More Power to You on Billing
One of the most significant consumer-friendly changes gives you more control over your finances. Card issuers must now provide you with a one-time option to change your billing cycle to better align with your income flow. This means you can adjust your statement
date to ensure your payment due date falls comfortably after you receive your salary, making it easier to manage payments and avoid late fees. Furthermore, the RBI has mandated that banks must ensure you receive your statement with at least a fortnight to pay before any interest is charged, tackling the common complaint of late bill delivery.
Your Consent Is Now Crucial
Gone are the days of surprise credit limit increases. Under the new RBI directives, banks cannot upgrade your card or increase your credit limit without your explicit and prior consent. Silence or non-response can no longer be treated as approval. This rule is designed to prevent consumers from being pushed into higher credit brackets unknowingly, promoting more responsible lending. Similarly, if a new card is not activated by you via an OTP within 30 days of issuance, the issuer must close the account without any charges.
Tighter Security and Scrutiny
Security has been significantly enhanced with mandatory two-factor authentication (2FA) for all transactions, including at point-of-sale terminals. This means most purchases will require an extra layer of verification, like an OTP or biometric check, making fraudulent transactions much harder. On another front, your spending is now under closer watch. The Income Tax Department is monitoring high-value transactions, with annual spending over ₹10 lakh potentially being reported by banks. This move aims to align spending with declared income, discouraging the use of credit cards for unaccounted expenses.
A Uniform Approach to Penalties
The RBI has standardized how and when late payment fees are applied, creating a more uniform system across all banks. A card account can now only be marked as 'past due' if the minimum amount is not paid for more than three days after the due date. Consequently, late payment penalties can only be charged after this three-day grace period has passed. In another pro-consumer move, these charges will now apply only to the outstanding balance rather than the total amount due, preventing disproportionately high penalties.
Your Credit Score Will Update Faster
Your financial discipline (or lack thereof) will now reflect on your credit score much faster. Banks are required to report your credit data, including repayments and defaults, to credit bureaus like CIBIL on a weekly or fortnightly basis, a significant change from the previous monthly cycle. This means a missed payment could impact your score in as little as a week, while consistent, on-time payments will also be rewarded more quickly. This increased frequency makes it crucial to maintain a diligent repayment schedule to protect and build your credit profile.
