In the old days, credit cards were a luxury open only to lavish spenders. Today, however, there is a choice of cards from Indian and multi-national banks for an array of income levels. Your take home salary per month can be as low as Rs 5,000, and credit card fees per year are a minimum of Rs 600.
You will find three main categories of credit cards standard or classic are the cheapest; executive or silver are the medium range; and gold or exclusive are the premium range. The only bank which has cards at every level is Standard Chartered; Citibank and HongKong Bank offer classic and gold, ANZ Grindlays offers silver and gold. Among Indian banks, Canara Bank and the Central Bank of India offer classic level, while the Bank of Baroda offers gold.
The main differences in card level are the credit limits and insurance benefits. Stanchart and Citibank say they use the following multipliers to set credit limits based on income level: 2.5 for classic cards, 3.5 for executive cards, and 4 for the gold cards.
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For the classic or standard cards, your salary should be at least Rs 50,000 to Rs 96,000 a year; card fees are from Rs 600 to Rs 750. Citibank quotes slightly lower eligibility criteria for salaried employees of Fortune 500 or public sector companies, while Stanchart quotes lower income criteria for self employed individuals. In all cases, the primary card holder can buy add-on cards for family members; however, the credit limit is then shared by all holders.
There are many differences between MNC and Indian bank cards. Both Canara Bank and the Central Bank of India require you to have been an account holder for at least six months before issuing the card; the multinational banks dont require you to be an account holder at all.
Also, the Indian banks dont yet offer the ATM facility; with the MNCs, you simply need to get a PIN (personal identification number) and can then access their ATMs. Of course, there is a 2.5 per cent transaction charge on the amount withdrawn, plus interest charges. Also, the Indian banks require that you pay at least 10 per cent of your total outstandings every month; the MNCs only require that you pay 5 per cent.
But Indian bank cards do carry lower interest charges Canara Bank charges only 2 per cent a month, while the Central Bank of India charges 2.5 per cent. By contrast, HongKong Bank charges 2.75 per cent for its classic cards, while Citibank and Stanchart charge 2.95 per cent.
Also, the Indian bank cards allow over-the-counter cash withdrawal at 2,500 branches across the country; MNC cards are more limited, since they are concentrated in the metros. But over-the-counter withdrawal is limited to the bank hours, while ATMs are 24 hour, says a spokesperson for Stanchart.
For the executive cards, the income criteria are much the same as the classic cards, but the annual fees are about Rs 800 to Rs 1,600 a year. The main gain to the card holder is the insurance benefits; for Stanchart, air accident cover doubles from Rs 4 lakh to Rs 8 lakh, while road accident cover doubles from 2 lakh to Rs 4 lakh; spouse cover is Rs 2.5 lakh. The main competitor here is the ANZ Grindlays silver card the insurance cover is slightly less at Rs 6 lakh for air accidents and Rs 2 lakh for road accidents; there is no spouse cover. Also, the ANZ Grindlays card does not have the ATM facility yet.
However, the ANZ Grindlays silver card is cheaper. It also levies only 2.9 per cent interest charges versus the latters 2.95 per cent. And it allows the holder to withdraw upto 60 per cent of his or her credit limit, versus only 40 per cent from Stanchart.
At the gold level, you need a salary of at least Rs 84,000 a year; initial fees start at Rs 1,000. Stanchart and HongKong Bank offer an attractive interest charge of just 2.5 per cent. Citibank stays at 2.95 per cent, and Bobcard Exclusive is 3 per cent. With Citi, Stanchart, and HK Bank gold cards there is zero lost card liability as soon as you report a loss or theft, you are not liable for expenditure incurred. Bobcard and Grindlays have Rs 1,000 liability in this case.
Citibank claims that it offers more services to justify its higher charges. You can use Citibank cards for paying phone and electricity bills, or paying for mutual funds or public issues. Stanchart does offer a tele-draft facility to pay phone bills, house rent or school fees but the draft will be delivered to you, rather than the final recipient, in 72 hours.
Citibank Gold offers purchase protection for goods bought on the card this covers losses up to Rs 40,000 annually for a period of 90 days from the date of purchase. While Stanchart also offer protection on its gold card, it is only up to Rs 15,000 per year, for just 30 days from the date of purchase.
Co-branded cards give you discounts on the partner companys products, while affinity cards donates a percentage of your spending to a certain cause. The cards correspond to classic cards for eligibility and annual fees.
Amongst co-branded cards, you have Citibanks cards with Philips, Indian Oil, and the Times Group; Stancharts cards with Mahindra and Mahindra and Amway; HongKong Banks card with Shoppers Stop; and the Bobcard-Bharat Petroleum card. The charges correspond to classic cards. In the affinity category, Citibank has cards with the World Wildlife Fund, the Indian Air Force, and womens associations SPARC and FWWB; Stanchart has cards with alumni associations like Doon School, Mayo College and the IITs. Members of the partner association get a discount on initial enrolment fees, and a part of the credit card spend is donated to the alumni association. Its about 0.25 % for the IIT affinity card, reveals an alumnus of IIT Delhi. For the Citi-WWF card, up to 50 per cent of annual fees and 0.1 per cent of spend goes to the WWF.
Whatever your reasons for spending, you can be sure that the convenience of plastic is becoming more real for millions of Indian consumers these days.