By Chaitali Dutta

I made some purchases using my credit card. If I convert the amount into EMI for six months, do I have to pay any extra interest?

—Sikhar Bhandari

Yes, the EMI payment on a credit card is essentially a loan. Any overdue amount and outstanding EMIs are considered for interest calculation. It carries an interest of 2.5-3.5% per month, which converts to an annual rate of 30-42%. It is advisable to pay the outstanding amount in full at each billing cycle. That way, you pay zero interest on the outstanding.

If I apply for an education loan for my son, do I have to pay any amount during the moratorium period?

—Prakash Singh

The moratorium period coincides with the course duration. It can vary from 12 months to three years. Simple interest is applied to the outstanding loan amount during this period. You may pay this interest to reduce the burden on your son but it is not mandatory.

I pay interest rate of 9% on a home loan of Rs 50 lakh. Another bank is offering an interest rate of 8.25%. Should I do a balance transfer?

—Pranab Chaudhury

Balance transfer comes with extra paperwork, some one-time charges, and a few trips to the bank. Negotiating with the existing lender is the first choice. If they do not offer you a competitive rate, you may go for balance transfer.

I have a home loan of Rs 25 lakh. I need another Rs 50 lakh to buy a new flat. My take-home is Rs 1.90 lakh a month. As my wife is the primary applicant, will I have any problem in getting a home loan?

—V Dinesh

The aggregate outgo on loans should not exceed 50% of the in-hand salary. If the loan is in both spouses’ names, then the aggregate household income is considered. Your current age, retirement age, and the loan tenure will have a bearing on the calculation.

If I take a gold loan, how can I be sure I will get back the original jewellery?

—Kailash Mahanta

Banks and financial institutions have SOPs for the gold loans they are processing. There are instruments that measure the purity of gold without melting it. You will get a documentation that captures the details of the pledged ornaments including size, weight, and description. You can also take photographs of the ornaments. The official sanction letter that includes the details of the ornaments and your photographs will help ensure that the same valuables are handed back to you.

The writer is founder, AZUKE Personal Finance Advisory.