I applied for a credit card with three different banks in the last four months, but the application got rejected each time. Considering my clean credit history, I am surprised with the rejections. As far as my liabilities go, I have a home loan and have never defaulted on its repayment. On what basis do banks reject credit card applications?
The issuance of a credit card is governed by a bank’s own credit policy. The minimum income requirement also differs from one bank to another. Moreover, the repayment capacity (or debt coverage ratio) of the customer is considered after analysing his/her repayment obligations on existing loans and credit cards. A bank may decline a credit card application if the debt coverage ratio of the customer does not meet the minimum requirement of the bank. Hence, a customer may not be eligible for a new credit facility, despite a good credit history. Check with the respective banks their reasons for declining you a credit card.
I had deposited Rs 2 lakh last month in a 555-day term deposit, earning 7.5 per cent. Recently, the bank revised its rate upwards from 7.5 to 8.5 per cent. I want to take advantage of the higher interest rate and shift the deposit. Is it possible and is there any charge/penalty/tax liability attached?
A fixed deposit cannot be switched for a new one. You may, therefore, pre-close your fixed deposit and open a new one at a higher interest rate. However, your bank will levy a penal interest rate, which is usually at one per cent. The penal rate is reduced from the interest rate payable for the tenure till your fixed deposit has been pre-closed. For example, if your fixed deposit has completed 30 days and the applicable interest rate for a fixed deposit of the bank for 30 days is four per cent, your bank will pay interest at three per cent on your fixed deposit after deducting the penal rate.
When I got my account statement this month, I found out that despite a substantial amount in my account, the interest earned was lower than expected. I fail to understand the reason for the discrepancy. Can you help?
The interest rate and the methodology to calculate interest on balance in savings accounts are both governed by the Reserve Bank of India (RBI). The applicable rate of interest for a savings account is 3.5 per cent a year. With effect from April 1, 2010, RBI has advised banks to calculate the interest on savings accounts on the basis of daily balance as against the earlier system of calculating interest on the least balance maintained in the account between the 10th and the last day of a month. You may, however, request your bank to provide the details of the interest rate calculation on your savings account.
The writer is managing director & head, private & business clients (India), Deutsche Bank. Views expressed are his own. Send your queries to yourmoney@bsmail.in