Behavioural biases that damage your investments!

In an age when almost every touch is a ‘bad touch’, a contactless debit or credit card is a technological blessing. In recent times, public and private sector banks are pushing contactless credit and debit cards.

But before using these cards enthusiastically, it is proper to be aware of the pros and cons.

First, even if you don’t have a contactless card, you can turn your chip-based card into a contactless one, simply by sending an SMS to a designated number assigned by your bank.

Despite the obvious advantage of contactless cards, these are extra vulnerable to misuse.

In the last monetary review meeting, Reserve Bank of India raised the transaction limit of these cards from Rs 2,000 to Rs 5,000.

However, according to the rules, one can make only five consecutive contactless transactions. Every sixth transaction has to be in the traditional method, this is by keying in the PIN in a machine. This is irrespective of the amount of transaction.

Once a traditional transaction is done, one can again do five contactless transactions consecutively.

This feature has been incorporated to ensure that the card has not fallen into the hands of some unauthorised user.

Since the ceiling of contactless transaction has been raised to Rs 5,000, one also bears the risk of losing more money.

However, if one makes a purchase of more than Rs 5,000, one has to punch in the PIN every time.

An obvious advantage of contactless transaction mode is that one can buy goods or service below Rs 5,000 even if one forgets the PIN, a situation which is not uncommon.

The most important thing is to keep the cards secure. Since it does not need authentication, you may lose some money quickly even before you can detect the loss/theft and proceed to block it.