Review: AU Small Finance Bank allows you to design your own credit card, but at a cost

The LIT credit card offers five bags of goodies or benefits; airport lounge access, milestone benefits, movie streaming subscriptions and lifestyle memberships, accelerated rewards for shopping online and offline, and other features including fuel surcharge waiver, cashback on grocery purchase, dining and travel.

If you do not opt for any of the reward benefits, you get the most basic variant of the LIT card. There are no annual renewal charges for the basic card.

Each of the basket of features comes with a validity period of 90 days. And at a cost of Rs 49-499 per cycle <see graphic>. If you fail to renew or discontinue your chosen basket, it gets auto-renewed.

“Our target customers are millennials and Gen Z because these consumers want to have all the controls of features and spending in their hands. They are tech savvy and know the usage of credit cards,” says Mayank Markanday, Head of Credit Cards Business unit, AU Small Finance Bank.

The minimum income eligibility requirement is Rs 15,000 per month of the applicant while applying for this card.

“The customisable features on a credit card is a long overdue step in the right direction by AU Small Finance Bank,” says Raj Khosla, founder of MyMoneyMantra. He adds, users can customise the card as per the spending pattern and maximise the benefits by using only one credit card.

What works

The card offers a variety of benefits in one single card. All you need to do is to choose which basket of features you want, depending on your spending pattern and the time of the year.

For every Rs 100 spent, you earn 1 reward point. Parijat Garg, a personal finance expert who analyses credit cards closely says this is better than many cards that reward you with one point for Rs 150 or more spent.
However, the option to choose accelerated reward points may not suit everyone. According to Garg’s back-of-the-envelope calculations, if you opt for the 5x reward points option (by paying a fee of Rs 199), then you need to spend at least Rs 16,000 (in 90 days or approx. Rs 5,500 per month) to be able to get your money’s worth. Similarly, the 10x reward program (that comes with a fee of Rs 299) need you to spend at least Rs 12,000 (in 90 days or approx. Rs 4,000 per month) to make it worth it.

The airport lounge benefit is a useful feature even though it comes at a small cost, mostly lesser than what premium cards -- that come loaded with lounge benefits -- charge.

There’s also more flexibility when you choose the accelerated reward points option; offline versus online purchases. Even cashback offers you flexibility depending on whether you see yourself spending more on grocery, travel or dining.

LIT card provides full visibility on daily spends including milestone targets & respective earning (cashback/reward) to customer through Bank’s 0101 app interface, compare to monthly statements offered by Banks currently.

What doesn’t work

As convenient as the custom-built features are, you need to remember when to switch these off (bank sends two reminder communication to customer before auto-renewal, hence remembering to switch-off is taken care) when you don’t need them. And you need to choose them with care, if you are choosing multiple basket of benefits. Khosla says that once you activate all the features, then the annual fee goes up to Rs 11,756.

The annual percentage rate (APR) for most of the credit cards ranged from 24 percent to 42 percent. The LIT credit card however, charges 41.88 percent annually, which is on the higher side.

The accelerated cashback features come with some exclusions you need to be aware of. For instance, cash withdrawal, rent payments, insurance premium payments, EMI and fuel transactions will not earn you any benefits under milestone achievements, cashback benefits and accelerated reward points.

There are caps on the maximum additional cashback feature of a LIT credit card. For instance, on the additional 5 percent cashback feature option, the card user gets a maximum cashback of Rs 500 over a 30-day period.

This might pale in comparison with other co-branded credit cards such as AmazonPay ICICI credit card and Flipkart Axis Bank credit card that offer 5 percent unlimited cashback while shopping from their websites or apps and up to 1.5 percent cashback on other transactions.

A forex mark-up fee for international transactions of 3.49 percent is higher than HDFC Regalia credit card and SBI Elite credit card that charge 2 percent and 1.99 percent, respectively.

Garg says that the OTT subscription feature may also not be too attractive since many telecom operators bundle these services along with a phone connection.

Should you apply?

Customisation is the card’s biggest benefit. First-time users of credit cards and those who have just joined the work force could find this card attractive.

“It’s also useful to those who clearly know their spending patterns and preferences,” says Khosla.

But credit card is an evolving space. So, undertake a basic comparison with entry-level cards before you choose LIT.

For those in their 30s, 40s and beyond, who have multiple cards or have been using credit cards for long, AU Small Finance Bank’s LIT card offers little.