Here is a look at the three new credit card related rules that will come into effect from next month.
Card-issuers to seek One Time Password (OTP)
Credit card issuers must first obtain One Time Password (OTP)-based consent if a cardholder hasn’t activated their card for more than 30 days from the date of issuance. If the consumer declines the request to activate the card, the card issuer must cancel the credit card account without charging them within seven working days.
There have been numerous situations where credit cards have been activated and charged without the credit card holders’ knowledge; by requesting consent, this will not occur, and the card issuer will not be charged.
Credit limit approval
Card-issuers must make sure that the credit limit that has been approved and notified to the cardholder is never exceeded without the cardholder’s express permission.
Individuals used to receive only messages regarding credit limit increases. After October 1, 2022, the card issuer will not increase the credit limit without the cardholder’s written consent.
“The terms and conditions for payment of credit card dues, including the minimum amount due, shall be stipulated so as to ensure there is no negative amortization. An illustration is included in the Annex. The unpaid charges/levies/taxes shall not be capitalized for charging/compounding of interest,” stated RBI’s master circular.
“Capitalized interest is the addition of unpaid interest charges to the balance of a loan (the amount you still have left to pay),” according to the American Express website.