Calculation of Finance Charge by HDFC Credit Cards

Many of you still don't quite understand how Finance Charge is calculated on balance amount by credit card companies. We found that HDFC Credit Card is one of the better ones which can explain it very clearly.

Here is a step by step guide on how Finance Charges are calculated.

• Assume you have Zero balance on your card to begin with.
• You now make a Biz Bazaar household purchases worth Rs 15,000 on April-10th. Then on 18th April you buy a Mobile Phone worth Rs 5,000. Lets say your billing cycle ends on the 18th of every month. So your April-18th credit card statement lists Total Dues as Rs 20,000 and Minimum Payment of Rs 1,000.
• Due Date for making entire payment or at least minimum payment is May-2nd.
• Lets assume you miss the May-2nd deadline. This is very bad to your credit history. Creditors think you don't even have the money to make minimum payment. Missing Minimum Payment will attract you additional fees known as Late Payment Fees.
• If you make minimum payment by May-2nd then their is no Late Fees in your next credit card bill.
• Assume you have not made a minimum payment by May-2nd and on 12th May you pay Rs 2,000.
• You purchase groceries worth Rs 1,000 on May-14th.
• On May-15th you make a payment of Rs 15,000
• Thus on your May18th Bill you will see the following,

1. Late Payment Fees of Rs 350
2. Interest on Rs 15,000 @ 2.95% pm [whatever your APR is] from 18th April to 12th May.
3. Interest on Rs 13,000 @ 2.95% pm from 13th May to 15th May
4. Interest on Rs 5,000 @ 2.95% pm from 18th April to 15th May
5. Interest on Rs 3,000 @ 2.95% pm from 16th May to 18th May
6. Interest on Rs 1,000[Fresh Purchase] @ 2.95% from 14th May to 18th May

Add Service Tax on Late Payment Fees + Interest.

Total outstanding = Rs 4,000 [Rs 3,000 from Previous Bill and Rs 1,000 Fresh Purchase] + Service Tax+ Late Fees + Interest = Rs 5,000 say.

Thus you are un-necessarily paying a hefty fees of Rs 1,000 to credit Card company on just Rs 4,000 outstanding balance.

Always pay at least minimum fees by due date. Still better, pay off the entire debt by due date to avoid any FEES!!!!

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CashBack Credit Cards -- Consumer Tips Part-I

How does a little extra cash in your pocket sound? Maybe you could use it for a nice dinner out on your birthday, a movie night with that special someone, a rainy day shopping spree, college savings for you or your child, or even to pay down your mortgage. Keep dreaming because if you had a little extra cash you could use it for anything--donate it to your favorite charity, compensate for high gas prices, pay down other debt, or buy a discounted airline ticket. For all these reasons, and the thousands of others you can dream up, a cashback credit card may be the perfect fit for your wallet.

CashBack Credit Cards are great IF...

...you don't carry a balance from month to month. Credit cards offering cash back tend to have a higher interest rate, which usually wipes out any reward you might receive if you carry a balance. According to CNNMoney.com statistics, interest rates on reward credit cards are, on average, approximately 1% higher than standard no-frill platinum credit cards. So if you plan to carry a balance your best deal is to look for the credit card with the lowest interest rate. Keep your financial health in mind and don't be lured by cards offering rewards that end up costing you more money.

President of Money Magic, Inc. and money educator Mary Ann Campbell (CFP) says, "The way for cash back to be a good option is if you are truly managing your credit cards where you are literally earning cash back but not turning around and paying it back in any other form." The cash you receive from a rebate card should be viewed as a reward for all the hard work you have done in lowering your credit card debt and paying your balance in full each month.

Which Cash Back Credit Card to apply?

And if you happen to be wondering how credit card companies can pay you cash for free, here's the answer-the merchants you shop at are charged a fee for every credit card purchase. So let them pay for you to get a well deserved reward!

You don't carry a monthly balance BUT...

...not all cards are created equal either. You will need to do some shopping around and maybe even pull out your calculator or utilize our online calculators to determine the best card for your spending habits and lifestyle. Consider it an investment of your time with the payout being a little monetary freedom. Here are some things to keep in mind:

Is there an annual fee? This is a huge red flag. With all the different cash back reward cards that do not charge an annual fee, you should not have to settle for one that does. If a card with an annual fee seems too good to resist, then it is time to do some calcuations in order to compare the rebate to other cards without an annual fee.

Which Credit Card to apply?

Does the card require you to carry a balance or offer enhanced rebates if you carry a balance? This is another red flag because any interest you pay will most likely be more than the amount of cash you get back. Determine how much you will charge for the year, how much it will cost you in interest, how much you will pay in fees, and how much you will receive in cash. If you do end up still receiving more cash than you pay in interest and fees, then you need to compare it to other cards to see which will give you the greatest rebate. But remember, reward cards tend to have higher interest rates and carrying a balance on any credit card is generally not advisable.

back to Credit Card Help                                                  CashBack Credit Cards -- Consumer Tips Part-II

LIC Credit Card and Credit Card Protection program

LIC credit card holders can now report loss of any of their cards from anywhere in the world to a 24-hour helpline launched by LIC Cards Services. 

LIC Cards Services Ltd has launched Card Protection Plan for its credit card customers in partnership with CPP Assistance Services which will safeguards all of the LIC cardholder's payment cards - credit, debit and ATM cards. 

The members can also be able to register their non-financial cards such as store cards, loyalty and membership cards. 

Credit Card Security

Besides these, customers will be able to retrieve important details on lost/stolen documents like passport, PAN and driving license also 

To avail the new service, customers would need to purchase a membership plan offered by LIC and register their cards with CPP.

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Deutsche Bank Airline/World miles credit card

Deutsche Bank is set to launch a credit card that will allow the users to redeem points — or flight miles — accumulated by booking flight tickets using the card — named WorldMiles credit card — against airline tickets. The WorldMiles credit card is offered in two variants, Platinum and Signature. 

To use the service, card holders need to log on to their accounts — created automatically once the card is issued — on myworldmiles.com and buy tickets from any airline (international, domestic, full service as well as low cost) through the portal. 

In addition to ‘FlightMiles’ accumulated on tickets purchased on the portal, the user also earns ‘SpendMiles’ for booking the tickets through the card. These SpendMiles, too, can be redeemed against flight tickets. Spends made on the card for purposes other than air travel also yield ‘SpendMiles’. On the Signature variant, every Rs 100 spent will fetch you three SpendMiles — two in the case of Platinum. These miles can be collected in addition to the points you would earn as per the airlines’ frequent flyer programmes. 

While such schemes offered by airlines restrict the redemption to their tickets bought from the carrier, this one is airline-agnostic — you can redeem the miles accumulated against tickets of any airline. It also allows you to accumulate miles when you fly low-cost airlines which, barring a few, do not run frequent flyer schemes. You can accumulate the miles if you use the card to book tickets for your family members, friends or associates as well. 

Which Airline Credit Card to apply?

There are certain limitations, though. Since the miles earned can be redeemed only against flight tickets, those looking for a diverse rewards programme may not find this offering appealing. The points earned on an airline’s frequent flyer programme cannot be clubbed with the miles earned via this credit card. That is, assuming a traveller has accumulated 500 points on the airline’s frequent flyer programme and another 500 miles on the WorldMiles credit card — and assuming, hypothetically, that 1000 miles entitle a card holder to one free ticket — the two cannot be clubbed together to buy one ticket. The miles accumulated from the card and the airline’s scheme will have to be redeemed separately. 

While the joining fee for the Platinum variant is Rs 5,000, one will have to shell out Rs 7,500 for the Signature card. In addition, the annual maintenance fees amount to Rs 1,500 and Rs 2,500, respectively. 

The card and the programme are operational on a pilot basis, and the bank is planning a full-fledged launch shortly.

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