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HAVE CAKE AND EAT IT TOOÂ
                        EARN  BANK INTEREST ON  SALARY                                                              WHILE SPENDING ALL YOUR SALARY EARN EXTRA INCOME USING CREDIT CARDSPLAN BANK ACCOUNTS, EXPENSES , CREDIT CARD USE TO EARN EXTRA INCOME ARTICLE ORIGINALLY CREATED IN JANUARY 2015 : ​The article explains how you  can earn on your salary account while spending  most of your salary . If your savings bank account is getting you nominal interest  , we show you how to increase it many folds  without cutting on your expenses. You spend all your expenses as usual and still earn interest .  Eat  cake and have it too . Are you spending all your  salary and you are getting nominal interest on your savings bank account ?  While we encourage you to reduce expenses , we  are showing a way with  4 simple steps  by  which  you will earn  higher interest almost equivalent to  bank deposit rate  even when you continuing to spend as usual  most of your salary .  Initially the idea may look crazy  to  have fixed deposit and overdraft against the same on same day . As you see  in the case study , you will have amazing results . 1. Open  a Fixed  Deposit for  amount of salary you get in to account on the day of salary itself . So all your  month's salary goes to Fixed deposit . Presently you can earn  8.5% to  9% pa  on 1 year deposit What I will eat during the month and how I live  without  salary ? 2.  Avail overdraft  facility  against the Fixed Deposit just opened to the maximum extent .   You can avail around 90% of  Deposit amount as limit of overdraft facility . Overdraft facilities normally carry  an interest of 1% to 2 %  more than F fixed Deposit interest rates . Utilise the facility for  your expenses 3. Avail  credit  card facility from the same  bank where you are drawing salary. Obtain credit  limit equivalent  just to one month's salary . Normally banks do not charge either  joining fees or  annual fees  for their own customers . So you get free of cost . Otherwise there are various banks which issue credit cards free of cost . 4. Have your standing instructions  registered with the bank to deduct 100  % of your card dues on due date itself  from your overdraft  account . You will have no head ache of delayed payment and penalties for delayed payment . You will  start  earning interest on  deposit from the very first day . Now postpone  your expenses  as much as feasible  without attracting penalties / charges for delayed payments .Some simple ways to  delay your payments are 1. Reduce  cash holding to the minimum required 2.  Postpone your payments to near due dates . 3. Utilise your credit card to the maximum extent  at the beginning of billing cycle .Normally credit cards give free credit period ranging from 20 days to 50 days . If you use cards at the beginning of the cycle , you will get 50 days of free credit period .  By adjusting payment days suitably , you can get  get maximum number days of free credit . Now , you have not reduced  any of your expenses nor you have not paid any charge for availing the above banking facilities . See how much  your interest income has gone up .  I will show an example here  of Mr Santhosh .You can calculate  how much you can gain  in your salary and expenses circumstances .  Click Here and  go to Personal Finance Page  for Tips on Managing expensesÂ
Case of Mr Santhosh , an young marketing executive in Bangalore
Mr Santhosh  is earning  a monthly salary of Rs 50,000/-. He  has come new to Bangalore and he wants to live full  and he spends most of his salary  .  His expenses amount to Rrs 45,000/-  pm and are spread evenly over the month . He is able to save  just Rs 5,000/- at the end of month . He has got savings bank account with ABC Bank  which pays SB interest of 4 % pa , Fixed deposit interest of 9%  pa  and  charges overdraft  interest of 11%pa,. They issue free credit card facility  to their savings bank account holders whose salary is routed through the bank  . Interest on SB  balance of Rs 5,000/-  =  17.00 pm when Mr Santhosh maintains  his savings bank account alone . Now he has accepted our suggestion  and opened  a Fixed deposit , availed overdraft against the deposit ,  obtained  a credit card  and has given standing instruction to recover 100%  of dues on due date .  Interest  on Fixed deposit  of Rs 50,000/- at 9% pa  =  Rs 375/-  pm .  Interest on overdraft  at 11%                      = Rs 207/-  pm ( on an average  overdraft balance of Rs 22,500/ - assuming  he has  not used his credit card at all) If Mr Santhosh uses his credit card to an extent of Rs10,000/-  and thus postpones his  payment by more than one month .his net payment would be Rs 35,000/- and average overdraft balance would comedown  to Rs 17,500/- . and interest on  overdraft for the  first month            = Rs 160/pm Net interest income of Mr Santhosh  Rs375/-  -  Rs 160/-  =  Rs 215/- . Thus in the very first month Mr Santhosh could his  interest receipt from  Rs 17/- to Rs 215/-  which is more than 12 times higher . Now let us see what happens to Mr Santhosh ' s interest income in second month . Month end balance in overdraft account is  Rs 35,000/- on getting salary of Rs 50,000/ , his overdraft  has  a credit balance of rs 15,000/- Now Mr santhosh continues to spend Rs 45,000/-  this month also out which Rs 10,000/- is spent through credit card . Now Mr Santhosh's  Fixed Deposit interest for the month       =   Rs 375/-  His overdraft interest  on average  balance of Rs 10,000/-        =  Rs  92/- Mr Santhosh's interest income  for second month is              = Rs 263/- Thus  overdraft interest would go on reducing  and net interest income would go on raising  month after month until overdraft interest reaches zero and  Santhosh  would earn 100 % of fixed deposit interest . Thus Mr Santhosh will earn fixed deposit interest of Rs 4,500/- in the year  while his overdraft interest may not exceed  Rs 500/- . If he continues to judiciously use his credit card and payments , his net interest income would be Rs 4,000/- . Without reducing his expenses even by  a rupee, Mr Santhosh  has earned. By using his credit card more and more , he would be saving more and more . You too can  earn  . TRY  Check up with your bankers  and confirm charges  they levy . Work out  gains based on your salary , your expenses , spending pattern  .Bankers will be happy  to assist you as they will have  fresh deposit , overdraft and credit card account  from you . All the best in your endeavor to save more . ​
1 Comment
2/7/2020 11:48:30 am
Post recession most debt relief companies are offering debt relief counseling to help out the debtors. Therefore, before going to such companies you should check out whether they are legitimate or not.
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Manjunathan BellurÂDGM ( Retired ) |