Credit cards: evading the hard sell attacks

THE RECENT Reserve Bank of India guidelines issued to banks on the credit card business focus on credit risk and recovery of overdues. The central bank reminds card issuers that credit card debt is unsecured and tells them it is imperative for banks to take immediate steps to reduce the incidence of default and closely monitor recovery of outstandings while observing the code of ethics prescribed by the Indian Banks Association with regard to collection agents. The RBI wants banks to set up efficient internal control and processing systems to prevent fraud and ensure collection of dues.

The RBI has identified three factors that lead to increased credit risk and consequently to default. Two of these are relaxed underwriting standards and inadequate account management while the third, which the central bank quaintly calls `aggressive solicitation programmes', is something that has been troubling this author for a while. While the RBI's concern over hard sell is that it may lead to credit cards being given to people who may not settle their dues, the author's is with the plight of cardholders who are the victims of the marketing dudes.

Besides the press and television advertisements one also has to contend with the phone calls and mails that are thrown at one with amazing regularity. All of them try to tell you that the credit card is a magic passport to the good life, conveniently glossing over the fact that everything has to be paid for and that credit comes at a stiff price. The last mailer the author found in his box offers him credit at `just' 2.79 per cent per month, conveniently not mentioning the annualised rate of interest.

An environmental activist would be gravely concerned about the number of trees that are being cut down to make paper for mailers. One bank apparently has, on its database, different mis- spelt versions of names, and they faithfully send corresponding number of mailers once every six months!

Then there is that breed that ranks right up with the Chennai mosquito as a prime pest - the tele-marketer. Members of this tribe call you up, just as you prepare for your afternoon siesta, with an offer to brighten up your life with a credit card.

While this is irritating at the best of times, it is worse when the call is on behalf of a bank whose card you already hold. Apparently they did not think it necessary or feasible to give a list of existing cardholders to the telemarketing team.

To add insult to injury, the caller usually signs off with a cheerful suggestion to have a nice day, after having just ruined it.

In the U.K. and probably some other countries, there are rules that dictate how and when cold (??) calls should be made. We in India have been left to devise our own responses. I think that readers will find it useful if I share some of my own innovations with them.

The fact that one of the callers apologised for disturbing an existing customer gave me an idea and I started lying to all callers that I already had the card they were selling. This worked for a while until countered by first expressing their delight at my wisdom in choosing their card and then asked for names and phone numbers of friends who also deserved the best things in life. For a while I started putting them on to people who had irritated me over the last fortnight, with a secret feeling of glee at the thought of them being disturbed at odd times.

Then, in a flash of inspiration, I found what seems to be the most efficient response. When the marketer calls just tell him or her that you already have the card and since there are a couple of problems with billing that you would like to discuss, would they be kind enough to help out? The effect is almost magical; the caller will immediately inform you of the existence of a help desk, give you their telephone number and disconnect quickly. It works every time and is highly recommended.

While I am being bombarded with mailers and phone calls, a whole population that lives in some district headquarters and many smaller towns are not able to get cards from some of the leading issuers. One would think that these banks would consider the free spending doctors and other professionals who live in these towns as prize customers.

With their high disposable incomes, most of them are excellent credit risks and are quite keen on holding a prestigious card or two. I recently met an exporter from Pondicherry, who wanted a credit card for use on his trips abroad. He had seen the television and press advertisements and had a good idea of the various products on offer, but the cards that he really wanted were not on offer, unless he could produce a Chennai address. That is ironic.

P. Yesuthasen

Forex consultant and former Deputy Controller, Reserve Bank of India.

He can be contacted at: pyes@vsnl.com

Send this article to Friends by E-Mail

Section  : Business
Previous : Tackling the problem of embarrassing plenty
Next     : AA plus for Reliance Petroleum's NCD