Protecting Cardholders: Why RBI Should Stop Mid-Term Credit Card Devaluation

[Hemang]

I am closing my Axis MyZone and PNB CC next week. ICICI Sappihro 🐍🎷 also on the list of closure. Will keep only SBI Cashback, Simplyclick (because of 10% discounts which are not valid with cashback), HDFC Millennia CC. HDFC offering me Tata Neu Infinity as LTF but already have Millennia for purposes.

Talked to ICICI CC yesterday and they said my Coral Rupay will be made primary card on request and Sapphiro both variant AmEx/Master will be closed. Sunn ke accha laga. Ab Naa Rahega Baans (Credit Card), Naa Bajegi Bansuri (Cashback via DC). Thaq gaya hu ab. Nahi rehna ee Banks ke gola mein. Most of time I have bills only for SBI cashback/simplyclick and HDFC Millennia.

P.S: Tomorrow morning I will recall that all ICICI, PNB and Axis are LTF and when CC will confirm should I close, I will tell him to not proceed. LTF ka chakkar hi aisa hai. 🙁

bhai fir axis aur icici ke core cards ni rkhe for offers (instant discount 10% vale) ? pata hai bhai agar ye banks ne core card aur co branded ka chakkar nahi rakha hota to cards aur minimum rakh sakte the hum. But iss chakkar me kuch cards zinda rakhne padte hain.

 

[desiviru]

bhai fir axis aur icici ke core cards ni rkhe for offers (instant discount 10% vale) ? pata hai bhai agar ye banks ne core card aur co branded ka chakkar nahi rakha hota to cards aur minimum rakh sakte the hum. But iss chakkar me kuch cards zinda rakhne padte hain.

That's why not closing it from long else my most reliance is on HDFC Millennia and SBI CB.

 

[sun156]

One more thing, closure of CC A/c is not that simple as Savings Bank A/c. It does also have negative impacts on customer's/ card holder's credit report.

Especially when the devalued card is old card in his report, or/& s/he only possess the devalued card or/& s/he has no long payment history.

I think, RBI purposely did not make definite guidelines.

Try to use cibil simulator in closing old card , your score doesnt change.

I closed so many my old cards ,My score havent changed.


I have personally spoken to CIBIL Technical Team persons, The age itself is calculated for the score. irrespective of account active or closed
of course score decreases because the TOTAL CREDIT LIMIT SANCTIONED IN CIBIL DECREASES making CREDIT UTILIZATION Increase

please in whole internet confusing for the same.

 

[sun156]

According to RBI guidelines, if a bank wishes to make changes to a credit card’s benefits or terms and conditions, the issuer must provide a one-month advance notice to all customers of the specific product. If a customer doesn’t respond, the bank may consider this as consent to continue using the product under the new terms. However, the guidelines do not clarify what happens if a customer does not wish to continue with the credit card after these changes. Whether the customer would receive any refund is also not specified by the RBI.

Recently, we've seen several card issuers launch credit cards with highly attractive benefits, only to reduce their value after gaining a significant customer base within a few months. For example, the ICICI Bank Emeralde Private Metal Credit Card initially offered 1 reward point = Rs. 1 for Amazon Pay and some other gift voucher redemptions. However, just a month after the card’s launch, this was reduced to 1 reward point = Rs. 0.50 for Amazon Pay and similar vouchers.

Similarly, the Yes Bank Marquee Credit Card was recently devalued, with a higher spend threshold now required for complimentary airport lounge access. Additionally, reward point redemption for flights and hotel bookings is now capped at a maximum of 70% of the booking amount.

I don’t have an issue with devaluation itself; it’s ultimately the bank's decision. However, what about customers who have already paid a joining or annual fee, typically charged for a full 12 months, only to see their card’s benefits reduced partway through the year? If customers are paying for a full year, why should banks reduce benefits midway?

Banks often include clauses in their terms and conditions stating that they can change benefits anytime, even without notice. But this is exactly where the Reserve Bank of India (RBI) should step in. The RBI exists to protect customer interests, and it should ensure that card issuers don’t devalue a product mid-term for existing customers who have already paid their fees.

Possible Solutions:

I believe there are two solid solutions to address this issue:

1. Delayed Implementation Based on Renewal Dates: When a bank announces product changes, these changes should only take effect upon the cardholder’s renewal date. This way, each existing customer can enjoy the original benefits until their renewal and then decide if they want to pay the renewal fee for the card with updated benefits. This would mean that the changes would take effect at different times for different customers, depending on their specific renewal dates, which could be challenging for card issuers to manage.
   Example: Person A holds a card with a renewal date in 7 months, while Person B has the same card but with a renewal in 4 months. If the card issuer announces benefit changes, Person A would continue receiving the original benefits until their renewal date in 7 months, while for Person B, the changes would take effect in 4 months when their renewal comes due.
   
   
2. Pro-Rated Refund of Annual Fees: Card issuers could offer a pro-rated refund of the annual fee if a customer chooses to discontinue the card due to benefit changes. For instance, if a cardholder has paid the annual fee and used the card for only 3 months, with 9 months remaining until renewal, and the bank announces a devaluation, the customer should have the option to cancel the card and receive a refund for the unused 9 months.

These two solutions seem very practical and could effectively protect customer interests. If regulators don’t take such steps, or similar necessary measures, card issuers may continue this practice unchecked, ultimately causing customers to suffer. Imagine this scenario: a card issuer launches a credit card with an enticing 5% unlimited cashback and an annual fee of Rs. 10,000. Hundreds of thousands of customers pay Rs. 10,000 for the card, only to find, after just two months, that the card terms have changed to offer only 5% cashback capped at Rs. 1,000 per month, with additional restrictions like no cashback on utilities, insurance, wallets, or rent payments. Then what?

Banks doesnt give issuance charges in this case. ( of course devaluating the same within less time is not acceptable)
( MY SOULUTION IS The bank itself should promise that these benifits will last for these many YEARS FOR A NEW CUSTOMER irrespectove of devaluation) ( or RBI should amend/REVISE the CREDIT CARD GUIDELINES)

But as per RBI guidelines , banks should calculate reversal on PRO-RATE basis on no of months card used for reversal of debit or credit card annual charges.
Mostly the annual charges are collected as postpaid in 95% of cards and banks. SO there wont be reversal. since you used the card for full CARD YEAR

If they charges annual charges prepaid that is beginning of the year, then if you close the card you can ask for PRO- RATE CALCULATION ( I am dammm sure regarding this one)

In icici before 3 years I received DC Charges reversal after complaining to RBI ombudsman. Here clearly stated to bank the same.