Impact of RBI moratorium extension on you

The Reserve Bank of India announced measures to further ease financial stress and improve debt management in response to the COVID-19 crisis. The earlier moratorium which was ending on 31st May 2020, has now been extended by three months, i.e. August 31, 2020.

The extension of the moratorium means all financial institutions are now permitted to allow a moratorium of six months on payments of installments of all term loans and credit card dues arising between 1st March 2020 and 31st August 2020

Please note that the moratorium does not apply to interest charges. If you have Rs 1,00,000 due as on 3rd March 2020 and you take advantage of the moratorium till 31st Aug 2020, the dues payable on 3rd Sept 2020 could be as high as Rs 1,30,000 (Rs 1,00,000 (due amount) + Rs 30,000 (interest amount and additional bank charges)).

The moratorium is short-term relief but can result in long-term stress and ballooning interest at 36-42% CAGR. CRED, therefore, urges those who can to continue paying the total due amount, or as much of it as possible, within the due date.

Please read the FAQs below to understand the moratorium well and its implications. FAQs:- What is the moratorium period for Credit Card dues? Given the circumstances of the global pandemic, RBI has allowed banks to push the 'Billed Credit Card dues' falling between 1st March 2020 to 31st August 2020. This is not an exemption from repaying the amount. The payment can only be "deferred" by 6 months as per RBI circulars. If you take advantage of the moratorium, your credit score may not be impacted by non-payment of credit card dues for 6 months till 31st August 2020, but interest fees will continue to be charged at current rates or as specified by your credit card issuing bank. For credit card dues, billing will be restored on 31st August 2020. To avoid late fees and interest charges from 31st August 2020, you will have to pay your total due amount. If you pay your minimum due, you will avoid late fees but will be levied interest charges on the outstanding amount. If I take this option, will interest charges be levied for the deferred period of payment? The RBI notification has clearly specified that interest will continue to be charged on the outstanding amount during the 6-month deferment period. What do I have to pay after 6 months? Opting for 6 months 'deferment' option allows you to delay the payment of your credit card dues till 31st August 2020. As per our understanding of the circular, you will be expected to pay your outstanding amounts and the interest charges on the due date after 31st August 2020 to avoid late fees and impact on credit score. Will taking this option impact my credit score? Exercising this option may not impact your credit score since the banks may not report it as a "default" to RBI recognized credit bureaus.

Imagine you were born in 1900

A very interesting late Saturday evening PERSPECTIVE

For a bit of perspective during these frustrating times, imagine you were born in 1900. 

On your 14th birthday, World War I starts, and ends on your 18th birthday. 22 million people perish in that war. Later in the year, a Spanish Flu epidemic hits the planet and runs until your 20th birthday. 50 million people die from it in those two years. Yes, 50 million. 

On your 29th birthday, the Great Depression begins. Unemployment hits 25%, the World GDP drops 27%. That runs until you are 33. The country nearly collapses along with the world economy. 

When you turn 39, World War II starts. You aren’t even over the hill yet. And don’t try to catch your breath. On your 41st birthday, the United States is fully pulled into WWII. Between your 39th and 45th birthday, 75 million people perish in the war. 

At 50, the Korean War starts. 5 million perish. 

At 55 the Vietnam War begins and doesn’t end for 20 years. 4 million people perish in that conflict. 

On your 62nd birthday you have the Cuban Missile Crisis, a tipping point in the Cold War. 

Life on our planet, as we know it, should have ended. Great leaders prevented that from happening. 

When you turn 75, the Vietnam War finally ends. 

Think of everyone on the planet born in 1900. 

How do you survive all of that?

When you were a younger or even possibly a kid in 1985 and didn’t think your 85 year old grandparent understood how hard school was. And how mean that kid in your class was. 

*Yet they survived everything listed above.*

Perspective is an amazing thing. 

Let’s try and keep things in perspective. 

Let’s be smart, help each other out.

#staysafe #takecare 

#GodBless🙏🏻