In a move set to impact millions of cardholders, ICICI Bank has announced a sweeping revision of its credit card terms and conditions, effective from January 1, 2025. The changes, detailed in communications to customers, introduce higher fees in several areas and impose new limits on reward point accumulation, marking a significant shift in the bank's credit card policy landscape.
Key Changes to Fees and Charges
The bank is implementing a substantial increase in the fee for cash withdrawals at ATMs using credit cards. The charge will rise from the current 2.5% of the transaction amount (with a minimum of Rs 300) to a flat 3%, with the minimum fee also increasing to Rs 350. This makes accessing cash via credit card a more expensive proposition for customers in urgent need of liquidity.
Furthermore, ICICI Bank is revising its policy on outstation cheque collection. The fee for collecting cheques drawn on non-Mumbai centers will be hiked from Rs 100 plus applicable taxes to Rs 150 plus taxes. This adjustment affects customers who receive payments via cheques from other cities.
Another notable change involves the processing fee for converting credit card transactions into Equated Monthly Installments (EMIs). The bank will now levy a processing fee ranging from 0.75% to 1% of the converted amount, a cost that was previously waived for many offers. This could dampen the appeal of instant EMI conversions at point-of-sale terminals.
New Caps on Reward Points and Lounge Access
Beyond fee hikes, ICICI Bank is introducing limits on two popular cardholder benefits: reward points and airport lounge access.
The bank will now cap the total reward points that can be earned in a calendar year. For many of its premium cards, the annual reward point earning limit is set at 1,00,000 points. Once a cardholder reaches this threshold, further spends will not accrue any reward points until the next calendar year begins. This directly impacts high-spending customers who actively chase reward points for travel or redemption.
Additionally, the complimentary airport lounge access program is being tightened. The number of free domestic lounge visits per calendar year will be limited to four for a range of cards. This change aligns ICICI Bank with several competitors who have already restricted unlimited lounge access due to rising costs.
Impact and Strategic Rationale
These revisions represent a strategic move by ICICI Bank to bolster its revenue from credit card operations and manage the escalating costs associated with reward programs and premium perks. The banking sector has witnessed a surge in credit card issuance and usage post-pandemic, but profitability has been pressured by high rewards costs and operational expenses.
For the average cardholder, the changes mean a need for more careful financial planning. The increased cost of cash advances makes them a less viable option for emergency funds. The caps on rewards necessitate a review of spending patterns; customers may need to strategize their large purchases or consider diversifying their wallet if they consistently hit the new reward ceilings.
Industry analysts suggest this could be the beginning of a broader trend where banks move towards more sustainable and less generous card structures. Customers are advised to thoroughly review the revised terms and conditions communication from ICICI Bank, assess how the changes affect their specific card variant, and budget accordingly for the increased fees on specific services.
While the new rules apply from the start of 2025, transactions and reward accruals happening in the remainder of 2024 will follow the existing terms. Cardholders looking to maximize benefits under the old regime have a short window to do so.
