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 Citibank offering me 3.66% per annum, For minimum RM30,000

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TStaiping...
post Sep 13 2019, 04:54 PM, updated 5y ago

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Citibank offering me 3.66% per annum
For minimum RM30,000
min 30 months, max 5 years

Could you advice whether should i take this and put into FD promo rates?
MUM
post Sep 13 2019, 05:02 PM

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since you already have 100k Cash + 10k in FD,....

then you must have your own reasons to seek this extra cash loan of RM30k.

you can managed to generate that amount of cash in hand then I am sure you can make full use of this RM30k loan

thus I cannot advise you if you should take this promo loan...maybe other can.
weissPC
post Sep 13 2019, 05:05 PM

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QUOTE(taiping... @ Sep 13 2019, 04:54 PM)
Citibank offering me 3.66% per annum
For minimum RM30,000
min 30 months, max 5 years

Could you advice whether should i take this and put into FD promo rates?
*
Ask the effective rate, 3.66% p.a. is equivalent to 6.82% effective interest rate for 5 years loan period.

You're not earning interest if you take loan and put into FD, you'll lose money.

Count what's your installment to Citibank every month (RM591.50). It will be more than what you'll earn from FD.
TStaiping...
post Sep 13 2019, 05:16 PM

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QUOTE(weissPC @ Sep 13 2019, 05:05 PM)
Ask the effective rate, 3.66% p.a. is equivalent to 6.82% effective interest rate for 5 years loan period.

You're not earning interest if you take loan and put into FD, you'll lose money.

Count what's your installment to Citibank every month (RM591.50). It will be more than what you'll earn from FD.
*
Mind sharing how you get 6.82% effective interest rate?

weissPC
post Sep 13 2019, 05:28 PM

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QUOTE(taiping... @ Sep 13 2019, 05:16 PM)
Mind sharing how you get 6.82% effective interest rate?
*
I just did some quick calculations using financial calculator, not absolutely sure.

Attached Image

But using Excel calculations, you can earn some extra from FD, now I'm a bit confused.

Attached Image

Sorry, need to do some digesting too.


TStaiping...
post Sep 13 2019, 05:49 PM

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QUOTE(weissPC @ Sep 13 2019, 05:28 PM)
I just did some quick calculations using financial calculator, not absolutely sure.

Attached Image

But using Excel calculations, you can earn some extra from FD, now I'm a bit confused.

Attached Image

Sorry, need to do some digesting too.
*
Oh.. i'm more confuse now
MUM
post Sep 13 2019, 08:32 PM

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QUOTE(taiping... @ Sep 13 2019, 05:16 PM)
Mind sharing how you get 6.82% effective interest rate?
*
maybe from here.....??
https://loanstreet.com.my/calculator/calcul...ective_interestAttached Image

This post has been edited by MUM: Sep 13 2019, 08:50 PM
ckdenion
post Sep 13 2019, 10:00 PM

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QUOTE(taiping... @ Sep 13 2019, 04:54 PM)
Citibank offering me 3.66% per annum
For minimum RM30,000
min 30 months, max 5 years

Could you advice whether should i take this and put into FD promo rates?
*
not advisable. the 3.66% is simple interest rate. say you take RM 30,000 with 5 years.

your repayment will be RM591.50/month. that will fetch an effective interest rate of 6.82% per year for that 5 years.

perhaps you might wanna look into saving and investing RM590/month in a low risk investment vehicle, say bond funds. smile.gif
ckdenion
post Sep 13 2019, 10:02 PM

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QUOTE(weissPC @ Sep 13 2019, 05:28 PM)
I just did some quick calculations using financial calculator, not absolutely sure.

Attached Image

But using Excel calculations, you can earn some extra from FD, now I'm a bit confused.

Attached Image

Sorry, need to do some digesting too.
*
yea you are right. just need to select "END MODE" then you will get 6.82%. of course you can still earn some from FD also depending on the rates. in this case make sure it is at least 4%. just my point of view, it will be better instead to invest RM590 monthly elsewhere instead of taking up the loan.
Ramjade
post Sep 13 2019, 10:58 PM

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QUOTE(taiping... @ Sep 13 2019, 04:54 PM)
Citibank offering me 3.66% per annum
For minimum RM30,000
min 30 months, max 5 years

Could you advice whether should i take this and put into FD promo rates?
*
Some of the rules when it comes to investing
1. Banks are never your friend. What they want is your money only.
2. Never ever depend on banks for investment advise, products. Reason: see no (1)
2. Whatever deal they offer you, you will always end up as the loser. Banks always win. Think twice before taking up anything from banks.
adele123
post Sep 14 2019, 12:27 AM

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I hope you have been enlightened.

Banks are using a method abit like saying '2cm is longer than 1 inch' and they hope you dont know how long is 1 inch in cm.

So you need to convert everything to cm first. Cheers
TStaiping...
post Sep 14 2019, 12:43 AM

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Damn! I learn so much! Thanks guys for the advice. Hope others who read this thread learns too
cherroy
post Sep 14 2019, 12:47 AM

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QUOTE(weissPC @ Sep 13 2019, 05:28 PM)
I just did some quick calculations using financial calculator, not absolutely sure.

But using Excel calculations, you can earn some extra from FD, now I'm a bit confused.

Attached Image

Sorry, need to do some digesting too.
*
QUOTE(taiping... @ Sep 13 2019, 05:49 PM)
Oh.. i'm more confuse now
*
You won't make money by loan money from bank and put in FD.
The reason why confusing, because of using wrong formula to calculate, you need to use reducing balance to calculate the FD interest, because you need to repay the loan every month.

You borrow 30K to put in FD. You need to repay every month (Rm591) immediately after borrowed. Set aside the month to month calculation, use year for easy illustration.
30K first year FD interest = 30k x 0.04 (4% Interest) = 1,200

On 2nd year, your FD left with 30K - (591 x 12) repayment = 22,908
So second year FD Interest = 22,908 x 4% (assume 4% FD) = 916.32 Interest
On third year, FD left with 22,908 - 7,092 = 15,816 x 0.04= 632.64 Interest
on fourth year FD left with 15,816 - 7,092 = 8,724 x 0.04 = 348.96 Interest
Fifth year FD left with 8,724 - 7092 = 1,632 x 0.04 = 65.28

Total FD interest earned = 1,200 + 916 + 632 + 348 + 65 = 3,161 vs total loan interest 5,490

The FD interest earned will be much lesser if we count month to month (as the loan repayment is monthly basis reducing).

So you can see where goes wrong, because the excel use compounded interest to calculate, which is only right if there is no monthly repayment, that's why the flat interest rate is not an effective rate.
Effective rate is the "real" rate of interest you are paying.



Showtime747
post Sep 14 2019, 12:51 AM

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QUOTE(taiping... @ Sep 14 2019, 12:43 AM)
Damn! I learn so much! Thanks guys for the advice. Hope others who read this thread learns too
*
Haha, so many threads about simple interest and compound interest in this forum before yours, yet you never searched and read first. Now you hope others learn from your thread ? laugh.gif
TStaiping...
post Sep 14 2019, 12:54 AM

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QUOTE(cherroy @ Sep 14 2019, 12:47 AM)
You won't make money by loan money from bank and put in FD.
The reason why confusing, because of using wrong formula to calculate, you need to use reducing balance to calculate the FD interest, because you need to repay the loan every month.

You borrow 30K to put in FD. You need to repay every month (Rm591) immediately after borrowed. Set aside the month to month calculation, use year for easy illustration.
30K first year FD interest = 30k x 0.04 (4% Interest) = 1,200

On 2nd year, your FD left with 30K - (591 x 12) repayment = 22,908
So second year FD Interest = 22,908 x 4% (assume 4% FD) = 916.32 Interest
On third year, FD left with 22,908 - 7,092 = 15,816 x 0.04= 632.64 Interest
on fourth year FD left with 15,816 - 7,092 = 8,724 x 0.04 = 348.96 Interest
Fifth year FD left with 8,724 - 7092 = 1,632 x 0.04 = 65.28

Total FD interest earned = 1,200 + 916 + 632 + 348 + 65 = 3,161 vs total loan interest 5,490

The FD interest earned will be much lesser if we count month to month (as the loan repayment is monthly basis reducing).

So you can see where goes wrong, because the excel use compounded interest to calculate, which is only right if there is no monthly repayment, that's why the flat interest rate is not an effective rate.
Effective rate is the "real" rate of interest you are paying.
*
Oh I get it now! Thanks for the clarification. The sales person tat called me was truthful, now tat I remember. She said monthly hav to pay RM1,900 plus. Got it!
12kevin
post Sep 14 2019, 10:33 PM

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Luckily u still remember to ask it in here,btw lowyat really a good place to learn new thing /gain knowledge,haha
cedyy
post Sep 14 2019, 11:26 PM

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Bank ain't stupid to let you make money back from the bank's money
Drian
post Sep 18 2019, 12:00 PM

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QUOTE(taiping... @ Sep 13 2019, 04:54 PM)
Citibank offering me 3.66% per annum
For minimum RM30,000
min 30 months, max 5 years

Could you advice whether should i take this and put into FD promo rates?
*
You have to understand how the interest rates are calculated.

Imagine at 4th year , you’ve paid back 80% of the loan but they are still charging you 3.66% of the full loan.
You can’t compare interest rates like that.

This post has been edited by Drian: Sep 18 2019, 12:09 PM
babygrand123
post Sep 19 2019, 12:42 AM

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Nice to learn from you all expertise here. Thanks

 

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