Your Queries: How can I reduce interest burden on my credit card bill?

Updated: Mar 04, 2020 9:08 AM

Credit cards charge a high interest rate on overdue amounts, to the tune of 24% to 40% per annum depending on the service provider and card taken.

money, casConsidering a total outlay of Rs 85 lakh, you may get a loan of Rs 60 lakh.

By Chaitali Dutta

I have 1 lakh due on a credit card for which I am paying interest every month. Can I reduce interest burden by converting the due into EMI?

—Rahul Gupta

Credit cards charge a high interest rate on overdue amounts, to the tune of 24% to 40% per annum depending on the service provider and card taken. You are paying only the interest amount every month on this Rs 1 lakh. You need to pay additional amount every month to reduce your principal outstanding. Even in the EMI option with the service provider, the interest component will remain. Pay off this credit card overdue amount as soon as possible. You may consider taking a personal loan from your bank and paying off the credit card loan.

I want to buy a property in Pune after one year. I am 52 years with six years for retirement and my wife is also working. How much loan will a bank give me as the value of the property will be around Rs 80 lakh plus registration?

—P K Sankaran

Considering a total outlay of Rs 85 lakh, you may get a loan of Rs 60 lakh. That will have an EMI of around Rs 1.25 lakh. If the aggregate monthly, post tax, in-hand salary of yours and your wife’s, is about Rs 2.5 lakh, you are good to go. Alternately, if your income is lower, then you have to arrange for a larger margin money and you can take a lower quantum of loan.

If I pay two extra EMIs every year on my Rs 40-lakh loan for 20 years, how much interest can I save?

—Deepak Arora

Considering additional payment of two EMIs at the end of the year from the time that you take the loan, you will pay interest of Rs 28.86 lakh instead of Rs 41.79 lakh. This is a saving of Rs 12.93 lakh interest. Your loan will get over in 175 months instead of 240 months.

My 28-year-old daughter wants to buy a flat. She wants to take loan and save tax. Registration will be in joint name of my wife, daughter and I. Will there be any problem when she gets married?

—Rakesh Prakash

I do not foresee any problem in owning this property in joint name. Let your daughter be the first holder. If the eligibility of the home loan is only on her income, she can claim the full benefits for income tax purposes.

The writer is founder, AZUKE Personal Finance Advisory (www.azuke finance.com). Send your queries to fepersonalfinance@expressindia.com

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Common mistakes to avoid while investing in mutual funds
2Budget 2021 Expectations: What FM may do on direct tax front
3Income guaranteed for life! Canara HSBC Oriental Bank of Commerce Life Insurance launches new plan