When credit cards make you broke

By Gayathri Madhavan

A bank advertisement has the following punchline: 'Hum Hai Na' (we are there for you). Well, this bank also offers a credit card, and apparently it's pretty easy to get one. 

Shiju Joseph, 31, an engineer with a private firm in Delhi, was enticed into taking XYZ Bank's preferred credit card in April 2007. He signed the credit card application form without bothering to read the terms and conditions. Big mistake!

What happened next
Another mistake. He defaulted on his payment from October 2007 to March 2008. He made a part payment, but due to some miscommunication that amount was not set off against his bill. 

In April 2008, the bank debited the outstanding amount from Shiju's savings account without informing him. Shiju was left wondering how the bank could do this as his savings account was in no way connected to his credit card.

So, he mailed the bank asking who gave them the authority to deduct the money. I reproduce below, in verbatim, the bank's reply:

“In addition to the general right to set off or other right conferred by law or under any other agreement, XYZ Bank may, without notice, combine or consolidate the standing balance on the Card Account with any other account(s) which the Card-Member maintains with XYZ Bank and its Group Companies, and set-off or transfer money standing to the credit of such other account(s) in or towards the satisfaction of the Card-Member's liability to XYZ Bank under his/her Card Account. Hence the amount has been marked as lien in your savings account.”

That maze called 'Terms & Conditions'
I expected that 'T&C' would be mentioned in the credit card application form. So, I hopped across to a branch and got a copy of the form. I read it but to my surprise there was no such clause.

I was about to give up and look for some other explanation, when the very first point (out of the 54 points in the terms and conditions) caught my eye: “to get the complete version of the credit card terms and conditions, please visit the website.”

The title of the page that I was reading was "the most important terms and conditions" and not 'complete terms and conditions'. To get the complete T&C I had to visit the bank web site. And to get to this page, I had to apply for a preferred credit card online. I filled up personal details such as my qualification, residential status, etc. Once the form filling was over, I found a link to the terms and conditions in the bottom of the page.

T&C was 23 pages long and after spending much time mulling over some vague clauses, I came across the relevant clause on the 17th page. So, when Shiju had signed the credit card application form, he had agreed to all these 23 pages of terms and conditions!

Continued on page 2