Skip to main content

No interest period in credit cards have Limited benefit

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

 

Credit card companies, often, dangle offers that seem irresistible. But most probably, they are not as profitable as they seem. The latest one: A no- interest period offer. This offer allows you to carry forward the outstanding amount, for a specific time without paying any interest.

This may seem very attractive, as the bank is allowing free revolving credit. But there are a few factors that customers must keep in mind, or else they could end up losing money. Let us look how this facility can be turned into a benefit.

Unnecessary spending

The option to carry forward the outstanding amount without any interest could lead the card holder to use the card recklessly and spend too much. This should be avoided.

Keep your spending under control because the amount has to be paid back at some point of time. Remember that this is not extra cash flow but is in the nature of a loan with a limited interest- free period.

Customers should take a holistic look at their ability to pay and ensure that the total spends do not cross the figure that is reasonable. If not, it can put a burden on their finances and they will find it very difficult to pay off the credit card dues. Hence, at all times, keep a tight check on the credit card spends.

Period of benefit

Keep in mind that the interest- free period is time bound. So, it could be that if your payment is due on April 15, you may get time to clear your dues by payments by May. This means that during this period if you carry forward the payment, there will be no interest charged. But if you don't clear the dues beyond that period, then the interest charges will kick in, with effect from the first payment due date. Assume the payment is due on April 15, with the no- interest period ending on May 15. If you miss the May 15 deadline, you will be charged interest from April 15. This will negate the benefit of no- interest. Banks charge very high interest rates on credit cards, usually between three to four cent per month.

On an annual basis this translates into 36- 48 per cent per year.

Minimum payment

To avail the interest- free period benefit, often the conditions will require the cardholder to pay the minimum amount. If this amount is not paid, it will be considered as a default. In such a case, the no- interest rule will not apply and the bank will start charging interest rates immediately. The minimum amount may be small, but it is important that it be paid if you want to enjoy the benefits of the no- interest period.

Don't make it a habit

The interest- free period should be treated only as a short- term measure. It should be used only in case you are short of funds in one particular month. If so, then defer payment of your credit card dues. But ensure that you have sufficient funds to pay off the dues in time for your next payment cycle. Don't make it a habit of carrying forward amounts on your credit cards because the interest costs can be very high. Remember that banks would like customers to use the revolving credit facility because that is one way for them to earn interest income. But customers must avoid this temptation.

Usage limit

All credit cards have a usage limit or spend limit, depending on the kind of card. These limits can be as low as ₹ 50,000 and could also run into lakhs of rupees for high end cards. This limit is restored after every billing cycle. But if you do not repay the outstanding, then the limit gets used up. Only when you pay the dues will the limit be restored again. So, cardholders have to be careful while deferring the payments. If you have utilised the no interest offer, and are planning a big- ticket purchase the next month, then repay on time so that the entire usage limit will be available.

When you come across such offers make sure you read the fine print very carefully. The benefit of such a facility is that it offers you an additional credit period, but there is the risk of overspending. This means incurring extra interest rate cost. It may not make much of a difference, in case your spends are not too much. Look at all these factors carefully before deciding whether to take up the offer or not.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...
Read more

Financial Planner - Do Integrity & Dependability Check

How does one can find value proposition when it comes to financial planning, which is a new area? There is nothing to benchmark it with. So, how does one figure what is the right fee to pay? Look at what you want. You probably want to hire a financial planner to get a blueprint for your life ahead and want to know how to achieve your goals. For creating a tailor-made financial plan, our experience is that it takes 25-30 man-hours in all. Taking an average of Rs 500 per hour for hiring the services of a qualified financial planner like one who has a CFP(CM) certificate, the fee would come to Rs 12,500 to Rs 15,000. But the per-hour rate can be higher or lower depending on the process adopted, the experience and expertise of the planner, etc. That's how planners arrive at their fee. Now, is that value for money? For that you need to find out what benefits you would derive by engaging them. The financial plan will give you clarity, direction and pathway to achieve your goals. Th...
Read more

About CRISIL IPO Grading

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...
Read more

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Read more

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now