If you are struggling to clear your credit card dues, you can consider the ‘balance transfer facility’. It is the process by which you can shift the pending balance from one credit card to another.

Balance transfers on credit cardscan help manage your credit card debt. However, knowing the effect they can have on your credit score is important. Let’s learn more about it.  

Understanding Balance Transfers on Credit Cards

First, let’s understand what a credit card balance transfer is in detail.

• Balance transfer is a feature offered by credit card issuers where a cardholder can move their credit card debt to a new credit card account. 

• Balance transfers are beneficial when the new credit account has a lower interest rate than the existing one. Usually, this may be a promotional interest rate valid for a particular time, such as 6 months or a year. 

• By shifting existing debts, the cardholder can pay off their debts faster. It also helps to reduce the risk of missed payments. In addition, they may also incur a lower interest rate with the new account. 

Not all banks offer balance transfers on credit cards. It is advisable to contact your bank and get clarity about this feature. 

If you are planning for a balance transfer and are wondering, “Does a balance transfer affect my creditscore?” the answer is ‘Yes’.

The Negative Effects of Balance Transfer on Credit Scores

When you opt for a balance transfer, the credit score gets affected due to the following reasons:

1. You May Face an Inquiry on Your Credit Report

When you apply for a new credit card to carry out the balance transfer, banks initiate an inquiry on your credit report. With each inquiry, the credit score may decrease. If your credit score is not very good, these enquiries can further add to it.

2. Your Credit Utilisation Ratio May Increase

The credit utilisation ratio is the debt you are currently using divided by the total credit available to you. It is a crucial part of your credit score, which you must keep below 30%. After the balance transfer, if you use the freed credit limit from the new credit card, it may increase your credit utilisation ratio. It will negatively affect your credit score. 

3. Your Credit History May Reduce

Your credit history gets shortened if you close the existing credit card after transferring the balance to a new one. The average age of your credit account will suffer a hit, impacting your credit score. 

Now you know that balance transfers do hurt your credit score. However, they can also have positive effects on credit scores.

Also Read: People with a Low CIBIL Score Can Still Get a Credit Card – Here’s How

How to Improve Credit Scores with Balance Transfers

By utilising the balance transfer smartly, you can improve your credit scores.

1. Pay the Bills on Time

When you move your balances to a single card, it can be easier to track its payment. With a single due date in mind, you can avoid late payments. It can help maintain and improve your credit score.

2. Avoid Using Credit on the Other Cards

Opting for a new credit card can increase your credit limit. If you do not utilise this credit limit, it reduces your credit utilisation ratio. Thus, it leads to improvements in your credit score.

Conclusion

Understanding balance transfers on credit cards can help in effective debt management. But it’s essential to use it wisely. Also, choosing the right banking partner for your credit card is crucial.

IndusInd Bank offers a seamless digital banking experience and exclusive rewards, offers, and privileges. To make the most of these benefits, apply now for a new credit card with IndusInd Bank today.

When you sign up for a credit card, you agree to pay back the money you owe. The card-issuing bank funds your credit card spending. Hence, you are responsible for paying them back what you owe on time. 

If you fail to pay the minimum amount due on your credit card by the due date, you may face credit card delinquency. If you do not pay your credit card bills (for several months) even after a delinquent status on your card, you may be termed a credit card defaulter. 

Hence, being aware of credit card delinquency and how to avoid such a situation is crucial. Read on to learn more. 

Understanding Credit Card Delinquency in Detail

The following illustration provides a brief overview of how a credit card account can become delinquent:

Let’s assume you have a credit card with a payment due date on the 10th of every month. 

Now, if for some reason you are unable to make the payment by the due date, the following occurs with each set of days after the missed payment:

1. In the first 30 days, a missed payment can lead to your credit card account being declared delinquent. Your bank will send you a notice about this status. Also, a delinquent credit card account means that its holder must incur late fees. Your credit card-issuing bank will also inform the relevant credit bureau. This will have a negative impact on your credit score.

If there is no payment even after two months, your credit card account will be marked 60 days delinquent. The late fees and the interest on the pending credit will also increase.

• In case of non-payment even after two months and beyond, the bank might close your account or approach a debt collection agency. If they choose the latter, you will have to face numerous calls and visits from the debt collection agency.

If the cardholder does not pay the dues even after six months, the bank may declare them a defaulter. It can lead to severe repercussions.

Now that you know what delinquent debt is and its consequences, let’s look at how to avoid it.

Also Read: What Happens When You Default on Credit Cards?

How to Avoid Credit Card Delinquency?

To ensure you do not have to face a delinquent credit card account, keep the following points in mind:

1. Automate Your Credit Card Bill Payments

Setting up autopay for your credit card bills can ensure timely payments. Even if you forget the due date, the autopay system will ensure that the payment happens on time.

2. Use Your Credit Card Carefully

The chances of credit card delinquency are higher if the bill amount exceeds your repayment capacity. Hence, use your credit card with care. Create a budget, control your spending, and prudently use your credit card. Also, review your credit card statement regularly to verify the total dues.

3. Reach Out to the Bank

If you know you will find it difficult to clear the upcoming credit card bill, connect with your bank. Inform them about the reason for late payment. Enquire if there are any adjustments or alternative payment plans to avoid delinquency.

Conclusion

By understanding what delinquent debt is and ways to avoid it, you can maintain a positive credit score and have a smoother financial journey.

Also, choose the right banking partner for a smooth and seamless banking experience. With IndusInd Bank, you can enjoy a 100% digital credit card application process, excellent customer service, and a host of rewards, offers and privileges to make your lifestyle easier.

Apply Now for IndusInd Bank Credit Cards today!

Key point summary:

• A chargeback is a formal request made through your card issuer to dispute a transaction.
• It can help in cases such as an unauthorised payment, duplicate charge or goods not received.
• It is different from a refund, which is processed directly by the merchant.
• Keep all relevant proof and report an unauthorised transaction as soon as you notice it.

If you have ever looked at your card statement and found a charge you do not recognise, you may have wondered what a chargeback is and whether it can help. A chargeback gives a cardholder a way to raise a dispute through the bank when there is a genuine issue with a transaction.

It is not meant for simply changing your mind about a purchase. A chargeback request is generally raised when a credit card transaction is unauthorised, charged incorrectly, or linked to goods or services that were not delivered as promised.

Understanding Chargebacks in Detail

The chargeback meaning is simple: you ask your card issuer to review a transaction and, if the claim is valid, recover the money through the card-payment process. The bank reviews the details, and the merchant may also get a chance to provide its side of the story.

In some cases, the disputed amount may be temporarily credited while the bank investigates. This is not a final decision. If the claim is accepted, the reversal may become permanent. If the merchant’s evidence shows that the transaction was valid, the temporary credit may be removed.

When to Ask for a Chargeback?

You can consider a chargeback when you have a valid reason to dispute a card transaction. Common examples include an unauthorised payment, the same amount charged twice, an incorrect amount charged, goods not delivered, or a service that was cancelled but still billed.

If the transaction was authorised and the issue is with a product or service, try contacting the merchant first. A merchant may be able to issue a refund more quickly. However, if the merchant does not respond, refuses to resolve a genuine issue, or the transaction appears fraudulent, contact your bank without delay.

How to File a Chargeback?

First, check the transaction details carefully. Note the date, amount, merchant name and any transaction reference number. If you do not recognise the transaction, block the card immediately through an official bank channel, such as customer care or the Mobile Banking app.

For a dispute involving a merchant, keep copies of your order confirmation, invoice, delivery details, cancellation request and communication with the merchant. Contact the bank through its official customer-service or online dispute-resolution channel and clearly explain why you are raising the dispute. The bank may ask you to complete a dispute form and submit supporting documents.

Do not wait too long to report a problem. Chargeback timelines can vary depending on the type of transaction and card-network rules.

How Does a Chargeback Process Work?

Once you submit the request, the bank reviews the transaction and the documents you provide. If the case can be taken forward, the merchant is informed of the dispute. The merchant may accept it or challenge it with proof, such as a delivery confirmation, invoice, customer communication or evidence that the transaction was authorised.

The bank then reviews the available information before making a decision. If the chargeback is upheld, the disputed amount is credited as per the applicable process. If the merchant successfully challenges the claim, the chargeback may be declined or reversed.

Difference Between Chargeback and Refund

A refund is usually requested directly from the merchant. For example, if you return a product because it is the wrong size, the seller may agree to send the money back to your card. The bank does not normally need to investigate the matter.

A chargeback is different because it is raised through the card issuer. It is useful when there is a transaction dispute, fraud, non-delivery or a serious billing issue that the merchant has not resolved. A refund is generally the simpler option when the merchant is willing to cooperate.

Who Pays for a Chargeback?

If a chargeback is accepted, the merchant may lose the disputed amount. The merchant may also face charges from its payment partner, depending on the agreement between them. However, the outcome depends on the facts of the case and the evidence submitted by both sides.

If the merchant proves that the transaction was valid, any temporary credit given to the cardholder may be reversed. This is why you should raise a chargeback only when you have a genuine reason and can provide the relevant details.

Can a chargeback be reversed or rejected?

Yes. A chargeback can be rejected if the bank finds that the claim does not meet the required conditions, the request was made too late, or the available documents do not support it. It may also be reversed if the merchant provides convincing proof that the charge was valid.

For example, a merchant may show delivery confirmation, proof of service usage, or records of a customer approving the transaction. Keep your communication and documents organised so that you can respond if the bank asks for more information.

Wrapping Up: Protecting Your Finances with Chargebacks

A chargeback can be useful when a card transaction goes wrong, but it should be used responsibly. Check your card statements regularly, save purchase records and report suspicious transactions immediately. For an unauthorised transaction, do not share your OTP, PIN, CVV or password with anyone, even if the caller claims to be from a bank.

If you are dealing with a merchant issue, try to resolve it directly first. If that does not work, a chargeback may help you raise the matter through the proper banking channel.

Frequently Asked Questions

Q1. Is a chargeback bad for my credit score?

A genuine chargeback request does not usually lower your credit score by itself. However, you should continue paying the undisputed amount on your credit-card bill by the due date to avoid late-payment charges or a possible impact on your credit history.

Q2. What is an example of a chargeback?

Suppose you see a ₹3,500 card transaction for an online subscription that you never signed up for. You can report the unauthorised transaction to your bank and raise a chargeback request after providing the required details.

Q3. What documents are required for a chargeback?

The bank may ask for transaction details, invoices, order confirmations, proof of payment, communication with the merchant, cancellation proof, delivery records or screenshots. The documents required depend on the reason for the dispute.

Q4. Is a chargeback illegal?

No, a chargeback is not illegal when you raise it honestly for a genuine transaction issue. However, raising a false claim or hiding relevant facts can lead to the request being rejected and may create further issues.

Receiving an incorrect credit card bill can be stressful. You may notice a transaction you had not carried out or a charge you did not make. It impacts the amount you owe to the bank. Hence, it is crucial to correct the mistake by flagging any incorrect credit card transaction shown in the bill immediately.

This article will guide you through the steps to take if you receive an incorrect credit card bill.

What to do in Case of an Incorrect Credit Card Bill?

Here are the steps to follow in such a situation:

1. Review Your Current and Previous Credit Card Statements

The first step is to understand the error in detail. So, review your current credit card statement closely, focusing on the charges and fees. Compare the starting balance of the current statement with the previous one. Be alert for anything unfamiliar, such as an add-on or a service.

2. Reach Out to the Customer Service

Once sure that there is an error, reach out to customer care and explain the issue in detail. Depending on the issue, the representative may inform you of the next steps you need to take, if any, to resolve the credit card dispute.

Also, note down call details, such as a complaint ID or number, for future reference. 

3. Raise an Official Complaint

To submit a complaint, you can refer to your bank’s grievance redressal process. You can seek an online dispute resolution by providing the bank with the necessary details or visiting a branch.

Many banks follow a separate process for unauthorised debit and credit card transactions. If your bill has a similar problem, you can seek a resolution via this process.

4. Escalate to a Higher Representative

Banks have a multi-level grievance redressal procedure. So, if your complaint or query has not been resolved even after following the steps shared above, you can escalate the issue to a higher authority.

You can disputethe credit card transaction or charges by writing to the head of customer care of the bank. In case the customer care head is unable to resolve the issue, you can write to a senior authority, such as the bank’s Principal Nodal Officer. 

In both cases, it is crucial to provide the complaint ID/number for reference and describe the inaccuracy in the credit card bill in detail.

5. Approach the Banking Ombudsman

You can contact the Banking Ombudsman’s office if the credit card dispute remains unresolved within a stipulated time frame. Contact details and the address of the concerned Ombudsman officer are available on the bank’s website. 

You can also approach the appellate authority if not satisfied with the Banking Ombudsman’s decision. 

While you take the above steps, keep the following points in mind:

1. Keep a record of all communications. You can also write a letter or email the concerned representatives to ensure you have written correspondence. 

2. Before taking the dispute further, inquire whether you need to clear the credit card bill payments for the undisputed transactions. If it is necessary, clear such payments on time.

3. Note the complaint time limits that the Reserve Bank of India (RBI) has set for customers and abide by them. 

Also Read: Credit Card Transaction Failed- Money Debited? Here’s What to Do

Conclusion

Receiving an incorrect credit card bill can be worrying, but by following the above steps, you can seek an effective resolution. It is crucial to be aware of your rights as a consumer and take proactive measures to protect your financial health.

While an incorrect credit card bill can be unfortunate, it is crucial to remember that credit cards can offer many benefits. Research thoroughly and choose a reliable banking partner like the IndusInd Bank for a safe and seamless banking experience. 

Apply Now for an IndusInd Bank Credit Card today to take better control of your finances!