Planning to withdraw cash on your credit card? Watch out for the expenses

You could end up paying not just a steep rate of interest but a hefty cash advance fee as well. In several cases the cost of the loans exceeds 36% on an annualised basis

Rahul, 24, landed himself a new job in Delhi at a multinational company. He had just shifted to the new city from Mumbai, but was soon soon hit a cash crunch brought about by a variety of reasons.

The money he got from his parents was exhausted, pay day was still very far away and, to make matters worse, his landlord began pestering him for some more money for the house he’d already paid advance rent and deposit.

All this meant that he needed some quick cash that he was finding really difficult to raise. So he decided to use his new credit card to sort out everything. Just go to the ATM, insert your card, punch in the PIN number and amount and bingo! You get the money you want so badly.

It was only a few weeks later that he realised that easy liquidity comes with some unpleasant side effects. When Rahul received his monthly credit card bill, he was shocked to see the charges — interest and processing fee — that the card issuer had bunged him with.

Here are some of the charges such loans attract:

Cash advance fee: This fee is charged every time a credit card is used to withdraw cash and typically varies from 2.5% to 3% of the withdrawn amount, subject to a minimum amount of Rs 300 to Rs 500.

Finance charges:

You will also have to pay a finance charge on cash advance fee at a rate similar to that charged on the withdrawn amount. It will be levied from the date of withdrawal till the amount is paid back in full.

Interest:

This is charged at the monthly percentage rate and will be levied from the date of transaction till the repayment is made in full.

Article Source : BS

Axis Bank cuts savings bank deposits rate to 3.5% on deposits below Rs 50 lakh

Bank to continue to pay 4% interest on deposits of above Rs 50 lakh

economy policy: Private sector lender Axis Bank has reduced interest rate on savings bank accounts by 50 basis points to 3.5 per cent for deposits up to Rs 50 lakh.

However, the bank will continue to pay four per cent interest on deposits of above Rs 50 lakh. The new interest rates will be effective from August 8, Axis Bank said in its filing with the BSE.

Axis Bank’s action follows the decision by State Bank of India (SBI) and Bank of Baroda to reduce rates on savings deposits. SBI was the first bank to cut the savings deposit rate by 50 basis points to 3.5 per cent for deposits up to Rs 1 crore. Bank of Baroda had cut the rate to 3.5 per cent on deposits of up to Rs 50 lakh.

While Kotak Mahindra Bank retained the existing rates of five per cent on savings deposits up to Rs 1 lakh and 6 per cent on deposits between Rs 1 lakh and Rs 1 crore, it reduced the rate on savings deposits of amounts above Rs 1 crore and up to Rs 5 crore from six per cent to 5.5 per cent. The interest rate on deposits of over Rs 5 crores was retained at 5.5 per cent. Karnataka Bank, too, had tweaked the interest rate on savings deposits.

SBI Managing Director Rajnish Kumar had said that it was a choice between increasing MCLR (marginal cost of funds-based lending rate) or reduce the savings bank rates.

A hike in lending rates would have meant an increase in equated monthly instalments (EMIs) for retail, small and medium enterprises, and farm loans. SBI opted to cut savings rate, helping to maintain MCLR at the existing level, he said.