Case study based factual comprehension with table data interpretation/ inference worksheet for class 10, 11 & 12

 Read the case study based factual passage and study the table. Answer the questions given below on basis of the comprehension content:


With credit card companies keeping limits high, many people are tempted to go for high-value purchases/shopping on credit using the cards. Often enough, the total dues are also not cleared by the due date and the card holder has to opt for either revolving credit or convert the outstanding into EMIS. Now, if you can clear the dues by the second due date, then revolving credit may not be a bad idea, but if you do not expect to complete repayment in the near future, EMI is always a better option. "Technically, the entire outstanding balance on the card (and not just a particular purchase) can be converted into EMIS.

Banks charge a monthly rate of interest on converted transactions,” says Aditya Kumar, founder and CEO of Qbera.com.


Compared to revolving credit, in which people mostly pay minimum dues and the interest piles up, the EMI conversion option is far less costly. “The interest rate charged will depend on three factors:

 (a) credit pro file of the borrower

 (b) loan tenure and

 (c) the bank's internal policies.

 Typically, the interest rate charged is in the range of 14-21% p.a when the credit card transactions are converted into EMIs, compared to the 42 % on the credit card itself," says  Mr. Gaurav Chopra, founder and CEO, IndiaLends


However, all EMI conversion options are not the same, varying widely in the total costs. If you use your credit card frequently for big purchases and spends, then it would make sense for you to minutely compare EMI conversion costs too. 


 

Compare the total cost. Do not take a call based on just lowest interest rate, but  factor in the processing fee charged with it. In small tenure loans, the processing fee will play a significant role in your total outgo. "You have to pay an additional 18 % GST on interest amount of the EMI and the processing fee. Further, prepayment or foreclosure of the EMI facility also attracts associated charges and GST," says Anuj Kacker, COO and co-founder, MoneyTap. Sometimes a credit card with lower interest rate may appear less costly but it may be charging a higher processing fee than others. (see accompanying table).


Most credit cards give you a tenure(time period) option ranging from three to 24 months. However, interest rates will not be the same. "The longer the tenure, the higher the interest rate," says Mr. Kacker. This means the sooner you repay the dues, the less costly it will be. Interest rates are also decided based on the customer's usage, repayment behaviour and many other factors. So cards could offer different rates to different customers. It makes sense for you to try the EMI con version option and compare the total cost.


Q1. Which option is always a better option?


            a) interest

               b) loan

             c) EMI

             d)Revolving credit

Q2. Banks charge a monthly rate of interest on __________transactions.

            a) loan

            b) deposit

            c) original

            d) converted

Q3. Which dues are monthly paid in revolving credit?

            a) minimum dues

            b) monthly dues

            c) cost dues

            d) credit dues

Q4. Why all EMI  conversion options are not same?

            a) they change differently

            b) they vary widely in Total costs.

            c) they come under different policies.

            d) the banks are different.

Q5. What is interest rate p.a. in case of card A for 12 months?

            a) 15%                                b) 20%

            c) 12%                                d) 10%

Q6. Flat monthly cost in 6 months for card B is __________.

            a) 0%                                  b) 1%

            c) 2%                                  d) .5%

Q7. Which card has lower months processing fee?

             a) Card A                            b) Card B

             c) Card C                            d) Card D

Q8. In which loans, the processing fee will play a significant role in your total outgo?

            a) long term                         b) monthly

            c) small tenure                    d)  fixed

Q9. Most credit cards give you a tenure option ranging from three to ____________ .

            a) 12 months                        b) 15 months

            c) 30 months                        c) 24 months

Q10. On which basis, interest rate is decided?

                a) customer usage

            b) number of transactions

            c) area of bank

            d) type of customer

 Answer:


A1. EMI

A2. converted

A3. minimum dues

A4. They vary widely in total cost

A5. 15%

A6.  1%

A7. Card B

A8. Small Tenure

A9. 24 months

A10. customer usage

Comments

Unknown said…
Thanks for making case study data interpretation comprehension worksheet
August 1, 2021 at 11:55 PM
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