| That slow killer in your wallet
Do your bit for society. Use plastic, reads a very cleverly worded advertisement of a credit card, where the card issuer promises to contribute a sum to a well-known charity, if you spend money through its cards.
The bank also makes it very convenient to pay off the money thus spent in easy installments by allowing you to pay only 5% of the total amount due.
The only fly in the ointment is the interest that the bank charges if you do not pay off the full amount on the due date. The average interest rate charged on the amount revolved (bankerspeak for the amount allowed to be rolled over and paid later) is around 34% per annum.
I am sure you have wondered why the average rate of interest on credit cards is around 34% per annum when the average rate on a home loan and personal loan is around 10% and 18%, respectively? There are several reasons for this.
Realty bite: ICICI ups home loan rate by 1%
MUMBAI: ICICI Bank, India's second largest bank, on Saturday raised the interest rate on its home loans by 1%, a hike that will crush new buyers with a minimum interest rate of 12% on loans. The decision follows the Reserve Bank of India's decision on Friday to increase the rate at which it lends to banks.
This is the fifth increase in ICICI's rates since May last year, when housing loans were going for only 8.5%. The latest hike will increase the equated monthly instalments payable by Rs 60 for every Rs 1-lakh loan taken for a tenure of 15 years. ICICI has also increased the broad floating reference rate that determines other consumer loans like car and personal loans to 12.75%. The benchmark rate at which it will lend to business is also up a percentage point to 15.75%.
PNB considering cut in exposure to personal loans
New Delhi, April 9 (PTI): Punjab National Bank, the country's second-biggest public sector lender, plans to cut exposure to personal loans, including home finance, to bridge the gap between higher credit offtake and lower deposits. "The bank is concerned over widening gap between resource mobilisation and credit expansion and will soon take decisions on curtailing credit exposure by reducing personal loans," PNB Chief General Manager U S Bhargava said. The bank's asset liability committee (ALCO) will meet later this week to decide on the issue, he added. PNB's credit exposure is growing at 28 per cent as against a growth of 20-22 per cent in resource mobilisation. The bank had earlier indicated it could increase the Prime Lending Rate (PLR) by 25 to 50 basis points and interest rates on all types of personal loans, including housing loans.
Consumers feel the heat as interest rates rise
NEW DELHI: For most, the interest rate increase has been a bolt from the blue. If you've taken the plunge and splurged recently on that luxe 4,000-sq ft penthouse apartment, you've been hit really hard. And if you've been window-shopping to upgrade your car or for expensive gizmos, chances are you've put your plans on hold. ET commissioned a survey to global market research company Synovate immediately after Monday's interest rate hikes were announced by housing finance companies and banks to take a peek into the mood of the nation. And you may have guessed it right, the results are definitely a dampner on the urge to splurge. In fact, such has been the reaction to the latest round of hike that 71% of those surveyed feel that it will hit their household expenses, while another sizeable chunk (71%) feels that they would not opt for a housing or personal loan now.
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