All About RBI’s new Credit Card rules and how they affect you

Several new credit card rules were introduced by the Reserve Bank of India (RBI) in the last few months. These changes will impact the average Indian credit cardholder - in a good way. Let us take a look at these credit card rules and understand how they will affect you.

Credit Card limit
 

Earlier, you had to raise a request to the card-issuing company to increase your Credit Card limit. Sometimes, as a pleasant surprise, the credit limit would go up automatically. If you were fine with the existing credit limit, chances are that you didn’t need the increase in the first place. In such cases, you may end up swiping your way into a debt trap. 

RBI has put an end to this practice. Since 1 October 2022, card issuers have to seek written permission and consent from the cardholder to change the person’s credit limit. From this date, the practice of automatically increasing a cardholder’s credit limit has ceased to exist.

Tokenization
 

Tokenization is a process that replaces your actual credit card details with a code, referred to as a token. The token is a unique code comprising three components:

·     The card details

·     The token requestor (the entity that accepts the customer’s tokenisation request and passes it to the card network, which then issues a corresponding token)

·     The identified device for the transaction

The process to be followed by the cardholder to request and obtain the token is as follows:

·     Enter the card details for the transaction and click on ‘Secure your card as per RBI guidelines’

·     The merchant requests the operating bank to generate the unique token 

·     Once the bank agrees to it, the merchant sends it to the card network

·     The cardholder receives an OTP, which must be entered into the bank’s page, and the token gets generated

The website no longer gets to save your name, card number, CVV number, expiry date, etc. Even if the website is hacked, your confidential information won’t be leaked. This change is also applicable to debit cards.

OTP for card activation
 

If a cardholder doesn’t activate the credit card for more than 30 days, the issuing company must obtain an OTP from the cardholder to activate it. If the cardholder is not willing to activate the credit card, the issuing bank must deactivate the card within seven days without charging any additional fee.

Interest charges
 

The payment terms and minimum due will now be calculated in a manner that avoids negative amortization. As a result, unpaid charges and taxes will not be capitalized while compounding the interest on the outstanding dues. Simply put, these charges will not compound every month and snowball the outstanding amount.

Conclusion

IDFC FIRST Bank has been prompt in implementing these changes to its credit cards, in keeping with its dedicated customer service to cardholders. IDFC FIRST Bank follows a fully digitized credit card application process that can be tracked online by the applicant. Apply for your IDFC FIRST Bank credit card today!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.