ARE you a cynic? Try this test: when you see an advertisement with the word FREE HOLIDAY emblazoned in large letters, do you look for the Conditions Apply caviat?

I tried this on hundreds of people. I have yet to meet one who does not look out for the caviat.

Then again, we don't seem to be a nation of cynics, because we still get conned by our friendly neighbourhood banks. When a bespectacled, respectable-looking gentleman in a stiff white shirt tells you that you will be offered a 11 per cent per annum interest rate or that you are being offered an advance Equated Monthly Installment scheme because you are a special customer, isn't it easier to believe him than try to make sense of the numbers?

Take my advice. Make the effort. Bankers thrive on our fear of numbers and lack of knowledge.

Here are three of the latest marketing gimmicks doing the rounds:

1. Flat rates
Ashok Gupta wrote about his dream bike that he finally bought for Rs 41,000 with a down payment of Rs 9,000. The two-year loan was offered at a flat interest of 11 per cent pa, working out to an EMI of
Rs 1,627.

Without knowing or being told what flat means, he signed on only to realise that his EMI at 11% pa should have been Rs 1,492!

The innocent sounding flat rate was the culprit. Flat simply means the bank calculates your interest every month on the full amount of loan, conveniently ignoring that you are repaying the principal amount with each EMI.

Photograph: Associated Press/ Andy Wong

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e-mail: Sanjay Matai

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