Monday, September 25, 2023

Credit Card Rule: RBI’s new rule regarding credit card, will reduce the debt burden

RBI Credit Card Payment New Rule: The central bank has directed banks and card issuers regarding credit card bill payments. Saying that the minimum amount due should be calculated in such a way that there is no negative loan amortization. RBI in one of its master directions has said that unpaid fees, levies, and taxes shall not be clubbed for interest. The Reserve Bank of India had given instructions to implement this rule from 1 October 2022.

If you understand this RBI rule in more simple language, banks and card issuers will be required to. Fix a minimum balance so that the total outstanding amount can be repaid within a reasonable period of time. Also, applicable fees, penalties, and taxes on the outstanding amount will not be capitalized in subsequent statements. That is, once the balance amount is paid, the balance fee will not have to be paid.

How the new credit card rule will work 

As per this new rule, if you pay the minimum amount, interest will be charged on. The balance amount and subsequent transactions till the previous amount is paid. Calculation of interest on credit card dues (number of days counted from. The date of transaction x outstanding amount x rate of interest per month x 12 months)/365.

For example, if your bill date is the 10th of the month and you have spent Rs.1,00,000 on the 1st of the month. Your due date is the 25th of the month and you pay the minimum amount of Rs.5,000. Now for the next bill, the outstanding Rs 95,000 interest will be calculated for 40 days, which will be the time from the date of expenditure to the date of the second bill.

What do experts say 

Experts say that if you continue to pay the minimum amount every month, interest can be charged on interest every month. In such a situation, it is also possible that due to high interest, the amount of interest in the coming months will be more than the minimum account. And if the card issuer ensures that the minimum payment covers the interest accrued on the outstanding balance as well as the contribution towards it. So it can charge 10 percent of the minimum payment due amount and 5 percent of the minimum balance due instead.

Read More: Best Cashback Credit Card: People don’t know this trick, but using a credit card like this can earn you 10,000 rupees per year.

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