Balance Transfer – HSBC

If you have an HSBC Credit Card, and you are going to do a balance transfer (BT) from another card to your HSBC card – think twice. It’s been a whole new world of rules that opened up for me when I ventured there.

Suppose you have Rs. 5000 pending on another card (say Citibank), and you want to pay this amount from your HSBC card, here is what you would do:

  • Make sure that your HSBC card is clean and you don’t have to pay them anything, prior to making this BT request.
  • Go ahead with calling them up and re-ensuring there is nothing to pay there. Give them your Citi card number and the amount (5000).
  • Take care to not use your HSBC card anywhere until the end of 3 or 6 months (whatever tenure you selected).
  • As soon as you get the draft – deposit it with Citibank.

Here’s what’s in store for you now. You see these charges on your next month’s statement of your HSBC card:


19NOV 19NOV BALANCE TRANSFER BTW 5000.00
TRF FRM CITI BANK CC # XXXX XXXX XXXX XXXX
20NOV 20NOV BT Processing fees IN 249.00
20NOV 20NOV Service Tax + [email protected] IN 30.83

Seems fair enough? Well, they did tell you that there would be a BT fees (for a transfer for 3 months). Now here’s what they did not tell you (in your next statement):


OPENING BALANCE          5279.83
03JAN 01JAN Your Name VisaMoneyTXFR IN 300.00CR
12JAN 12JAN FINANCE CHARGE 16.74
12JAN 12JAN "SERVICE TAX+CESS"@12.36% 2.06

Wow, there is a finance charge of Rs.16.74 (~17) and another Rs. 2 STT! HSBC had charged you a Processing Fee in the previous month’s statement (look at the first snippet above). Now, here are the rules from HSBC:

  • Any payments you make (minimum due) would go towards completing the BT amount first.
  • As the Processing Fee was charged after the BT was given out, it’s considered as a shopping on your card.
  • Until you repay the whole 5000, there would be finance charges on that Rs. 249+30.83 @36% compounded p.a., every month.
  • As the system counts any payments only towards the BT, these finance charges will attract interest next month too.
  • So, here’s the total money you’d shell out for your 90 day BT:

    (249+30.83) + (16.74+2) + (17.48+2) = 318.05

Considering the BT amount to be 5000, this money wasn’t much. But if you did any larger transaction – you’ll be paying much more money.

Remedy

  • Call up Customer Care and ask them to reverse these charges.

    This weird system is not mentioned any where in their Terms (as of date) and also they can’t fool customers with small figures.

  • If the officer refuses to budge, tell them to transfer call to someone senior.
  • If it doesn’t help, drop a comment here and let’s make sure they mend their system.
  • Screen That's Dynamic (screenrc + bashrc = ..)

    I am an avid user of screen. If you haven’t had the chance of using it, do look up here: [http://www.linuxjournal.com/article/6340]. Having said that, it’s of paramount importance to have a nifty configuration for your screen session. I have been successful in having a working combination of my bash profile and screen, which work together to give some pretty dynamic content. I would put these two things in an installable rpm and host it here soon.

    Memory Will Defraud You

    Was reading a book by Sigmund Freud which had some classic experiments. Some times memory can fool you, so much so that what you can recall very clearly had never actually happened. There have been some real life instances where I have experienced this, and so I can confirm this truth (at least for myself). Some really unpleasant memories held by close relatives I know, also live to tell the same truth.

    An excellent way to run ahead of your memory, and always be in time to catch it is writing personal diaries. It has been a long time since I have written into my diary (I used to when I was a kid – basically for logging whatever I used to do). Even though I might resume that, I have taken care to invent a script of my own to make sure that none but some extremely trustworthy people can read it. That said, personal diaries are meant only for the people who write them, and for those who are very near and dear to them.

    Anyhow, the point I want to make is that I can clearly remember the years where I used to write diaries (though not regularly, but I kept as much track as possible). But there is a certain void in my memory for all these years I haven’t been writing, which to somewhat extent does mean that my memory might be fudged. The most interesting part is, the conflicts of whether a certain event happened or not are more during these unlogged years – even though it was only 6-8 months back. Still to read up more on Freud.

    Mutual Funds – Saving Tax

    Mutual funds explained with some comment on how to save tax.

    • ELSS = Tax Saver (Saving) Mutual Funds (Schemes)
    • You can invest upto one lakh in any ELSS scheme.
      • You should check if you really need to invest one lakh, because in all probability, your employer is already deducting PF from your salary.
      • In that case, your investments should be: 1 Lakh – (monthly PF deduction x 12)
      • PF = Provident Fund = Govt’s way of making people save from their salary.
    • This investment gets locked for 3 years (lock in period = 3 years).
      • That means that if you invest Rs. 3000 today, you will get it back only after three years from today.
      • That also means that if your are doing an SIP of Rs. 3000 every month, the three years are counted for every 3000 from the month they were invested.
      • SIP= Systematic Investment Plan = Fund’s way of saying “please invest in us regularly at a definite interval”.
    • Lock in period of 3 years is good, why?
      • …because that ensures that people can’t take out money for at least next 3 years.
      • … and that makes it easy for the funds to make more money for you.
      • … also this is better than locking your money away for 5 or 7 years (in other schemes – don’t worry about them if you don’t know).
    • Which fund to choose?
      • Choose a fund (search now: http://search.yahoo.com/search?p=elss+funds) that has:
        • a decent asset size and
        • and good two years performance (look at the rate of return in the last two years)
      • Frankly, every fund company has two or three Tax funds (or may be just one)
      • It’s better to keep your folios tight and invest in a Tax fund of the company where you already have funds
        • Reason: tax funds generally are better than any other tax saver investment, so you should really not worry about choosing, too much.
    • Which option to choose?
      • Choose growth option. Don’t choose dividend re-investment. That’s because you really don’t want any more money to get locked again for three years.
        • So if you choose dividend re-investment, and the fund declares a dividend of Rs. 500 at the 29th month after your investment, that Rs. 500 per unit will get locked for three more years.
        • In effect, you will get back the re-invested money after another 36 months (in case the Govt. keeps lock-in as 3 years).
        • So, you get back the dividend money after 29+36 months of your original investment.
      • Options: Growth – this means that you won’t get any dividends, but your fund’s NAV will increase intrinsically with dividend declarations.
      • Options: Dividend Payout – this means that a dividend declaration will give you back cash in your account. Some times this makes sense.
      • Options: Dividend Re-investment – Any declaration will buy you new funds for whatever money you might have got paid. Stay clear of this one.
      • NAV: Net Asset Value – Fund’s way of saying “my one unit will cost you this (NAV) much.”
    • The best way to invest is using an SIP.
      • During April, calculate what your PF amount is (assuming your appraisal and stuff is over).
      • Multiply that by 12 and then deduct it from one lakh. There you go, you have an investment figure – X.
      • Divide X by 12, and decrease another figure Y from this new Z = X / 12.
        • This Y depends on your age. Y is directly proportional to [Your Age – 28].
        • Y is the money you should invest in a fixed return investment (like Fixed Deposit, National Saving Certificates or Public Provident Fund).
        • Y is totally your call, but should be quite less than Z.
      • Your total fixed return investment becomes Y x 12, and ELSS investment is (Z – Y) x 12.
      • Your SIP should be for an amount of (Z – Y), starting in April.