ICICI's once Attractive Rewards Program will no Longer be so - Hefty fees for Reward Point Redemption
So far ICICI Bank had the best reward terms in India. Last week an email from them landed in my inbox which stated that w.e.f. 12 June 2014 a Redemption Handling Fee plus Service Tax will be charged on every redemption request for PAYBACK Points earned on ICICI Bank Credit Cards, Debit Cards or MySavingsRewards. The charges were outlined as follows:
The terms are so watertight that a customer has no way out to avoid these charges. Naturally ICICI Bank's argument would be this is an international practice and they see nothing wrong in levying fees for every service they have on offer!
- Around 2000s, all banks started installing ATMs at every corner and began attracting customers with free ATM cum International Debit Cards. Both customers and banks benefited out of this as the former did not have to wait for banks to open and stand in queues. Banks on the other hand could concentrate on much needed things(?!) like selling investment products.
- Similar to cards, there was SMS banking which was totally free, but is now being charged at ₹60/year by almost every bank.
- Private banks even charge for cash deposit at their branches beyond a certain number of times.
- In the name of going green (of course a welcome move) banks are saving huge amounts of paper and money by getting rid of paper statements and passbooks.
ICICI Bank was always ahead in the race in terms of technology banking. This is evident from the fact that they are one of the top players in the industry in terms of credit cards in circulation. The internet banking platform is the best in class after recent upgradation.
In FY 2012-13 they introduced MySavings Rewards for Savings Accounts and took every step to attract new customers - offered free reward points just for activating internet banking, provided free coupons and what not! Terms and conditions always stated that currently there are no fees for redemption indicating it might come up in the future! I never expected the future to arrive this soon.
Making things worser is the redemption charges would not be deducted from the points but would be billed separately in the card statement. This shows that even ICICI knows that the points are of little value and cash is of importance.
My TakeI feel that the redemption charges are way too high and would not make sense to redeem the points, particularly in small chunks like 500 points.
Payback points expire in three years after they are earned. Hence it would be wiser to redeem just once in three years at the cost of ₹25 + taxes - of course in next three years we can expect to pay more. I would never redeem my points at the Payback catalogue for ₹99 + taxes owing to little choice.
Cashback websites like gopaisadotcom offer better deals than ICICI and their partner Payback. I have also started my pursuit for other banks which offer better terms as of today. Needless to say, in banking things work like a cartel and it won't take time before others start increasing their charges.
Days are not far away when banks start charging customers for Internet banking citing server costs!