Your example of interest calculation is very misleading. You mentioned that it is a fresh account opened on 10th June with 2 purchases in billing cycle amounting to 800. How can you charge interest before the bill is generated as it is customer's very first bill ? Interest should be charged on any outstanding balance which customer is unable to pay after the due date of statement. Thus if customer is unable to pay 800 after 15th july then his interest accrual starts from this date and reported in next statement.
Great explanation. You could have touched upon the calculation of minimum due, interest and the total outstanding amounts. Hope that's covered in another video. Thank you
From this what I understand is that, if the cardholder pays the full amount on a due date no interest is charged but if they pay the minimum amount there is an interest component. Am I right?
Yes, if full balance is paid. Interest is usually waived. Customers who continue to pay full balance are called as "Transactors". Interest is deferred/waived for them. Customers who pay minimum due or less are called as "Revolvers", for whom interest is levied.
Hello, first of all thanks for the great explanation. I have a question please, why have you added 5 Rupees in Tx1 (800) , is this the on-hold interest which will be considered after due date? if yes, then why there is no interest added for Tx2 (1000 rupees)?
Dear Hesham, Please do NOT read much into the interest component given in the example. Since the presentation was for Delinquency, i did not think on the interest aspects much. However to your point, - Interest will be usually deferred on first statement (so that Rs. 5/- should be deferred), not billed - In the statement#2, since no payment is received. Interest of that Rs. 5 + Interest in the current cycle for 800 and 1000 will be billed. Thanks, Satish VT.
@@LearnPayments Thank you for your prompt response. 1- So by 30/6 outstanding balance should be 800Rs 2- By 15/7, since no MAD was paid then interest will be calculated + delay fees, let's say 5Rs interest and 2Rs delay fees. 3-25/7 new 1000tx 4- 30/7 still no payment, so statement#2 outstanding balance is1807Rs (807+1000) 5- 30/8 assuming no MAD again, then i will be charges 1807+ interest % (1807) + new delay fees Am i correct?
Hi Hesham, on 30/07 - Interest will be calculated and billed for - Interest on 800 for 30/06 cycle and 30/07 and billed - Interest on 1000 for 30/07 cycle Lets chat over email, should you have any further Qs. learn.payment.2020@gmail.com :) Thanks
Nice video thanks sir I have a question I paid credit card payment due past date by 6 days like 23rd due and paid on 29th does it affect my cibil score because heard payment past due 30 60 90 reported to cibil. Please help me sir.
Your example of interest calculation is very misleading. You mentioned that it is a fresh account opened on 10th June with 2 purchases in billing cycle amounting to 800. How can you charge interest before the bill is generated as it is customer's very first bill ? Interest should be charged on any outstanding balance which customer is unable to pay after the due date of statement. Thus if customer is unable to pay 800 after 15th july then his interest accrual starts from this date and reported in next statement.
Great explanation. You could have touched upon the calculation of minimum due, interest and the total outstanding amounts. Hope that's covered in another video. Thank you
From this what I understand is that, if the cardholder pays the full amount on a due date no interest is charged but if they pay the minimum amount there is an interest component. Am I right?
Yes, if full balance is paid. Interest is usually waived. Customers who continue to pay full balance are called as "Transactors". Interest is deferred/waived for them.
Customers who pay minimum due or less are called as "Revolvers", for whom interest is levied.
@@LearnPayments So revolvers are the one that helps the card company make money. Great information, really appreciate your effort.
Hello, first of all thanks for the great explanation. I have a question please, why have you added 5 Rupees in Tx1 (800) , is this the on-hold interest which will be considered after due date? if yes, then why there is no interest added for Tx2 (1000 rupees)?
Dear Hesham,
Please do NOT read much into the interest component given in the example. Since the presentation was for Delinquency, i did not think on the interest aspects much.
However to your point,
- Interest will be usually deferred on first statement (so that Rs. 5/- should be deferred), not billed
- In the statement#2, since no payment is received. Interest of that Rs. 5 + Interest in the current cycle for 800 and 1000 will be billed.
Thanks,
Satish VT.
@@LearnPayments
Thank you for your prompt response.
1- So by 30/6 outstanding balance should be 800Rs
2- By 15/7, since no MAD was paid then interest will be calculated + delay fees, let's say 5Rs interest and 2Rs delay fees.
3-25/7 new 1000tx
4- 30/7 still no payment, so statement#2 outstanding balance is1807Rs (807+1000)
5- 30/8 assuming no MAD again, then i will be charges 1807+ interest % (1807) + new delay fees
Am i correct?
Hi Hesham,
on 30/07 - Interest will be calculated and billed for
- Interest on 800 for 30/06 cycle and 30/07 and billed
- Interest on 1000 for 30/07 cycle
Lets chat over email, should you have any further Qs. learn.payment.2020@gmail.com :)
Thanks
Perfect... so let's suppose user paid back rs 80 on 1 October.. how are the dues recalculated?
Nice video thanks sir I have a question I paid credit card payment due past date by 6 days like 23rd due and paid on 29th does it affect my cibil score because heard payment past due 30 60 90 reported to cibil. Please help me sir.
Since you have paid back, it should not have a major impact.
@@LearnPayments thanks sir will it reduce score mine is 784 now
Super explanation sir thank you
Awesome thanks sir