During the lockdown period when the whole nation was at rest, the government had announced 3 months moratorium period in which the credit cardholders can skip their payment of credit card bills. The moratorium was from March to May. Later, the finance minister announced the extension of the moratorium from June to August. But there were some individuals who haven’t opted for the moratorium period. So, the Finance Minister has announced an interest Cashback on Credit Card Interest Charged During Moratorium Period. You must see how the interest cashback will apply to your credit card and credited to your account.
Interest Cashback on Credit Card Bills
As per the Finance Minister, the difference between the Compound Interest and the Simple Interest on the outstanding amount for 6 months will be returned to the credit cardholder’s account as a Cashback. Everyone knows that the amount of compound interest is high in the comparison with simple interest. The bank will calculate the difference for the interest of 6 months only that was the moratorium period and will return it to the user. The moratorium period was from March 2020 to August 2020.
How Does this Interest Cashback Scheme Works
You can see how the value of the interest is different in calculating compound interest on the principal amount and simple interest on the principal amount. The difference between these two methods used for charging interest will be credited to your account as cashback.
Compound Interest on ₹1 Lac for 6 Months @ 15%
You can see the final interest amount that you will have to pay after the expiry of the moratorium period if the bank implements compound interest.
|Months||Interest||Total Payable Amount|
Simple Interest on ₹1 Lac for 6 Months @ 15%
You can see the final interest amount that you will have to pay after the expiry of the moratorium period if the bank implements Simple interest.
Simple Interest= Principal x Interest x Time/ 100
The Simple Interest on ₹1 Lac for 6 months at the rate of 15% will be ₹7500.
After seeing the above calculations it is clear that the compound interest is more than the simple interest. So, the difference between the Simple Interest and the Compound Interest is ₹238.22. The bank will credit ₹238.22 as a Cashback to the credit card holder’s account.
Terms and Conditions of Cashback of Interest on Credit Card
- The interest cashback will be given on the interest charged for the period of March 2020 to August 2020.
- The outstanding amount of the individual must not exceed ₹2 Crores.
- This scheme will earn you the difference between the Compound Interest and Simple Interest for the period of 6 months.
- The banks will get reimbursement for the Cashback given to the credit cardholder from the central government.
Banks that Give Cashback Benefits
You can enjoy interest Cashback on Credit Card Interest Charged During Moratorium Period from the following banks.
- Public and Private Sector Banks
- Co-operative Banks
- Regional Rural Banks
- All India Financial Institution
- Non-banking Finance Companies (NBFCs) having a membership to an RBI-recognized self-regulatory organization
- Housing Finance Companies (HFCs) registered with the RBI or National Housing Bank