Credit cards have their advantages, but they also carry significant risks. Their use remains problem-free as long as the user pays the bill on time; however, missing a payment can lead to financial losses. A recent case drew public attention: a credit card user had to pay a 2600% fine due to a shortage of only 46 cents.
According to a report published on India Today, the credit card holder found that his account balance was 10,649.46 rupees, but on the due date, there were only 46 cents short in his account. Due to this deficit, the credit card provider charged a large fine of 2600%, resulting in the need to pay 1,200 rupees instead of the missing 46 cents.
This incident once again sparked a discussion about the trap of credit cards and how such minor balances should be handled. Dr. Samir Kagalkar shared this case on social media Twitter (now X), tagging HDFC Bank, and called for the reversal of the charged fees exceeding 1,200 rupees for a 46-cent delay.
The Reserve Bank of India (RBI) states that amounts less than 50 cents should be ignored. The bank issued instructions to all banks regarding the rounding of all transactions, including interest on deposits and loans, to the nearest whole rupee. According to the RBI, fractions of less than 50 cents should not be taken into account. Applying this principle, 10,649.46 rupees should have been rounded to 10,649 rupees, whereas 10,649.50 rupees could have been rounded to 10,650 rupees.
Nevertheless, the rounding principle itself does not determine how an individual credit card account should be handled. Rules concerning customer payments, registered debt amounts, and bank accounts may vary.
The RBI also has separate rules regarding late payment fees on credit cards. According to credit card guidelines, card issuers can only report an account as overdue or impose a penalty if the account remains overdue for more than three days after the specified payment date. The RBI rule states that late payment penalties and associated charges should only be applied to the outstanding debt amount after the due date, not to the total amount due.
This means that the rounding rule and the credit card late payment rules regulate two different aspects of transactions: the former concerns how amounts involving fractional rupees are rounded, and the latter concerns when and on what amount late payment fees can be imposed.
Users on social media also shared their experiences. While Kagalkar appealed to HDFC Bank for a refund of the fees, other X users recounted their credit card problems. One user wrote that if the issue is not resolved, one should contact the RBI Banking Ombudsman. Another user stated that they faced a similar problem with SBI Credit Card, where charges continued to accrue even after requesting card closure.