Current Inflation rate at 9.55 %.. is buying with a credit card with 0% interest rate a safe bet.. ?

POSTED BY Himanshu ON January 29, 2013 11:52 am COMMENTS (2)

Hi Manish,

I am just thinking of a situation considering current inflation rate.

I want to buy a digi cam costing 10,900. suppose I made a FD for 12months putting 10,000 assuming that at a rate of interest of 9%, i’ll get back  10,900 and can buy that cam.

Now after a year when this fd gets mature I’ll get back Rs. 10,900,but surprise surpirse.. because of current consumer price inflation rate of 9.55 % that cam will now cost me Rs.11,940.. its going to hurt now!!! I waited for a year, blocked my 10,000 Rs. for a year and I still can’t buy that goddamn camera. :'(

now, if istead of putting my money in a FD, if I would have bought that camera on a credit card at 0% interest rate then :

* No waiting for a year time.

*10,900 would have cost me only 10,900.

*EMI of 1816 for next 6months so no need to put Rs.10,000 aside for a year in a FD.

So, I think I am making some sense here , but would really appreciate if you can let me know that whether I am talking sense or nonsenses.  

2 replies on this article “Current Inflation rate at 9.55 %.. is buying with a credit card with 0% interest rate a safe bet.. ?”

  1. Dear Himanshu, do you really need that camera at all? May I know which bank’s CC are you using as of now? If it’s HDFC, please check for the 0% EMI for 3-6-12 months period on various online stores & so do the price, in all probability you ‘ll get your camera for less than 10900 Rs. by using coupons on these online shopping sites. If it’s real 0%, you may go for it.

    Thanks

    Ashal

  2. Inflation does not always for tech products. In an years time the product could become cheaper!

    If you pay off the purchase amt well within the introductory period when there is 0% interest then great your argument will work but
    later the interest rates of such cards are usually higher than normal cards.
    There are limits on balance transfer and so. To say the very least the fine print on such cards is quite a bit and needs careful reading.

    If you decide to close such a card after the intro period then it will go on your record and may affect your chances of getting a new card.

    If you actually open an RD or invest in a debt fund and save for the camera, one year later it is possible that you could get a camera with better specs for the same amt. I would take that chance every time than get a shady credit card

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