Glut of plastic freebies as banks try to beat lean season blues

Card issuing banks are offering a host of incentives to ratchet up plastic usage during the lean season between June and July.

While the State Bank of India, ICICI Bank, HDFC Bank, Standard Chartered Bank and HSBC are offering discounts on their cards, ICICI Bank is offering 5 per cent cash back on its card spend. Ditto Standard Chartered Bank.

SBI is also offering a 2 per cent cash back. "The festival seasons in India starts in September and customers usually avoid spending during June-July," said a card head of a leading private sector bank. Card spends dip by around 10-15 per cent during June and July, he added.

"To induce customers to spend, banks usually run a number of promotional offers during this season," he added.

"With the introduction of 5 per cent cash back, ICICI Bank's objective is to increase day-to-day spends through cards rather than occasional spends," said Madhivanan B, joint general manager, retail assets products group, ICICI Bank. Card spends are relatively less during this season, he added.

ICICI Bank is offering its customers 5 per cent cash back on spending Rs 2,000 through card at ICICI Bank terminals. To qualify for cash back, cumulative spending by a customer should be to the tune of Rs 10,000 during the three month period (June to August).

"We expect our spends to go up by about 20 per cent during the cash back period," said a senior State Bank of India official.

HDFC Bank is offering online instant redemption of points called 'Instant Wonder Programme' within a closed loop of merchants, said Pralay Mondal, senior vice-president, head-credit cards, HDFC Bank.

On every Rs 100 spent, a customer earns five points which is equivalent to Rs 5, which is called Turbo points. Currently, the bank is running a pilot in Chennai and Pune and has roped in over 300 merchants. "We plan to roll out this programme across the country shortly," said Mondal.

HSBC and Standard Chartered are offering "fuel surcharge waiver" (2.5 per cent) at all fuel stations. HSBC credit card holders get a refund of surcharge for fuel purchases between Rs 400 to 3,000 per transaction.

On a Standard Chartered Bank credit card, a customer gets 5 per cent cash back. The cash back will reflect in the customer's next billing statement as reversal of the 2.5 per cent surcharge and a further 2.5 per cent off, a total of 5 per cent savings on fuel purchases.