Credit cards bring good life in US, not in India

NEW DELHI: Credit card users in India may be paying huge "extra charges" amounting to over Rs 1.6 crore a day, but those in the US believe that using plastic advance money has a positive impact on their lives.

According to a survey by Washington-based Financial Services Forum, 72 per cent of the respondents across the US are satisfied with the services offered by the card issuers.

Besides, 73 per cent said their credit card company treats them fairly and as many as 62 per cent said using a credit card has a positive impact on their lives.

The Forum comprises of the CEOs of world's 20 leading banks such as Citigroup from the US, Britain's HSBC, Germany's Deutsche Bank, Swiss giant UBS and GE Commercial Finance.

The survey comes within a week of another study conducted by Credit Card Holders' Association of India, which said that credit card holders in India have been ripped of Rs 6,000 crore as "extra charges" by banks in a span of ten years - resulting in additional charges of over Rs 1.64 crore a day.

These charges imposed on credit card users in India, who pay the highest rates of interest in the world, come in the form of penalty for late payments and exceeding the credit limit as well as fees for services like cash advance, cash withdrawal and cheque pick-up, besides the service tax on all these fees.

Incidentally, HSBC and Citigroup as well as domestic lenders like HDFC Bank have come under the lens of Monopolies and Restrictive Trade Practices Commission on credit cards. DGIR, the investigative arm of MRTPC, has recommended action against Citigroup and HSBC for making false promises to credit card customers and violating RBI norms.

It had found both banks were delaying delivery of bills and realisation of cheques toward payment just to charge increased interest rate, late fee and fine.

The Indian rights group, which collated the figures from the balance sheets and profit and loss statements of all private and nationalised banks, is also planning to move the Supreme Court asking banks to pay back the extra money.

According to the group, the average annual interest rate on the rolled over amount in the US is 14 per cent while banks in India charge around 36 per cent. These issues were similar across all banks in the country.

In contrast, a vast majority of users in the US (72 per cent), according to the Financial Services Forum survey, believe if a consumer does not like terms or conditions of their credit card, they are able to obtain better rates and terms of service from another issuer.

However, when it comes to understanding the fine prints of credit card agreements, the satisfaction level failed to get a clear majority even in the US.

Just 49 per cent of the respondents said that disclosures in their credit card agreements were clear and understandable, with 43 per cent replying in negative and 9 per cent expressing their inability to answer the question.

However, 62 per cent people said they were able to extract the adequate information from these agreements as against 28 per cent replying in negative.

Incidentally, the nationwide survey of 1,000 adults in the US conducted by independent research firm RT Strategies did not include a single American Indian among a wide range of ethnicity including White, Black, Hispanic, Asian and others.