IN response to last week’s column in which readers were cautioned against the cloned credit cards, some of the readers have asked about the percentage of commission to be paid on credit card usage. Do we have to pay commission on goods purchased through a credit card? What is the percentage which one has to pay more?
 These were the questions which these readers have asked and at the same time have expressed their displeasure over the card issuing banks. They say the banks while issuing the card didn’t mention that the cardholder has to pay a certain percentage as commission to the merchant while making purchasing through these cards. One of the readers has mentioned that he had gone to purchase some gold ornaments and the goldsmith had asked him to pay two per cent over and above the price of the jewelry he intended to purchase. The reason given by the goldsmith was ‘extending the facility of cashless transaction’ and he even stated that ‘the commission was basically to be paid to the bank and he was just acting as a collecting agent’. So, the goldsmith insisted him to pay it.
 To put the things straight, a credit card holder does not need to pay any commission to the merchant establishment where he uses his card for making purchases and demanding this kind of ‘commission’ from the cardholder is unethical as well as illegal. However, the onus lies on the cardholder. If he faces such a situation, he should immediately report to the card-issuing bank. Under Master Card guidelines, any merchant establishment found indulging in such unethical and illegal practices will be delisted and no bank can install Point of Sale (PoS) terminal at such business establishments.
 Remarkably, credit cards have become popular from past few years in J&K. All the working employees and self-employed who have the regular monthly income are eligible to get a credit card. Different people have different comments of the growing usage of credit cards in the state. Some say that its waste of using credit cards as banks may charge extra hidden charges for its usage and we tend to do frequent purchases as we can pay money later and so on like that. Then there are situations when merchant establishments ask for some kind of commission over and above the price of the item. The other set of people say that - it is definitely useful that when we have no cash available with us, can purchase through credit card. Apart from that you will be given a cash limit on your credit card. Whenever you are in need of money, you can go to any bank ATM center and draw the cash limit amount for your urgent needs.
 In reality, we have advantages and disadvantage for every product in any sector. If we use it in a proper way, we have many advantages with the credit card.  There is need to maintain high confidentiality of your card information. You should not disclose the card details with anyone, which would cause you to loss of money. If you misplace your card, immediately call the card-issuing bank and ask them to block the card and raise a request to send a new card. If you use card for online purchases and transactions, make sure that the respective website is safe and secured to use.
 Over a past few years, debit cards have witnessed a spectacular growth of over 300 per cent and credit card growth has gone beyond 50 per cent in the State. If statistics are to be believed, the number of credit cards in India is touching 200 lacs and the average spend per card per annum is over Rs.20,000. As far as debit cards are concerned, the number is estimated to have gone beyond 400 lacs.
 It is now more than four years now when the J&K Bank introduced its own credit card having three variants Gold Card, Silver Card and Blue Card. In order to make this card more attractive and encourage customers to take benefits of this card, the bank waived off all charges/fees like entrance fee, annual fee, renewal fee etc. This means the bank is issuing credit cards free of cost.
 The issuance of credit cards is related to the income of the customers. Customers falling in salaried class category having a minimum annual gross income of Rs.0.80 lacs and customers other than salaried class with minimum annual gross income of Rs.1.50 lacs are eligible for blue card having a credit limit of Rs.25,000. Customers (salaried class) having minimum annual gross income of Rs.1.50 lacs and for others having minimum annual gross income of Rs.2.50 lacs are eligible for Silver card with a credit limit of Rs.50,000. Gold card with a credit limit of above Rs.50,000 is issued to the customers having minimum annual gross income of Rs.2.50 lacs (for salaried class) and Rs.5.00 lacs (for others).
 The card is accepted for payment at all Merchant Establishments like shops, restaurants, Railways, Airlines, Petrol Pumps, hotels, traders etc. globally. It is accepted for cash withdrawal at all ATM's of the Bank and at all ATM's of other banks in India and abroad, which are linked to MASTER cards. It is worth mentioning that credit card holder can withdraw 20 per cent of his credit limit in cash through ATMs. For example, a Gold credit card holder with Rs.1.00 lac limit can withdraw up to Rs.20,000 in cash.
 The billing statement of the cardholder is generated on 20th of every month, which is called as statement date. The payment due date would be 10th of succeeding month. Thus the cardholder would get a minimum 20 days free credit period provided the total payment due shown in the statement is paid in full on the due date. If the payment is made after the due date, the cardholder has to pay interest on the amount due to him at 2 per cent per month.
 Efficient use of credit card can ensure many benefits to the cardholder. Here is a word of caution. Most of the credit cards offer grace periods to customers that pay off their balances each month. A grace period is the period after a purchase is made during which interest is not charged. If payment is made in full by the end of the grace period, no interest is charged. But if only a partial payment is made, interest kicks in at the end of the grace period. One should avoid cards, which have no grace periods whatsoever, which means interest clock starts ticking after each and every purchase. Nobody should plan missing a credit card payment or going over the limit.
 A cardholder should avoid taking cash out of the credit card. As soon as one takes out a cash advance, he has to get ready for a shock. The rate for cash advances is much higher. And there is no grace period – one starts paying interest right away. When considering a credit card, make sure to know all the details of how the card will work. Be sure to study its terms and conditions before signing on.
 Meanwhile, the unethical practice of demanding ‘commission’ over and above the original price of the item kills the basic concept of the credit card facility. It is not the cardholder alone who suffers but at the same time the merchant establishment will also witness customer defection over a period of time, as the card culture is picking fast in our state.

(The views are of the author & not the institution he works for. Feedback at sajjadbazaz@greaterkashmir.com)

Lastupdate on : Tue, 13 Jul 2010 21:30:00 Mecca time
Lastupdate on : Tue, 13 Jul 2010 18:30:00 GMT
Lastupdate on : Wed, 14 Jul 2010 00:00:00 IST