IDFC First Bank had some time ago announced changes in all credit cards except its super-premium IDFC First Private Credit Card, which will be applicable from May 1, 2024. Under this, the private bank will reduce reward points for online spending, implement more spend-based criteria for airport lounge access and update the terms and conditions for utility and fare payments.

how much was cut
Reward points will be tripled (3X) for online spends up to Rs 20,000 in a statement cycle. At present it is 6 times (6X). However, cardholders can get 10 times (10X) reward points on spends above Rs 20,000 per month. But the reward points for education, wallet reloads and government service transactions will be changed to 3X. IDFC First Bank said that there will be no surcharge on bills below this limit, but 1% credit card fees and GST will be charged on bills above this limit.

Free Domestic Airport Lounge Visit
However, this utility surcharge will not be applicable on First Private Credit Card, LIC Classic Credit Card and LIC Select Credit Card. Regarding airport lounge access, the number of free domestic airport lounge visits on IDFC First Select Credit Card will be reduced from four to two every quarter. Whereas on First Wealth Credit Card, users will now be able to use the lounges of both domestic and international airports twice per quarter, which was earlier four. The bank will increase the fees for fare transactions to Rs 249 per transaction or 1% plus 18% GST (whichever is higher).

These banks have also cut benefits
Axis Bank, ICICI Bank and Yes Bank have also reduced the benefits on their cards. Some time ago, ICICI Bank had increased the minimum spend required for complimentary airport lounge access to Rs 35,000 on several credit cards including the Coral Credit Card and MakeMyTrip ICICI Bank Platinum Credit Card. Meanwhile, Yes Bank has now increased the minimum spend to avail the domestic lounge access benefit on all its credit cards to Rs 10,000. Apart from this, Axis Bank will make changes in Magnus Credit Card from April 20.

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Yes Bank has changed the rules to avail its domestic lounge access. According to the latest report of Live from Lounge Report, the bank said that all its credit card holders will have to spend a minimum of Rs 10,000 in the current quarter to get lounge access in the next quarter. Special benefits are given under lounge access facility. This includes food, WiFi facility, airport lounge access for bathing and rest.

Changes in the rules will come into effect from April 1, 2024. Credit card holders will have to make necessary spends from December 21, 2023 to March 20, 2024 to avail lounge access. Understanding the cost associated with availing lounge access, banks are no longer offering this ‘free’ benefit to customers holding only basic credit cards.

Which cardholders will it be affected by?

This rule change will impact credit cards including Yes Marquee, Yes Select (formerly Yes Prosperity Edge), Yes Reserve (formerly Yes First Exclusive), Yes First Preferred, Yes Bank Elite (formerly Yes Premia) But it is not limited to these. This will also affect BYOC and Yes Wellness Plus cards. Along with this, after HDFC Bank Group got approval from the Reserve Bank of India to increase its stake in Yes Bank to 9.5 percent, Yes Bank shares saw an increase of up to 13% on Tuesday, February 6. After this rally the share reached Rs 25.70.

Adding to the banking sector update, ICICI Bank is also set to implement changes in its standards for availing airport lounge access from April 1, 2024. Customers holding certain cards will now have to spend at least Rs 35,000 in the previous calendar quarter to unlock airport lounge access for the next quarter. Meanwhile, Axis Bank has informed its card members about the changes in ‘Axis Vistara Infinite Credit Card’. According to the report of Live from Lounge, the gold status benefit initially available for the first year will no longer start automatically from the second year.

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The Reserve Bank has issued new instructions for banks and card issuers regarding the payment of credit card bills. Under this, it has been said that the calculation of Minimum Amount Due should be done in such a way that there is no negative amortization. RBI has said in its directive that unpaid charges, levies and taxes will not be compounded for interest. Explain that the Reserve Bank had implemented this rule from 1 October 2022.

According to Sachin Vasudev, Director and Head of Cards, Paisabazaar, under the new rule, credit card issuers will have to fix a minimum amount so that the total outstanding amount can be paid within a reasonable time. Also, finance charges, penalties and taxes applicable on the outstanding amount will not be capitalized in the next statement. It means to say that once the outstanding amount is paid, the rest of the charges will not have to be paid.

How will the new rule related to credit card work?

If a person pays only the minimum amount due on a credit card bill, interest will be charged on the outstanding amount and all new transactions until the previous due amount is paid in full. The interest calculation on the credit card outstanding amount will be something like this. (number of days counted from the date of transaction x outstanding amount x interest rate per month x 12 months)/365.

Understand with example:

Let us assume that your credit card bill comes on 10th of the month. But you spent Rs 10,000 on the first of the month. Your bill due date is 25th of the month and you pay minimum due amount of Rs.500. Now interest for the next bill will be calculated on the outstanding amount of Rs 9,500 for 40 days, that is, from the date of expenditure till the date of the second bill.

Expense. If you pay only the minimum amount every month, interest will be calculated on interest every month. In such a situation, it may also happen that due to high interest, in the coming months, the amount of interest will be more than the minimum amount.

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