The most famous loans are
- Car/bike
- Home
- EMI on gadgets
- Personal loan
You pay interest on the loan, which means you lose money every month on the borrowed money.
But only the credit card is a positive loan, because you can earn interest on the loan amount. Understand the whole concept before making your decision.
Credit card companies give up upto 50 days interest free period. For that period, you can earn interest on the money in your savings account.
For example - you spend 50,000 per month from a credit card which otherwise you spend through debit card or cash, right?
But now, 50,000 would be in your savings account and you will earn interest till the day you pay the credit card bill.
You can earn interest up to Rs 400 (50,000*6%*50/365)
I have calculated the amount for 50 days from a bank like Kotak which offers 6% interest on saving accounts.
You can increase your interest income by investing into higher return investment options like stocks and mutual funds.
If you make 12% returns on 50,000 then you would earn Rs. 800 per month, sufficient to pay the annual fees of the credit card if any.
Tip - Go for shopping on the next date of your credit card statement generation date to get a max interest free period.
Double Power Tip - Always pay your credit card bill before the due date otherwise you would lose all your savings in paying interest to the credit card company.
Next email will be completely loan management.
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