News: Credit card goes 'full' cash-back

(DNA 08/05/2007) Mumbai - While major banks are competing hard amongst each other by offering cash-backs and other special benefits on select transactions using their credit cards, ABN Amro Bank has come out with a card that offers 2% cash back on all purchases for a lifetime. The foreign bank is targeting the middle and upper-middle class population with this product. As per a survey conducted by it, the middle class population is expected to touch 220.7 million in 2010 from 206.3 million in 2007.

“We will target salaried people drawing an income of Rs 4-5 lakh per annum or above. They are generally above 28 years of age,” said Harjeet Toor, senior vice-president and regional consumer banking head, north India, for ABN Amro Bank “These people spend Rs 5,000-10,000 on a monthly basis using their cards. This will help them save some money on every purchase they make.”

The rate of interest charged on this card will be 2.95-3.15% per month, depending on the customer’s age, salary and income level etc.

“As the younger generation is lured to using credit cards, we are coming up with newer ideas of generating revenue,” said Toor, adding, ABN Amro expects a huge response for its product. It plans to push the card by using direct selling associates, besides telemarketing and hoardings. However, other banks are not following suit just yet.

“We do not promote cash-back offers on any of our cards and will not follow them. We are targeting the high class individuals for the sale of platinum cards,” said an American Express spokesperson.

ICICI Bank’s head of cards, Sachin Khandelwal, avers: “We do not intend to copy our competitors. We have a cash-back scheme in place on promotional basis. We will not come up with something of this sought.”

ICICI Bank charges an interest rate of 2.95% per month. It had launched its cash-back scheme last Diwali and extended it till March 2007. Under the scheme, cash-backs can be availed only on purchases above Rs 2,000.

Among others, HSBC offers cash-backs on transactions like apparels, consumer durables, jewellery, watches, electronic goods, leather items, groceries, music and books etc.