- Latest Popular Stories, Instablogs Community by Paisawaisa

Credit cards making life easier

Shweta Singh — Tue, 22 Jul 2008 07:05:01 +0000

Plastic money has become one of the most important possessions of upwardly mobile urban Indian consumer. Credit card works great when you want to spend, or you need immediate cash but these aren’t without their flip side too. The phenomenon called credit cards is is the new born baby in the Indian financial market and has acquired mammoth proportions in the recent times. The origination of plastic money can be credited to the UK over 40 years ago. Barclay Card was the first pre-paid plastic money to be launched in 1966. This plastic money operated like a charge card with the bill having to be paid off in full each month and had the credit limit of 100 pounds only.

Today the there is a dramatic change in the scenario. Talking of the prevalent situations of India, one can see that there are about 1,500 credit cards to choose from. The numbers have intensified the competition among card providers, thus leading to a fragmented market catering to card users across the classes, financial backgrounds and different credit histories. Almost anyone can be a credit card owner as these are perceived as the ones which make life more convenient. .

Credit free period associated with the credit cards helps you in not paying interest charges. The best use of plastic money is to-buy goods or services on credit for a stipulated period(known as grace period) and then paying off the amount in full when it’s due. No interest charges need to be paid if the card user repays the money within the time. The convenience of not paying interest charges is available on the balance amount till your due date is only due to credit free period available in your plastic money. Without a free period, the concerned bank may impose a finance charge from the date you use your card or from the date each transaction is posted to your account.

Car financing interest rate; the puzzles solved now

Shweta Singh — Thu, 17 Jul 2008 10:02:21 +0000

Availing a car loan to own the dream car is often the most cumbersome and complicated process. The lenders generally charge a higher rate of interest and the car loans become taxing on the monthly budget of a person if he does not balance the monthly installments properly. Both fixed and floating interest rates are associated with the car loans. The person should choose one of them according to his risk-bearing capacity.

The major difference between these two types of interest rates is the variability in monthly payment. When the car loan plan is the fixed interest rate scheme, your EMI does not alter throughout the tenure of repayment. However, in case of floating interest rate, the rates of interest fluctuate according to the situation of the financial market. The interest rate calculation in both the cases is done taking the basis points into account. the payable rate varies with the variation of basis points.

Banks engaged in car financing often change the effective rate by changing the Benchmark rate or Mark-up rate from time to time. When there is a change of 1 percent in the the benchmark rate of 12 percent, the effective interest rate also changes by 1 percent. In this way, the benchmark rate of 11 percent in addition to the mark up rate of 4 percent makes the effective rate 15 percent and this effective rate is lower than the original effective rate. However, banks use their own method to correct the interest rate. Banks generally prefer to change the mark up rate only and maintain the benchmark rate at a constant level. This ensures that the borrower pays a fixed mark up rate for the loan tenure. The borrowers are advised to be careful in choosing the right type of interest rate associated with car financing. They should conduct a small market research on the Internet before making a final decision to avail a car loan.