Monday, September 8, 2014

Paying homeloan from credit card

Somebody, in some forum (@Ashal: ssshhh), asked a question: "Can we pay home loan from a credit card?".

Actually, it was not a question. It was kind of a suggestion and the person just wanted to get the feel of the audience. I dare not comment on such threads. It just gets nasty. I have burned my fingers once, when I argued, why should an agent cheat client. If he needs to be paid the commission, he must say that. Simple, right? Nopes, someone argued that he needs income as well. This is the exact mentality, why agents get a bad reputation. Offcourse, nobody is against their income. Just that, it should be differentiated from the premium. Okay, lets not get into that.

Coming back to the topic. The moment I heard the question, I remembered this "thread". First thing first, I have never heard any bank deducting a premium from his credit card. Why? Simple: It is actually like an old proverb - 'Robbing Peter to pay Rob'. The idea sucks, not financially but psychologically (I never get this spelling right). It is like a trap. You get use to the credit card and then comes the admin charges, yearly charges, usage limits and plenty of other stuff. 

Why complicate our lives. Just pay off the EMI from SB account. The counter argument is, we get free money, if we pay by credit card. This is what Subra call - innumeracy. What people do not understand is (even if banks allow) paying by credit card just changes their EMI date and nothing else. 

Suppose, my EMI date is 5th of every month.
I have started using credit card and hence get say, 20 days to pay off. So now, effectively, my EMI date becomes 25th of every month. The benefit of free cash usage is only in the first month. Then onwards, its just the change of the date and nothing else. 

P.S.1: If somebody disagrees with my view, I would be happy to hear their counter logic.
P.S.2: It would be interesting to see Ashal's views on this.


  1. Dear Viren, people fail to realize innumeracy. Rightly pointed out by you that it's change of emi date only if allowed. Still people want to have a feel of delayed payment.



    1. Huufff... thanks Ashal... I was actually, worried about your response....
      Never know, when I would cross the line and publish something 'porn'...