrowers will get benefited. The interest rates will be based on the base rate plus a premium depending on the credit rating of the borrower.
The individual having a good credit can get a loan at a lower interest rate as compared to a loan based on a bad credit rating.
Cibil has become an important tool for banks and housing finance companies as they are able to get credit history of applicants.
Up till now only lenders had access to the information provided by Cibil but individuals could not verify their credit ratings.
Now individuals can access their credit information reports from Cibil. The home loan seekers can access their credit information details prepared by Cibil.
There have been instances where lenders have not notified dues to borrowers, (especially credit card payments and personal loans) and such loan accounts becoming irregular, which therefore regarded customers as defaulters.
But now individuals can access their credit information as analyzed by Cibil and also can get the mistake rectified, if any.
Earlier when borrower applied for home loan he used to get credit information from the bank and his loan application was rejected if his credit report is negative or poor scoring by Cibil.
The lenders directly never provided the CIR to borrowers. If the borrower found that his credit information is incorrect and requested the lender to provide the credit details, then lender would provide him a nine-digit unique borrower control number.
On obtaining the nine-digit unique control number the borrower used to contact Cibil to get the exact details related to the negative or poor scoring details. It has been noticed, most of the times the report of the borrower sent by the member organization to the Cibil was wrong due to which the Cibil report was incorrect.
And to get the mistakes rectified, the borrower had to go through a long process.
Now borrower will have direct access to his CIR. A CIR is a record of the credit payment history complied from information received from credit institutions.
This will enable the processing of credit applications faster in order to help provide quicker access to credit at better terms.
The individuals to get the report, one need to fill up a requisition form available on Cibil’s website. Along with the form, it has to provide self-attested copies of some documents such as identity proof and address proof to Cibil.
The CIR can be obtained by paying Rs 142. It must be paid through a demand draft favoring 'Credit Information Bureau (India) Ltd.', payable at Mumbai and sent to CIBIL. The documents can be sent either through email, post or fax. On receiving the documents and fees, CIBIL will process the request and send a copy of the CIR.
Name and address of borrower Identification and PAN numbers Passport details Date of birth Records of all the credit facilities availed by the borrower past payment history Amounts overdue Number of inquiries made on that borrower by different members Suits filed and their status.
In CIR report does not have Income and revenue details Amounts deposited with banks Details of assets Details of investment. It is expected with the introduction of new base rate system the home loan borrowers will get benefited. The interest rates will be based on the base rate plus a premium depending on the credit rating of the borrower.
The individual having a good credit can get a loan at a lower interest rate as compared to a loan based on a bad credit rating.
Friday, July 16, 2010
Read your credit card statement carefully to manage your cash flow
All credit card issuing banks send credit card statements every month to the cardholders but most of them do not take care to check the details of the bill and just pay the amount due. At times this habit can prove to be costly especially, when there is increase in cloning of cards and phishing. By chance there can frauds or incorrect payment information in the statement. Some of the cardholders avoid reading the statement because they cannot understand terminologies used are confusing. Here is the brief explanation of some of the terminologies to make easy for you to understand.
Credit card number: A unique 16 digit number is assigned to you by the bank and is superimposed on your credit card. When you pay your credit card bills through cheque or if you have to do any correspondence with the bank, then it is needed. You must write this number somewhere so that you can keep it handy with you, in case of any theft or fraud you can report to the credit card issuer. This number should always be stated on your credit cards statement.
Credit limit: The maximum amount credit card issuer allows you to borrow. When you apply for credit card, the issuer checks your income profile and your payment track record if you have taken any card before, then is decides the limit accordingly. If your previous payment track record is good, your credit limit can be enhanced and vice versa. If you exceed the credit limit, the credit card issuer will charge an overdrawn fee. This fee is a fixed percentage of the overdrawn amount subject to a minimum and maximum amount.
Available credit limit: The difference between your credit limit and the amount you have spent i.e. total amount due is the available credit limit. If your credit limit is Rs 1,00,000 and you have spent Rs 20,000 then your available credit limit is Rs 80,000.
Payment due date: This is the date by which you should make payment of your credit card bill. This is not the last day on which you can issue the cheque but by this date the cheque should be realized i.e. your account should be debited and the credit card issuer should realize the amount on or before this date. Paying your credit card bill before this date enables you to keep your credit card history and your credit score good.
Statement date: The credit card issuer generates a billing cycle when issues a new credit card. On the basis of this it fixes the date on which the bill is generated. According to this date card issuer calculates the interest amount if you do not pay the full outstanding amount by the payment due date, even though the due date may fall weeks after the statement date.
Cash advance/ Cash limit: The amount you can withdraw from the ATM is called the cash limit. It is not your credit limit. On cash advance the card issuer will levy one-time transaction fee which could be to the tune of 2.5-3% of the cash withdrawn. In addition interest charges will start increasing immediately. The interest charged on cash withdrawals is more than those charged on your purchases. So, you must avail this facility only when you need funds on an emergency basis.
Total amount due: It is the total amount outstanding on your credit card i.e. the amount you owe to the credit card company. This is an increasing amount comprising of interest or any other charges such as over drawn fee among other things.
Minimum amount due: It is a minimum amount fixed by credit card issuer which you have to pay every month which is generally a certain percentage of the total amount due. Generally it is 5-20% of the total amount due. Non-payment of the minimum amount is treated as default and a late payment fee will be levied.
Some of the card holders pay the minimum amount due, the unpaid amount is carried forward to the next billing cycle and so on, under the revolving credit facility. In such cases you don’t enjoy interest free period on any fresh purchases. You will have to pay the interest from the day on which the purchase has been made. This will continue till the total amount due has been paid for. Moreover, even if you pay the minimum amount due, interest will be charged on the total amount due which will include the minimum amount due. For example, if you have paid 60% of the total amount due before the due date, interest will be charged on 100% of the total amount due rather than on the balance 40%. To avoid paying high interests opt for paying minimum amount due only if you’re running short of money to pay off the total amount due.
Transaction details: All transactions done using your credit card, which includes purchase, payments made are recorded under transactions details. Moreover any charges levied by the credit card company such as interest, annual fee, late payment charges among other things will also be listed in details. Therefore it is necessary to check your card statement in order to spot any discrepancy in the details.
Reward points: On credit card every card issuing company give reward points on using the card. In the statement the record of the points accumulated till date is given. You can redeem these points on a need basis against gifts, vouchers, etc enlisted by the card issuer. Each credit card issuer has the different method of redemption.
Now you must have understood why it is important to go through the card statement, it not only protects you from fraud but it will also help you manage your cash flow better.
Credit card number: A unique 16 digit number is assigned to you by the bank and is superimposed on your credit card. When you pay your credit card bills through cheque or if you have to do any correspondence with the bank, then it is needed. You must write this number somewhere so that you can keep it handy with you, in case of any theft or fraud you can report to the credit card issuer. This number should always be stated on your credit cards statement.
Credit limit: The maximum amount credit card issuer allows you to borrow. When you apply for credit card, the issuer checks your income profile and your payment track record if you have taken any card before, then is decides the limit accordingly. If your previous payment track record is good, your credit limit can be enhanced and vice versa. If you exceed the credit limit, the credit card issuer will charge an overdrawn fee. This fee is a fixed percentage of the overdrawn amount subject to a minimum and maximum amount.
Available credit limit: The difference between your credit limit and the amount you have spent i.e. total amount due is the available credit limit. If your credit limit is Rs 1,00,000 and you have spent Rs 20,000 then your available credit limit is Rs 80,000.
Payment due date: This is the date by which you should make payment of your credit card bill. This is not the last day on which you can issue the cheque but by this date the cheque should be realized i.e. your account should be debited and the credit card issuer should realize the amount on or before this date. Paying your credit card bill before this date enables you to keep your credit card history and your credit score good.
Statement date: The credit card issuer generates a billing cycle when issues a new credit card. On the basis of this it fixes the date on which the bill is generated. According to this date card issuer calculates the interest amount if you do not pay the full outstanding amount by the payment due date, even though the due date may fall weeks after the statement date.
Cash advance/ Cash limit: The amount you can withdraw from the ATM is called the cash limit. It is not your credit limit. On cash advance the card issuer will levy one-time transaction fee which could be to the tune of 2.5-3% of the cash withdrawn. In addition interest charges will start increasing immediately. The interest charged on cash withdrawals is more than those charged on your purchases. So, you must avail this facility only when you need funds on an emergency basis.
Total amount due: It is the total amount outstanding on your credit card i.e. the amount you owe to the credit card company. This is an increasing amount comprising of interest or any other charges such as over drawn fee among other things.
Minimum amount due: It is a minimum amount fixed by credit card issuer which you have to pay every month which is generally a certain percentage of the total amount due. Generally it is 5-20% of the total amount due. Non-payment of the minimum amount is treated as default and a late payment fee will be levied.
Some of the card holders pay the minimum amount due, the unpaid amount is carried forward to the next billing cycle and so on, under the revolving credit facility. In such cases you don’t enjoy interest free period on any fresh purchases. You will have to pay the interest from the day on which the purchase has been made. This will continue till the total amount due has been paid for. Moreover, even if you pay the minimum amount due, interest will be charged on the total amount due which will include the minimum amount due. For example, if you have paid 60% of the total amount due before the due date, interest will be charged on 100% of the total amount due rather than on the balance 40%. To avoid paying high interests opt for paying minimum amount due only if you’re running short of money to pay off the total amount due.
Transaction details: All transactions done using your credit card, which includes purchase, payments made are recorded under transactions details. Moreover any charges levied by the credit card company such as interest, annual fee, late payment charges among other things will also be listed in details. Therefore it is necessary to check your card statement in order to spot any discrepancy in the details.
Reward points: On credit card every card issuing company give reward points on using the card. In the statement the record of the points accumulated till date is given. You can redeem these points on a need basis against gifts, vouchers, etc enlisted by the card issuer. Each credit card issuer has the different method of redemption.
Now you must have understood why it is important to go through the card statement, it not only protects you from fraud but it will also help you manage your cash flow better.
Tuesday, July 6, 2010
Delhi police arrested three people involved in credit card cloning
On Saturday Delhi police arrested three people who were involved in cloning credit cards, debit cards and electronic data capture (EDC) machines.
Police arrested three accused 'Ravinder Sunekha, Anil Kumar and Sanjay Kumar Jha from Kotla Mubarakpur but two of their partners Shoiab and Majid Khan, are still absconding, Deputy Commissioner of Police H.G.S. Dhaliwal said.
Police received complaints from multinational banks like Standard Chartered, ICICI and Kotak Mahindra Bank regarding transactions. The banks claimed that their customers are complaining about the frauds, that transactions shown in their statements have not been done by them.
On investigation police found that Anil used to take out credit cards from the parcels meant for delivery to the customers and handed them over to Shoiab for cloning. Then Shoiab cloned the cards and give them to Ravinder, who along with his associate Majid Khan, a former employee of ICICI Bank, used to go to the merchants (shopkeepers) to verify the customers whose transactions were declined by the bank. Khan would note down the credit card number and date of validity.
Dhaliwal told, “He would then pass on the numbers and the dates of validity to Ravinder who used the data on the cloned EDC machines. Sanjay used to reconfigure the merchant ID and terminal ID provided by the merchants and gave them to Ravinder. Thus, EDC machines installed at merchant's office got cloned in Ravinder's office.”
The EDC machines installed at Ravinder’s office, after reconfiguration did not require a credit card for swapping and only the card number was required to execute the transaction. From the accused police has recovered 11 credit cards, six EDC machines and transaction slips of Rs.20-25 lakh from them.
Kumar was working as a courier boy with Blue Dart Courier Company and Ravinder was an owner of a tour and travels agency and had EDC machines installed in his office at Faridabad.
Sanjay was employed with M/S TVS Enterprises, an authorized service centre for EDC machines.
But such charges defeat the anytime, anywhere banking and banking for all aspect. Bankers don’t subscribe to the aspect.
Police arrested three accused 'Ravinder Sunekha, Anil Kumar and Sanjay Kumar Jha from Kotla Mubarakpur but two of their partners Shoiab and Majid Khan, are still absconding, Deputy Commissioner of Police H.G.S. Dhaliwal said.
Police received complaints from multinational banks like Standard Chartered, ICICI and Kotak Mahindra Bank regarding transactions. The banks claimed that their customers are complaining about the frauds, that transactions shown in their statements have not been done by them.
On investigation police found that Anil used to take out credit cards from the parcels meant for delivery to the customers and handed them over to Shoiab for cloning. Then Shoiab cloned the cards and give them to Ravinder, who along with his associate Majid Khan, a former employee of ICICI Bank, used to go to the merchants (shopkeepers) to verify the customers whose transactions were declined by the bank. Khan would note down the credit card number and date of validity.
Dhaliwal told, “He would then pass on the numbers and the dates of validity to Ravinder who used the data on the cloned EDC machines. Sanjay used to reconfigure the merchant ID and terminal ID provided by the merchants and gave them to Ravinder. Thus, EDC machines installed at merchant's office got cloned in Ravinder's office.”
The EDC machines installed at Ravinder’s office, after reconfiguration did not require a credit card for swapping and only the card number was required to execute the transaction. From the accused police has recovered 11 credit cards, six EDC machines and transaction slips of Rs.20-25 lakh from them.
Kumar was working as a courier boy with Blue Dart Courier Company and Ravinder was an owner of a tour and travels agency and had EDC machines installed in his office at Faridabad.
Sanjay was employed with M/S TVS Enterprises, an authorized service centre for EDC machines.
But such charges defeat the anytime, anywhere banking and banking for all aspect. Bankers don’t subscribe to the aspect.
Friday, July 2, 2010
To have one or two credit card is good, multiple leads to defaults
The young generation prefers to carry multi-colored cards in their wallet. Most of them make payments of groceries, apparels or even bill payments with card rather than cash.
However credit card is most preferred to debit card because of a wider acceptance, in online booking for flights, entertainment or shopping credit card is accepted. But there is a disadvantage too in carrying multiple cards such as there is problem in keeping track of errors, missing payment dates or ignoring a wrongful entry at the bank’s end.
Mostly banks offer good credit limits if you have a bad credit history. In case bank has set a credit limit then it can be due to your credit score or some banks over a period of time do changes in their approach, they enhance credit limit for new customers. So it is better to stick to a Visa and Master Card, as both have wide acceptability.
Always do payments using one credit card. It is better to choose co-branded cards such as a petro card, airline card or a shopping card such as ICICI Bank-Big Bazaar credit card or Citibank-Shoppers Stop credit card. These cards have advantage over normal credit card as it is easy to keep track of expenses as the second card would not generate any bill on a regular basis. In fact debit card best to use as it is to keep track of expenses.
It is always best to have one credit card but, if you want to have a second card then opt for a card which can cater your maximum needs such as petro card is best for frequent car/bike users on using this card they get an additional fuel surcharge. People who have to travel frequently for business purpose can opt for co-branded airline cards.
People who have more than two cards and if have forgotten to pay bill of one card or are short of cash to pay the dues in such cases you can play with cards based on their billing cycles. Suppose the bill on the first card is due on July 30 then keep the second bill due date as August 15. Like this you will get enough time to repay dues.
The billing cycle is set in accordance to the issue of the card. But you get choice to change the billing cycle to suit your convenience.
As people are getting tech savvy they are opting e-payments for credit cards and in this way they are able to avoid penalty on late payments because of delay in cheque clearance or any typos or wrong date which would have made the cheque invalid.
You can also opt for the ECS mode if you have a sound bank balance. The credit card can also be linked with your net banking profile, this is a convenient way of paying bills and you will also get unbilled transaction information almost real time. This way you will have an idea of the next bill amount.
However credit card is most preferred to debit card because of a wider acceptance, in online booking for flights, entertainment or shopping credit card is accepted. But there is a disadvantage too in carrying multiple cards such as there is problem in keeping track of errors, missing payment dates or ignoring a wrongful entry at the bank’s end.
Mostly banks offer good credit limits if you have a bad credit history. In case bank has set a credit limit then it can be due to your credit score or some banks over a period of time do changes in their approach, they enhance credit limit for new customers. So it is better to stick to a Visa and Master Card, as both have wide acceptability.
Always do payments using one credit card. It is better to choose co-branded cards such as a petro card, airline card or a shopping card such as ICICI Bank-Big Bazaar credit card or Citibank-Shoppers Stop credit card. These cards have advantage over normal credit card as it is easy to keep track of expenses as the second card would not generate any bill on a regular basis. In fact debit card best to use as it is to keep track of expenses.
It is always best to have one credit card but, if you want to have a second card then opt for a card which can cater your maximum needs such as petro card is best for frequent car/bike users on using this card they get an additional fuel surcharge. People who have to travel frequently for business purpose can opt for co-branded airline cards.
People who have more than two cards and if have forgotten to pay bill of one card or are short of cash to pay the dues in such cases you can play with cards based on their billing cycles. Suppose the bill on the first card is due on July 30 then keep the second bill due date as August 15. Like this you will get enough time to repay dues.
The billing cycle is set in accordance to the issue of the card. But you get choice to change the billing cycle to suit your convenience.
As people are getting tech savvy they are opting e-payments for credit cards and in this way they are able to avoid penalty on late payments because of delay in cheque clearance or any typos or wrong date which would have made the cheque invalid.
You can also opt for the ECS mode if you have a sound bank balance. The credit card can also be linked with your net banking profile, this is a convenient way of paying bills and you will also get unbilled transaction information almost real time. This way you will have an idea of the next bill amount.
Subscribe to:
Posts (Atom)