Pay for paying credit card bill at your own bank branch

People are in a habit of paying credit card bills at a bank branch. But soon people need to change this habit as it is going to cost them. Some of the banks have started charging card holders for paying the bill at a bank branch.

ICICI Bank largest private sector bank has started charging Rs 100 from its card holders for making credit card payments in cash at ICICI Bank branches, starting June 1, 2008. Standard Chartered Bank since March 2006 is already charging Rs 99 from its customers.

Here the question rises why pay charges to even pay your bank the due cash? The reason bankers give is that they are trying to reduce the burden on short-staffed branches.

Sachin Khandelwal, head of the cards group at ICICI Bank, said, "We are discouraging our customers from depositing cash as there is a transaction cost.

About Rs 100 is what is typically charged and it's not specific to cards. It's a cash deposit charge."

He advises the customers to avoid the charge card holders should drop their cheques in a drop-box or do an ECS (electronic clearing service) or auto debit to pay their credit card dues.

R L Prasad, general manager, credit cards and personal loans, Standard Chartered Bank, says that allowing payments to be made at branch counters is an added facility that the bank provides therefore it is charged. He added "This is a service charge for providing teller facility for making cash payments. Customers are informed of this and all other charges at the time of applying for the card through the most important document (MID)".

Also, the details of the charges are printed on back of the statement.

Dropping a cheque in a drop-box a couple of days before the due date is not a reliable solution as processing of cheque takes about three days to clear if one stays outside the national capital region of Delhi.

"We recognize that cheques take a day or two to clear and hence we encourage our customers to make their payments three days in advance though the cheque may be dated as per the payment due date," said Prasad of Standard Chartered Bank.

As for ECS payments — where a card holder authorizes his bank to pay whatever is billed on his — is also not safe, if a huge, unwarranted amount gets billed for whatever reason, bank balance will automatically get debited.

Thus there is a new payment option is to deposit cash at ATMS. According to Citibank "A PIN-less deposit facility has been launched for the benefit of cards customers at all our ATMs. A customer carrying his/her credit card can use this option for payment".

While other banks with strong credit card portfolios, such as HSBC Bank, ABN Amro Bank, SBI, Kotak Mahindra Bank and Citibank have denied for charging card holders for making cash payment at branches. Answers from HDFC Bank are still awaited.

But there are chances of other banks following the suit. The reason is that most of the banks have started penalizing customers for using branches and give incentives for using alternate channels such as ATMs and online payments.

For example, demand draft requests at branches can cost you Rs 75, but if you use phone banking mode, then you have to shell out only Rs 50.

A stop-payment order would cost you Rs 50 per cheque (Rs 100 per mandate) if asked for at a branch. But, if one uses the phone banking channel, then HDFC Bank charges only Rs 40 per cheque (Rs 80 per mandate). Though ICICI Bank doesn't offer any cut for stop-payment via phone banking, but it is free if one uses the internet banking mode.

However some banks see a disadvantage in trying to push customers away from branches by charging them for doing payments at desk. Sanjay Sharma, IT advisor at IDBI Bank says, "When banks promote electronic payments and transactions, they must also keep in mind that they are missing an opportunity to cross-sell products."

True, if there are no customers at branches, then to whom banks will sell insurance, mutual funds, and other products that help them earn commissions?