On Friday, the Reserve Bank of India (RBI) doubled the moratorium period for the repayment of term loans and credit card dues by another three months till 31 August to help those who have been facing any income disruptions due to the COVID-19 crisis.
At the press briefing, RBI governor Shaktikanta Das that the period of the moratorium was extended to 31 August "in view of the extension of the lockdown and continuing disruptions on account of COVID-19." This takes the total applicability of the relief on commercial loan installments and credit card payments due between 1 March 2020 to 31 August.
If you are a credit card user, you should know that you now have the option to opt for the moratorium on your credit card bill which means that you will not be required to pay anything for the six-month period, not even the minimum due amount.
Your bank will not be allowed to charge a late payment fee for failure to pay dues during the moratorium period.
But if you are planning to opt for the options, you should know that:
- your bank will continue to levy interest as usual on the outstanding amount.
- If make a fresh purchase during the moratorium period using your credit card, the interest will start accruing immediately.
- The interest accumulated at the end of the moratorium period will be an additional burden and it is advised to avoid opting for a moratorium if you can manage to pay your dues. Note that interest rates on credit card dues are high as it is a form of unsecured loan.
- Opting for the moratorium option provided by the central bank amid global pandemic will not affect your credit scores.
- Delaying credit card bill payments will increase your overall debt liabilities and your credit card may be blocked. According to a LiveMint report, some credit card issuers have started blocking cards of customers who avail moratorium on outstanding dues. It may be a precautionary measure taken by banks to temporarily block cards to reduce the risk of increasing their NPAs (non-performing assets) as it is assumed that those who have stopped repaying loans are facing cashflow issues.