Credit card is a honey-coated pill

Credit card is a double-edged financial tool. And its irresponsible use can create unimaginable financial mess, very quickly.

     Print Edition: May 3, 2007

A credit card could be a honey-coated pill that has the potential to ruin, instead of curing, your finances (Plastic Power, 19 April).Though there are virtues of reward points and freebies, a one-time indiscretion could not only create a financial mess, but also destroy fortunes and mental peace.

Shakti Ahuja, e-mail

Credit card is a double-edged financial tool. As our story proved, an intelligent user can use it to get free loans for up to 54 days and be rewarded for that with something as big as a car. But its irresponsible use can create unimaginable financial mess, very quickly.

There are tax benefits on bank fixed deposits (FDs) under Section 80C of the Income Tax Act (Matters of Interest, 19 April). With the recent increase in interest rates on FDs, it is quite an attractive investment with a high degree of safety. FDs are now more attractive than post office schemes that offer 8% returns. The rate of interest for Varistha Bima Yojana is 9%, it should be enhanced to 10% as senior citizens could get this return from any bank fixed deposits currently on offer.

Mahesh Kapasi, New Delhi

The senior citizen savings scheme (SCSS) was introduced in 2004 at a time when the prevailing interest rates on bank deposits were less than 7% for senior citizens. They come with a 9% guaranteed return which is paid out quarterly. One can deposit no more than Rs 15 lakh for a 5-year tenure, exitable after the first year. The high interest rate FDs on offer today are for terms shorter than 5 years. FD rates can fall in a few months, whereas there is not much likelihood of interest cuts on SCSS.

The MONEY TODAY issue on the Budget was very informative specially the part on family budget (MONEY TODAY Basics, 22 March). I would like to know whether you can provide us access to calculators where one can evaluate personal budgets, SIP, retirement plans, etc.

Ram Lalwani, e-mail

Planning a family budget is not too difficult but can be rewarding. Small savings, done regularly, can create a big fund pool. Very soon we'll have a calculator ready on our website www.moneytoday.in. You can also submit your queries on a section called Prof Calculus. We will reply as soon as possible.

Trading in insurance is a very exciting concept (Cover for Sale, 19 April). But I feel it would benefit only those who have high insurance cover.

Prakash Mehra, New Delhi

Trading in insurance policies is still a nascent idea. How well you can trade your policy will depend on its tenure and the number of years it has been serviced for. Though a higher sum assured plan is likely to fetch a better rate, a lot will depend on the kind of policy it is—pure risk policy or a savings-linked plan.

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