Minimize Interest Cost SBI Credit Card

How To Reduce Interest Cost Through SBI Credit Card

If you want to reduce interest cost and you own an SBI credit card, then this article is for you.

Due to this prevailing pandemic situation, the Indian government has provided the moratorium scheme which is applicable on loans & credit cards, however, there was a disadvantage in the scheme related to the interest cost.

As per RBI guidelines on COVID-19 Regulatory Package dated March 27, 2020, the moratorium benefit has been extended till August 31, 2020.

  1. In the moratorium scheme for a credit card you will be enrolled for the moratorium if you chose not to pay the Minimum Amount Due to your card up to 2 days before the next statement date.
  2. The benefits of Moratorium will then be available for that statement period and no late payment would be payable for that period.
  3. EMIs (if any) on your card will be deferred for the enrolled period/statement cycle and
  4. Your account will not be reported to the credit bureaus as being in default.

Your account will be given due credit for the repayments made during this period, and will be adjusted against your outstanding, to help you reduce interest cost.

However there was one disadvantage of the scheme or you can say this disadvantage was greater than all the advantages are clubbed together, i.e.

  • It is only a deferment option and not a concession or waiver since interest would continue to accrue for this time period, as usual.

In case you are facing cash flow difficulties and you are not able to pay your credit card (other than SBI) dues on time and you also don’t want to incur the huge interest charges then an SBI (State bank of India) credit card will help you up to a certain extent to manage your cash flows by reducing the interest burden.

Also read: ITR Filing: ITR 1&4 Forms for AY 2020-21 released

How this will happen?

SBI provides some benefit facilities on its Credit card, those facilities are named as below:

1. Balance Transfer (BT)

Balance Transfer (BT) facility on SBI Card enables the card holders to transfer their outstanding credit balances from any other credit card, issued by a different bank, to their SBI Card at lower rates of interest.

Example: Assuming you own credit card of ICICI bank and SBI, Amount payable as of 31St July against ICICI bank CC- Rs 40,000/-, Interest in case of non payment @3.5% per month, for 2 months= 40,000*3.5%*2= Rs 2800 so the total amount payable will be 40,000+2800= Rs 42,800/-

Since you have an SBI card, you can reduce interest charges via the BT facility Tenure- 60 days (Maximum), ROI= 0%, Processing fees= 2% or 199 (whichever is higher), The total amount payable after 60 days will be Due amount + Processing fees with the GST+ Interest cost= 40000+ 944+0= Rs 40,944/-

Net cash saving= 42,800 – 40,944= 1856 Rs and cash flow managed for 2 months as well.

Advantages of Balance Transfer

  • Consolidate your multiple balances into one by transferring all of them to SBI Card.
  • Easy payment options.
  • Lower interest rates.
  • Due to the impact of COVID-19, Balance Transfer payment will be made via NEFT, directly to your other bank credit card account, instead of cheque. Stay at home, stay safe.
  • Transfer the outstanding on your other bank’s Visa Credit Card to your SBI Card within 3 working days.
  • If you use any card other than Visa, you will receive a cheque within 5 working days.

2. Balance Transfer on EMI (BT on EMI)

Balance Transfer on EMI (BT on EMI) facility on SBI Card enables the card holders to transfer balances from any other credit card to their SBI Card at low rates of interest and pay back in EMIs.

Example: Assuming you own credit card of ICICI bank and SBI, Amount payable as of 31St July against ICICI bank CC- Rs 40,000/-, Interest in case of non payment @3.5% per month, for 3 months= 40,000*3.5%*3= Rs 4200 so the total amount payable will be 40,000+4200= Rs 44,200/-

Since you have an SBI card, you can reduce interest charges via BT On EMI facility- Tenure- 3 Month, ROI= 0.75%, Processing fees= 1.5% or 199 (whichever is higher), Total amount payable for 3 months will be Due amount + Interest cost+ Processing fees with GST= 40000+ 900+708= 41,608/-

Net Interest cost saving per month= 3.5%-0.75%= 2.75% and the total saving for 3 months will be 44,200-41,608=2592 Rs

Advantages of Balance Transfer on EMI

  • Repay in 3 months or 6 months.
  • Continue enjoying interest free period on purchases with BT on EMI.
  • In the event of pre-closure of BT facility (before the completion of tenure) a pre-closure fee of 3% of the outstanding principal would be levied on the account.
  • Due to the impact of COVID-19, Balance Transfer payment will be made via NEFT, directly to your other bank credit card account, instead of cheque. Stay at home, stay safe.
  • If you transfer the outstanding balance from a Visa Credit Card, the BT amount will be transferred within 3 working days.
  • If your other bank card is not a Visa card, you will receive a cheque of the BT amount
  • within 5 working days.

3. Flexipay

With SBI Card, you can convert your transactions into easy installments. Make big purchases and enjoy paying back with our flexible pay back options.

Advantages of Flexipay

  • Convert your transactions into Flexipay within 30 days of the purchase.
  • Any transaction of Rs. 500 or above can be converted to Flexipay.
  • Minimum booking amount of Rs. 250

Visit SBI for more details: https://www.sbicard.com


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