Life beyond rate cuts in home loans

You do not earn any interest on the amount in the account, but get the benefit of a reduced interest burden on your total loan amount. While HSBC is giving this benefit only on its floating rate loans, Standard Chartered is offering it on both fixed and floating rates. This account can be used as part of an efficient strategy to prepay loans if needed. You can set a target savings amount, over and above your EMI and keep accumulating it in this account. Whenever the pre-payment opportunity arises (some banks allow once a year prepayment, some more often than that) you can prepay the loan and begin accumulating again.

Citi begins quasi-credit rating

In the absence of credit rating bureaus for customers, an informal kind of customer profiling has begun. Credit rating of an individual is when the financial institution looks at the credit history of the person to see his risk-profile and determine effective rates of interest on loans. A person who has regularly rolled the credit card bill forward, or made late payments or defaulted will be faced with a higher interest cost on borrowings than a person with a good track record. Citibank has already begun differential treatment of its credit card customers. Those who pay on time are faced with an interest cost of 1.25 per cent per month as against 2.95 per cent for other borrowers. Keep tracking this space for more updates on these issues.