Money, without the sales talk
The truth about cards, loans and rent
Three honest calculators: the minimum-due trap, prepay your loan or invest, and buy or rent. Plain-language answers and a chart, worked out on your device.
Last updated: Reviewed by IndiaDigital editorsSources
Your card bill
Paying only the minimum
30 years 5 months · ₹2,61,433 interest
You would pay ₹3,11,433 in all for a ₹50,000 bill, if you never use the card again.
Paying ₹5,000 a month
1 year 2 months · ₹17,499 interest
You save ₹2,43,934.
Better still: move the balance to a cheaper personal loan or a card EMI, and stop using the card until it is cleared.
How it works
- Minimum due: each month we add the card’s finance charge (typically 3.5% to 3.75% a month, which is 42% to 45% a year) plus 18% GST on that charge, then take your payment. Banks charge on the daily balance from the purchase date and you also lose the interest-free period, so the real cost is usually a little higher.
- Prepay or invest: we compare your wealth at the end of the original loan tenure. Prepay keeps the same EMI and shortens the loan, then the freed EMI is invested; invest puts the lump sum to work and keeps the loan running.
- Buy or rent: the buyer’s wealth is the home’s value minus the loan left. The renter invests the down payment and buying costs on day one and, each month, whatever the buyer spends beyond rent. Selling costs and tax on gains are left out.
- All results are estimates from the numbers you enter. Returns are not guaranteed; past returns do not predict future ones.
Questions people ask
What happens if I pay only the minimum due?
You avoid the late fee, but the rest of the bill carries interest of around 3.5% to 3.75% a month plus GST, and new purchases lose their interest-free period. A ₹50,000 balance paid at 5% minimum takes years to clear and can cost more in interest than the original amount.
Should I prepay my home loan or invest?
Prepaying earns you a guaranteed return equal to your loan rate. Investing can earn more, but with risk. If your expected after-tax return is not clearly above the loan rate, prepaying is usually the calmer choice. Keep an emergency fund first, and remember that home-loan interest deductions apply only in the old tax regime.
Is buying a house better than renting?
It depends on price-to-rent, how long you stay, the loan rate, how fast prices and rents rise, and what you would earn by investing instead. In many Indian cities, yearly rent is only 2% to 3% of the price, which often makes renting and investing cheaper in money terms. Buying also gives security that a calculator cannot price.
Do banks charge GST on credit card interest?
Yes. GST of 18% applies to finance charges, late fees and most other card fees in India, so the effective charge is higher than the rate printed on the statement.
Sources
Last checked: