Sunday, August 30, 2009


The Credit Card default has reached now such a limit that a new legal provision has been put on place to realise the dues from the salary of the cardholders. With the new provision on place the defaulting card holders have to be very cautious to save their name and the fame from now onward. Defaulting credit card holders may risk their credit worthiness too. Of course, it was also true that most Credit Card Companies used to realise, at the slightest pretext, their outstanding dues by applying strong arm tactics . There were volleys of protest against such uncivilised mannerism of the Credit card companies. Fortunately court debarred Credit card companies from using force and extra legal provisions but it also equipped the banks with legal provision to realise their legal dues from card holders . What is really a credit card ? What is the function of credit card ?

A credit card is a small plastic card and is a part of a system of payments issued to users by banking system. It is a card entitling its holder to buy goods and services based on the holders promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user, to be paid within a specific period of time as agreed. Working class should be aware that from now onward credit card default could be realised directly from salary payment.

The use of credit card is like a double edged sword. When used judiciously and with good intention it is helpful to users. When used recklessly it creates problem for the users. The payment of credit card must be made in time. Though credit card allows payment to be made slowly every month this facility should not be availed off , by salaried persons,as it is a very costly option.The interest charge for the outstanding due are generally more than 40%. The money kept in fixed deposit of bank is paid at the maximum rate of 9% interest now a days. Whereas for any outstanding amount of the credit card interest charged is around 40-%. So even if credit card is used the money should be paid immediately on receipt of the bill to be cost effective.
Recently two most important steps have been taken in respect of the credit card. The first, in case of credit card default the money can be deducted from the salary of the card holder and and the second, is the introduction of PIN number to save card holders from defrauding. These are two important steps,all credit card holds need to know, that have been introduced.

Perhaps by now most of credit card holders know that from the month of August a separate PIN Number would be required to use the credit card on line. This provision came in force as per directive of RBI. The most of the issuer bank has already made arrangement for this procedures. Now it is the responsibility of the credit card holders to apply for this PIn number from their respective bank. This method has been put on place so that fraud could be avoided. The credit card number could be stolen, copied and can remembered but Pin number would be known by only individual concerned .To ensure double safety this concept has been introduced. The card holders now need to apply for the same.

Some credit card users forget to pay their dues in time and dues to be paid multiplies fast. On non receipt of original and subsequent dues dues on time Credit card issuers at first keep on sending reminders and if no response is received the holders then deploy recovery agent, who are actually a gang of muscle power, to realise the due payments. In such situation credit card users face harassment and sometime get bodily injuries beside experiencing traumatic situation.

Sometime younger generation while trying to show off their purchasing power flash out their credit cards and buy goods and commodities and later fails to pay and there by inviting unnecessary trouble for themselves. A few years back an incident took place in Guwahati on misuse of credit card.. There were a group friends who, after graduating , found jobs in a few multinational companies selling white good products. After their office hours these friends used to meet in a rendezvous located near Christianbasti at G.S. Road. They used to enjoy in a nearby restaurant almost every evening after office hours and used to have innocent fun.

Rajib Bharadwaz and Dhiraj Borah, in the group, were two friends working in the same company. One evening when all the friends assembled Raijib' business acymen was discussed and everyone congratulated him for fulfill his annual sales target within six month's time. Rajib told his friends that a special Bonus would be paid for his achievement by the year end. All the friends congratulated him and ultimately pressurized him to throw a dinner party that night itself.. Rajib agreed to the party next week for he had no cash in his pocket then. But his friends were unrelenting and kept on demanding the party that night itself. Ultimately Dhiraz, being his colleague, agreed to use his credit card with an assurance that Rajib would pay him the money next week. Party continued and all the friends thanked Rajib. In due course of time when the bill came Rajib was away on tour. On his arrival Dhiraz gave him the bill and asked him to deposit the money next day as he was going out on tour. Rajib kept the bill with him and forgot later to send the payment to the credit card company.. The due date of payment expired and credit card issuer kept on sending reminders. when the company did not receive payment continuously for three months recovery agents arrived at Dhiraj's home. They insulted his both the parents and forced them not only to pay the amount but to handover their fees as penalty. Parents were shaken. Dhiraz was a regular payers of bills. He took up the matter with the bank but without any avail. Dhiraz then only realised the danger of using the facility of credit card emotionally. He realised it was not correct to flash out the credit card to pay the someone else dues. It was also not correct for him to hand over the bill for payment to someone else. He should have asked for the money next week as decided and pay the bill himself in due course. For his own fault he lost his money and his friend. The realisation came to him too late when already his parents were insulted.

The above incident was a true story. So all the young man should realise that credit and debit card are sacred instruments to be used with utmost care. It is not meant for making any style statement. Please don't let your credit and debit card number be known by anyone. There was another incident when even powerful man like Jyoti Basu was shaken when his DEBIT card was stolen by his security man and used. The person concerned was was later nabbed. So use your credit card , ATM card and Debit card with utmost caution.

Over the years the news of using muscle man in the garb of recovery agent by banks reached the Reserve Bank of India but no substantial steps could be taken. But court delivered judgment that Banks would be in their right to recover their dues of credit card if payment remain due for for long. They can take legal means to recover their dues but would not be able to use brutal force. The recovery agent would have not rights to talk to anyone other than the holder of the card. Despite those legal sanction many persons refrained from making timely payment of the credit card dues. The banks were feeling frustrated because it meant loss for them
Recently a provision has been made by the bank in case any employed person does not pay the credit card dues on time it would be possible for the banks to realise the amount from the salary of the person concerned. Now employed person should be aware of this provision. This may lead to not only the realisation of money from their salary but they may be defamed . Their credit rating may go down and ultimately it might create a black spot in their career. This fact was kept secret till now . The matter came to light when a bank has started using the provision legally.

ICICI bank will be the first bank to utilise this concept. While issuing credit card from now onward they would bind the holders in such a way that in case payments are not received during the due dates the bank would be in a position to approach their employers to deduct the dues from the salary legally and pay to the bank. This provision would be made legally foolproof and others banks are also expected follow the rule when issuing creditcard to holders.

Many educated people also once thought that most of the time dues of credit card can be avoided. But as the days passed by the non payment of credit card dues have been taken as an legal offense. In modern days provision of taking debt would be getting easier but for that credit rating of individual would be very important. From now onward before sanctioning Housing credit and car loan the banks would be demand credit rating of individual. In most of the developed countries such provision are most essential. In India, up till now Loans were easily available for the working persons but now onward even credit rating would be necessary. So every young persons must zealously protect their credit rating status from now onward, by preventing misuse of credit card.
It must be kept in mind that default in credit card payment not only bring bad name to non payer but may also destroy credit worthiness of the persons concerned. So now days beware of credit card default. Regular payers of credit card would have great advantage in building their credit worthiness.



Rajeev Ranjan said...

It's a great information for all who want to some new information about credit card default. Great job dude and thanks for your kind info.

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