In this episode, Monika discusses a recent Supreme Court judgment that impacts credit card holders, overturning a 2008 ruling by the National Consumer Disputes Redressal Commission (NCDRC) that capped interest rates on unpaid credit card dues at 30% per year. This decision now allows banks to set higher rates, arguing that credit cards, being unsecured loans, necessitate such charges. Monika highlights the pitfalls for consumers, such as interest being levied on the full bill amount if partial payments are made and the significant cost of revolving credit card debt. She advises listeners to use credit cards wisely to avoid excessive interest rates of 36-49% annually and warns against accumulating debt that could take years to pay off.

The conversation moves to practical financial advice for listeners. Monika shares essential tips to avoid credit card debt traps, emphasizing timely payments, limiting the number of cards, and breaking fixed deposits if necessary to pay off high-interest debt. She underscores the importance of thoughtful financial planning to steer clear of costly mistakes.

Monika then explains the role of benchmarks in evaluating investments. Just as the perception of height varies by country, investment returns need context to be meaningful. Benchmarks provide a standard for comparing performance, showing if an investment outperforms or underperforms the market average. Monika stresses that understanding and using appropriate benchmarks is crucial for making informed investment choices, as it puts returns in the right perspective.

Listener queries focus on practical financial challenges. Nagendra from Bengaluru seeks advice on managing risks and tax implications of company ESOPs, exploring diversification strategies. Hiren, a retiree, asks whether to withdraw additional income from mutual funds or PPF to meet leisure expenses. Sukhjeevan from the U.S. seeks guidance on minimizing losses from a mis-sold whole life insurance plan and reallocating funds into better investments.

Chapters:

(00:33 - 4:05 ) Higher credit card interest rates and how to manage credit card debt

(4:06 - 6:34 ) Understanding benchmarks and their importance in portfolio performance

(6:38 - 9:31 ) Managing ESOPs: Balancing risks and tax implications

(9:33 - 11:44 ) Retirement planning: Deciding between PPF and mutual funds for withdrawals

(11:45 - 13:20 ) Dealing with dud insurance policies: Max Life and other mis-sold products

If you have financial questions that you’d like answers for, please email us at ⁠mailme@monikahalan.com⁠

Monika’s book on basic money management

⁠⁠⁠⁠⁠⁠⁠⁠https://www.monikahalan.com/lets-talk-money-english/⁠⁠⁠⁠⁠⁠⁠⁠

Monika’s book on mutual funds

⁠⁠⁠⁠⁠⁠⁠https://www.monikahalan.com/lets-talk-mutual-funds/⁠⁠⁠⁠⁠⁠⁠

Monika’s workbook on recording your financial life

⁠⁠⁠⁠⁠⁠⁠⁠https://www.monikahalan.com/lets-talk-legacy/⁠⁠⁠⁠⁠⁠⁠⁠

Calculators

⁠⁠⁠⁠⁠⁠⁠⁠https://investor.sebi.gov.in/calculators/index.html⁠⁠⁠⁠⁠⁠⁠⁠

You can find Monika on her social media @monikahalan. 

Twitter ⁠⁠⁠⁠⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠⁠⁠⁠⁠

Instagram ⁠⁠⁠⁠⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠⁠⁠⁠⁠

Facebook ⁠⁠⁠⁠⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠⁠⁠⁠⁠

LinkedIn ⁠⁠⁠⁠⁠⁠⁠@MonikaHalan⁠⁠⁠⁠⁠⁠⁠

Production House: ⁠⁠⁠⁠⁠⁠⁠www.inoutcreatives.com⁠⁠⁠⁠⁠⁠⁠

Production Assistant:⁠⁠⁠⁠⁠⁠⁠ Anshika Gogoi⁠⁠⁠⁠