How to select best Cash Back Credit Card

Credit cards have become a way of life for many of the urban consumers, who use credit cards to make purchases both online and at merchant establishments. In today's time of high inflation, credit cards help consumer in more ways than one. Firstly the credit cards can be used to make payments even in scarcity of cash and the settlement can be made later when the liquidity conditions come back to normal.

Another important feature of credit card is that most of the credit cards offer a cash back facility. Cash back feature involves the card company remitting a fixed percentage of the user's spends. For example a card with 5% cash back would mean that out of every Rs. 100 spent, the customer practically pays Rs. 95. But its not necessary that the higher cash back percentage is always good.

The customer should check his/her spending pattern and decide a card which would best suit his/her need. These cards fall primarily under two broad category; one which offers cash back on leisure and lifestyle spends and other which offers cashback on utility bills like fuel. Depending on one's monthly expenses, one should chose the card. For example if someone drives a lot, he/she should select a petro-credit card with cash back facility on fuel purchases, whereas a movie enthusiast should buy a credit card which offers discounts/cash backs on movie tickets.

Another feature to keep in mind is that card companies limit the cash backs, for example most banks limit the fuel surcharge waiver limit. A thorough questioning from the bank about the exclusions cash back is necessary before zeroing in on your card.

Click2Card by SBI Cards allows users to apply for credit cards online

SBI Cards has launched a new service on its website. Click2Card as the service is called, provides the prospective users to view, choose and apply for a credit card online. The company is hoping to add nearly 3000 customers through this route in the next 4 months.

SBI Cards and Payment Services Pvt. Ltd, is a joint venture between State Bank of India and GE Capital is the second largest credit cards issuer in the country after HDFC Bank.

Click2Card would allow the customer to apply for the card of his/her choice and securely to enter his details. The website upon receiving the request, the system approves or rejects the customer depending on his/her credit history with the bank and the credit bureau. If the request is approved, the customer receives a soft/electronic approval and is informed of the assigned credit limit.

Jet-ICICI launch a co-branded airlines credit card

The leading private sector bank ICICI Bank has tied up with Jet Airways to roll out a co-branded credit card. The card will be targeting frequent flyer to benefit from the special features of the card to convert normal purchases to air miles.

In addition to air travel, the holder of the card will be entitled to exclusive offers on lifestyle purchases as well. The cards would be available in three flavors - Sapphiro, Rubyx and Coral, allowing cardholders to transfer benefits of daily purchases to air miles.

The card would be available in either Visa Card or American Express variant. The prospective a single application form. The card is available for grabs with pre-booking offer of 5,000 JetPrivilege miles if applied by Sepmtember 30.

The airliner had earlier launched a similar card with HDFC Bank. Jet Airways soon intends to create a separate division for its air miles.

NPCI incentivises debit card purchases, reduces charges on RuPay Cards

National Payments Corporation of India (NPCI), a RBI backed company specializing in payment gateways has announced reduction on charges on its RuPay branded debit cards. New interchange rates on RuPay card would be 0.45% on transactions upto Rs. 2000, while for larger transactions, the rate would be 0.65%.

This is done to incentivise the use of RuPay platform by smaller cities and rural areas. NPCI faces tough competition from global payment giants Visa Inc. and MasterCard, who issue a vast majority of debit cards in the country. With only 11 lakh Rupay branded cards primarily in rural areas.

Earlier RBI had dictated banks to cut down transaction charges on debit card to increase their usage. However Visa and Mastercard continues to charge prevalent charges, causing rift of profit for bank which issues card and the bank that installs the point of sales terminal. RBI also directed banks to remove the difference in charges on debit card and credit card, with debit cards having a lesser charge.

Reverse trend observed in Credit Card Business

Banks are now again in a mood to revise their credit card policies and make this segment more attractive seeing to the current scenario where delinquencies in credit cards have reduced.

“The consumer spends are going up dramatically… Hence, we are seeing a positive traction in the credit card market,” said Parag Rao, Senior Vice-President, Credit Card, HDFC Bank.

Since the start of current fiscal, about 3.60 lakh credit cards have been issued by the banks in just three months amongst which HDFC Bank, SBI, Axis Bank and Standard Chartered Bank have been major issuers.

“We have seen growth in cards where the annual fee is low. We are also planning to push the platinum and signature cards, targeting high net worth individuals, because of their compelling value proposition,” said Kadambi Narahari, CEO, SBI Cards and Payment Services Private Ltd.

RBI worried about low penetration of debit cards

The banking and monetary regulator Reserve Bank of India has expressed its concerns on lower penetration of Automated teller machines (ATM) and debit cards in the country.

"Although there has been a steady year-on-year 25 per cent growth in the number of ATMs in the country, their penetration as measured by the number of ATMs per million population is still very low when compared to other emerging markets," said Dr. D. Subbarao, RBI Governor.

The number of ATMs and point of sales (PoS) per million of population are among the lowest globally. Dr. Subbarao further added that the central bank has allowed 'White Label ATMs'by non-banks to operate and increase the reach particularly in Tier III to tier VI locations.

He also emphasized on differential merchant discount rate (MDR) for credit cards and debit cards, announcing differential MDR for debit cards.

Dr. Subbarao however appreciated the growth of mobile banking both in terms of value as well as volume of transaction. He further added, that compared with other emerging markets like Brazil, Russia and Mexico, India has very high value of currency circulation (12% of GDP).

The new Corporate Platinum Card by American Express

American Express added a new feather to its cap. Adding to its existing credit cards range – Green card and Gold card, it launched super – premium Corporate Platinum Card to be consistent as a dominant player in the corporate payment segment.

Looking to the needs of the companies’ top management, this card is launched to complete the product range by American Express by providing B2B offerings.

According to Mr. Manoj Adlakha, Vice- president and GM, Global Corporate Payments, American Express India, said that the card offers extraordinary benefits, privileges and corporate savings. It mainly targets C-suite executives and SMEs owners.

The tie ups of American Express with airlines, hotels, car rental service providers will help the card holders to enjoy great discounts and savings. Customers can also avail the benefit of Priority Pass Access at 600 VIP airport lounges.

Youth find a new friend in Plastic Money

More and more youth customers are subscribing for credit cards. This includes customers of the age group of 25-34 years of age. According to Credit Information Bureau India Limited (CIBIL) data, about 65% of customers acquired by credit card companies were 25 to 35 years old, while only about 5% of new customers were older than 55 years.

As per the data, credit card companies are getting more young customers than before. In 2009, approximately 50% of credit card holders were below 35, which has gone up to 65% in Q2 2012. Another shift in credit card issuance is that the companies have becaome more cautious and are issuing credit cards to only those customers who have a CIBIL Transunion score of 700 or higher. In 2011, more than 80% of the new customers had a credit score of 700 or higher.