We all know about credit cards, but we often don't bother to learn about the RBI guidelines for credit cards and their issuers. When we encounter problems, we contact the bank and trust them blindly. But banks don’t always tell you the truth. In fact, people lose more money to banks than to scammers because maximum customers don't know the RBI guidelines and don't question their banks.
Today, I'll tell you about a few crucial RBI guidelines regarding credit cards. Save this post and don't let your bank scam you ever again.
I hope these rules help you save money. Don't blindly trust your bank, as they won't always tell you what's beneficial for you. Be informed about the banking products you use to avoid being a victim of banking scams. Our mission is to educate people about credit cards and other banking products, and we'll continue to spread correct information and processes.
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Today, I'll tell you about a few crucial RBI guidelines regarding credit cards. Save this post and don't let your bank scam you ever again.
1. 3 Days Grace Period Rule:
This rule applies just to credit cards as of now and it's not applicable any other credit products like personal loans, home loans, and car loans. You get a 3-day grace period after the due date to pay your credit card bill. If you pay within these 3 days, the bank cannot charge you any late payment penalties or interest.
Example: Anil has a HDSC Bank credit card bill of Rs. 5,000 due on May 28, 2024. If he pays by May 31, 2024, HDSC Bank cannot charge any extra penalties or interest. However, if he pays after May 31, he will incur additional charges.
*Official RBI Guidelines: check 9. (b). (v). point of Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (Updated as on March 07, 2024)
2. Cashback or Refund Adjustment:
If you receive any cashback or refund after your bill is generated, your card issuer must adjust that amount with your total due and send you a new adjusted total due amount.
Example A: Anil has an ICCI Bank Credit Card. His bill was generated on May 24, 2024, with a total due of Rs. 10,000. On May 26, he received a Rs. 2,000 cashback. ICCI Bank should adjust his total due to Rs. 8,000. Anil needs to pay Rs. 8,000 by due date now.
Example B: Rohit has a HDSC Bank Credit Card. His bill was generated on May 18, 2024, with a total due of Rs. 20,000. On May 24, he received a Rs. 18,000 refund. HDSC Bank should adjust his total due to Rs. 2,000. Rohit needs to pay Rs. 2,000 by due date now.
*Official RBI Guidelines: Check 10. (g) point of Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (Updated as on March 07, 2024)
3. Late Payment & Interest on Due Rules:
If you make a partial payment on your credit card bill before due date, the bank can only charge interest and late fees on the remaining amount, not on the basis of the original bill.
Example: Sujit has an Axix Bank credit card with a bill of Rs. 50,000 due on May 28, 2024. He pays Rs. 30,000 on May 25, 2024. Axix Bank can only charge late fees and interest on the remaining Rs. 20,000 after due date plus 3 days grace period, not the full Rs. 50,000.
Previously, banks charged interest and fees on the total amount due, but RBI has now instructed banks to stop this practice.
*Official RBI Guidelines: check 9. (b). (v). and (vi). point of Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (Updated as on March 07, 2024)
4. 7 Working Days Credit Card Cancellation Rule: If you request your bank to cancel your credit card, they must do so within 7 working days, provided there is no amount due or active standing instruction. If the bank fails to cancel within this period, they must pay you a penalty of Rs. 500 for each calendar day of delay.
Example: Anil asked HSSC to cancel his credit card on May 10, 2024, via email, with no amount due or active standing instructions. Considering only working days, HSSC bank should have closed the card by 21st may, 2024. But HSSC canceled the card on May 25, 2024. In this case, Anil is entitled to Rs. 2,000 (Rs. 500 x 4 days delay) as compensation.
*Official RBI Guidelines: check 8. (a). point of Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (Updated as on March 07, 2024)
5. Extra Payment Transfer:
If you overpay your credit card or receive a refund after paying your bill, you can request the bank to transfer the extra credit balance to your savings account. The card issuer shall do it within three working days from the receipt of such request.
Example A: Bhavye has a Kota Bank credit card. His bill was Rs. 50,000 due on May 28, 2024. He paid Rs. 50,000 on May 20, 2024. On May 25, 2024, he received a refund of Rs. 40,000. Since he already paid his bill in full, he can request Kota Bank to transfer the Rs. 40,000 credit balance to his bank account.
Example B: Neeraj has a IDFG Bank credit card. His bill was Rs. 30,000 due on May 29, 2024. He paid Rs. 25,000 on May 20, 2024. On May 25, 2024, he received a refund of Rs. 20,000. Since he already paid his bill partially, he can request IDFG Bank to transfer the remaining Rs. 15,000 credit balance to his bank account.
*Official RBI Guidelines: check 10. (h). point of Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022 (Updated as on March 07, 2024)
What to Do If Banks Don’t Follow Guidelines:
If any bank doesn’t follow the above guidelines, you can file a complaint with the bank via email. If the bank doesn’t resolve your issue within 30 days, you can escalate the complaint to the RBI Banking Ombudsman for further action.I hope these rules help you save money. Don't blindly trust your bank, as they won't always tell you what's beneficial for you. Be informed about the banking products you use to avoid being a victim of banking scams. Our mission is to educate people about credit cards and other banking products, and we'll continue to spread correct information and processes.
Related Video On TechnoFino YouTube: Click Here To Watch On YouTube
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