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Old 10th October 2012, 21:31   #751
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Default Re: The Credit Card Thread

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Originally Posted by racingmachine View Post

The only worry I have with swiping CC is if the amount is not converted to emi by the cc company.
You can confirm with them, prior to the purchase.
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Old 11th October 2012, 01:43   #752
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Default Re: The Credit Card Thread

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Originally Posted by racingmachine View Post
Is it wise to swipe the credit card for purchasing a new two wheeler?

I have a HDFC credit card with 1 lac limit which i want to swipe for full amount for purchase of new bike. Do they easily convert it into EMI's(12 months, 18 months, etc)? or is it a risk-they may or maynot convert the amount into EMI's?

I want to avoid 2 wheeler loan because I do not want the hassles of hypothecation. Another option is going for a personal loan for 1 lac & repayment in 12-18 months. What would you guys suggest?
I am somebody you would call "Uncle ji", when we meet. So pardon me, If I sound offensive. Who the hell buys a 2 wheeler with a credit card? You are thinking of personal loan for a 2 wheeler? Why? Shouldn't you be questioning your financial choices?

Anyways since you asked, and I am on a credit card thread, here are your answers according to what I know.

1. Dealer will not accept full payment in CC, unless you pay him transaction fee (2% or above). Or he might not give you discount, freebie because you are paying by CC.

2. A credit card with 1 Lac limit doesn't automatically mean you can swipe your card for 1 Lac. Credit card companies are generally very generous in allotting high limit. It does not necessarily mean they would allow you to do a 1 Lac transaction in a shop. The transaction approval happens based on a algorithm. If that algorithm determines you to be a credit risk in that particular case, your transaction will be declined.

3. Please read the logic above. A similar logic determines whether you are EMI worthy or not. And it also determines for how long that EMI will be allowed to run. There is a chance that transaction is approved, but EMI request is denied or it's period shortened to 3 months or something. Also, 5 years back it was not possible to pre-determine if EMI would be allowed.

4. The interest free EMI of CC is not free. They charge admin fee, processing fee and god knows what fee. Don't forget to account for these charges in your calculation.

Last edited by carbookie : 11th October 2012 at 01:46.
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Old 11th October 2012, 12:21   #753
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Default Re: The Credit Card Thread

I just got a call from a company saying they are a debt management company which can be used to settle credit card unsettled amounts. I have an unsettled amount with an ICICI card for Rs. 6000. I have not used the card for an year and half, and the original principal amount due was a rs.1000. After that they started adding default interest which i disputed. Then i got very irritated, and its just gone into a tangent, and I have not really bothered with them - since I haven't taken any loans otherwise, this has not come back to haunt me, but still, I would like to settle it off.

This company said said that they charge Rs. 1600 and will settle the debt for the principal amount due, and will get me an NOC from the Bank and any CIBIL implications will be taken care of. I couldn't get the name of the company, but was wondering if any one has used such services before, worried about it being a scam.

Or should i just call ICICI customer care and be done with it, pay whatever 5-6k and be done with it.
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Old 11th October 2012, 13:28   #754
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Default Re: The Credit Card Thread

Quote:
Originally Posted by racingmachine View Post
Is it wise to swipe the credit card for purchasing a new two wheeler?

I have a HDFC credit card with 1 lac limit which i want to swipe for full amount for purchase of new bike. Do they easily convert it into EMI's(12 months, 18 months, etc)? or is it a risk-they may or maynot convert the amount into EMI's?

I want to avoid 2 wheeler loan because I do not want the hassles of hypothecation. Another option is going for a personal loan for 1 lac & repayment in 12-18 months. What would you guys suggest?
Possible to use the swipe facility of entire limit to purchase the bike. But, before making the payment, speak to the CC company and mention your intent and see if they allow entire limit to be swiped?

Generally, in HDFC bank, after a certain limit purchase is made ( 25K or 30K, not sure which one) you get an instant call from their customer care asking if YOU made that purchase. It's just a confirmation call which i feel is a great feature from them.

Secondly, check in advance if they have an EMI conversion option. If yes, ask them total EMI amount and all charges

Once above is confirmed then you can purchase the bike using your credit card ( but, I agree with carbookie, its rather odd product to buy with a CC)

Personal Loans to buy a bike, I highly DO NOT recommend as interest % would be a ridiculously high (17%-22% )
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Old 11th October 2012, 13:46   #755
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Default Re: The Credit Card Thread

Quote:
Originally Posted by racingmachine View Post
Is it wise to swipe the credit card for purchasing a new two wheeler?
Quote:
Originally Posted by mobike008 View Post
( but, I agree with carbookie, its rather odd product to buy with a CC)
I bought my Bullet Electra on credit card. Swiped the entire amount 1.15L through card and then converted a part of it into EMI. Both SBI and HDFC(the cards that I have) have this facility. HDFC was more interested in selling a loan of that amount. But SBI's plan was cheaper. Over all buying it on Credit Card is definitely expensive due to the various charges-
-processing fee for converting to EMI
-Additional 2% charged by Showroom
- Simple interest charged on the amount
But the convenience is immense as there is no paperwork and no waiting. No hypothication of the vehicle to the bank hence no Dehypothication issues later on. The interest they charge is simple interest and that means that it is almost the double of what you pay in reducing interest loans(from banks). e.g. 9% Simple interest charged is almost equal to 18% reducing if you compare the actual money paid in interest. So don't get misled by interest rates to assume that its cheap.
Keep the tenure as short as possible.

Last edited by huntrz : 11th October 2012 at 13:51.
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Old 11th October 2012, 13:48   #756
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Default Re: The Credit Card Thread

Quote:
Originally Posted by carbookie
Who the hell buys a 2-wheeler with a credit card? You are thinking of personal loan for a 2 wheeler?
Agree that personal loan is a bad choice to buy a 2-wheeler due to the higher interest rates. But I did not really understand why it is wrong to buy a 2-wheeler with a credit-card. Especially if the person has cash available to pay off the full amount when it figures in his next bill. And provided the dealer does not ask 2% extra on the charged amount.

Or were you implying that it is not a good financial decision to buy a bike on CC if the dealer charges an extra 2% surcharge and then revolve the debt over months/years paying crazily high interest charged by the bank ?

I hate carrying cash in my wallet and if a transaction can be done by CC (without any surcharge) I opt for that irrespective of the amount being low or high. Then when the bill comes, pay off the whole thing - no revolving-balance business ever.
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Old 11th October 2012, 13:49   #757
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Default Re: The Credit Card Thread

Quote:
Originally Posted by mobike008 View Post
Possible to use the swipe facility of entire limit to purchase the bike. But, before making the payment, speak to the CC company and mention your intent and see if they allow entire limit to be swiped?

Generally, in HDFC bank, after a certain limit purchase is made ( 25K or 30K, not sure which one) you get an instant call from their customer care asking if YOU made that purchase. It's just a confirmation call which i feel is a great feature from them.

Secondly, check in advance if they have an EMI conversion option. If yes, ask them total EMI amount and all charges

Once above is confirmed then you can purchase the bike using your credit card ( but, I agree with carbookie, its rather odd product to buy with a CC)

Personal Loans to buy a bike, I highly DO NOT recommend as interest % would be a ridiculously high (17%-22% )
Hi. Thanks for the reply.

Actually if you go for a two wheeler loan from any bank(public, private), or NBFC, the interest rate for two wheeler ranges from 15%-21%, so it is almost the same whether you go for personal or a two-wheeler loan. With personal loan, i avoid the hassles of HP, which personally, i prefer.

I talked to the dealer and they accept payment by CC, with 2% transaction fees additional. I need to check with CC company for EMI tenure.

Anyways, i will do all due diligence from my end before taking a final call.
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Old 11th October 2012, 14:04   #758
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Default Re: The Credit Card Thread

Quote:
Originally Posted by manolin View Post
I just got a call from a company saying they are a debt management company which can be used to settle credit card unsettled amounts(...)

Or should i just call ICICI customer care and be done with it, pay whatever 5-6k and be done with it.
The problem with disputed payments is that you need to take care of the pretty quickly otherwise the disputed amount builds up to crazy levels. If it's a simple case of a bad entry that you disowned early on and some random late payment/interest charges after that, my suggestion is call up ICICI, talk to someone (they're usually not bad, ask for a manager), explain the situation and see what develops. Chances are they will reverse the original charge or worst case you can offer to pay the original amount if they waive off the late charges/interest.

Do NOT by any means bring a third party into the equation. You don't know what their MO is- you may be inviting only more trouble on yourself. It's too small an amount to bother.
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Old 11th October 2012, 14:51   #759
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Default Re: The Credit Card Thread

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Originally Posted by noopster View Post
The problem with disputed payments is that you need to take care of the pretty quickly otherwise the disputed amount builds up to crazy levels. If it's a simple case of a bad entry that you disowned early on and some random late payment/interest charges after that, my suggestion is call up ICICI, talk to someone (they're usually not bad, ask for a manager), explain the situation and see what develops. Chances are they will reverse the original charge or worst case you can offer to pay the original amount if they waive off the late charges/interest.

Do NOT by any means bring a third party into the equation. You don't know what their MO is- you may be inviting only more trouble on yourself. It's too small an amount to bother.

Keep in mind that CIBIL is now the be all and end all of credit reports. As a person who has worked in financial institutions for the last ten years, I would suggest you clear thsi amount ASAP and also get a written letter from them as proof of clearig the outstanding. This will continue to show in your CIBIL report even in the future, but that letter will clear up any credit issues. SO keep that letter safe and clear that outstanding as soon as possible.

Also dont take the help of middle men. They are just out to make 1-2k in between and will do nothing to help you in any way. Just approach a bank branch and speak to the concerned people.
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Old 11th October 2012, 14:52   #760
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Default Re: The Credit Card Thread

Quote:
Originally Posted by racingmachine View Post
Actually if you go for a two wheeler loan from any bank(public, private), or NBFC, the interest rate for two wheeler ranges from 15%-21%, so it is almost the same whether you go for personal or a two-wheeler loan. With personal loan, i avoid the hassles of HP, which personally, i prefer.
Is it? Didnt know the 2-wheeler loan is that expensive?

I bought my Bullet last December for 10% or something in that range from HDFC Bank ( Will confirm exact % after checking my documents)

OT : These dealers in between who settle debts make lot of money. My friend's brother who lives in Canada does this as business there and lives in a palatial house and drives a Range Rover, Cadillac Escalade, BMW X5 and BMW 3-Series

Last edited by mobike008 : 11th October 2012 at 14:54.
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Old 11th October 2012, 21:40   #761
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Default Re: The Credit Card Thread

Quote:
Originally Posted by manolin View Post
I just got a call from a company saying they are a debt management company which can be used to settle credit card unsettled amounts....
This company said said that they charge Rs. 1600 ....
Or should i just call ICICI customer care and be done with it, pay whatever 5-6k and be done with it.
Quote:
Originally Posted by mav2000 View Post
...Also dont take the help of middle men. They are just out to make 1-2k in between and will do nothing to help you in any way. Just approach a bank branch and speak to the concerned people.
+1 to that.

Way back in 2004, I facilitated a settlement for my module lead who had to leave for onsite at a very short notice and had a pending case with his credit card company. I talked to the bank straight away. I did not even have any authority letter or anything from my module lead. His original amount was ~11k which had now turned into ~23k.

I must have spoken with the cencerned executive 20 times or more and each time I brought down the sum from 23k. Finally we agreed to settle everything for 12k. Not much extra since the original amount due was 11,xxx/-. I paid him a cheque and collected the NoC and couriered it to my module lead's father who was at his native place.

Funny thing happened when the executive and I met, the first and last time, to settle things. He brought with him a sheet in which there were names of several defaulters from my company. He wanted me to help him settle with these guys as well. I did recognise some names from the list, but feigned ignorance.
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Old 12th October 2012, 10:16   #762
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Default Re: The Credit Card Thread

^^^I have negotiated similarly for a team-member who at one time (not anymore I believe) had outstandings with many banks on his range of CreditCards. And we did manage to whittle down the bloated outstanding amount to a reasonable one. So yes, the best way is to pick up the phone and talk to the bank direct instead of having some goons as the middlemen who will only cause more trouble than good.
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Old 12th October 2012, 12:05   #763
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Default Re: The Credit Card Thread

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Originally Posted by supremeBaleno View Post
Agree that personal loan is a bad choice to buy a 2-wheeler due to the higher interest rates. But I did not really understand why it is wrong to buy a 2-wheeler with a credit-card. Especially if the person has cash available to pay off the full amount when it figures in his next bill. And provided the dealer does not ask 2% extra on the charged amount.

Or were you implying that it is not a good financial decision to buy a bike on CC if the dealer charges an extra 2% surcharge and then revolve the debt over months/years paying crazily high interest charged by the bank ?

I hate carrying cash in my wallet and if a transaction can be done by CC (without any surcharge) I opt for that irrespective of the amount being low or high. Then when the bill comes, pay off the whole thing - no revolving-balance business ever.
Short term debt should finance short term obligations
Long term debt should finance capital "assets"
That's how business operate.

Sure, you may be great at revolving money, and managing cash, and thus use short term debt to finance long term obligation - but sometime, somewhere - a slight mistake can ruin the whole game.

Quote:
Originally Posted by huntrz View Post
I bought my Bullet Electra on credit card. Swiped the entire amount 1.15L through card and then converted a part of it into EMI. Both SBI and HDFC(the cards that I have) have this facility. HDFC was more interested in selling a loan of that amount. But SBI's plan was cheaper. Over all buying it on Credit Card is definitely expensive due to the various charges-
-processing fee for converting to EMI
-Additional 2% charged by Showroom
- Simple interest charged on the amount
But the convenience is immense as there is no paperwork and no waiting. No hypothication of the vehicle to the bank hence no Dehypothication issues later on. The interest they charge is simple interest and that means that it is almost the double of what you pay in reducing interest loans(from banks). e.g. 9% Simple interest charged is almost equal to 18% reducing if you compare the actual money paid in interest. So don't get misled by interest rates to assume that its cheap.
Keep the tenure as short as possible.
Sorry to nitpick but what exactly do you mean by "reducing interest"???
Do you mean that on 1st month the interest rate is say 9%, and next month it becomes 8%, and so on ... ?

And in case you are taking about the fact that in 1st month the interest is on full amount, and the next month interest is on [full-1st month's payment] - then that's how interest is ALWAYS calculated.

You don't pay interest for amount that you've already paid back!
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Old 12th October 2012, 13:28   #764
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Default Re: The Credit Card Thread

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Originally Posted by alpha1 View Post

And in case you are taking about the fact that in 1st month the interest is on full amount, and the next month interest is on [full-1st month's payment] - then that's how interest is ALWAYS calculated.

You don't pay interest for amount that you've already paid back!
Alpha1, that's correct. That was what I meant by reducing loans. Interest is charged only on the outstanding principal for the day(Daily reducing) or the month(monthly reducing). That's the way it is supposed to be calculated always but it is doesn't always happen that way in practice.

Many NBFC and all credit card companies don't follow this method. They use the formula (Principal+SimpleInterest for the tenure)/tenure
Check this-
http://www.sbicard.com/services_for_..._0_011818.html

They clearly mention it is a flat interest rate of 14.5% on entire amount. This should be equivalent to about 27%(approx) interest if it is calculated the way banks do.
The initial EMIs are against the Interest component entirely. Once entire interest has been realized then the principal repayment starts. That's how they calculate outstanding principal for foreclosure. Totally skewed against the customer!!!


I don't know about all the NBFCs but a guy from a renowned NBFC was offering me SimpleInterest(Flat interest) loan in probiking showroom saying that this the way it goes for bike loans etc.

So everyone, please keep your eyes open when taking any kind of loan.

Last edited by huntrz : 12th October 2012 at 13:33.
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Old 12th October 2012, 16:21   #765
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Default Re: The Credit Card Thread

Quote:
Originally Posted by alpha1
Short term debt should finance short term obligations
Long term debt should finance capital "assets". That's how business operate.

Sure, you may be great at revolving money, and managing cash, and thus use short term debt to finance long term obligation - but sometime, somewhere - a slight mistake can ruin the whole game.
Isn't short/long term debt/liability relative and dependent on one's financial ability ? I can understand a car needing to be bought on finance, but is a bike something you would call a long term obligation (or want as one) ? Unless it is an R1 that I am buying. If not for the credit-card, I would pay the full amount by cheque, instead of doing documentation for loan, paying interest, removing hypothecation etc. I am talking as an individual, not as a business, where they might do it differently.
P.S.: I mentioned about avoiding the CC trap called "revolving card balance" - did not say that I revolve money.
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