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Old 4th September 2009, 18:40   #1
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Default 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!
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Old 4th September 2009, 18:59   #2
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Quote:
Originally Posted by ashwinsid View Post
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?
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Old 4th September 2009, 19:08   #3
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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.
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Old 4th September 2009, 19:48   #4
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It is a no brainer, straightaway go for option A.

Last edited by Gansan : 4th September 2009 at 19:49.
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Old 4th September 2009, 20:04   #5
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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.
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Old 4th September 2009, 20:10   #6
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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.
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Old 4th September 2009, 22:43   #7
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@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.
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Old 5th September 2009, 03:17   #8
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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!
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Old 5th September 2009, 11:09   #9
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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.
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Old 5th September 2009, 11:41   #10
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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.
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Old 5th September 2009, 14:18   #11
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Balance transfer. and stop using the card to which you transfer the amount
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Old 7th September 2009, 08:30   #12
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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!
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Old 7th September 2009, 08:50   #13
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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.
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Old 7th September 2009, 09:05   #14
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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
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Old 7th September 2009, 09:21   #15
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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.
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