Credit Card:Converting Outstanding amount to EMI/Pay only minimum amount due?Advise

ashwinsid · 4th September 2009, 18:40

Hi

I have a query. This is both for my knowledge and also am considering the option. So I need your advise / your experience in this topic.

Say I have a Credit Card from HDFC Bank and my total outstanding amount is Rs. 20,000. For some reason, I wont be able to pay the entire amount.

1. Should I opt to convert the total outstanding into EMI?

2. Should I pay the minimum amount due and take the balance amount due to the next months outstanding?

I just want to know if anybody has experience with HDFC credit card EMI?

Thanks!

diabloo · 4th September 2009, 18:59

Quote:

Originally Posted by ashwinsid

Say I have a Credit Card from HDFC Bank and my total outstanding amount is Rs. 20,000. For some reason, I wont be able to pay the entire amount.

1. Should I opt to convert the total outstanding into EMI?

2. Should I pay the minimum amount due and take the balance amount due to the next months outstanding?

2 is worst. The rate of interest you would be paying could be as high as 50%, by the time you clear all outstanding amount.

For 1, what are the conditions for EMI conversion? What are the charges?

Wolfheart · 4th September 2009, 19:08

You could get ripped off bigtime!! If possible borrow from a friend and pay it off but don't get caught in the credit card trap.

Gansan · 4th September 2009, 19:48

It is a no brainer, straightaway go for option A.

mail4ajo · 4th September 2009, 20:04

If you are with Citibank Suvidha, see if you can get an OD on your savings account and pay CC bill. Have heard of guys using it. Works cheaper than CC interest.

mjothi · 4th September 2009, 20:10

Remember, option 2 makes you pay interest for anything you buy after the statement period too. Which means, from the day you have outstanding, all purchases made till you complete the full amount, will be added for interest calculation. Worst, that interest will also be added for next month interest.

dre@ms · 4th September 2009, 22:43

@ashwinsid reading your post made me think was I started this thread!!! Because I am in the same situation has you are in. I too own a HDFC credit card and have a OB of 26k. Previously I used to pay a certain amount and dont mind the interest getting accumulated. But one fine day, I got a call from HDFC asking me to convert my Outstanding into EMI. Normally I dont encourage these calls, but on that particular day I still dont know what happened to me, I opted for the EMI. Through EMI my ROI including all taxes is 1.9% Otherwise the normal ROI is 12% + ST. I am not sure about these values but it is this much high. To opt for this, I have to sign an application form and there is a one time charge of 450 rupees. But, peace of mind. According to me, HDFC is one bank with whom I have not even faced a single issue. So, please opt for the 1st option. EMI is best.

Ali · 5th September 2009, 03:17

I would not opt for either of the 2 options,I have faced problems with icici on the EMI charges. If possible borrow money from someone and clear the CC. If not possible,check the clear terms and conditions before opting for an EMI. If one EMI is defaulted,may be cross due date for some reason. You will be slapped with huge interst.

Make sure you have terms of converting to an EMI on paper,Read carefully before signing!

Fordmanchau · 5th September 2009, 11:09

The best options would be
1) if you have a friend/relative who can loan you the required amount, take it from them and payoff the dues asap.
2)If not, then check with any of your banks if they can give you a personal loan for that amount and at what terms and conditions.
3)If personal loan is not available, do thorougly enquire about the t&c of the EMI option and get your outstanding converted to EMI. But please make sure you are aware of all the charges.
Lastly, exercise restraint in using your credit card, it's the convenience best avoided.
Don't let your dues pile up and don't go on shopping binge with your card unless you have that money in your savings account to pay off your dues.

Spitfire · 5th September 2009, 11:41

I would pay the interest or go the EMI route whatever maybe the loss, instead of asking money from friends or relatives.

Take it as a lesson and never overspend ever again.

bblost · 5th September 2009, 14:18

Balance transfer. and stop using the card to which you transfer the amount

harjeev · 7th September 2009, 08:30

I would go with option number 1.

However if you have a FD with a back or if its a remote possibility to borrow from a friend or someone else that would be better. Because if you have an FDR then you will be getting a measly interest of 7% or so and if you borrow from someone and maybe even pay interest to them that that would be in the range of 12-18% PA. Whereas in credit cards the interest works out to be atleast 40-50%!!!
More so the interest that might be charged in the present month, next month that too is included in the interest calculations!!!

I read a very nice book by Robert Kiyosaki "Rich Dad's Guide to Becoming Rich...Without Cutting Up Your Credit Cards"!!!
This book should be of great help for anyone going through a credit cards trap!

benbsb29 · 7th September 2009, 08:50

I came across this on the statement of my SCB credit card bill. Makes perfect sense:

Quote:

If you spend Rs.10,000/- and pay back exactly the Minumum Amount Due every month, it will take approximately 6.5 years for you to pay back the complete amount. We therefore suggest that whenever your cash flows allow you, do pay back substantially more than your minimum payment due.

I once burnt mmy fingers with one such transaction, and that experience in itself was enough to make me realize the trap the credit card business is. I was on my first job then, and relatively new to the world of finances. Now, i use the CC only if i know i can pay off the amount the SAME month itself and if i need to make an online purchase. Despite many offers informing me of an increase in my credit limit, i have declined such offers.

spadival · 7th September 2009, 09:05

Aren't there any banks in India who offer 3-6 months 0% interest on balance transfer?

My friend in UK used this option to keep transferring the balance between different credit cards and managed to get an interest free loan of 2000 odd pounds for 2 years !!

Of course, he was a marwadi

vasudeva · 7th September 2009, 09:21

If you cannot pay the full amount, pay the max. you can. Pay the max. out of the balance next time. Converting into EMI with 6-12 mths is the worst option because of the usurious rates being charged.

I always think of credit card as a cash substitute and not as a supplemental source of expenditure.

4th September 2009, 18:40	#1
ashwinsid BHPian Join Date: Feb 2008 Location: Bangalore Posts: 185 Thanked: 40 Times	Credit Card:Converting Outstanding amount to EMI/Pay only minimum amount due?Advise Hi I have a query. This is both for my knowledge and also am considering the option. So I need your advise / your experience in this topic. Say I have a Credit Card from HDFC Bank and my total outstanding amount is Rs. 20,000. For some reason, I wont be able to pay the entire amount. 1. Should I opt to convert the total outstanding into EMI? 2. Should I pay the minimum amount due and take the balance amount due to the next months outstanding? I just want to know if anybody has experience with HDFC credit card EMI? Thanks!
	() Thanks

4th September 2009, 19:08	#3
Wolfheart BHPian Join Date: Jun 2009 Location: Bombay Posts: 160 Thanked: 35 Times	You could get ripped off bigtime!! If possible borrow from a friend and pay it off but don't get caught in the credit card trap.
	() Thanks

4th September 2009, 19:48	#4
Gansan Senior - BHPian Join Date: May 2009 Location: Chennai Posts: 4,623 Thanked: 5,917 Times	It is a no brainer, straightaway go for option A. Last edited by Gansan : 4th September 2009 at 19:49.
	() Thanks

4th September 2009, 20:04	#5
mail4ajo Senior - BHPian Join Date: Mar 2006 Location: Dallas, Texas Posts: 1,959 Thanked: 337 Times View My Garage	If you are with Citibank Suvidha, see if you can get an OD on your savings account and pay CC bill. Have heard of guys using it. Works cheaper than CC interest.
	() Thanks

4th September 2009, 20:10	#6
mjothi Senior - BHPian Join Date: Dec 2007 Location: Bangalore Posts: 3,290 Thanked: 233 Times View My Garage	Remember, option 2 makes you pay interest for anything you buy after the statement period too. Which means, from the day you have outstanding, all purchases made till you complete the full amount, will be added for interest calculation. Worst, that interest will also be added for next month interest.
	() Thanks

4th September 2009, 22:43	#7
dre@ms BHPian Join Date: Oct 2006 Location: MADRAS Posts: 642 Thanked: 206 Times	@ashwinsid reading your post made me think was I started this thread!!! Because I am in the same situation has you are in. I too own a HDFC credit card and have a OB of 26k. Previously I used to pay a certain amount and dont mind the interest getting accumulated. But one fine day, I got a call from HDFC asking me to convert my Outstanding into EMI. Normally I dont encourage these calls, but on that particular day I still dont know what happened to me, I opted for the EMI. Through EMI my ROI including all taxes is 1.9% Otherwise the normal ROI is 12% + ST. I am not sure about these values but it is this much high. To opt for this, I have to sign an application form and there is a one time charge of 450 rupees. But, peace of mind. According to me, HDFC is one bank with whom I have not even faced a single issue. So, please opt for the 1st option. EMI is best.
	() Thanks

5th September 2009, 03:17	#8
Ali BHPian Join Date: Sep 2007 Location: Hyderabad Posts: 38 Thanked: 3 Times	I would not opt for either of the 2 options,I have faced problems with icici on the EMI charges. If possible borrow money from someone and clear the CC. If not possible,check the clear terms and conditions before opting for an EMI. If one EMI is defaulted,may be cross due date for some reason. You will be slapped with huge interst. Make sure you have terms of converting to an EMI on paper,Read carefully before signing!
	() Thanks

5th September 2009, 11:09	#9
Fordmanchau Senior - BHPian Join Date: Jul 2009 Location: Hyderabad Posts: 1,666 Thanked: 341 Times	The best options would be 1) if you have a friend/relative who can loan you the required amount, take it from them and payoff the dues asap. 2)If not, then check with any of your banks if they can give you a personal loan for that amount and at what terms and conditions. 3)If personal loan is not available, do thorougly enquire about the t&c of the EMI option and get your outstanding converted to EMI. But please make sure you are aware of all the charges. Lastly, exercise restraint in using your credit card, it's the convenience best avoided. Don't let your dues pile up and don't go on shopping binge with your card unless you have that money in your savings account to pay off your dues.
	() Thanks

5th September 2009, 11:41	#10
Spitfire BANNED Join Date: Jul 2006 Location: Panaji - Goa/Bangalore - Karnataka Posts: 3,313 Thanked: 778 Times	I would pay the interest or go the EMI route whatever maybe the loss, instead of asking money from friends or relatives. Take it as a lesson and never overspend ever again. Last edited by Spitfire : 5th September 2009 at 11:42.
	() Thanks

5th September 2009, 14:18	#11
bblost Team-BHP Support Join Date: Jul 2007 Location: Hyderabad Posts: 11,279 Thanked: 17,873 Times View My Garage	Balance transfer. and stop using the card to which you transfer the amount
	() Thanks

7th September 2009, 08:30	#12
harjeev Senior - BHPian Join Date: May 2006 Location: New Delhi Posts: 1,900 Thanked: 296 Times View My Garage	I would go with option number 1. However if you have a FD with a back or if its a remote possibility to borrow from a friend or someone else that would be better. Because if you have an FDR then you will be getting a measly interest of 7% or so and if you borrow from someone and maybe even pay interest to them that that would be in the range of 12-18% PA. Whereas in credit cards the interest works out to be atleast 40-50%!!! More so the interest that might be charged in the present month, next month that too is included in the interest calculations!!! I read a very nice book by Robert Kiyosaki "Rich Dad's Guide to Becoming Rich...Without Cutting Up Your Credit Cards"!!! This book should be of great help for anyone going through a credit cards trap!
	() Thanks

7th September 2009, 09:05	#14
spadival Senior - BHPian Join Date: Oct 2004 Location: Melbourne, AU Posts: 1,772 Thanked: 29 Times View My Garage	Aren't there any banks in India who offer 3-6 months 0% interest on balance transfer? My friend in UK used this option to keep transferring the balance between different credit cards and managed to get an interest free loan of 2000 odd pounds for 2 years !! Of course, he was a marwadi
	() Thanks

7th September 2009, 09:21	#15
vasudeva Senior - BHPian Join Date: Mar 2007 Location: Delhi Posts: 2,221 Thanked: 212 Times	If you cannot pay the full amount, pay the max. you can. Pay the max. out of the balance next time. Converting into EMI with 6-12 mths is the worst option because of the usurious rates being charged. I always think of credit card as a cash substitute and not as a supplemental source of expenditure.
	() Thanks