Like most people, I own two credit cards, both from private banks. And I am harassed by both of them.

Here's my story and what you can learn from it.

There is such a thing as a free lunch!

At least that is the impression I got from the direct sales agent.

September 2004

I joined my last company by the virtue of which I became a customer of Bank I via a corporate salary account. So far so good.

February 2005

I get a visit from a Direct Sales Agent (the most notorious element in the credit card ecosystem; customer care executives come a close second). Dropping into my office, the agent managed to successfully lure me into a lifetime free credit card from Bank I. The DSA kept cooing into my ear, telling me I would not have to pay an annual maintenance fee and the card is mine till death do us part.

"What's the catch?" I asked.

"Nothing," was the prompt reply

Well, I figured, on and off there is such a thing as a free lunch.

Now, I already was in possession of a credit card from Bank H. I pay an annual fee of Rs 750 for this card. I blindly opted for this new card with the intention of junking my old card. Why pay for a card when I can get one free?

I signed on the dotted link while the agent gave me a foxy smile. Well, I figured, must be just happy to meet the target.

February 2006

Come February 2006 and I am blissfully unaware I have held the card for a year. And why should I care? There are no payments due on this card.

Fortunately, I was in a mood to scrutinise it in detail.

A few headings began making my head spin.

AUTO DEBIT PAYMENT RECEIVED, THANK YOU (Rs 800)
AUTO DEBIT RETURN (Rs 800)
AUTO DEBIT RETURN FEE (Rs 250)
LATE PAYMENT FEE (Rs 300)
INTEREST CHARGES (Rs 541.51)

In case you are unaware, interest charges are calculated on the total outstanding amount (total amount you owe the bank) on the statement day.

They debited Rs 800 from my bank account at the end of the month. If you cannot the entire bill, they expect a minimum payment of Rs 800. The account did not have that much cash for them to make the debit. Hence the late payment fee and the auto debit return fee.

I failed to understand this conundrum and called customer care. An automated voice informed me to please be on the line because my call was important to them and that a customer care executive would attend to me shortly.

Five minutes later, someone finally does appear on the line.

I wanted to know how on earth the bank could merrily dip into my account for Rs 800 (auto debit charge).

The executive had no answer.

So I asked him to escalate the call to the floor manager.

The floor manager was not too helpful. He spoke just like the customer service executive and tried to settle the matter with "we-will-waive-off-those-charges-if-you-pay-up" kind of a gambit.

I persisted for an explanation. Well, this is one of the few times my persistence paid off.

The buck stopped with me!

He informed me I had signed for the auto debit facility when the DSA had asked me to sign on the dotted line.

Now, he was more forthcoming. He also informed me the auto debit payment doesn't lapse on its own and the card holder has to make an application for the same after the first six months to de-activate this facility.

This time I kicked myself for not asking the DSA some more questions and reading the fine print in detail.

The floor manager was obviously enjoying himself. He told me this auto debit payment was made on my account on two previous occasions!

All I could mumble was: "How come I was not aware?"

I deserved another kick. Why have I never pored over my monthly statement?

I demanded to meet with someone responsible from the credit card division. I was told that would not be possible and I would have to write to them instead.

Moral of the story? I still feel they have no right to utilise the Auto Debit facility. I understand I had signed the form which gave them the right to do it, but I still feel the agent should have informed me about it.

Lesson to be learnt

• Never blindly trust a DSA.
• Ask questions, don't just listen to the sales spiel.
• Read the fine print carefully.
• Always check your monthly card statement carefully.
• Check how your dues will be settled.
• Look at what the minimum payment is and what the late payment fees are.

Over to Bank H

That was my experience with Bank I. Now let me move over to the other one.

November 2004

During Diwali, I had availed of two pre-approved loans Bank H. I took these loans on my credit card and paid a fixed monthly installment of about Rs 220 and Rs 460 for each loan for more than a year.

A few months later, when Bank I made the above offer, I decided to transfer my credit card outstandings to the new cards since they were offering a lower interest rate for the first six months.

I called customer care of Bank H and was told there was an outstanding balance of Rs 12,000 odd on my card.

I transferred the balance to my new Bank I card.

January 2006

Early January I decided to close my account with Bank H and called them up.

This time the customer care executive told me I still had an outstanding of Rs 6,000. I was aghast! I knew I had cleared the card outstandings.

March 7, 2006

The matter did not end there. I get a call from Bank H's customer care informing me I have a Rs 4,000 credit on my card account for some reason.

Around the same time, I get another call from the same bank -- Bank H -- telling me to make a payment for Rs 1, 000 as well! Isn't that strange?

Of course, I refuse to pay them anything.  

Lesson to be learnt

Always keep relevant statements.

Let's say you are shifting your outstandings from one credit card to another.

The new bank will give you a demand draft in favour of the earlier bank which holds your credit card. This will be for the entire amount you owe the bank.

You then need to hand over this to demand draft to the bank. When the bank verifies the balance transfer (they will send you a statement to that effect), you stop paying them.

Keep copies of these statements. You never know when you might need it.