How Good Is The Insta Credit Facility By ICICI Bank For Paytm Users?

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To boost the cashless drive yet again, private sector lender in association with wallet major is extending insta credit for those buying ICICI bank customers buying online from Paytm.

How Good Is The Insta Credit Facility By ICICI Bank For Paytm Users?

Know its features

As of now Paytm users who are also ICICI bank customers for purchases or payments between Rs. 3000 and Rs. 10000 can avail loan facility. The credit limit can go upto Rs. 20000 in cases where credit profile of a person is sound. A 45 day interest day free period shall be offered and beyond this a charge of upto 3% shall be levied on a month on month basis.

The facility shall be extended keeping in view a set of variables such as the borrower repayment plan, digital and financial behavior and frequency of purchases.

Should you be opting this insta credit facility?

The facility though seems to be enticing to finance our needs it should not be given into as the resultant risk if the payment is not made on time would prove to be hefty with 36% interest on an annual basis. Moreover, one should streamline one's online purchases with their needs and financial budget.

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Arun Ramamurthy, founder, Credit Sudhaar, a credit advisory, said consumers must realize that not every transaction gets a 45-day interest-free period. This will depend on the date of purchase. The billing cycle will be from the 1st of each month and one needs to pay by 15th of the next month. So, if you make a purchase on the 30th of a month, you get about 15 days to pay for it, and not 45 days. If you buy after the billing cycle, you would get a 45-day period to make the payment. "While one would tend to gain marginally with an interest-free credit period, in the bigger scheme of things, such gains will not contribute to one's finances to a great extent," said Ramamurthy.
While this new product works similar to the way a credit card does, the bank is aiming to reach out to customers who may not have a credit history to be eligible for a credit card, such as employees in their first jobs.
"Largely, we feel that the people using this facility will not have a credit card, and it will be an impulse purchase. There are many customers who do not have a history to get large limits on credit cards, but they are still good customers who want to make a purchase," said Bagchi.
If there is a spend of Rs100, for instance, a large part of it will be paid off but some part may get rolled over. "We will make some money in that rollover. It's a game of probability," said Bagchi.
At the same time, a Paytm customer who was not able to make a purchase due to lack of a credit line, will be able to make that purchase. "Because of extension of credit to their customers, Paytm's sales will improve," he said.
Mint Money take
Financial advisers emphasise on refraining from impulse purchases. Moreover, easy credit could also lead you into a debt-trap. "The ease of access to credit should be accompanied with the sense of being a responsible borrower. Similar to credit cards, where people can expose themselves to a much higher credit than they can manage, even here the consumers will need to refrain from overexposing themselves to credit," said Ramamurthy.
While the bank is lending up to Rs20,000, a delayed payment would attract 3% interest per month, or 36% per annum. Plus, there will be a late payment fee of Rs50.
Should you use this? "One must realize that the spends have to be in line with income and be restricted to the budget for the product," Ramamurthy said. However, it is not advisable to take credit for impulsive buys.
First Published: Tue, Nov 21 2017. 04 59 PM IST
Topics: Instant credit online shopping online payments EMIs e-commerce
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Story first published: Wednesday, November 22, 2017, 14:33 [IST]
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