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Old 7th December 2009, 13:50   #1
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Default Interest free cash offer from SCB but what is the catch?

Hi
I was getting calls from SCB agents saying they are offering free cash based on the credit limit and there is no interest for 6 months, other the the nominal process fee of Rs.99.
Initially I was treating this as another way to pull me in to the trap and charge some hidden fee later. Eventually I decided to try it out and accepted the offer. I was told that I will recive a letter and the DD and only after seeing the terms I can encash the DD.
I recieved the letter and the DD, and I saw that interest rate was mentioned as 0% as promised, but, the service charge is 10%!
I will be calling the Bank to seek clarification and probably retrun the DD.
Is this the new way of the banks to catch the unsuspecting prays?
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Old 7th December 2009, 13:56   #2
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this is normal:

Banks extend a Loan against Credit Card for specific periods.
This is classified as an Interest Free Loan/ No Additional Charges Loan.
However they charge a processing fee which is usually a percentage + some normal fixed amount for documentationj.
In your case if they have charged Rs 99 for documentation and 10% Processing Fee then please note that the 10% while termed as Service Charge, is effectively the interest rate you are paying over 6 months! Comes to 20% per annum.
Very expensive loan@ .16- 1.7% per month.
So if you have taken say 1 lac as loan then in effect you will be paying 10000/- towards Service Charge + 99 towards Processing fee.
Effectively Rs 1683 per month for 6 months which you will be paying in addition to the pre-agreed instalment of Rs 16,666.67 per month!!
Like they say always check the fine print before agreeing and/or signing.

Quote:
Originally Posted by Guna View Post
Hi
I was getting calls from SCB agents saying they are offering free cash based on the credit limit and there is no interest for 6 months, other the the nominal process fee of Rs.99.
Initially I was treating this as another way to pull me in to the trap and charge some hidden fee later. Eventually I decided to try it out and accepted the offer. I was told that I will recive a letter and the DD and only after seeing the terms I can encash the DD.
I recieved the letter and the DD, and I saw that interest rate was mentioned as 0% as promised, but, the service charge is 10%!
I will be calling the Bank to seek clarification and probably retrun the DD.
Is this the new way of the banks to catch the unsuspecting prays?
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Old 7th December 2009, 14:24   #3
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First there is the service charge (whoa! what a rip-off!)... then there is the interest rates that they charge after six months.

I am afraid that, with any "financial product", and even with bank services, one has to look very carefully for the sting to the customer, and to do so with the attitude that there almost certainly is one.

These companies have to make profit --- but, really, this sort of misleading advertising/calling should be strictly regulated and banned.
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Old 7th December 2009, 14:44   #4
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Be careful, read the fine print and then go through. I had an interest free offer from SCB for 2 L for 3 months, after which I would be charged approx 2% per month (24% per annum).
I went for it, since I had a home improvement project going on and paid them back at the end of 3 months. It was quite straightforward, but I had to be 100% sure, ask and ask in different ways, to ensure that there would be no charges for the 3 months as promised.
All went well. Only thing you have to remember is, if you make online payments, the money gets credited to your Credit Card account. You have to call the helpdesk and get that transferred to your merchant account (new account to track your loan). Else it will show as not paid. Remember that.
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Old 7th December 2009, 15:16   #5
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Yup - be aware of all the charges and when banks call you for such offers keep needling them and they will spill out the charges. Most callers will keep telling you about the interest-free aspect and after a little needling will throw in the processing charges. On further questioning they will say that there are nominal handling or service charges. On further questioning they will tell you what this actual amount is.
This is just a trick - be careful!
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Old 7th December 2009, 15:33   #6
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HDFC is calling its customers for a similar loan on credit card upto 50% of the credit limit on a 1.25% per month ratio. Once they called me for a '1% monthly rate' offer for 3 days. So far I havent got into it, but on emergency purposes, it would be a help, considering the process, delay and approval for other loans.
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Old 7th December 2009, 15:37   #7
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Is there any commitment charge mentioned anywhere?
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Old 7th December 2009, 17:18   #8
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1% per month sounds ok, doesn't it?

How does 12% per annum sound?

That's the rate they should be quoting.

Weazely words, using small numbers when they should be using much larger ones.

Here's another thing with the credit card market. Credit card loans, in other countries, are unsecured. You borrow the money, but the bank holds nothing of yours. This is a much higher-risk form of lending for the banks, which is the reason behind high interest rates. Here, they ask for security too! Axis bank, for a one Lakh credit limit, wanted a lien on a one-lakh FD.

Anyway, my Axis bank (in my book, the bank that can't get anything right) credit card has just been cut up and they have been told to close the account: there have been problems almost every time I have tried to use it, and it is supposed to be a convenience, not a nuisance.

Sample phone call:

"Please give us your date of birth"

"mm-dd-yy"

"That is not what we have on our system"

"I am not likely to get my birthday wrong"

"You have to tell us what is on our system"

"How can I tell what mistake you have made"

"Sorry, we cannot talk to you unless you tell us the date of birth on our system"



Yes... they sorted it... but should I ever have had to have that conversation? No way!

Last edited by Thad E Ginathom : 7th December 2009 at 17:24.
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Old 7th December 2009, 17:25   #9
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Only place you get free lunch is at your parents home

outside, there is no free lunch.
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Old 7th December 2009, 19:27   #10
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Oh and one thing I forgot to mention
Golden rule : Never use a credit card of the same bank you have a savings account with.
so, if you have a savings account with SCB, do not ever use its credit card or the loan. If there is a dispute, they will grab your money immediately, from the savings account and then you have fun going through help desk.
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Old 7th December 2009, 19:39   #11
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Quote:
Originally Posted by Guna View Post
Hi
I was getting calls from SCB agents saying they are offering free cash based on the credit limit and there is no interest for 6 months, other the the nominal process fee of Rs.99.
Initially I was treating this as another way to pull me in to the trap and charge some hidden fee later. Eventually I decided to try it out and accepted the offer. I was told that I will recive a letter and the DD and only after seeing the terms I can encash the DD.
I recieved the letter and the DD, and I saw that interest rate was mentioned as 0% as promised, but, the service charge is 10%!
I will be calling the Bank to seek clarification and probably retrun the DD.
Is this the new way of the banks to catch the unsuspecting prays?
You had my number, you could have atleast called me to enquire.

The offer made is right, but the catch is 10% upfront charges
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Old 7th December 2009, 22:16   #12
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Thanks guys

@phamilyman, there is no committment fee

I called the bank helpline with the intention of canceling the loan but I am told that the service charge of 10% is not applied to the entire loan amount but only to the processing/transaction fee. So, it is 10% of Rs 99 and later if there are interests getting charged for non payment (after 6 months) etc, it is 10% of that amount.
I am still wondering what is the catch.

Last edited by Guna : 7th December 2009 at 22:21.
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Old 8th December 2009, 11:42   #13
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Quote:
Originally Posted by Thad E Ginathom View Post
"You have to tell us what is on our system" "How can I tell what mistake you have made" "Sorry, we cannot talk to you unless you tell us the date of birth on our system"
This is 100% eligible to the jokes thread! Recently I realised this kind of fun can happen even in the US.

Quote:
Originally Posted by Seeler_Rebeiro View Post
Never use a credit card of the same bank you have a savings account with.
I always use my HDFC card where I have also my savings, but I make sure its not my main operating account, to be on the safe side. My wife's collegue has her salary acc with icici and the credit card of the same too. Recently her 2 months salary was swallowed by the system, on enquiry, the bank told her that the oustanding due was more than 5 times of the salary and had used the savings, without informing her. The saddest part was, salary gets credited and within few mts it was shown as paid to the card ! Good lesson to learn.
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Old 8th December 2009, 15:58   #14
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Quote:
Originally Posted by shajufx View Post
My wife's collegue has her salary acc with icici and the credit card of the same too. Recently her 2 months salary was swallowed by the system, on enquiry, the bank told her that the oustanding due was more than 5 times of the salary and had used the savings, without informing her. The saddest part was, salary gets credited and within few mts it was shown as paid to the card ! Good lesson to learn.
I always had the credit card and savings account from the same bank as it is easier to pay the credit card bills but never faced this problem, even when I had overshoot the due date etc. Unlesss someone has opted for the auto payment option, how can they transfer the money without the consent of the account holder? This must be done under some special circumstances.

Last edited by Guna : 8th December 2009 at 16:05.
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Old 8th December 2009, 16:07   #15
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Even I had received the same offer from SCB. I found the offer to be too good to be true and finally did not accept it. May be there is no catch - but we cannot be certain unless we see all the terms and conditions which they only send with the DD.

I have used their 3 months interest free cash (they charge 2% processing fee - which is their interest) offer a couple of times. I made sure to pay back everything before 90 days.
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