The only way…

The Consumer Unity & Trust society (CUTS) has failed in convincing the Reserve Bank of India to pull down credit card interest rates.

You would think that the CUTS would get some sense knocked into its stubborn head after repeated failures. After all, it has been at this for over five years.

And even it they are fighting the good fight on our (the credit card consumers) behalf, the complaints are not going to go away. Neither are the problems. Whether interest rates go down or not, we ARE paying those interest amounts, month after month.

And let’s face it, no amount of sound logic is going to convince any of us who are inveterate spenders to slow down and maybe, you know,..spend less.

So, this will be just an exercise in questionable logic.

Do you wonder why when you just have Rs. 10000 to spend in a month, you end up spending twice that? How is that even possible?

Today is your lucky day.

Your income defines your shopping budget. Let say your monthly income is Rs. 25000; after expenses, let’s say you have Rs. 10000 free and clear. This is spending money, folks! Here comes the catch – Your shopping budget is actually twice that Rs. 10000! How? You know you can back Rs. 10000 worth of shopping on your credit card with this spending money.

But when you are swiping that card, you know that you have a fifty day grace period before you gotta pay it back with interest. Guess what, your next pay will come in by then and with it comes another Rs. 10000 of spending money. So you are simply spending that money right now. Neat, eh?

Now, how do you do this smartly, so that you don’t default or end up paying exorbitant interest on all this?

Let’s say your credit card statement comes on the 5th of every month, and the due date of payment is the 25th of that month. Now, if you buy something on the 6th of the month, that purchase is listed only in next month’s statement.

Which means, provided you pay up by every due date, you can blow the spending money of this month as well as the next month AND pay zero interest on the amount swiped on the card.

You are welcome.

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