There may be no free lunches but there surely are free credit cards. In a bid to penetrate the near-saturated plastic money market, card issuers are now offering products which come free-some for a year and others for life. Offering free cards, which started as a gimmick to lure customers, has now become an industry norm. Some banks offer cards free only for the first year. But Standard Chartered's Manhattan card is unique: it is free for life.

Where's the catch? Says Standard Chartered Bank's head of credit cards Shyam Srinivasan: "Manhattan is a lifestyle product and pricing is just a part of the strategy. If a card issuer is giving up on fee then it is looking at growth in terms of volume and higher spends." So, if a Manhattan card isn't used for six months then a non-usage fee of Rs 100 is levied. If a consumer wants a low interest rate of 1.49 per cent for the first six months, he has to pay Rs 399.

Like most other "free" products, the consumer has to pay for the benefits at the end of the day. Puneet Chaddha, vice-president and head of cards at HSBC, says, "The impact of a free card will find its way back into the consumer's pocket. The industry trend is in favour of a free card but there is nothing like a free card." In fact, consumers stand to lose out in terms of benefits and discounts if they don't pay the annual fees. Also in some cases, issuers charge "free" customers a transaction fee while regular members are given the benefit of lower interest rates.

HIDDEN COSTS

Many credit card companies do not charge any annual fee. But watch out for the minimum purchase commitment. There could also be a transaction charge on all purchases. Or you may be paying a higher rate of interest on credit.

MONEY TALKS

FLOATING RATE FUND: LIC Mutual Fund has launched its Floating Rate MIP Fund. The scheme is an open-ended income scheme with the objective of generating consistent returns, minimising the interest rate risk and generating capital appreciation in the long term by investing in equities and other instruments.

NUMBER GAME: After the billion-dollar celebrations by it companies, it is the turn of private insurers to play the number game. ICICI Prudential Life Insurance, India's largest private insurer, is the first to cross the one-million policies milestone. The company achieved this in less than four years. It enjoys a marketshare of 5.6 per cent of the life insurance market in India.

-Malini Bhupta

I INVEST IN...

POOJA BEDI, ACTOR AND TV PERSONALITY
"I keep some money in the bank and short-term FDs for emergencies. I invest in blue-chip companies and in equity mutual funds. I also invest in jewellery. A good sum is reinvested in me for my grooming and personal growth for I am my own enterprise."

MUTUAL FUND TRACKER

Equity Rules Top three diversified equity and debt funds   1 YEAR 6 MONTHS 1 MONTH Equity Funds (Diversified) Magnum Global 79.15 32.54 9.45 Magnum Contra 78.36 29.05 6.66 HSBC Equity 70.21 12.13 8.10 Income Funds (Medium-term) Escorts Income 6.34 1.67 0.37 BoB Income 6.32 3.65 0.26 Principal Dep-EA/EB 4.94 2.44 0.17 Figures are percentage returns as on September 27, 2004. Funds ranked on basis of one-year returns. Source: ValueResearch Returns from diversified equity schemes surged as the markets continued their upward march. But the returns of debt funds languished as inflation fears loomed large.

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