When was the last time you used that credit card? If the answer is I don’t know then you could soon receive a deactivation notice from the bank informing you that your card has been blocked. Yes, it’s true, as per the latest RBI statistics the number of credit cards in India dropped to 25.51 million. That’s  a 5% drop compared to last year.

One of the biggest reasons the banks deactivate inactive customers is because of the huge costs involved in maintaining these accounts. In the last few years banks had issues thousands of new credit cards with no annual fees which have only added to this problem. This is also a good way for banks to get rid of customers who default on credit card payments.  With credit card spend and number of credit card users on the decline, banks are now looking to retain customers who pay on time and use their credit cards regularly.

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With the economic slowdown hitting everybody, banks are also facing the heat. Banks like ICICI, HSBC and HDFC which were at one time aggressively acquiring new customers are now chasing away new customers. This is because of the increasing default rates and low rate of credit card transactions.

According to RBI data over 22 lakh credit cards have gone out of circulation since April 2008 either due to non renewals or cancellations. Banks have now started issuing fewer cards and no longer pursuing new customers with incentives like they used to do before. Banks have even started charging annual fees which was earlier waived off for new customers. Customers have also reduced their use of credit by over 5% as compared to the 25% increase last year.

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Did you know that When a credit card is issued based on an existing savings account, many banks have a ‘Right to Lien’ clause in their credit card agreements with their customers and that this clause allows the banks to tap into customer’s savings account to payoff their outstanding credit card bills? Some banks have started excercising this practice because of the current economic scenario.

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Citibank India has launched its Platinum Select Credit Card initially in New Delhi and Mumbai. The Card offers low interest rates, superior earn rates, security and fraud covers with an annual fees of Rs 4000. The cardholders will enjoy 50% discount on weekend stays at Taj properties and 50% discount on buffet lunches at Taj Properties for up to six persons at a time.  Cardholders will also get dedicated 24×7 Concierge assistance, shopping rewards, exclusive dining privileges and complimentary access to swimming pool, spa and health club at some hotels.

The Platinum Card covers upto Rs 50,000 against financial loss due to the fraudulent use of their card, insurance coverage of Rs 1,50,000 in case of burglary of household articles, Rs 25,000 if the personal baggage is lost during travel, Rs 10,000 if the passport is lost in a foreign country and Rs 40,000 in case of loss or damage of items purchased.

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A group of foreign banks have challenged a consumer court ruling on credit card interest rates, claiming that they are now free to decide interest rates for credit card users. Earlier a consumer court had restrained banks from charging interest rates in excess of per cent per year. The four banks that challenged this order were Standard Chartered, HSBC, Citibank NA and American Express Bank.

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Dena Bank has decided to enter into a tie-up with SBI to re-launch its credit card service. Dena Bank first launched its credit card business 10 years ago with little success, and hopes to cash in by leveraging on SBI’s brand power. The new card is expected to carry logos of both the Banks.

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