There’s a general rule of thumb for financial products that you should run away from:
“The fancier the product verbiage used in its marketing literature, the faster you should run away from it.”
Let me ask you a question.
What’s the first thought that comes to your mind when you see a big bold ad for “IDBI Bank Magic Card” in the morning paper? As soon as I saw the ad, my mind started to scream “this definitely has to be magic at your expense.”
And indeed it turns out to be one. Here’s why (emphasis mine):
(From the product flyer — the first danger sign.)
A first-ever debit card with a credit limit that charges you much less than a regular credit card. It supports your salary account. Allows you to spend you salary and then some more. A card that believes in stretching its limits so that your salaries never end.
(From the product FAQ — more danger signs.)
What is IDBI Bank Magic Card?
IDBI Bank Magic Card is a Debit Card with inbuilt credit facility. Magic Card allows the cardholders to spend on the card even there are no funds available in their Savings Bank account.
How the interest will be recovered on the utilized amount?
Such interest (together with the principal outstanding) would be recovered from the salary credited to the customer’s account.
See where the magic’s happening?
Salary credited into your account. Card balance debited from that account. Poof! Magic! There you go! Your hard-earned money magically disappeared even before you realized it.
Need I say more?
Yep. A couple of closing thoughts — why you should not own a credit card from a bank where you have other deposits and the order in which your credit card payments are applied while settling dues.