As the story of my experience with my supposedly closed Secured CC from Union Bank unfolds (as detailed in another thread), I thought it would be a good idea to enhance our common knowledge of Secured CCs and Blocked cards beyond the basics with help from the TF community expertise.
Basics of Secured CCs issued against FDs are common knowledge. For example (please correct if wrong):
* Such CCs are issued against FDs by putting a lien on them.
* These FDs can be encashed only after the lien is removed by cancelling the CCs.
* Such a CC can be renewed after expiry only if the corresponding collateral (the FD) has a long enough term left to maturity.
Basically, such a CC can not exist without a collateral (an FD).
So what happens if you apply to the bank to close your CC, consequently the lien on your FD is removed, and then you encash the FD?
The Secured CC can't exist anymore when the collateral is removed, so it must be closed, right?
Yet Union Bank recently claimed to have only Blocked my CC (instead of closing it in accordance with my application back in April 2016). If so, it was done completely without my knowledge! Yet the lien on my FD was removed, and I was able to encash it. However, my Secured CC somehow still lived on, despite the absence of a collateral!
Now, how exactly does a Blocked card work?
We know that a Blocked CC can't be used, or reissued/renewed without the customer's explicit consent. But is it ever closed in the absence of the holder's explicit request?
As I've found out recently to my utter astonishment, Union Bank have somehow kept my supposedly closed Secured CC in an Undead Blocked state for 7 years, past two renewals, after removal of the collateral! And all this while the Bank have also kept on generating regular Payment Status Reports for this Undead CC to all the credit bureaus, -- and all these without my knowledge!
Perhaps this is an one-off exceptional situation. But perhaps not! Because the current Indian financial system with all its rules and regulations and checks and balances (or lack thereof) has somehow let it happen!
So all we can do is keep aware of the rules and regulations, and our credit reports, and know how to seek enforcement of our rights in case of surprises.
To that end, the TechnoFino community with all their expertise can be our immensely valuable support mechanism. Thanks in anticipation of your views.
Basics of Secured CCs issued against FDs are common knowledge. For example (please correct if wrong):
* Such CCs are issued against FDs by putting a lien on them.
* These FDs can be encashed only after the lien is removed by cancelling the CCs.
* Such a CC can be renewed after expiry only if the corresponding collateral (the FD) has a long enough term left to maturity.
Basically, such a CC can not exist without a collateral (an FD).
So what happens if you apply to the bank to close your CC, consequently the lien on your FD is removed, and then you encash the FD?
The Secured CC can't exist anymore when the collateral is removed, so it must be closed, right?
Yet Union Bank recently claimed to have only Blocked my CC (instead of closing it in accordance with my application back in April 2016). If so, it was done completely without my knowledge! Yet the lien on my FD was removed, and I was able to encash it. However, my Secured CC somehow still lived on, despite the absence of a collateral!
Now, how exactly does a Blocked card work?
We know that a Blocked CC can't be used, or reissued/renewed without the customer's explicit consent. But is it ever closed in the absence of the holder's explicit request?
As I've found out recently to my utter astonishment, Union Bank have somehow kept my supposedly closed Secured CC in an Undead Blocked state for 7 years, past two renewals, after removal of the collateral! And all this while the Bank have also kept on generating regular Payment Status Reports for this Undead CC to all the credit bureaus, -- and all these without my knowledge!
Perhaps this is an one-off exceptional situation. But perhaps not! Because the current Indian financial system with all its rules and regulations and checks and balances (or lack thereof) has somehow let it happen!
So all we can do is keep aware of the rules and regulations, and our credit reports, and know how to seek enforcement of our rights in case of surprises.
To that end, the TechnoFino community with all their expertise can be our immensely valuable support mechanism. Thanks in anticipation of your views.
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