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RBI Moratorium: Postponing credit card dues will mean paying exorbitant interest costs

Use the flexibility only if you have no funds to pay your dues

April 03, 2020 / 02:26 PM IST

Last Friday, the RBI (Reserve Bank of India) gave banks the option of deferring the dues of credit card users. They now have the option of postponing their upcoming payments until May 31. Several banks have laid out steps for making use of the moratorium. Credit card dues from March 1 to May 31, 2020 will be eligible for the deferment.

The moratorium is merely a deferment, and not waiver. So, your outstanding dues will continue to accumulate interest during the moratorium or until you clear the bills. In fact, banks themselves have reiterated this aspect in their communication to customers. It could snowball into an unwieldy sum by June, since interest rates on credit card dues are upwards of 40 per cent per annum.

Moreover, if you hold multiple credit cards with the same bank (such as your own plus an add-on card), opting for moratorium on one card’s outstanding could affect all other cards’ dues too, depending on your bank’s policy. “If you opt for moratorium on any one credit card, it will be applicable on all credit cards held by you,” says an ICICI Bank statement issued on April 1. Put together, the interest payable across cards could well be a nightmare to deal with once the moratorium ends, if you are habituated to running huge credit card bills.

With the total credit card outstanding as on February 28, 2020 topping Rs 1.1 trillion, the number of people opting for a moratorium is bound to have a considerable impact on individual finances as well as the banking system over the next two months.