Credit Card Question and Answers

User: Which is the better CC in which one can pay back in longer time duration with minimal interest on the borrowed amount?

CardBhai: Credit cards are not the best choice to borrow and interest costs are very high. If at all you want to borrow on an undecured loan you should go for unsecured personal loans. In fact if you can possibly give security such as financial assets (Life insurance policies, fixed deposit certficates, mutual fund units, bonds, jewellery, etc.) you will get the cheapest loan.

User: Which loan should one opt for - personal loan or loan on existing credit card ? In which one shall I get lower interest rate.

CardBhai:If you have a good repayment track record on your existing credit card and also have good provable income papers [IT Returns / Salary Slip] then personal loans will definitely be cheaper. Even otrherwise personal loans will normally be cheaper than loan facility provided on a credit card.

User: Bank refuses to take Cheque and acknowledge with a seal on the slip.

CardBhai: RBI has clearly directed that banks will need to cumplosorily give stamped acknowledgements if the cosnumer does not wish to use the drop box facility and wishes to deposit / make payment across the counter.

User: I have an outstanding of Rs 21,000 on my ICICI CC and about Rs 27,000 on my personal loan. Should I topup my personal loan to pay off my CC outstanding ?

CardBhai: Absolutely you should. Keep your CC off in the cupboard until you pay off your Personal Loan.

You can ask your question on CardBhai Forum.

Difference Between Debit and Credit Card

Many still don't know the difference between Debit and Credit Cards. Debit cards are most popularly known as ATM cards in India.

During the post-liberalization era, the Indian consumer had very less time in a Day and was looking for self banking. Thanks to K V Kamath who started the modern banking revolution - ATM, Online and Mobile Banking.

ATM/Debit Card:
Debit Cards are always tied to a Bank account [Savings or Current]. Earlier, Debit Cards came with a 4 digit PIN [Personal Identification Number] and you could use it to withdraw cash, view statements etc. They served as a Teller for your Bank account. These days, in addition to PIN and teller type ATM transactions, debit cards are endorsed by VISA or MasterCard and they can be very conveniently used like credit cards, but only if you have sufficient balance in your Account. Since you are using your own money, their is no APR [Annual Percentage Rate] or Interest.

Credit Cards:
Credit Cards are basically unsecured loans given to you by a Bank or a Financial Institution. Every credit card has a pre-set spending limit / credit limit. In India, the banks look at your Income Tax returns or your salary slip and fix the credit limit. Their is a payment grace period [upto 30 days] within which you have to payback the amount you have spent on your credit card failing which you will be charged an interest on the amount used. Depending on your credit card usage and payment record your credit limit will be raised.

CardBhai suggests always be very conservative when using credit cards.