FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Debit cards beat credit cards
Increasing adaptation of Point of Sale (POS) terminals to debit cards has raised the use of these cards as against credit cards.
In the previous 2 years, there has been a big change in the transactions occurring using debit cards as well as credit cards. Presently there are 19 crore debit cards in circulation as against .9 crore credit cards. Last year 80 lakh debit cards and 1 crore credit cards were cancelled or withdrawn from the circulation.
Ratio of debit cards amongst the total card spend has gone up to 30 % in FY 10 as against just 17% in FY 08.
B Amrish Rau, VP and country head, First Data Corporation, a joint venture with ICICI Bank for point of sales terminals said, “Consumers are warming up to using debit cards at merchant location as they perceive it to be a more secured and a hassle-free way of transaction. Moreover, increasingly, it is also used for settling e-commerce transactions.”
Maitri Kumar, marketing head, HSBC India said, “We focused on debit cards as we observed that a customer using a debit card actively is likely to have a deeper relationship with the bank. And, to engage the customer, we made them offers and ran usage campaigns which have worked well. We have an equal focus on both credit and debit cards as they meet different customer needs.
In the situation where credit limits have been trimmed, debit cards offer a good alternative as they provide purchasing ease and access to instant cash. But credit cards still make up a bulk of transactions and it is still a long haul for debit cards to beat credit cards.
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