Don't borrow on your credit card! Here's why

Shashikanth asked, Recently many banks are offering life time free credit cards. How far are they true ?

Harsh Roongta answers, I did not exactly understand the question but if it means whether any joining fee or annual fee is not chargeable on this card ever, then the answer is yes. However, interest will be payable if the full amount due is not paid and regular fees such as cash withdrawal fee and late payment fee, etc, are also payable.

Kuljit asked, Hi, Which is the better CC in which I can pay back in longer time duration with minimal interest on the amount?
Harsh Roongta answers, Credit cards are not a great vehicle to borrow and interest costs are fairly high. If at all you want an unsecured loan, you should go for unsecured personal loans. In fact, if you can possibly give security such as financial assets (life insurance policies with good surrender values, savings certificates, mutual fund units, bonds, jewellery, etc), you will get the cheapest loans.

yajnas asked, Hi I am sanjay, which loan should I opt personal loan or loan on existing credit card, in which one I will get lower interest rate?

Harsh Roongta answers, If you have a good repayment track record on your existing credit card and also have good provable income papers, then personal loans will definitely be cheaper. Even otherwise, personal loans will normally be cheaper than a loan facility provided on a credit card.

ajey asked, i have some deposits maturing in july. for the interim period is it a good idea to get balance transfer and loan on my credit card?

Harsh Roongta answers, For borrowings for very short periods such as your need, credit cards may be the most convenient mode to borrow since you can pay back the loan at any time without incurring any prepayment charges. But before you consider borrowing on your credit card, please check out the option of raising an overdraft facility against financial assets

Raghu asked, Hi, Please explain the limitations of ICICI Personal loans. Let me know the alternate bank that is offering the personal loans with BEST guidelines/terms & conditions. Thank you.

Harsh Roongta answers, There is no such thing as one single 'best loan' or the 'best bank' for a loan. If that was true, all other banks and all other loans would stop doing business. Depending on who you are and what your needs are, you will need to look around for the best possible loan.

Maruthi asked, Is there any guidelines by RBI to Credit Card Companies about the processing charges that will be charged by Banks for services like Balance Transfer, EMI etc..?

Harsh Roongta answers, Not that I am aware of.

mohan asked, I need to take a personal loan in May I know what are the interest rates ?

Harsh Roongta answers, This is a myth that all banks have interest rate charts of their personal loan rates. The interest rates for a personal loan vary widely between 12% to as high as 55%. It all depends on your income profile, your employment profile, your qualifications, your existing track record of repayment and existing borrowings, etc. The best possible way to find the rate applicable to you is to look around among various banks and get them to compete for your loan.

sameer asked, Hello sir, Is there any problem if i pay my credit card bills by cash over the counter? My monthly salary is 13k. Is the bank liable to give receipt if i pay by cheque by dropping the same in the drop box?

Harsh Roongta answers, RBI has clearly directed that banks will need to compulsorily give stamped acknowledgements if the consumer does not wish to use the drop box facility and wishes to deposit/ make payment across the counter.

Debajit asked, Hello Mr.Harsh Roongta, is it an intelligent choice to go for CC or personal loan keeping in mind its high interest rates comparing with inflation, home loan rates, own bank fixed deposits? Secondly, is there anyway a credit card user can see his credit rating in India? Thank you in advance.

Harsh Roongta answers, Credit cards are not a good instrument to borrow money. Detailed reasons have already been given in response to an earlier question.

As far as consumer access to his credit rating is concerned, currently the consumer has no access to credit bureau records. However as per the draft rules bought out by RBI in April 2006 consumers will be allowed to get access to their credit bureau records. You will have to wait for the RBI to come out with the final rules.

loanoloanoloanmela asked, credid card ...when the banks say the exorbitant interest is for the loan being UNSECURED...why don't they reduce the interest as and when they receive the payments promptly? Are they charging huge rate to good customers in order to compensate for bad and delinquent customers ?

Harsh Roongta answers, The increased interest rate is not just for its unsecured nature. It is also for its flexibility -- you can borrow and repay at any time -- as well as convenience. You are right. Today, good consumers are paying for the bad ones. The emergence of credit bureaus will allow this cross subsidisation to stop.

d_nagori asked, You are not answering me Harsh, I have asked number of times - Pls tell me whether HDFC Titanium credit card is good?

Harsh Roongta answers, I don't think this forum is good for passing judgements on specific products of specific banks. Please use the credit card comparator on our site for taking your own desicion.

ashishanuda asked, harsh, ICICI has offered me 18% interest on revloving credit on gold card is it feasible??

Harsh Roongta answers, Possible. But please remember there will be service tax on that interest, making the actual cost work out to more than 20% (after adding 12.24% soon to be increased to 12.36%) after the charging of service tax.

Srath123@rediffmail.com asked, I want to apply for the credit cards.Would you please let me know what are the procedure?

Harsh Roongta answers, Just go on your chosen bank's website and apply.

Senthil asked, Hi Harsh, What is meant by the CASH BACK offer? how is it helpful and which bank is better in this regard?

Harsh Roongta answers, CASH BACK means that banks credit a specified percentage of your spends (normally 1%) made in specified categories.