Banks often promote their credit cards aggressively because they earn a lot of money from various fees associated with their use. To sell these cards, banks usually hire outside agencies, paying them a set amount for each card sold. However, a new scam has emerged involving credit cards.
How this scam works
Due to a lack of strict data privacy laws, these agencies can obtain personal information such as names, PAN numbers, and phone numbers from different sources. They then contact potential customers, promising high credit limits on new cards. Unfortunately, once you complete all the required steps, the actual credit limit ends up being much lower than what was promised.
For example, this writer received a call from one such agency. They had writers name, phone number, and PAN number, and they promised a credit limit of Rs 1 lakh. But after the writer went through all the formalities, the card he received had a limit of only Rs 50,000.
How it affects your credit score
This approach is being used by many banks and agencies, so it’s important to be cautious about such credit cards. They can harm your credit score, which reflects your ability to borrow money in the future. When you use a credit card, it’s treated like a loan, and your spending is tracked. If your usage exceeds 30 percent of your credit limit, it can negatively affect your score. For instance, if you have a low limit, say Rs 20,000, and you spend Rs 15,000, that means you're using 75 percent of your limit, which can lead to a lower credit score.
These agencies are incentivised to sell new cards and trick their potential customers with promises of high limits and they end up with much lower limits, which can hurt their credit score.
How to avoid such scams
To avoid falling for this scam, it’s best to apply for a new credit card directly from the bank, as they are likely to provide the information you can rely on. If you ever find yourself deceived by one of these agencies, do not activate the credit card to help protect your credit score.
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