Credit cared-issuing banks are going all out to get customers to use their cards within a month of receiving them. In the month of August, outstanding credit cards shrunk by 22.6 lakh as new RBI norms came int effect. To ensure that banks did not push credit cards to those who did not need them, the RBI has ordered cancellation of cards that are not activated immediately after use.
HDFC bank group head Parag Rao said that the industry practice of distributing cards irrespective of whether the customer uses it or not, will drop. Fees are not necessarily a deterrent for customers as even in cards where there is already a fee, it is either waived subject to usage or offset by benefits. There has been an increase in card usage and spending, because of the drop in numbers.
Sandeep Ghosh, the chief of Visa India said, “It is activation and usage that drives profits. Weeding out unused cards is not a bad thing. However, there is the issue of sunk cost, which is why there is a lot of effort to get customers who are sitting on cards to get them activated. Visa has already provided many insights to banks on the best way to increase activation and regular usage.”
Axis bank President and head Sanjeev Moghe said, “The cost of not activating a card within a month goes up significantly. So, our endeavours to activate the card in the first month are intensifying. We are concentrating more on channels where the activation rates are higher. Also, we are trying hard for early engagement with customers. There will be some offers and incentives. We can send communication and obtain explicit consent if the customer wants to retain the card.”