Credit card interest gets slightly less punishing

Revolving a credit card balance in India has always been expensive in a way the statement does not make obvious. The headline rate of 3 to 3.5 percent a month compounds to somewhere between 43 and 51 percent a year, and until now the base it was applied to could include convenience fees, late payment penalties and the GST on both.

Under the revised framework, those cannot be rolled into the compounding base. Interest is charged on what you actually spent and have not repaid, not on the penalties layered on top of it.

This is a real improvement and a small one. It does not change the rate, and 42 percent a year remains the most expensive borrowing most households will ever do. On a 50,000 rupee balance carried for a year, the rate itself still costs more than 20,000. The change trims the edges of a number that was already the problem.

The practical read has not moved. If you are carrying a balance, clearing it beats every investment available to you, because no fund reliably returns 42 percent and paying this off does exactly that, guaranteed and tax free.