Some banks are now charging an extra 1% fee when you use their credit cards to pay your utility bills, like electricity, water, or gas. This fee starts on May 1, 2024.
When you use your credit card to pay for utilities, like electricity or water bills, the banks don't make as much money as they do with other types of purchases.
This means they're not earning as much profit from these transactions.
Some people use their personal credit cards to pay for business-related utilities. But business credit cards don't usually give the same rewards as personal ones. So, the banks feel like they're missing out on potential profit.
Even though it's not allowed, some folks still use their personal credit cards for business expenses. This can lead to transactions being labeled incorrectly, making it harder for banks to enforce the rules.
Now, customers are worried because this extra fee could add up, especially for business owners who use credit cards for their day-to-day expenses.
But the banks are trying to ease concerns by giving customers a limit where they won't have to pay the extra fee.
For example, Yes Bank says you won't pay the fee if your utility payments are below Rs 15,000, and IDFC First Bank's limit is Rs 20,000.
So, it's all about the banks trying to make more money and dealing with people bending the rules, but they're also trying to make it a bit easier for customers by setting limits.