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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Thu Dec 22, 2005 2:10 am Reply with quoteBack to top

Priya: I want to buy a Sony digital camera costing Rs.20,000, but I dont have any cash right now.

Raj: Why dont you use your ICICI Bank credit card? Never heard them say Hum Hain Na ??

Priya: I am quite skeptic about using these cards. I pay using the card, get a bill after 30 days and pay after another 20 days. This is a maximum of 50 days interest free loan. Why does any bank do it?

If I borrow Rs.20,000 on personal loan at 11%, Interest to be paid for 50 days = Rs. 20,000 * 11% * (50/365) = Rs. 301.40. Here the bank is giving me a loan without interest when I use the credit card. Something is wrong somewhere!

Raj: Well, Let me tell you how it works when you use your card to pay for the camera.

*** You present your ICICI Bank credit card a VISA card.

*** Sony World swipes your card on a machine provided by Citibank. Lets call Citibank the acquirer bank and the process of Sony World swiping the card on that machine requesting authorization .

*** Citibank communicates with the card issuer ICICI Bank through VISA Network to check if the card is valid and has the required credit limit.

*** ICICI Bank reviews and approves / declines which is communicated back to Sony World.

*** You sign a receipt called Sales Draft given by Citibank. This is the obligation on your part to pay the money to ICICI Bank. Data on this receipt can be captured electronically and transmitted.

At the end of day or at the end of some period Sony World chooses:

*** Sony World submits the receipt you signed to Citibank who pays Sony World the money. Sony World pays Citibank a fee called Merchant Discount . Let us say this is 6% of the sale value = 6% * 20,000 = Rs. 1200.

*** Citibank sends the receipt electronically to a Visa data center which in turn sends it to ICICI Bank.

*** ICICI Bank transfers the money to a Settlement Bank which in turn transfers the funds to Citibank. Citibank pays ICICI Bank an Interchange Fee of 4% of the sale value = 4% * 20,000 = Rs. 800

*** 20 to 50 days later ICICI Bank gets the money from you and you dont pay the interest!!


Priya: Interesting! So Sony World pays more than the interest that I should have paid for the loan that I take. I, as a cardholder have the following benefits

1. Convenience of not having to carry cash.
2. Credit availability free of interest.

However what benefits does Sony World get for paying so much money? Isnt it more profitable for them to take cash? They can save as much as Rs.1200.

Raj: Certainly. Some retail outlets offer you discounts if you pay by cash, dont they?

However when you dont count the money that you are spending, you tend to buy more! Cards encourage this called Impulse purchase .

If you did not have access to credit, you would not have bought the camera this month or may be not any time soon either. By accepting cards, the merchant is actually extending you credit at the risk of the card issuer. He pays money to the banks to carry that risk.

Priya: So ICICI Bank uses this money to pay back to us when they announce 5% cash back. They insist that the Sales draft that I sign at the retailer should also be from ICICI Bank. This means they are saving on the Interchange Fee and also pay me a part of the Merchant Discount that they get.

Raj: Exactly! If you have noticed, ICICI Bank gives you the Cash back in the next credit card statement. They keep the cash back money for a maximum of 60 days before passing on a part to you. This accrues them interest too.

Say if ICICI Bank earns an interest of 6% per annum for the cash they carry they get Rs.1000 * 6% * (60/365) = Rs. 10

That is not huge, but money nevertheless. And when you consider that almost everyone in this city shops with a credit card these days, it is a big sum.

Priya: And that also explains why banks tie up with petrol pumps like ICICI Bank has tied up with HPCL and I could re-fuel there without having to pay the fuel surcharge of 2.5%. The card issuer and the acquiring bank is the same and that saves interchange fees.

Raj: Good! You seem to have figured out how it all works!

Priya: Sooper! Toh ab shopping chalein?? Lets not miss the Namma Bengaluru Shopping Festival!


All the numbers used to explain concepts in this article must be treated only as an example. Merchant Discounts may vary from bank to bank. Interchange Fee is regulated by VISA and MasterCard .

_________________
Regards,
Vinod.
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vivekraju
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Joined: 30 Jul 2004
Posts: 194

PostPosted: Thu Dec 22, 2005 9:14 pm Reply with quoteBack to top

really informative.....One more suggestion when u put some stuff kindly put that into a single heading than posting it as a seperate topic....
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Fri Dec 23, 2005 8:57 am Reply with quoteBack to top

Sure Vivek... I had this idea, but was thinking of what would be the appropriate heading which suits all my postings... Can u suggest one....For now i will have it as My Collections...

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Vinod.
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vivekraju
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Joined: 30 Jul 2004
Posts: 194

PostPosted: Sun Dec 25, 2005 10:31 pm Reply with quoteBack to top

Thanx Vinu for accepting my suggestion...I think ur the right guy to choose the heading.... icon_lol.gif
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Mon Dec 26, 2005 5:50 am Reply with quoteBack to top

Thanks icon_biggrin.gif

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Regards,
Vinod.
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manoo
Starter


Joined: 25 Jun 2004
Posts: 16

PostPosted: Fri Jan 06, 2006 11:51 am Reply with quoteBack to top

what every u said id that is really nice and truth. but the problem in credit card usage i will tell u the story.

if u paying ur money after 50 days then tha is good for u but if u miss that 5o days because of some reson then u will die and cry of intrest for credit card.
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vinu_scorpion
Frequent poster


Joined: 19 Jun 2001
Posts: 274

PostPosted: Fri Jan 27, 2006 9:57 am Reply with quoteBack to top

Hi,

Have you ever come across any bad experience with any of the banks??

Do the bank officials always behave as if they are the Masters of the planet and donít reply properly??

Have you lost any money due to ATM faults?? Has money been deducted from your account without information????

Here comes the solution.

Log on to www.bankingombudsman.rbi.org.in and register your complaint. This is an RBIís initiative to protect customersí rights in todayís bank dominated environment. You will get your problem solved soon. Hope you find it useful.

_________________
Regards,
Vinod.
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ebhari
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Joined: 31 Dec 1999
Posts: 279

PostPosted: Fri Jan 27, 2006 10:31 pm Reply with quoteBack to top

Oh yes! Useful piece of info! No bad experiences so far, but who knows whats in store tomorrow icon_rolleyes.gif icon_smile.gif
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Wed Mar 15, 2006 7:00 am Reply with quoteBack to top

An important Information......

Your ICICI ATM / Debit cards can be used at SBI ATMs to withdraw money and most shocking thing is, it does not ask for your PIN**. Even if it ask for pin and if u cancel it, it goes on to the next screen and enables you to withdraw cash. This security vulnerability was shown live on India TV news channel at SBI ATM in Hyderabad. So please take utmost care of your ICICI ATM / Debit cards to avoid any such misuse.

Note: Not sure how true this information is... Has anyone come across this???

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Vinod.
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purni
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Joined: 12 Jul 2004
Posts: 236

PostPosted: Thu Mar 16, 2006 7:52 am Reply with quoteBack to top

icon_smile.gif

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Regards,Purni

Last edited by purni on Mon Oct 16, 2006 12:17 am; edited 1 time in total
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Thu Mar 16, 2006 9:02 am Reply with quoteBack to top

I experienced some problems in ICICI while transferring fund over the Internet... I clicked the submit button twice as i did not go to the next screen the first time and they deducted the amount twice... Later, this problem got solved after contacting the bank people.. This happened for few of my friends also...

Transferring funds and entering wrong number is our mistake and we cant do anything if we are careless... But this info is not about transferring fund...

This says that "Some people take or find your ATM card and can withdraw money without the use of PIN in SBI ATMs"... They can misuse ur ATM... Will check if this is possible and let you know in few days...

Got it Purni akka????

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Vinod.
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Sun Apr 09, 2006 9:01 am Reply with quoteBack to top

Hi,

This is to make people aware of the cheating which is going on behind the www.makemytrip.com. These people are simply making assumptions and booking the flights with their choice instead of what they are told to book by us.

I want to share an incident with you all so that you can save yourself from these cheaters and discard their practices in future.

I searched for a flight on their site for Bangalore to New Delhi for 29th April, 2006, and I could find the following flight, which suited me well. And as we can see it says 3699 Rs INR (excluding tax).

Departing Flight Rs.3699

Air Sahara 122
Boeing 737-800

Duration
2.40 hrs

Depart
Bangalore (BLR)Sat 29 Apr
7:30:AM

Arrive
Delhi (DEL)Sat 29 Apr
10:10:AM


I booked the same via credit card and then I got a mail from these people for the confirmed booking, This is as following:

Dear,

Thank you for booking your travel with MakeMyTrip.com - we value your business. Kindly take a moment to review your itinerary and booking details given below:

1. Name/Above 12-AVML

S2-122BangaloreNew Delhi29 Apr, 7:30:AM29 Apr, 10:10:AM

28 Mar, 2006 INR 4944
29 Apr, 2006 INR 4944
MMT-D60570 INR 0
Credit Card


As you can see, the above details say that the flight is booked for Rs. 4944. It did not ask me before booking and directly booked the tickets. Then I called at the toll free number mentioned on their site and asked why it booked for the 4944 Rs though I clicked for the ticket of Rs 3699+tax .They said it our policy and at the time of booking the Economy class ticket was not available so WE had to book your ticket for the M (the next upper class).They without asking anything (no pop-up message or warning), upgraded to the upper class.

Then I called them again and asked to cancel the same ticket and they told that they will charge 750 Rs (500 for Sahara and 250 for their site) for this, I told them that itís the fault of your site and thatís the reason I want to cancel this one and at least I am not eligible for paying this 250 Rs. The person told that you agreed to our terms and conditions and said ok, so now I cant help you on this and Sorry you will have to do like this only.

So from now onward please be alert from get cheated by these people and we should discourage these people from cheating us so honestly.

_________________
Regards,
Vinod.
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ebhari
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Joined: 31 Dec 1999
Posts: 279

PostPosted: Sat Apr 15, 2006 8:34 am Reply with quoteBack to top

I did book through this site a couple of times and had no apparent problems. Anyway, this is news for me. Thanks for the caution.

Just want to mention here a few points...

This site is associated with no other low cost airline except Spicejet. All the airlines involved are full fledged carriers. Hence, if going cheap is the idea, it's prudent to check www.airdeccan.com, www.goair.com, www.paramountairways.com, the websites of the carriers not associated with this site and who can offer much lower fares.

Even if you decide to travel by a full fledged carrier like Kingfisher, and utilise your Visa credit card of any bank, then you get a 20% off straightaway subject to a maximum ceiling of Rs.1000 for bookings through www.flykingfisher.com. I doubt if the same facility is available through the website in question.
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Tue May 02, 2006 8:21 am Reply with quoteBack to top

Why boom in flat rates?

Property market in Year 2001 -2004 was quiet Ok , People were able to buy Flats in reasonable rates . *Year 2005 -2006 , Some of the well known builders started the rates boom, flat which was at the cost of Rs.900 Sq Ft now became 2200 to 2800.

Q: Are there any additional facilities ?

--> No. Same Scheme/Area , Flat sold at 10 Lacks Now selling at 25 Lacks

Q: Why Property increased so High ?

--> IT people competition to buy sweet home .

Q: Who is going to Benfit from this Property Boom ?

--> Only Builders and some of the Politicians

Q: How is the Bank's support on Home Loans ?

--> Last Year , Bank gave the loan's at flexible mimimum rate, Now Banks has sufficient number of customers, (Trap) Slowly Banker's increasing interst at % 0.5 every month .. IT People Who bought house for 22 Lacks for 20 Yrs , Now became 23 Yrs with raise of 0.5 %

Q. How some IT people can face the problems in Future ?

--> Companies are Project Based, If Projects are not there then People will not be there .

Q. IT salaries are high in Market , How much actually IT-people are taking home ?

--> People, Who bought house of 22 Lacks to 40 Lacks They need to pay EMI 15,000 to 35,000 for 20 Yrs. If Bank keeps same interst rates .. Suppose Salary is 35- 40 K Per Month, 20K will be the EMI.

Q. Is there any "Terms & Condition or Processes to increase rates" ?

--> No , Depends on Buiders Greediness . Every builder follows the different strategies. Builder sold one flat 1500 Per Sqft in Morning and 1800 Per Sqft in the Evening. There are no records maitained .

Q. Who made builders smart & greedy ?

--> Foolish IT people .. No body is asking, Flat was sold at 12 Lacks , Why now 24 Lacks ?

Q. Is Corporation water & Electricity available to all schemes?

--> Some of the area don't have the Corporation water at all, People surviving on Water Tankers.

Q. What will be the condition If We are not able to Clear the Loan ?

--> Depends on individual capabilities.

Q. How can we stop Builders -Property Boom ?

1) IT People should stop buying flats having prices not worth for the property.

2) Once rates are reasonable , With some legal process get the booking .

3) Check Facilities, Conveniece, Road Approach, schools & Mainly corporation water. Don't go by certification and best project ,One of Project in the Banner got awards for best building & all, but Buildings looks like Loading & Boarding.

4) Ask Questions If I buy 2 BHK in some areas at 12 to 30 Lacs , Do get resale value in future?

5) Today you are capable for paying 1000 -3000 maintainance per month. Will will be the same case after 20-30yrs after retirement ..

6) In All, Don't stretch more to get the more & more loans other wise it will create unnecessary pressure and tension .

_________________
Regards,
Vinod.
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vinu_scorpion
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Joined: 19 Jun 2001
Posts: 274

PostPosted: Fri May 12, 2006 4:26 am Reply with quoteBack to top

"SAVING IS SIN, SPENDING IS VIRTUE" - Written by an Indian economist


Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. Has an annual trade surplus of over $100 billions. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger.


But where from do Americans get money to spend?

They borrow from Japan, China and even India. Virtually others save for the US to spend. Global savings are mostly invested in US, in dollars. India itself keeps its foreign currency assets of over $50 billions in US securities. China has sunk over $160 billion in US securities. Japan's stakes in US securities is in trillions.

Result:


The US has taken over $5 trillion from the world. So, as the world saves for the US, Americans spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2 billion a day, to the US! Otherwise the US economy would go for a six. So will the global economy. The result will be no different if US consumers begin consuming less.

A Chinese economist asked a neat question. Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested in US. The same is the case with India. We have invested in US over $50 billion. But the US has invested less than $20 billion in India.

Why the world is after US?

The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US. So US imports more than what it exports year after year.

The result:

The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money. It's like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is like the lucky customer. And the world is like the helpless shopkeeper financier.

Who is America's biggest shopkeeper financier?

Japan of course. Yet it's Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted it self, reduced the savings rates, even charged the savers. Even then the Japanese did not spend (habits don't change, even with taxes, do they?). Their traditional postal savings alone is over$1.2 trillions, about three times the Indian GDP. Thus, savings, far from being the strength of Japan, has become itspain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend. Dr. Jagdish Bhagwati, the famous Indian-born economist in the US, told Manmohan Singh that Indians wastefully save. Ask them to spend, on imported cars and, seriously, even on cosmetics! This will put India on a growth curve. "Saving is sin, and spending is virtue." Before you follow this neo economics, get some fools to save so that you can borrow from them and spend, ofcourse this will apply to the individual also.

This is what US has successfully done in last few decades.

_________________
Regards,
Vinod.
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