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Saturday, November 14, 2009

Customer Awareness: Most Important Terms and Conditions for Credit Cards (MITC)

Whenever you apply for a Credit Card, you are subscribing to the Most Important Terms & Conditions of the Credit Card Company at the time of applying for the Credit Card itself. These most important Terms & Conditions are mostly the same across Credit Card Issuers and usually state the following major points.
(1) Tariff Schedule is covered as the last part of the MITC. This gives your Rate of Interest (also known as APR in Credit Card circles) Late Payment Charges, Cash Advance Charges, Fuel Surcharge and all the other charges. It is recommended that you go through this list of charges to avoid nasty shocks at a later date
(2) It is to be noted that if there is any change in the MITC, then the bank has to inform customers at least 30 days before effecting the change. The bank will communicate to you as a part of the Statement Message on top of the statement or through a separate letter sent to your mailing address. If the bank does not do this, and changes your charges in an ad hoc manner then you can write to them for a Charge Reversal and escalate your Complaint to the Banking Ombudsman as well
(3) Other, than the schedule of charges, the MITC also contains a declaration that you authorize the bank to contact you for any offers that they may deem suitable for you. Some application forms like Deutsche Bank and SBI Card have a section which allows you to opt out of any calls and messages. You may choose to check the same. However, I recommend that you should opt for promotional messages as sometimes during festival times, the banks come out with good offers which you would not like to miss
(4) On a lighter note, the bank does not verify the number entered by you. You can change your Mobile Number later and change it to someone you really want to harass and the bank will start directing calls to the new mobile number updated by you. Believe me, the banks do not have a check to prevent this
(5) The MITC also states that they will provide your data to the Credit Bureau (CIBIL) from time to time which gives your spend data, late payment data and non payment data. This is an important point as you can ruin your future life because of this. Please note that now in India we have a CIBIL Score and hence any late payment / non-payment made by you will reflect across all banks and they will refuse to lend to you if you have a bad score. What this means is that you will need to take extra care that you make your payments on time, else you will have your record ruined. It does not matter if you are arguing with a bank for the reversal of charges etc. once they report you (which happens automatically end of month) you are finished. I would sincerely recommend that instead of fighting with the bank over a few hundred bucks it is better to pay up and keep your Credit Score in tact
(6) The MITC also gives other information such as the Payment Modes for making Payments to the Banks and other good to know features on your Credit Card
Please make sure you read the MITC of the Credit Card at the time of applying for one. Do not bother asking the Sales Representative, as they usually do not have a clue (they are usually paid per application and hence they are keen on picking up the application however complete, incomplete it may be.

Mark my word, if you do not read the MITC and are not an aware customer, your ignorance is going to come and bite you at a later date. Credit Cards are very useful and I strongly recommend them as a Financial product, however only informed users should use them.
If you have any queries or sugestions, you can write to me at Ask.Pranav@Gmail.Com and I will try to revert back to you as soon as possible.

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