What is credit card kiting or kite flying?

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Updated: Saturday, December 21, 2013, 11:25 [IST]
 
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What is credit card kiting or kite flying?

A technical terminology ' kite flying' was used for a kind of cheque fraud. The credit card holder in receipt of the monthly credit card statement is expected to make full outstanding balance and in the other condition an amount not less than the minimum amount due on credit card transactions.

The practice is a trick played by the credit card holder wherein an individual maintains two or more credit cards for obtaining cash and in turn the purchasing power that one actually not financially capable of. The credit cardholder also makes use of another held credit card for making payment towards outstanding dues on the first credit card. The practice works in the condition when interest paid on cash withdrawal from the first card is less than the interest serviced on the outstanding dues on the second credit card.

Some other use this trick using a single credit card wherein they use the credit card for withdrawing cash in advance and then makes minimum due amount payment. And in case if the cardholder is not able to service even the minimum payment due then an additional late fee is charged.

Through, credit card kiting or kite flying, credit card holder fosters a wrong impression of his sound financial position or creditworthiness or loan repayment capability which otherwise may not be the case. Further, the trick is actually not a fraud it is clearly indicative of the ill financial health of an individual which act as an alarm for banks.

But an increase in vigilant activity by bankers has enabled them to track such practices in advance and avoid bad debt.

GoodReturns.in

Story first published:  Saturday, December 21, 2013, 11:01 [IST]
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