Penny saved, is a penny earned!

“Penny saved, is a penny earned!” I cannot help but feel, how true this saying is today, when I try and calculate how much I am now saving each month, thanks to finally paying off my credit card debt (finally did that couple of months ago).

While the most apparent positive impact of completely paying off Credit Card Debt is the removal of high interest rate that one has to pay on the outstanding balance (constituted 7.14% of my total Credit Card Bill last fiscal), the other positive impact is in the reduction of Service Tax and Cess, we end up paying to the government, since it is also levied on the interest we have to pay to the credit card company!

Based on my calculation, on average I would be saving a whopping 40% in Service Tax and Cess each month, by not paying any interest to my credit card company and at the same time, spending much more than what I was, at the same time last year!

Another way I would be saving some money is by paying my Credit Card Bills Online, instead of paying cash at the bank branch, which I earlier used to do and it attracted a fixed cash processing fee of Rs. 50 per payment (Rs. 600 a year), not to mention cost of petrol to commute to the bank and the parking charges!

While all this might not seem like much, but when you are spending a good six figure amount each year through you credit card (mostly on business related activities) all these small charges can add up quickly and end up becoming a major invisible and useless expenditure and isn’t even deductible!

The next step I am planning to take is to apply for another Credit Card from a different bank, to not only serve as a backup in case of any issues with the current Credit Card or the Credit Card Company, but also one which gives cash back on online payment of Utility and Phone Bills (which I already do) and can thus be utilized to save a little more on these recurring, yet important expenses.


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  1. rahi September 17, 2011
  2. Yogesh Sarkar September 19, 2011

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