HEY! CONSUMER, BEWARE OF THESE ‘OFFERS’
‘Zero transaction charges on your current account’, ‘free sms banking’. As a customer, you need to check these. Read the fine prints (of course, you need magnifying glass!). Thanks to media – particularly electronic – consumer awareness level is at an all time high. Yet we come across cases where he has been taken for a ride. Consider this: a smartly dressed young man greets you & offers a ‘free for life credit card’ from a reputed bank. He also gives you a gift! Within seconds, he will ask you for your driving license, pan card, salary slip and your mobile bill – all this time, he would engage you in asking seemingly trivial questions and gathering information about you. They are trained in this line, make it look so convincing you find it difficult to decline the offer. You get your credit card as assured very soon. And a bill, little later!! It is then that you start running after them, trying to reach them through the ‘help(less)line’ that will be busy for ever. You are in for an eternal struggle to resolve the issue. More than the bill, it is the mental agony of having to deal with it that takes toll on your mind.
The debate on whether to opt for fixed rate or floating rate on your housing loan is endless. The borrower is confused about the whole thing. While some suggest fixed rate, others argue – quite rightly – that ‘fixed rate’ will not remain so for the entire period of loan. Bankers always insert a clause that fixed rate is subject to review periodically and this period varies from bank to bank. Generally, fixed rate would be reviewed once in 3 years. So, opting for fixed rate offers no insulation against future hikes in interest rates! A fixed rate is always higher than floating rate by about 0.25% to 1.50% depending on tenor of loan. If you opt for fixed rate, you will be paying higher interest from day one of your taking the loan. And the insulation against future interest hike is only up to the next review period. On such a review, interest rate might go up or down depending on the market situation. If you opt for floating rate which is linked to the bank’s BPLR, you are subjecting yourself to the volatility of interest rate which again depends on market conditions. Every change in bank’s BPLR will entail similar change in the interest rate on your loan. If you look at the past three years, interest rate has shot up several times, upsetting the budget of borrowers – particularly those who have opted for floating rate. Therefore, it is a difficult call really for the borrowers to decide which way to go – fixed or floating. More often, you find people taking such crucial decision based on what his friend or neighbor has opted for! It would be wise to do some research on the offers. Information is just a click away. All you need is the inclination to indulge in it. Where is the time to do all that, is the common refrain. What they don’t realize is that a little bit of research now would guard them against future shocks. Just as it is mandatory for the service provider – like bank, insurance, communication et al - to render efficient service, the consumer on his part needs to be equally responsible in his business relationship. Update pass books regularly. Check the transactions and notify any discrepancy immediately. Diarize the due dates of EMIs, premium payment, statutory payments. Be organized. This will help you a lot.
To sum up, next time when you have to deal with an ‘offer’ of a smartly dressed young man (lady), do some ‘due diligence’ on the ‘offer’ just as they do ‘due diligence’ on you! Because, behind every ‘offer’, there is a ‘price tag’ – by way of ‘T&C apply’!!
‘Zero transaction charges on your current account’, ‘free sms banking’. As a customer, you need to check these. Read the fine prints (of course, you need magnifying glass!). Thanks to media – particularly electronic – consumer awareness level is at an all time high. Yet we come across cases where he has been taken for a ride. Consider this: a smartly dressed young man greets you & offers a ‘free for life credit card’ from a reputed bank. He also gives you a gift! Within seconds, he will ask you for your driving license, pan card, salary slip and your mobile bill – all this time, he would engage you in asking seemingly trivial questions and gathering information about you. They are trained in this line, make it look so convincing you find it difficult to decline the offer. You get your credit card as assured very soon. And a bill, little later!! It is then that you start running after them, trying to reach them through the ‘help(less)line’ that will be busy for ever. You are in for an eternal struggle to resolve the issue. More than the bill, it is the mental agony of having to deal with it that takes toll on your mind.
The debate on whether to opt for fixed rate or floating rate on your housing loan is endless. The borrower is confused about the whole thing. While some suggest fixed rate, others argue – quite rightly – that ‘fixed rate’ will not remain so for the entire period of loan. Bankers always insert a clause that fixed rate is subject to review periodically and this period varies from bank to bank. Generally, fixed rate would be reviewed once in 3 years. So, opting for fixed rate offers no insulation against future hikes in interest rates! A fixed rate is always higher than floating rate by about 0.25% to 1.50% depending on tenor of loan. If you opt for fixed rate, you will be paying higher interest from day one of your taking the loan. And the insulation against future interest hike is only up to the next review period. On such a review, interest rate might go up or down depending on the market situation. If you opt for floating rate which is linked to the bank’s BPLR, you are subjecting yourself to the volatility of interest rate which again depends on market conditions. Every change in bank’s BPLR will entail similar change in the interest rate on your loan. If you look at the past three years, interest rate has shot up several times, upsetting the budget of borrowers – particularly those who have opted for floating rate. Therefore, it is a difficult call really for the borrowers to decide which way to go – fixed or floating. More often, you find people taking such crucial decision based on what his friend or neighbor has opted for! It would be wise to do some research on the offers. Information is just a click away. All you need is the inclination to indulge in it. Where is the time to do all that, is the common refrain. What they don’t realize is that a little bit of research now would guard them against future shocks. Just as it is mandatory for the service provider – like bank, insurance, communication et al - to render efficient service, the consumer on his part needs to be equally responsible in his business relationship. Update pass books regularly. Check the transactions and notify any discrepancy immediately. Diarize the due dates of EMIs, premium payment, statutory payments. Be organized. This will help you a lot.
To sum up, next time when you have to deal with an ‘offer’ of a smartly dressed young man (lady), do some ‘due diligence’ on the ‘offer’ just as they do ‘due diligence’ on you! Because, behind every ‘offer’, there is a ‘price tag’ – by way of ‘T&C apply’!!
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