With the banking sector the chances of creating different brands are very, very low. Only a few modifications can be made to almost identical products. In this situation, IDFC First Bank is making a new change in the credit card segment. Although the credit card is an important market, there is a great deal of public fear over it. The number of credit card users is low as they will get stuck in the pit if they do not use the credit card properly. The first attempt to change this has been launched.
We can buy goods using credit card. No interest if paid within the next 45 days. For example, from January 1st to January 31st, it is sufficient to pay by February 15th for credit card expenses. Maybe if we cross this limit then the interest we pay will be very, very high. Up to a maximum of 40 per cent (annual interest) will have to be paid. On a monthly basis, you will have to pay 3.5 per cent interest.
In this case, IDFC First Bank plans to set a variable interest rate for credit cards. Has set interest rates that vary from 9 per cent to 36 per cent. The interest rate is determined based on how the parties repay the loan.
‘We are entering the credit card market late. So we can go to the next level in the credit card market only if we are different from other companies, ”said Mathivannan, Chief Operating Officer (COO) of the bank.
‘Initially we are going to give on call basis only to the customers of the bank. After that we are going to gradually extend this to other customers as well. Also, many people do not use it because the interest rate is high. Credit card usage will increase if the interest rate is brought to be equal to the personal loan, ‘said Manivannan.
Other banks are likely to make similar products as the bank plans to offer lower interest rates to customers with higher credit scores.
Withdraw interest free:
You can use products or services by swiping credit cards. Can be used for 45 days without interest. The same credit cards can be used to withdraw money like debit cards. But the interest will be calculated from the moment taken. Apart from that Rs.250 will be charged for a transaction. (Some banks charge even more).
But, ‘IDFC First Bank’ allows cash withdrawals without interest. (However, transaction fees must be paid). No interest if the money withdrawn from the ATM is paid within 45 days. The bank has announced that interest will be charged if this period is exceeded.
Rs 62,349 crore was swiped through credit cards last November. But only Rs 231 crore has been withdrawn using credit cards. So it is necessary to reduce the interest rate if this market is to expand.
‘There are 80 crore debit cards in the country. But there are only 5 crore credit cards in the market. High interest rates and credit card withdrawals are the biggest hurdle. If this is rectified, the number of credit card users in India could increase to 60 crore, ”said V. Vaithiyanathan, CEO, IDFC First Bank.
‘We plan to issue these new cards in March. We plan to issue 2 lakh cards by the end of the year.
I spoke to a senior official working in the credit card department of a private bank about this. ‘Credit card infiltration is very low in India. Banks including HDFC Bank, ICICI Bank, SBI, Axis and Kodak hold the majority stake. In particular, HDFC Bank has 1.49 credit cards (up to last September) in the market.
If you want to make a profit in the credit card segment, you can only run this segment successfully if you have at least 25 lakh customers. Otherwise the credit card will be an additional privilege and will not be held by the bank as a successful segment.
Realizing this, the bank has been working towards connecting more customers from the beginning. Whereas credit cards cannot be given to debit card holders. Customers’ credit score is not the only thing that matters when it comes to credit cards. Recovery is important here. If someone does not pay, you should also look at how to collect it. Even those in small villages in Tamil Nadu can have a debit card. He will spend the money he has in his account. But a credit card is a loan. If not, the loan can only be granted after seeing if there are opportunities for recovery in that town.
It is doubtful whether there will be any growth for credit cards in the future with the advent of many payment methods including Google Pay and BDM. But, all other payment methods are only a one time transfer of money to the existing bank account. But, credit card is debt. So the need for credit cards will continue. But it is not clear whether 60 crore credit cards are possible.
Credit card is the best device if you know the need and use credit card. With the new example, a credit card is like a corona. No need to worry about looking at a credit card. But, if not careful it can turn your life upside down.