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.