SBI Cards: Be prepared for these changes from July 15

Kolkata: Come July 15, there will be significant changes in the rules of SBI cards, which is a major player in the credit cards market. According to published data, at the end of FY25 SBI Cards enjoyed a market hare of 18.9%, second only to HDFC Bank which was the market leaders with 22%. Therefore, a large number of users will be impacted by these changes. Let's see what will change and how it could impact users.

The first impact will be through a new way of calculating MAD or the minimum amount due of a credit card. The minimum amount due is an extremely significant item on your credit card bill. The reason: no matter what the total outstanding amount is, one can get away by paying the minimum amount due. Therefore, a lot of users or potential users think that they can keep using the card by paying only the MAD, quite oblivious of the fact that the rest of the amount will keep generating huge interest cost for them.

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HDFC Bank, the biggest credit card issuer in this country has the following to say about the minimum amount due: "The minimum due on a Credit Card is the smallest amount that a cardholder must pay in order to maintain their Credit Card account in good standing. It is typically a fraction of the total outstanding Credit Card bill payment amount, usually ranging from 5% to 10% of the total amount due set by the Credit Card issuer. The Credit Card issuer determines the minimum payment on Credit Card based on a predefined formula that considers the outstanding balance, new charges, and any applicable fees or charges associated with payments and monies spent on the Credit Card."

If you read the last sentence of what HDFC Bank says carefully, you will understand what SBI Cards is about to tweak. The new formula that SBI Cards will follow is the following: 100% of GST + 100% of EMI amount + 100% of fees/charges + 100% of finance charges + overlimit amount (if any) + 2% of remaining balance outstanding. According to reports, an user has to cough up a bigger amount as MAD.

Credit card delinquency is a rising problem in India and raising the MAD is one of the steps that can partially address this issue. Needless to emphasise, a change in the MAD calculation will be applicable on every user of the cards issued by this company.

There will be no more free air accident insurance cover in SBI Cards. A cover, completely free of charge, to the tune of Rs 50 lakh to Rs 1 crore, was available on many cards. The changes will be implemented from the middle of July and August 11. There is a long list of cards on which this feature will be discontinued, which comes after the Ahmedabad air crash. These cards are: UCO Bank SBI Card ELITE, Central Bank of India SBI Card ELITE, PSB SBI Card ELITE, KVB SBI Card ELITE, KVB SBI Signature Card and Allahabad Bank SBI Card ELITE (Rs 1 crore coverage was offered on these premium cards.)

UCO Bank SBI Card PRIME, Central Bank of India SBI Card PRIME, PSB SBI Card PRIME, KVB SBI Card PRIME, Karur Vysya Bank SBI Platinum Credit Card, South Indian Bank SBI Card PRIME, South Indian Bank SBI Platinum Credit Card, Karnataka Bank SBI Card PRIME, Karnataka Bank SBI Platinum Credit Card, City Union Bank SBI Card PRIME, Allahabad Bank SBI Card PRIME, UBI SBI PLATINUM Credit Card, OBC SBI VISA PLATINUM Card, Federal Bank SBI Platinum Credit Card, BOM SBI PLATINUM Credit Card will be dropping the free insurance cover. These used to offer a cover of Rs 50 lakh.