To reduce the default rate on credit card banks are allowing conversion facilityIn order to reduce the credit card defaults banks are increasingly allowing their borrowers to convert their credit card dues into personal loan
Apnaloan.com Research Bureau
30 Aug 2008
In order to reduce the credit card defaults banks are increasingly allowing their borrowers to convert their credit card dues into personal loan. All the leading banks are providing investors to pay for their purchase in installment. In these offerings some banks are being proactive while some are offering them as part of a restructuring package.
card attracts interest rate of 18-38%, whereas personal loan are available at
14%. Hence the facility to allow credit card holder to pay for purchases in
installments has been available for some time. Currently SBI Cards offers
the EMI scheme on transactions of more than Rs 2,500.
According to ICICI Bank head of cards group Sachin Khandelwal, "If a customer spends an average of Rs. 8,000 on his credit card every month and suddenly we witness a transaction of Rs. 50,000 billed on his name we call up the customer. We inform that he has an option to convert it into EMIs, which could weigh less on his pocket."
According to Citibank business manager-cards Sandeep Bhalla, "Customers, who become delinquent, are also offered special installment programmes called 'settlements', which ensure structured payments in a timely manner."