To boost its credit card business, India's new age private sector IDFC First Bank on Friday rolled out 2 new credit card offerings.
In the first, the bank shall extend interest free cash on credit card for 48 days. And as part of the second offer, the bank will offer dynamic interest on revolving credit. The foremost shall be a first of its kind offering in the industry and in fact this cash advance is just a small fraction of the overall credit card business. For instance, last November, customers withdrew just Rs. 231.3 crore from ATMs, while swiping for Rs. 62,349.7 crore on point-of-sale terminals.
In an usual case for every cash transaction there is levied a fee of Rs. 250-450 plus an interest of 2.5-3.5 percent per month, applicable from the day of withdrawal till the full amount is repaid. And this interest is also levied on non-cash spends but here in interest free period is enjoyed unlike cash transactions.
"When you are underwriting the customer, you are underwriting him for a credit limit and giving a certain percentage of that as cash. It has always been positioned as an emergency feature. The industry always tried to charge you both a fee and interest on the cash component to prevent people from taking it or to make money out of it," said Madhivanan.
Also, from a flat and fixed rate of 36-40 percent, there shall be charged 9-36 percent interest rate on credit cards on a dynamic basis.