Caveat Emptor

In the smallest of nutshells, a discussion on Condions and Warranties under section 16 of the Sale of Goods Act (India) says, "let the buyer beware". No, not about the dogs guarding the house, but of the quality of the subject matter of the sale - goods.

I forget the provision but it says the seller is under no obligation to convey to the buyer about the *strings attached to the goods being sold or of any compromising nature of the quality of the goods*.

Until a long time, I didn't carry a credit card with me. I didn't have too much money. Now, that I have a little bit of money, I signed in for a credit card. The credit card salesman promised me that there was a credit period of 52 days for cash withdrawals as well as purchases. I was informed of a monthly interest rate of 2.95%.

Today, I got my last month's statement and I was shocked. Well, for a cash withdrawal of Rs.600, there was an cash advance fee of Rs.100, an interest of Rs.8.XX (@8.XX%) and a service tax of 8%. My purchases were about Rs.2,600 something for the month.

On inquiring about the excessive charge, I was informed that:

(1) There was no credit period for cash withdrawals. So no 50 days cash credit. You pay interest for every day you keep the cash.

(2) There was a cash advance fee for every cash transaction upto 2.5% of the amount withdrawn or Rs.100 whichever was higher

(3) There'd be a service tax

I'd paid Rs.1409 as joining fee for three ears. If I opted out, it would be forfieted and I wouldn't get any of it refunded.

And I have no excuse for not being informed even inspite of the fact that I was lied to. How convenient is the law.

Sathyaish Chakravarthy
Saturday, February 28, 2004

--No, not **about** the dogs guarding--

No, not of the dogs guarding...



--for a cash withdrawal of Rs.600, there was **an** cash advance fee--

there was a cash advance fee



--How convenient is the law--

How convenient the law is

Sathyaish Chakravarthy
Saturday, February 28, 2004

Sathyaish, it sounds like you're joining the consumer society. Rule number one - companies offering money in any form are always rogues and will always try to screw you one way or the other. Being in India, I guess you would know that, from what happens in rural areas.

Heavy fees for cash advances are common, because they know that, if you want a cash advance from your credit card, you're probably desperate. So they can squeeze you.

The way to use credit cards is to not take cash advances from them, to pay the bill in full each month and to keep the lowest limit you need. Don't accept offers to go for a bigger limit.

m
Saturday, February 28, 2004

Credit cards are the same here in the US as you are finding - they have to pay hard cash money on any cash advances you take out, so they have to charge you interest starting they day you take it plus processing fees. Otherwise it would be a free loan and for that, the bank is not the right place to go. I am sure that the fees were disclosed in the fine print of your contract.

Tony Chang
Sunday, February 29, 2004

For credit card providers, funding cash advances is no different from them funding purchases. The extra fees are purely based on the fact they can charge them.

The fact that something is in the terms of the contract means very little in terms of legitimising it as a business practice. Most people do not read those contracts, and even if they do, credit card providers collude sufficiently that customers have very little choice.

m
Sunday, February 29, 2004

> For credit card providers, funding cash advances is no
> different from them funding purchases. The extra fees
> are purely based on the fact they can charge them.

Not exactly.  When a vendor takes your credit card in payment they have to pay a fee to the credit card company for the privelege - typically in the 1.5 - 2.5% range.

Most non-chain computer stores around here list their prices as cash-discounted.  If you pay by credit card you pay that charge.

Otherwise everyone would max out their credit cards with a cash advance on the 1st of the month.  Put it in a savings account, withdraw it on the 30th, pay off the credit card and repeat the cycle the following month.

Rob Walker
Sunday, February 29, 2004

"everyone would max out their credit cards with a cash advance on the 1st of the month.  Put it in a savings account, withdraw it on the 30th, pay off the credit card and repeat the cycle the following month"

This is that step number two always labelled "?" in those stupid lists, which is followed by "3: Profit!", isn't it?

Monday, March 1, 2004

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