"Neither a borrower nor a lender be" was the advice of the Bard. "Go, tell it to the bees," says today's youngster, for he believes in making his rupee go a little farther. Like the double-income family that had often found to their consternation "there was much of the month ahead at the end of their salary".
Asokan is a relieved man after he got himself a credit card. "My daughter's birthday gifts in the past were all bought out of borrowed money, because she was born in the last week of July," he says, explaining his predicament. "Meeting urgent expenses at the month-end is no problem now. And to top it, the credit on the purchases comes free if you pay the bills promptly," says Meena.
Mohan carries a clutch of credit cards in his wallet -- Citibank, HSBC, TimesCard, BOBCard... When he makes a purchase, he does not pull out a card at random. Some deliberation goes on before he selects the card. If it is the first week of the month, he uses the SBI card because it will get billed only in the first week of the next month and the amount will be due only in the last week of that month. In effect, Mohan gets a credit period of 50 days at zero interest. The same logic prompts him to choose the HSBC card for he may pay only in the second week. He takes advantage of the fact that the billing cycles of the cards are different.
But then there are others who have been bitten by the credit card bug and have a different tale to tell.
Shaji, a medical representative, pays his Diners' Club Card bill using his BOBCard in the first week of the month and his American Express Card bill using his SBI Card in the last week of the month. And the cycle goes on. Not quite smoothly, though, because cash draw against credit cards comes with a hefty price tag. The result is that each time this recycling takes place, the amount due under the bill snowballs fast and the cardholder falls, inexorably and irretrievably, into a debt-trap.
The anonymity that the credit card provides is a feature that attracts many of the users. They find that one's self-esteem does not become a casualty in the act of borrowing from an amorphous corporate lender. "It is embarrassing to be a debtor to someone I know. Why should I let her know how much or how frequently I have to resort to borrowing, or how long I take to pay it up?" asks Jayshree, who works with an insurance company.
The `cash-on-tap' feature -- the ready availability of money -- is what others are enamoured of. "If I do not have a card and need some money, I have to go round scouting for a friend who should not only be willing, but also have the cash in liquid form to spare. The credit card is ever ready to come to your rescue," gushes Rajan, who finds this a great charm. Is he not bothered about the cost? Rajan is quick to respond, "Yes, but this is the price I have to pay for the ready cash. I do not mind the cost. There is nothing called a free lunch."
Ashraf, who travels extensively within the country and abroad on business, finds his international credit card a great convenience, for he can avoid the hassles of carrying wads of notes and visits to the bank for foreign exchange. He settles all hotel bills, pays for entertainment and most purchases using his credit card, which is honoured across the globe.
"The notion that plastic money is widely accepted is a myth," says Raveendran Nair. The Railway timetable and the website say that reservation of tickets can be done at select counters (including Thiruvananthapuram) against credit cards. The young woman at the counter who drew his attention to a notice that said, `Only Cancards were accepted', turned him away. The complaint, which Nair had posted on the website of the Railways in early April, is yet to be acknowledged.
The credit card issuers use all the tricks in their bag to sell their wares.
`No joining fee' is a common bait. Some waive the annual fee for the first year or offer add-on cards at concessionary rates for your spouse or child. Whether you request for it or not (for a fee, of course, which gets billed), cards are renewed automatically. If they find that you use the card regularly and are not a defaulter, the cards are upgraded, higher credit or cash draw limits are offered. You can accumulate reward points that can be exchanged for goodies such as cosmetics, CDs, casual wear, travel goods, and other lifestyle products or services such as stay in hotels.
Co-branded cards are relatively new, but they have caught on. Leading the pack is Citibank cards that have tie-ups with the Jet Airways, Welcome Group of Hotels and even unlikely candidates such as The Times of India. Some petroleum retailers have tied up with credit card issuers. Apparel manufacturers, upmarket jewellers, restaurants, department stores... they are all queuing up to take advantage of the synergy by tying up with card issuers.
It is not as if you can get a credit card at will. Many do not entertain requests from those who are on the wrong side of 60, though existing cards are renewed even beyond this age.
The power of networking among the card companies and banks seems strong. Seven requests submitted by Ramesh for credit cards have been declined, apparently for the reason that the loan obtained by a firm in which he was a partner had turned sticky.
A defaulter gets hot-listed and might not know about it. If the girl at the counter returns your card to you after referring to the thick booklet, you might have to fork out currency notes with a sheepish grin and an apology.
This, though, is not foolproof, as Vijay Menon found out to his chagrin. No amount was due, but when the travel agent swiped his card, the control centre declined to authorise the transaction. Luckily, he had another card with which paid for the ticket. When he confronted the credit card company, they were apologetic, but the damage to his image could not be repaired.
Sundararaman, a disciplined user of credit cards says, "It is a boon if only you know how to use it. If you splurge just because you have a card, you'll end up paying for it dearly. On the contrary, you can stretch your money just that wee bit if you use it judiciously."