Banks are re-entering the credit card segment, though cautiously. In the last one month two banks have launched credit cards catering to the premium segment. While one offers free movie tickets to encourage card spends, the other offers faster accumulation of points which can be redeemed for premium products and services.
Kotak Mahindra Bank launched on Tuesday a co-branded credit card with PVR Ltd, which will help cardholders to earn up to two free movie tickets on spends of Rs 7,500.
Customers can also earn a bonus free movie ticket if they spend Rs 750 in a month at PVR cinemas.
Currently, the bank has a credit card base of 1.25 lakh. The average monthly spends are about Rs 15,000 for platinum cards and Rs 6,500 for gold cards.
“We want to increase monetary penetration by increasing card spends and not just our card base. An increase of 10 per cent in card spends every year seems likely,” said Mr K.V.S. Manian, Group Head-Consumer Banking, Kotak Mahindra Bank.
Mr Subrat Pani, head credit cards, Kotak Mahindra Bank, said there has been an increase of 7-8 per cent in card spends over the last one year.
For PVR, 12 per cent of ticket sales happen online, through credit cards. Of tickets sold at the box office, 2.5 per cent is through credit cards. “We hope about 30 per cent of our customers will shift to credit cards,” said Mr Pramod Arora, Group President and CEO, PVR.
Responsible spending
The card also allows customers the option to choose a lower interest rate of 1.99 per cent a month by agreeing to pay a minimum of 20 per cent of their outstanding credit card dues.
The interest rate works out to about 24 per cent per annum, against the average of about 40 per cent per annum. Most card issuers insist on a minimum repayment of 5-10 per cent of outstanding dues.
“By doing so, we also want to promote responsible spending,” Mr Manian said.
Another recent launch was American Express Gold Card. Launched earlier this month, the card offers faster accumulation of points.
It offers its members 12,000 points a year for using the card four times a month. To otherwise earn 12,000 points, a card member would need to spend Rs 4,80,000 annually.
In addition, the cardholders earn 2.5 points for every Rs 100 spent on the card and 5,000 bonus points for renewing the card membership.