Credit card default
John
(Querist) 15 September 2012
This query is : Resolved
I have incurred debt of about Rs.70k on my HDFC bank credit card. Bank converted it into EMI when I failed to pay even the minimum amount but they are charging a whopping interest+ penalty which works out to about 45% rate of interest. At this rate I would remain for ever their debtor. They are modern day "banias" of Prem Chand's famous Godaan novel. Bank says the credit card terms and conditions to which I am signatory empowers them to charge such high rate of interest. I feel trapped. What is the way out for me, legally.
ajay sethi
(Expert) 15 September 2012
1)when you used your credit card you were aware that interest charged is 3% monthly . it work out around 36% annually . if you fail to pay then bank charges penal interest .
2)in order to avoid debt trap it is better that you pay full amount of credit cARD BILL.
3)you get interest free credit of more than a month if you use it wisely . since you have defaulted in even payment of monthly minimum amounts interest will keep on mounting . sell off some assets and pay of entire dues .
4)if you have no income declare your self an insolvent .
John
(Querist) 15 September 2012
you mean such fleecing is legal because I had agreed to their terms and conditions. Banks pay interest of 10 to 12 pc on public FD. How can they justify charging 45pc. Can one argue on those lines and get relief from courts.
Sudhir Kumar, Advocate
(Expert) 15 September 2012
Meet the nearest available advocate who can argue that bank should charge the same interest which they are paying.
John
(Querist) 15 September 2012
Not same but also not so steep.There must have been such cases. Any idea what did the courts hold.
Guest
(Expert) 15 September 2012
Dear John,
Your subsequent query about how the bank can charge interest at 45% can be replied only by the RBI, which controls the banking operations of all the banks.
Hope you would also have enjoyed interest free credit for 45 to 50 days on each of your spending. So, banks get compensated for free credit only by charging higher rates of interest on EMIs.
However, you can approach the banking ombudsman about your complaint against the bank and for settlement of your dispute with the bank. I don't think any legal suit would help you.
You can also settle some fixed amount with the bank. But, be cautioned, that way your credit rating at CIBIL would get adversely affected with the result you would not be able to get any loan from any bank or financial institution in future due to bad credit rating.
John
(Querist) 15 September 2012
Thank you all Sirs for your valuable pieces of advice. I now know the pros and cons that I need to consider to make a decision.
Guest
(Expert) 15 September 2012
You are welcome. Just as piece of advice, Usage of credit card and payment of amount due should be made cautiously, as the CIBIL through credit rating provides a strong weapon to the banks and financial institutions against the creditors, who are normally not aware of adverse effects of credit rating.
ajay sethi
(Expert) 15 September 2012
in such cases banks generally file summary suits . courts will pass orderin favour of bank as by written contract you have agreed to pay interests at the rates bank is demanding in case of defaults
V R SHROFF
(Expert) 15 September 2012
John,
It is simple
If Bank charges 45% interest pa,
You raise loan from a Marwadi/ Money Lender, and pay off entire loan to Bank.
u will be un trapped - immediately & legally.
I am sure, Bank overhead expenses, rent & staff salary etc are very high , compare to ML.
All three have to survive, supporting each other!!! No other party involved...
Public- Depositors only get 4-8% p.a. of int on their money
Their money are used by you. Both of you enjoy at the cost of poor public, whose money with Bank, and thru bank with you....
John
(Querist) 15 September 2012
Yes, you are 100 pc right. I made a mistake and must suffer its consequences manly. I will. I took things lightly. I must not compound my mistake, pay up and be done with it. Thank you all, again.
