EFFECTIVE FEE 🧵
Here is the concept of "effective fee" - Only fee to be considered for credit card applications ❇️
Disclaimer : This thread requires a little bit more focus so do read it with 100% attention ⏳
There is a sheet for reference too 🙊
Let's go 🏃
Here is the concept of "effective fee" - Only fee to be considered for credit card applications ❇️
Disclaimer : This thread requires a little bit more focus so do read it with 100% attention ⏳
There is a sheet for reference too 🙊
Let's go 🏃
(2/n)
Let's first understand 4 Types of credit cards based on fee.
1️⃣ LTF (Life time free)
Joining fee - 0
Renewal fee - 0
Nil battey sannata
Everyone's favorite 😉
Apply whenever you need it
No calculation required except for overall increase in exposure.
Let's first understand 4 Types of credit cards based on fee.
1️⃣ LTF (Life time free)
Joining fee - 0
Renewal fee - 0
Nil battey sannata
Everyone's favorite 😉
Apply whenever you need it
No calculation required except for overall increase in exposure.
(3/n)
2️⃣ FYF (First year free)
Joining fee - 0
Renewal fee - Chargeable
Again easy choice 🆗
Apply and then experience the benefits in person 🤞
Calculate effective fee and if not beneficial enough, don't renew it after 1st year.
2️⃣ FYF (First year free)
Joining fee - 0
Renewal fee - Chargeable
Again easy choice 🆗
Apply and then experience the benefits in person 🤞
Calculate effective fee and if not beneficial enough, don't renew it after 1st year.
(4/n)
3️⃣ SYF (Subsequent years free)
Joining fee - Chargeable
Renewal fee - 0
Courtesy: IndusInd cards 😀
You have to calculate effective fee & compare with benefits while applying because
a) future is uncertain ❓
b) devaluation can happen anytime 🙊
3️⃣ SYF (Subsequent years free)
Joining fee - Chargeable
Renewal fee - 0
Courtesy: IndusInd cards 😀
You have to calculate effective fee & compare with benefits while applying because
a) future is uncertain ❓
b) devaluation can happen anytime 🙊
(5/n)
4️⃣ Chargeable cards
Joining fee - Chargeable
Renewal fee - Chargeable
Here you have to calculate effective fee at joining as well as on renewal 🎯
Now let's understand the concept 👇
4️⃣ Chargeable cards
Joining fee - Chargeable
Renewal fee - Chargeable
Here you have to calculate effective fee at joining as well as on renewal 🎯
Now let's understand the concept 👇
(6/n)
Effective fee = Fee charged - Most conservative worth of Gift vouchers and points
Some examples to understand it 👇
a) Axis Airtel
Joining fee is 590 but you get 500 amazon GV
I will discount it @ 10% (conservatively)
So effective fee for 1st year is 590 - 450 = 140
Effective fee = Fee charged - Most conservative worth of Gift vouchers and points
Some examples to understand it 👇
a) Axis Airtel
Joining fee is 590 but you get 500 amazon GV
I will discount it @ 10% (conservatively)
So effective fee for 1st year is 590 - 450 = 140
(7/n)
b) SC ultimate
Joining fee and renewal fee is 5900 but you get 5000 points (on paper at least)
Points can be used to buy 5000 GV of Croma and others
I will discount it also @ 10% (conservatively)
Hence, Effective fee for all years is 1400 (5900-4500)
b) SC ultimate
Joining fee and renewal fee is 5900 but you get 5000 points (on paper at least)
Points can be used to buy 5000 GV of Croma and others
I will discount it also @ 10% (conservatively)
Hence, Effective fee for all years is 1400 (5900-4500)
(8/n)
Why you are considering GV only ?
Because it has an inherent value by default (even though it pushes you to buy something) ✴️
You may not play golf, watch movies or use lounge access but you can't deny purchasing goods. That is what everyone does each and every month.
Why you are considering GV only ?
Because it has an inherent value by default (even though it pushes you to buy something) ✴️
You may not play golf, watch movies or use lounge access but you can't deny purchasing goods. That is what everyone does each and every month.
(9/n) So you are ignoring great dining, travel and movie offers ?
✅ Yes for calculating effective fee i.e. cost of holding credit card.
🗨️ But they will be considered under benefits of holding credit card.
This segregation of cost v/s benefits makes decision making easier ✨
✅ Yes for calculating effective fee i.e. cost of holding credit card.
🗨️ But they will be considered under benefits of holding credit card.
This segregation of cost v/s benefits makes decision making easier ✨
(10/n)
Compare
Axis magnus card with 10000 + GST fee
v/s
Axis magnus card with 3800 effective fee
Which one is more simpler for you to compare with benefits and find out whether you should apply for this card or not ?
Check this sheet for reference👇
docs.google.com
Compare
Axis magnus card with 10000 + GST fee
v/s
Axis magnus card with 3800 effective fee
Which one is more simpler for you to compare with benefits and find out whether you should apply for this card or not ?
Check this sheet for reference👇
docs.google.com
That is it 🎡
If you liked this, you can read all my other threads through this super thread. 👇
Trust me, you will not be disappointed 😉
If you liked this, you can read all my other threads through this super thread. 👇
Trust me, you will not be disappointed 😉
If you found this thread insightful & helpful, do 💗 & 🔁 the first tweet (link below)
Also requesting people who write blog @ChargePlate_in @CardMavenIn @TechnoFino @cardinsider @creditcardz_in to include "effective fee" in their blogs.
See you soon👋
Also requesting people who write blog @ChargePlate_in @CardMavenIn @TechnoFino @cardinsider @creditcardz_in to include "effective fee" in their blogs.
See you soon👋
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