Have you ever looked at your credit card statement and thought: maine rocket science ki course kab le li? Well, worry not..today, we'll demystify the calculation behind interest and other charges on your credit card under various scenarios. Let's dive right into it.
Consider Mr. X, a credit cardholder, with a transaction date of December 2nd, 2022, for Rs 11,000, and a statement date of December 7th, 2022.
His minimum due amount is 5% of Rs 11,000, which is Rs 550. The total amount due is Rs 11,000, with a due date of December 27th, 2022, and an interest rate of 42% per annum.
[CASE 1: FULL PAYMENT]
In Case 1, if Mr. X pays the full amount of Rs 11,000 by the due date, there would be no interest charges.
[CASE 2: PARTIAL PAYMENT BEFORE DUE DATE]
In Case 2, let's say Mr. A makes a partial payment of Rs 5,500 before the due date on December 22nd. His next statement date is January 7th, 2023, with no other purchases in the meantime. Here's how to calculate interest:
First, calculate the interest on the full amount from the date of purchase to the partial payment date (December 2nd to December 22nd): Rs 265.8.
Next, calculate the interest on the remaining amount (Rs 5,500) from the partial payment date to the next statement generation date (December 23rd to January 7th): Rs 94.9.
So, the total interest charged would be Rs 265.8 + Rs 94.9, which equals Rs 360.7.
[CASE 3: PARTIAL PAYMENT AFTER DUE DATE]
In Case 3, if Mr. X pays a partial amount of Rs 5,500 after the due date on December 29th, late charges and interest will apply. His next statement date is January 6th, 2023, with no additional transactions. Here's how to calculate the interest:
First, calculate the interest applicable for 28 days, from December 2nd to December 29th, on the full amount: Rs 354.4.
Next, calculate the interest charged for 8 days after the partial payment date (December 30th to January 6th): Rs 50.6.
The total interest charged in this scenario is Rs 354.4 + Rs 50.6, which equals Rs 405.
So there you have it, folks! Understanding how interest and charges work on credit card bills in India can help you manage your finances better. Remember, timely payments can save you from these extra costs. Stay financially savvy, and until next time, #SwipeSmart,SaveBetter
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