Yes Bank And IDFC First Bank To Impose Surcharge On Credit Card Utility Payments

New Delhi: Two major banks, Yes Bank and IDFC First Bank, have announced the introduction of a surcharge on utility transactions made through credit cards, effective from May 1. This move comes as credit card issuers reassess their reward-earning categories and revenue streams following recent industry developments.

Yes Bank And IDFC First Bank's Credit Card Surcharge Details

Yes Bank will impose a surcharge of 1 percent plus GST when the total amount of utility bill payments made with a credit card surpasses Rs 15,000 in a statement cycle. However, this surcharge does not apply to Yes Bank's Private credit card. (Also Read: Work From Home vs Work From Office Debate: Zerodha's Nithin Kamath On Why WFH Not A Fit For All)

On the other hand, IDFC First Bank will levy a similar surcharge, also at 1 percent plus GST, but only when utility bill payments exceed Rs 20,000 in a statement cycle. 

Cards Exempted From This Surcharge

Similarly, certain cards like the FIRST Private Credit Card and LIC Classic Credit Card from IDFC First Bank are exempt from this surcharge.

How It Will Impact On Users?

For users of these credit cards, it's important to note that if their aggregate utility bill transactions (such as gas, electricity, and internet) remain below the specified threshold, no surcharge will be applied.

However, once the spending crosses the threshold, the surcharge will apply to the excess amount.

Example

For instance, if a user of IDFC First Bank's credit card spends Rs 10,000 on utility bills in a statement cycle, they won't incur any surcharge as it falls below the Rs 20,000 threshold.

However, if their utility spends amount to Rs 30,000 in a statement cycle, they would be subject to a fee of Rs 300 (1 percent fee) plus GST on the excess amount.

Credit Cards's Industry Trends

This move by Yes Bank and IDFC First Bank follows a trend where many credit card issuers have been excluding certain categories, including utility bills, from their reward-earning category lists.