Concerned If You Should Pay Dues For Unused Credit Card? Know RBI Rules, Remedies

Many customers are worried if banks can demand payment of outstanding amounts, including joining fees if a credit card is issued but not activated from the customer's end. Several customers have raised such grievances on platform X saying, they have not activated their credit card, but banks ask them to pay the outstanding amount which is the joining fee if they want to close the card. Some ask for a late payment fine which is accrued on the outstanding amount. The Reserve Bank of India (RBI) has provided a comprehensive clarification in its latest Frequently Asked Questions (FAQ) release. You can only be charged any late payment fees or joining fees if your card is activated. So what constitutes card activation?

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What Can Be Considered As Activation Of Credit Card?

A credit card is considered activated by RBI only if customer activates it through methods such as PIN generation, modification of transaction controls, Interactive Voice Response, recorded calls to customer care, and SMS. If it is not activated by the cardholder through any of the above means, for more than 30 days from the date of issuance, card-issuers shall seek One Time Password (OTP). If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from the date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder. So just because it has issued you a credit card based on your request, doesn't mean you have to pay dues. You must have done this activation process.

However, the RBI reminds us that a credit card can be considered 'used' not only through financial transactions but also if other customer-initiated processes such as generation of statements, change of PIN, change in transaction controls, etc., are done. However, calls made to customer care for reasons other than those specified are not considered card usage.

If banks have slapped unjust due on you, first approach the concerned card issuer. If the card issuer does not respond within a period of 30 days or if unsatisfied with the resolution or response, customers can escalate their complaints to the RBI Ombudsman through the online portal at - cms.rbi.org.in or physical letter in the form as specified in Annexure ‘A’ of the Reserve Bank - Integrated Ombudsman Scheme, 2021 to “Centralised Receipt and Processing Centre, 4th Floor, Reserve Bank of India, Sector -17, Central Vista, Chandigarh - 160017”.

RBI Amended Credit Card Guidelines

Failure on the part of the card issuers to complete the process of closure within seven working days shall result in a penalty of Rs 500 per calendar day of delay payable to the cardholder, till the closure of the account provided there is no outstanding in the account.

Card-issuers shall report a credit card account as 'past due' to credit information companies (CICs) or levy penal charges, viz. late payment charges and other related charges, if any, only when a credit card account remains 'past due' for more than three days.

Further, cardholders shall be provided with the option to modify the billing cycle of the credit card at least once, as per the cardholders’ convenience, RBI said.