- The Bank will Charge no Interest on the Purchases made during the Moratorium Period.
- The Interest will only be charged on the bill amount if you haven’t made any payment during the interest-free period.
If you're searching for what is going to happen to your credit cards post the RBI's decision of giving a 3-month moratorium period for all retail borrowers in its monetary policy meet held on March 24-27, 2020, let's be told that it's going to cover you too. But, in your best interest, it is advisable to pay your bills on or before the due date as the interest will be accrued for three months and get combined together to form a tall amount at the end of the moratorium period. So, if you get your salary during this phase, look to pay off your bills. The moratorium, which was ending on May 31, 2020, has been extended till August 31, 2020.
The Reserve Bank of India has already clarified that neither the Cibil Score will get affected nor the extra late payment fees will be imposed if an individual skips the credit card bill payment for 3 months. But the bank will continue charging the applicable interest on the outstanding amount of the credit card bill. So similarly the bank will not charge any interest on the purchases made during the moratorium period but it will charge interest on the bill amount if it is not paid during the interest-free period that is the grace period.
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No Interest will be Charged on the Purchase Made During Moratorium
You are allowed to purchase anything using your credit card and no interest will be charged on the purchases but once the bill is generated at the end of the month and you haven’t cleared the bill before the due date or during the interest-free period then the bank will charge applicable interest on your bill amount. Let’s take an example to understand when the bank will charge the interest.
|2-3-20||Spend on Groceries||INR 5000||Zero|
|5-3-20||Paid the Regular Bills||INR 7000||Zero|
|9-3-20||Booked Flight Tickets||INR 6000||Zero|
|15-3-20||Online Purchases||INR 8000||Zero|
|21-3-20||Spending at Refilling Stations||INR 3000||Zero|
|1-4-20||Final Credit Card Bill||INR 29000||Zero|
Not a single amount of interest will be charged on all the purchases you made during the month and even on the date when the Bill is generated. Later on, when the interest-free period expires and you haven’t paid the credit card bill then the bank will charge the applicable interest on the amount of INR 29000. But while you are making purchases, not a single interest will be charged.
You can choose the Moratorium Period for skipping the payment for 3 months but once the grace period expires, the bank will start charging interest on the sum of INR 29000. It will continue for 3 months and the interest will keep on adding.
Benefits of 3 Months Moratorium Period
- You can save some extra funds to fulfill your necessities by not paying the credit card bill for 3 months.
- Skipping the payment of the credit card bill for 3 months won’t affect your CIBIL Score.
- The bank will not impose any late payment fees if you clear the credit card bill after 3 months.
- You’ll get enough time to pay the credit card bill.
Reasons for Not Choosing the Moratorium Period
- You will have to pay an extra amount as an interest after the expiration of 3 months.
- The payment of the credit card bill is only delayed by 3 months and not waived off.
Now, it is clear that no interest will be chargedon the purchases made through the credit card. The interest is only chargeableon the monthly bill amount if you don’t clear the bill within the grace period.So, you must enjoy making purchases from the card without worrying about anyextra interest. In the moratorium period, no interest is chargeable on the purchasesbut the interest is chargeable on the whole bill amount.