The Indian credit card industry, like any other service industry, strives hard to provide you with effective payment and easy credit-purchase solutions. The last thing that any credit card company would want is for you to have an acrimonious experience in the event of default on payment of your outstanding credit card bill. In India, even with the various payment alternatives available to you as a credit card holder, one in every ten credit card holders defaults as opposed to one in every twenty-five in the United States of America. This dilemma is the single factor that has kept the credit card industry in India struggling with problems of heavy overheads and the risk of debt amortization.
You, as a credit card holder, must be aware of the consequences of the abuse of your credit privileges, some of which are listed as under:
Late fees: Neglecting to pay your credit card dues on or before the due date attracts late fees. Technically, you need to pay at least the minimum amount due on your credit card bill on or before the due date, or you will be liable to pay late fees.
Interest rate: In the absence of any other collateral, the credit card company has no other option but to hike the interest rate in case of defaulters who continue to make credit purchases without making clearing their overdue debts.
Report of default status: All credit card companies regularly send default status reports of all card holders to Credit Information Companies. These Credit Information Companies, which are duly registered with the Reserve Bank of India, then generate your Credit Information Reports (CIRs) and Credit Scores which are provided to all registered lenders i.e. Banks and NBFCs. All your future loan and credit prospects are subject to evaluation based on these CRIs and Credit Scores. Negative CIRs and credit scores gravely hamper your credit worthiness throughout India.
Recovery calls: After a point of time, the follow-ups made by the credit card companies for payment of your dues becomes a taxing exercise for both the parties, furthermore, it affects your personal life and only adds to your anxiety and stress apart from the actual credit card debts.
Apart from providing extraordinary purchasing power at the minimal cost of your own conscious responsibility, there are plenty of credit card offers provided to you by the issuer. A rational and regular use of your credit card not only enhances your credit-worthiness, which in today’s business world is an asset in its own right, it is also a rewarding experience.