Banks Tighten Regulations to Curb Money Laundering and Fraud, Know New Rules For Credit Card Users Here

Credit Card

Credit Card: Banks are always enforcing stringent measures to stop credit card fraud and money laundering. The RBI periodically releases guidelines pertaining to this. Credit card issuers have now made significant progress in this area. Banks are either not allowing credit card customers to pay more than their outstanding balance or are not returning the excess amount because of worries about money laundering and fraud.

Payment Practices of Credit Card Users

The majority of credit card users pay their whole balance or just the minimum amount owed after the billing date. On the other hand, some clients pay extra to prevent going over their credit limit. They are unable to accomplish this at this time. Before travelling overseas, many consumers load their cards with additional funds. They then travel overseas to shop. By doing this, they attempt to keep their card at its maximum limit or temporarily raise their spending. Bankers explain that in this case, the customers can pay right away after making the purchase.

Preventing Misuse as Money Mule

According to the bank, one of the reasons money cannot be parked in credit card accounts is to keep the cash from being used as money mule in overseas transactions. In addition, there have been instances recently of bank account hacking leading to the transfer of funds to credit cards and the use of those cards for foreign purchases. Following this, the bank made this choice.

Overpayment Restrictions in Major Banks

As of right now, clients of HDFC, SBI, and AXIS Bank are not allowed to overpay. Holders of ICICI credit cards may still overpay using the app, though. Regarding this, HDFC stated that we urge clients not to have a balance on their credit cards because they are also examined from an AML (Anti-Money Laundering) standpoint. The bank is required under the apex bank’s directive to repay the extra credit balance on the card within a given time frame.

Credit Card Issuance and CIBIL Score

Based on the customer’s CIBIL score, a bank or other business issues a credit card. You can use a credit card as a financial tool for both online and offline purchases. You can utilise this cash-in-kind exchange to pay for your expenses by making purchases at different merchant locations. Using a credit card, you can make purchases up to a designated limit known as your “credit line.” Your payment history and credit score are the basis for this.

Interest Charges on Credit Card Purchases

Your credit card will charge interest if you use it for purchases and do not pay the entire amount due when the bill arrives. This interest is added to the amount you still owe and is calculated on the outstanding balance. You can make online arrangements to pay for goods and manage your credit card account. Additionally, it can be used to pay for meals at numerous restaurants and online retailers as well as other kinds of websites.

Credit Card Payment Period

There is a set amount of time that you have to pay back the credit card debt. This often occurs between 20 and 50 days. You must pay the entire bill amount within this period in order to avoid incurring interest. The corporation assesses interest on the bill amount if it is not paid within the designated grace period. The Annual Percentage Rate (APR) represents the interest rate that credit card companies charge. This percentage might be anywhere from 14 percent to 40 percent. The interest on your card’s outstanding limit rises if you fail to pay the payment on time. (Total days from the date of transaction x balance x monthly credit card interest rate x 12 months) / 365 days is the formula used to compute its interest.

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