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?
Citibank offering me 3.66% per annum, For minimum RM30,000
Citibank offering me 3.66% per annum, For minimum RM30,000
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Sep 13 2019, 04:54 PM, updated 5y ago
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#1
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Senior Member
1,056 posts Joined: Apr 2016 |
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? |
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Sep 13 2019, 05:02 PM
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#2
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All Stars
13,204 posts Joined: Mar 2015 |
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. |
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Sep 13 2019, 05:05 PM
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#3
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Junior Member
316 posts Joined: May 2015 |
QUOTE(taiping... @ Sep 13 2019, 04:54 PM) Citibank offering me 3.66% per annum Ask the effective rate, 3.66% p.a. is equivalent to 6.82% effective interest rate for 5 years loan period.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'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. |
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Sep 13 2019, 05:16 PM
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#4
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Senior Member
1,056 posts Joined: Apr 2016 |
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. Mind sharing how you get 6.82% effective interest rate?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. |
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Sep 13 2019, 05:28 PM
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#5
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Junior Member
316 posts Joined: May 2015 |
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Sep 13 2019, 05:49 PM
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#6
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Senior Member
1,056 posts Joined: Apr 2016 |
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Sep 13 2019, 08:32 PM
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#7
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All Stars
13,204 posts Joined: Mar 2015 |
QUOTE(taiping... @ Sep 13 2019, 05:16 PM) maybe from here.....??https://loanstreet.com.my/calculator/calcul...ective_interest This post has been edited by MUM: Sep 13 2019, 08:50 PM |
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Sep 13 2019, 10:00 PM
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#8
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Senior Member
2,866 posts Joined: Sep 2008 From: Wangsa Maju, KL |
QUOTE(taiping... @ Sep 13 2019, 04:54 PM) Citibank offering me 3.66% per annum not advisable. the 3.66% is simple interest rate. say you take RM 30,000 with 5 years.For minimum RM30,000 min 30 months, max 5 years Could you advice whether should i take this and put into FD promo rates? 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. |
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Sep 13 2019, 10:02 PM
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#9
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Senior Member
2,866 posts Joined: Sep 2008 From: Wangsa Maju, KL |
QUOTE(weissPC @ Sep 13 2019, 05:28 PM) I just did some quick calculations using financial calculator, not absolutely sure. 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.But using Excel calculations, you can earn some extra from FD, now I'm a bit confused. Sorry, need to do some digesting too. |
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Sep 13 2019, 10:58 PM
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#10
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All Stars
22,199 posts Joined: Feb 2011 |
QUOTE(taiping... @ Sep 13 2019, 04:54 PM) Citibank offering me 3.66% per annum Some of the rules when it comes to investing For minimum RM30,000 min 30 months, max 5 years Could you advice whether should i take this and put into FD promo rates? 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. |
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Sep 14 2019, 12:27 AM
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#11
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Senior Member
4,413 posts Joined: Jul 2013 |
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 |
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Sep 14 2019, 12:43 AM
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#12
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Senior Member
1,056 posts Joined: Apr 2016 |
Damn! I learn so much! Thanks guys for the advice. Hope others who read this thread learns too
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Sep 14 2019, 12:47 AM
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Staff
25,759 posts Joined: Jan 2003 From: Penang |
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. Sorry, need to do some digesting too. QUOTE(taiping... @ Sep 13 2019, 05:49 PM) 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. |
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Sep 14 2019, 12:51 AM
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Senior Member
4,258 posts Joined: Nov 2012 |
QUOTE(taiping... @ Sep 14 2019, 12:43 AM) 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 ? |
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Sep 14 2019, 12:54 AM
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#15
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Senior Member
1,056 posts Joined: Apr 2016 |
QUOTE(cherroy @ Sep 14 2019, 12:47 AM) You won't make money by loan money from bank and put in FD. 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!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. |
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Sep 14 2019, 10:33 PM
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#16
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Junior Member
53 posts Joined: Sep 2019 |
Luckily u still remember to ask it in here,btw lowyat really a good place to learn new thing /gain knowledge,haha
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Sep 14 2019, 11:26 PM
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Senior Member
1,351 posts Joined: Jun 2009 |
Bank ain't stupid to let you make money back from the bank's money
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Sep 18 2019, 12:00 PM
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Senior Member
4,968 posts Joined: Jan 2003 |
QUOTE(taiping... @ Sep 13 2019, 04:54 PM) Citibank offering me 3.66% per annum You have to understand how the interest rates are calculated.For minimum RM30,000 min 30 months, max 5 years Could you advice whether should i take this and put into FD promo rates? 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 |
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Sep 19 2019, 12:42 AM
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Junior Member
662 posts Joined: Sep 2011 |
Nice to learn from you all expertise here. Thanks
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