Why bankers don't like kite flyers

It is Makar-sankranti, and thousands will be flying kites today. But, did you know bankers don’t particularly like kite flyers? Surprised? Yes, they dislike kite flyers, but of another kind. Here the kites are smaller in size but deadlier–credit cards.

What’s kite flying: Kite flying is originally a technical term used for a type of cheque fraud. But, this term has now been extended to credit cards as well. “Though, technically, card kiting or credit card kite flying is not a fraud, it’s surely practiced by many card-holders,” a forensic accounting expert who did not wish to be named said. And bankers are wary of this practice.

[caption id=“attachment_587464” align=“alignleft” width=“380”]  The fact that you are card kite flying shows that you are in a tight financial situation. AFP[/caption]

So, what exactly is credit card kite flying, aka card kiting? In an ideal world, when you get your credit card statement, you should be paying the total amount due, also known as total outstanding balance, on your card every month. For some reason, if you are unable to shell out the total outstanding balance, banks expect you to pay at least the minimum amount due on the card. Kite flying is when you use one or more credit card to withdraw cash at an ATM as cash advance and pay dues on another credit card. Of course, this only works when the rate of interest you pay for cash advance on card A is lesser then the interest you pay towards pending dues on card B.

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Some people also try card kiting on the same card, where they withdraw cash using your credit card at an ATM and make a minimum amount payment on the same card. After all if you don’t have funds to pay even the minimum amount due, on time, you land up getting a late payment fee on your card. But, this isn’t the wisest thing to do.

Bankers are smart people and these days every banks diligently monitor your credit card activities. Monitoring helps banks to get warning signals on your accounts in advance and hence prevent a bad debt for their loans book. So, if you are into card kiting, you better be careful.

What should you do: The fact that you are card kite flying shows that you are in a tight financial situation. While card kite flying might be a temporary solution to your problem, we suggest you get in touch with a credit counselling agency. They will help you deal with credit card debt, that too free of cost.

So, this Makar-Sankranti, give up card kite flying and fly some real colourful kites.