Getting Your Finances Back On Track If You Overspend On A Vacation

Who does not like vacations?

Vacations refresh you. Vacations are blissful.

But unfortunately, vacations can be quite expensive. It is easy to go on a splurge when going on one of these trips. In fact, travel companies depend on your taking expensive packages.

When going on vacations, it is easy to overspend. Since it is a pleasure trip, everything that you do or think of doing, you tell yourself that you totally deserve it. We’re not saying you don’t, but it is not prudent to waste a lot of money on room upgrade, on drinks, on meals outside the hotel, and so on.

These costs add up fast, and can break the spell of your dream vacation. All the strict budgeting done back home won’t help if you splurge beyond your budget while on the trip.

The first step to do at times like this is to be honest. What is the extent of the damage? How much did you overspend, and from where did all that money come? Maybe you used your credit card, or almost emptied your bank account. Once done, make a concrete plan to refill that depleted or affected account.

Repay yourself and stop spending

Here’s what you need to do. You have to set a realistic goal for repairing your personal finance. The goal needs to say how much you overspend or spend during the trip, and how much and how you shall repair the damage. If the money was taken from an account or by using a credit card, say how you shall refill the account or pay back the credit card loan.

If your credit card was affected, pay attention to that first. Even if this expenditure gets you cash-back and spending points, these benefits are offset by the accrued interest when you cannot pay the balance back on time.

Do this: cut back and skip all optional expenses for the next few weeks, or even a few months. But don’t worry! This financial state of affairs won’t last forever.

Plan and set spending limits

When you have recovered your financial debacle created from your previous vacation, and if you are already dreaming about the next trip, don’t make the same mistakes again. Your financial situation depends on it.

Apply what you have learnt from this article. Pay attention to all expected and unexpected costs. Write down how much you are overspending and on what. Before going on the trip, plan everything and have a strict budget.

Keep the budget clear and reasonable. Don’t keep it too low either, or else you may return to overspending once more.

Travel Habits - 5 Traveling Habits That are Breaking Your Bank

Habits are not always easy to break. When it comes to making a trip, some travel-planning tendencies of yourself are costing you. If you want to save money during trips, here are 5 mistakes you do not want to make.

1. No logging in: Maybe you browse casually when looking for tickets and travel plans, but did you know that doing so can work against you? Yes, it can. When you make an account on a travel site and log in, you can get so much more in terms of better prices, offers and packages. Why miss out all of that and lose the opportunity to save money? You save a lot of money just by logging in. See these as a kind of member’s benefit which are available to members only, not to outsiders who are just casually browsing. Take Expedia for example. Just by signing up, you get 10% off on 80,000 hotels and from 10000 activities.
2. Waiting too long: Maybe you are waiting for the best moment to capitalize on a great travel rate. Well, there are way too many chances of you missing out. One expert says that finding the best time to purchase a flight ticket is not as simple as buying something on a certain date. What is the way out of this? Well, you may want to start researching earlier. If you want to book a flight, start from 3 to 6 months before.
3. The mistake of being inflexible: Travel experts are always ready to tell you that it is important to book tickets a few months before departure. That can work of course, but it is also important to be flexible. Be open to last-minute deals as well. For example, you want to travel to Paris on the 2nd of June. Normally, you’ll have to do with whatever air ticket price you can get for that day. However, if you are more easygoing, you can surely get the best deals. When you are planning for a vacation or try, try to be flexible. If you come across cheap flights suddenly, don’t let them go.
4. Forgetting to bundle benefits and packages: Most people do know about bundling auto insurance and home insurance, along with cable and internet. Well, there is another bundle as well: hotel and airfare. Nowadays, there are so many sites out there from where you can get flight and hotel stay packages. The benefit of course is that you get deep discounts. Now, there’s no need to book everything in one sitting. You can add things while on the trip itself! You can get as much as 32% savings when you buy in bundles.
5. Missing out on coupons: Price for the flight or for the hotel is not always the price you have to pay. Shoppers who are savvy enough know that it is important to look for online promo codes and coupons before ordering anything online. These save you a lot of money.

5 Ways To Get A Loan Despite Having A Low Credit Score

Lenders give you money after determining your credit worthiness, which means how likely you are to give back their loan on time.

Think of it from a different perspective of the lender. He is actually taking a risk by lending money to anyone at interest. After all, the borrower may not give back the money due to various reasons. This is why lenders, whether they are banks or individual lenders, give money after scrutinizing your credit worthiness. Understand, giving personal loans is risky.

They do this by seeing your credit score. A low credit score can indicate that you are not very credit-worthy, while a high score indicates otherwise. If you have a high credit score, banks will line up to give you loans.

Now, you may have heard that you can’t get loans with a bad credit score. However, it is not completely true. Here are ways to get a loan despite having a low credit score.

• Prove that your income can support EMI payments: Lenders are mainly interested in getting their money back on time. So if you have a stable monthly income which can support the monthly EMIs, they may not mind you having a low credit score. Yes, maybe you’ll get it at a high interest rate, but at least you’ll get the money
  
  
• As for a lower amount: A lower amount mitigates the risk of the lender, even if slightly. So if banks are not ready to give you a large amount, ask for a small amount. They shall be more than likely to give you that. Giving a smaller amount makes banks more comfortable in dealing with you since smaller amounts are easier to repay.
  
  
• Apply along with a co-applicant or guarantor: So here’s the thing with co-applicants and guarantors. Their creditworthiness is more than yours, and if they co-apply or guarantee loan repayment, banks will be more willing to give the money. Since guarantors and co-applicants greatly increase the chances of repayment, you are more likely to get the loan.
  
  
• Correct mistakes in credit report: Your credit report can contain errors, and it is your responsibility to see that there are no errors. Understand, credit bureaus handle hundreds and thousands of credit reports a year, and this there can be errors easily. It is up to you to check. If you do find mistakes, report it to the credit bureau and they’ll take care of it.
  
  
• Ask the lender to consider your application with NA or NH in the credit report: This means that there has been an absence of credit in the last 3 years. If so, you may not have a credit score at all. In such cases, talk to your lender about this credit inactivity, and if you can get a loan. The interest rate shall be slightly higher.

Loan Rejection - Is Loan Rejection Hurting Your Credit Score?

It hurts when your loan application is rejected. However, it hurts your credit score more than it hurts you. Getting rejected for a loan is bad for the score, not just for the short term, but for the long term as well. Getting rejected once increases your chances of getting rejected by other lenders as well. Yes, these things do get recorded in your credit report, and thus damage the score.

If your credit score is low, it can be due to a wide variety of factors. It can be due to debt settlements, on-payment of debts, not paying debt installments on time, high credit utilization, and much more. Thus, there can be many reasons for a low credit score.

The good news is that there are just as some ways to improve or increase it. But you won’t go into those points in this article. Here we shall detail out the impact of a rejected loan application on your credit score.

What is the credit score?

Your credit score is a 3-digit number that measures your credit worthiness, or how likely you are to repay loans. If the score goes down due to whatever reason, other lenders will see you are a risky candidate to give loans to.

Impact of a loan rejection on your credit score

Lenders make a credit inquiry each time you apply for a loan. This is known as a hard inquiry, which alone lowers your score if just a little bit. This is why experts warn not to apply at too many places at once for credit, as it only increases the risk of multiple rejections.

Thus, be careful before applying for credit. If there is a rejection, ask the bank or lender why it was so. Ensure that you don’t make the mistake again while applying next time.
Reasons why your loan may have been rejected

There can be many reasons behind a loan rejection. To know the reason behind a loan rejection, and what is affecting the score, check your credit report. Here are the common reasons behind a low credit score.

• Taking multiple loans: Do you have more than one loan account? If so, banks are more likely to refuse you loans and even credit cards. This is because they see you as one with an unstable personal finance since you are always in need of loans.
• Loans defaulted: Too many of these, regardless of whether it was solely your account or whether it was a joint-loan account, you will be penalized by loan denial later on. Banks don’t want to give loans to one who has defaulted on loans.
• Credit score remarks: Loan defaults are not the only problem which can lower your credit score. Did you make a debt settlement with a bank? If so, then your credit report now contains the remark “settled.” This makes it hard to get loans later. However, you can still get credit if you give security. Lenders are more likely to reject unsecured loan applications at this point.
• Employment status: Incidents of late salary credits and when the employer is not well-known to the bank can give rise to loan rejections.
  

6 things to do to raise your credit score?

Here are a few things you can do to get back on track. It’ll take time, but you’ll get there.

• Pay off all debts
• Have a low credit utilization ratio, below 30%
• Pay overdue bills
• Do not take multiple loans
• Get a loan tenure which suits you
• Get mixed loans
  

Follow these tips, you'll get over a loan rejection.

3 Steps to Have a Debt-Free Year - 3 Tips for Debt-Free Life

New Year is a time for making resolutions, decisions and for reflecting on the things in your life. Every year, countless numbers of people in India resolve, at the year’s beginning, to pay off their debt. However, very few of them actually do that.

By February, the enthusiasm you had in January may most likely wear off. This will be faster if your plan was too complex or too flimsy. In these cases, without a concrete plan, your plan shall fizzle out and finally be forgotten.

Instead, try out this plan. Complete the first two steps and you get to choose a payoff method in step three, which shall carry you through for the rest of the year.

• Know your debts: It might sound scary, but you do need to know your debts, or the money you owe to people or agencies. Besides, you do need an honest evaluation of your debt. Also, you only need to do this just once.
• Fund your debt accounts: Now that you know what debts you have, it is time to become free of them. To do that, there are a few sub steps. First of all, you need to calculate your monthly expenses, including what you need to create your emergency fund. Now, subtract that amount from your monthly income. This shall give you the funds you can dedicate towards eliminating debt.

To make real progress, you need to do two things. Firstly, you need to earn a bit more, which you easily can by cutting off excess expenses, selling old electronics and even your cable connection. All this might not be fun to do, but remember that doing these shall help you a lot in settling your debts.

Find a repayment strategy and stick to it: There are so many ways to fall into the debt trap, but just two ways to climb out of it. These strategies are the Debt Avalanche and the Debt Snowball. These depend on your preferences for persistence and instant gratification.

Debt Avalanche strategy can be used if you want results fast, but it can feel slow in the beginning. In this strategy, you pay off those debts with the highest interest first. Over time, this strategy saves you thousands. The only problem is that it takes time to get the first debt to be settled.

Debt Snowball is the strategy in which you get rewards upfront. In this, you focus on the smaller debts first. Since these get over faster, you get more motivation to keep continuing. You focus on the smaller debts first, no matter what the interest rates are. The catch is that this process takes longer and costs more in interest.

You can supplement either strategy with the strategy called Debt Snowflakes. In this strategy, you put small savings for your goals.

Loan Application - How You can Perfect your Loan Application

Getting your loan application rejected is not a good feeling. It’s not good for your credit score either. Did you know that loan application rejections mar your credit score, sometimes for as long as several years? And of course, with loan rejections, your chances of getting loans grow slim.

So, what are your options?

Well, the first thing you can surely do is to make sure that your application does not get rejected in the first place. And that is exactly what you shall teach you here in this article.

Make sure you meet the loan criteria

Each lender and each loan have their separate eligibility criteria. Therefore, before applying and risking everything at one throw, why not study the eligibility document carefully? Understandably, when you are desperate for money, you want that loan as soon as possible. Again, it is understandable. But it won’t help if that little-thought out application gets rejected. That is why you need to know the criteria like the back of your hand.

Know exactly what the bank is looking for in a borrower. Most banks in India have a minimum age limit of 21 and a maximum of 60. Again, this varies from one lender to another. Age varies in criteria for professionals and self-employed people too, for loans. Banks also have a minimum income requirement as well as income and employment requirements.

Keep all your paperwork in order

To get a loan, you need to submit certain documents. Below given are the common documents one needs to submit.

• ID proof: This includes your PAN card, Aadhar card, and driving license.
• Age proof: this includes your PAN card,  Aadhar card, Voter ID card, and Driving license.
• Address proof: This includes your Rental agreement, Passport, Lease agreement, Voter ID, Ration card, Driving license and Aadhar card. You can also use electricity, water, gas, and phone bills.
• Income documents: this includes your payslips and salary account bank statements.
  

Don’t forget to research

This is one of the biggest mistakes you can make. Not researching enough can mean ending up with the wrong loan for yourself, one with a higher rate of interest and lots of hidden fees and charges.

That is why you need to research thoroughly when looking for a personal loan. Other than this, you should compare the various options too. Take a special look at the various fees and charges.

Make sure your credit history is more or less spotless

For obvious reasons, lenders want to see if you can repay their loan. To know whether you can, they check your credit history. If you have been paying back your previous loans on time, you are likely to get this one’s application accepted as well.

With these tips, you’ll speed up your application process and also get it accepted!

Home Loan Transfer - Problems Faced in Home Loan Transfer

Getting a Balance Transfer of BT can be quite lucrative. It may seem to you that the grass is greener on the other side, or that there are many, many benefits waiting for you after getting the Balance Transfer. Banks do offer lower interest rates in BTs, but there are still charges and procedure to be aware of.

If you are not satisfied with the loan you have, or if you are finding it hard to repay it back, or if you just want to bring down the interest rate, a Balance Transfer is the best solution. This is your Plan B, if the first loan is not working. Maybe you have seen that the first bank is not giving good service and just want to switch to another one, or maybe you want to renegotiate the terms of the loan but your bank doesn’t want to hear anything about it. The reason can be anything, but at the end of the day, you know a Balance Transfer can help you in all of these circumstances.

Why did Balance Transfers Start?

Earlier, banks did not want to reconsider the interest rates or repayment terms and durations. After all, from the point of the banks and lenders, if customers were allowed lower interest rates suddenly, the banks themselves will lose out. Since customers would save more in case of lower interest, they’d repay faster, and that the banks were not ready to allow.

However, as we shall see below, Balance Transfers come with their own slew of problems.

The process

There are some things in the process itself which you need to be aware of. To even begin the process, you need to get an NOC letter from your current lender, along with a letter from them telling your new bank the outstanding amount of the loan. These are to be submitted to the new back.

Now the process begins. Your new bank, to which you are transferring the loan, shall treat it as a new loan. This means you’ll have to do the documentation process all over again. For this, you’ll have to submit documents like photo IDs, salary slips, employer’s letter, bank statements, among others. If you are transferring a home loan, you need coordination and follow-ups. You also need to pay all the fees and charges again!

Problems crop up when a co-applicant of the loan is retired, or when your income level has decreased. In this case, the bank can deny you the service. They can also deny you the BT if you were not paying your EMIs regularly.

Now, if the bank is satisfied with everything, they shall sanction the amount.

4 Personal Finance Lessons from the Covid-19 Pandemic

The pandemic of 2020 did certainly hit the global economy pretty hard, leading to companies shutting down, downsizing, cost cutting, job loss, salaries down spiraling and unbridled unemployment. However, it did also teach us a few things about money. In this article, we’ll see all the lessons one by one.

It’ll be wrong to say that 2020 was a downright whirlwind. It was so much more than that. Covid-19 did so much more damage to the economy and human life that it is widely known now that its effects shall last for 2-3 years more. Even now the number of cases is rising each day, and there is fear of an oil crisis. In India, the cases are rising as well, just like in the rest of the world. While all this won’t go away anytime soon, it has fortunately taught us several things about money.

Always have an emergency fund

In times like these, it is more than important to have an emergency fund. Of course, you can’t create such a fund overnight. This needs to be developed over the years. Now, it may have happened that you may have faced financial hardships last year due to the Covid-19. A lot of people faced that. Perhaps you could not have saved up for this time, but now that you know why it is important to have an emergency fund, you may want to save up for the next one, just in case. An emergency fund contains money enough to cover all expenses for 3-6 months.

Always have health insurance

Before the Covid-19 hit, lots of people paid little attention to having health insurance. Your employer may give you health insurance, but always have your own health insurance and for your family members. That’s because the one given by the company won’t be of much use if you are laid off.

One good thing is that the government of India has developed a very affordable health insurance policy called the Arogya Sanjeevani Health Insurance. You can find these at all insurance companies. The coverage here is from 1 lakh to 5 lakh.
It is better to have a second income

If the Covid-19 taught us one thing, it is that jobs and economies are equally vulnerable in times of global disturbances. If you lose your job, you can’t have your expenses. Sure, you can take loans, but that’ll only pull you further into debt if you don’t have an income source. That’s why it's better to have a secondary income source.

Avoid investing in equities if your goal is near

It is smart to invest in them, but not if your goal is nearly. If that’s the case, it is better to take the funds to a safer savings avenue which is not too much dependent on the market.

Need more help in money management? Need loans? Contact mymoneykarma today!

How to Decide on Your Financial Goals for 2021

No matter what your current financial situation is right now, it is everyone's goal to retire wealthy. For that you need a plan, but here’s the thing. In order to plan for the long term, you need to plan step by step as well. For instance, if you want to have saved Rs. 1 crore by the time of your retirement, you need a plan to save more per year. And to have a plan for each and every step, you do need financial goals. So for instance you want to save Rs. 100000 in 2021, you need a plan and goal.

In this article, we are going to give you 5 steps on how to do just that.

You know the importance of financial goals and how they ultimately add you in meeting all your financial needs at every stage of your life. But deciding on the goal, first of all, can be a hassle. It can be confusing and time-consuming. For instance, you may want to buy a house and a car. Or maybe you want to start a business. It can be anything. But until you have an action plan, all those dreams are only on paper. Here’s how to bring them into reality.

Do you need money to achieve it?

You may have more than one life goal, but you need to see if these goals are tied down to your money. For example, you may want to buy a house and a car down the line, but for that you need to save a lot of money. You may also want to save to start your own business before you turn 40, but for that you need not just working capital but also capital to bail you out in tough times. 

How much money does your goal require?

So now that you know your goal requires money, the next step for planning is to know exactly or approximately how much money your goals require. For instance, it is not hard to know how much a car or home is for, but it can be hard to determine how much you’ll need to save for your business. Besides, to work out where and how to save up for these, you’ll have to factor in inflation, interest rates, lifestyle and also your returns on investments, in addition to your ability to save. For all this, it can be a good idea to take the help of a financial advisor.

When will you need the money?

When you do have the financial goals you want to go for, you need to know approximately when you’ll be needing the funds. If the sum is large, you’ll need to save up for that. For instance, you probably need to save a lot of buying a car, but not so much for home renovation. Determine how much time you need to get the amount you need.

Can you afford to save for it?

There are some life goals like retirement and child’s education which are non-negotiable for saving for. These are goals you can’t compromise on. But you can make choices. For instance, when it comes between saving for a car and saving for your child’s education, it’s a no-brainer. Surely, the latter is more important, right? In the end, make sure you have enough funds for these.

Create a budget and make investments

Finally, you need to make a budget which coincides with all your plans. Additionally, think about making investments to fuel your goals.

Remember, you may also need to monitor and revisit, and even change your plans from to time, even if minutely.

5 Key Aspects of Personal Finance

Do you know that is the main thing that makes people fail in their financial planning? The fact that they remain unaware of the problems and the things which need to be done to solve them. In our financial planning, we do plan a lot thinking that we are doing the right thing. However, that does not always prove to be sufficient. Thus, it is important to know what are the key components which you need to focus on when making a road map for your financial life.

In this blog, you shall learn about the various aspects of your personal finance. This shall give you a good idea of your complete financial picture.

Before we dive deeper, it is useful to know that the 5 levels of creating your financial plan are:

• Saving: The main thing on this level is to save enough to face a sudden financial need.
• Investing: Investing is more important that you give it credit for. This lets you aspire for your goals.
• Financial protection: These take the form of insurance plans and savings which protects you and your family, especially during tough times.
• Tax planning: When you have a proper tax planning process, you can bring down your expenses and save a lot more than what you are now.
• Retirement planning: This is a crucial part of your financial planning. You need to save up for your retirement, when you’ll have nothing to fall back on but your savings. Here is where you need to make sure that you have a big enough savings or bank account for your twilight years.

Saving

You never know when you may need a lot of money. It can be as commonplace as a car breakdown or as serious as unemployment for a few months. At times like these, you need as much savings as you can have. Experts say you should have savings enough to meet 6 months of all expenses. This is why you need to invest in debt instruments. These give you better returns than savings accounts, are highly liquid and have low interest and credit risk.

Investing

Investing is different from savings. When saving, you are putting money aside. When you are investing, you are making your money grow. For investing, mutual funds are an all-round investment option, but only if these are used right. You need to choose the right fund, according to your needs and risk horizon. Pick mutual funds based on your short term goals, mid-term goals and long-term goals.

Financial protection

Financial protection is what actually makes our dreams and visions come true. These give us and our loved ones a safety net, but if the protection plans are not chosen well, these can turn into a liability. Here, we are talking about insurance. There are 43 types of insurance of which you need to know and have. These are Term insurance, Health and Critical Insurance, Mortgage Protection Insurance and Personal Accidental Insurance.

Tax Saving

We can reduce how much we give in taxes, even though we need to adhere to tax slabs. There are as many as 70 tax exemptions and deduction options for you. With these, you can bring down your taxable income. The most important ones here are Section 80C and Section 80D.

Retirement planning

Retirement planning is essential. When you have retired, you’ll just have your savings to fall back on. To plan for your retirement, you need to build a retirement corpus and plan to generate an income on retirement.

Financial Planning - Key Elements of a Financial Plan

Are you making a financial plan? Maybe for the first time ever or maybe for the umpteenth number of times? Either way, congratulations truly! Yes, we really mean it.

Creating a financial plan is something basic, right? But you’ll be surprised to know how many people still don’t have any type of plans at all for their financial future. They just live from month to month without saving and investing for the future. They don’t save for a possible situation such as job loss, medical emergencies, and etc. So if you do plan for the future, you are way ahead of those that do not.

If this is your first time making a financial plan, you need to know its components, or what it comprises.

• Goals and objectives: The very first thing which you need to pen down is the goals and objectives. These can be multiple, or you can have a single goal and objective. This is up to you, but you need to follow through. This section is going to be your guideline for the rest of the process, so really think hard about your goals and objectives. By the way, you can also make these for the long term, the short term, or both. It is better to have a mix of both so that you know you are making progress. Goals can be saving x amount within 30 years, investing x amount and earning over the years, saving up to buy a home, and etc.
• Income Tax planning: Here is where you examine whether you are maximizing all possibilities of saving taxes according to the planning objectives.
• Balance sheet: A balance sheet, or as it is also called the Statement of Financial Position, is now to be made. It shows your net worth, assets and liabilities. You should update the sheet from time to time as you progress towards your goals and objectives.
• Issues and problems: There shall invariably be problems and even the occasional setback. In this step, you try to determine what the issues are and problems are of your current financial situation. Record the risks as well.
• Risk management and insurance: It takes just one unexpected event to derail even the well-thought out financial plan. Think about it: last year so many people lost their jobs, faced unemployment, faced health issues, and more. When they faced these, their plans were derailed. They just were not ready for this, and faced a lot of problems.
• Retirement, education and special needs: These are things for which you need to plan. Your financial projections should be geared towards meeting these needs.
• Cash flow statement: This is where all of your income streams are shown, as is shown how much money comes in from all of them. Here is also where you should recurring stream income and regular income.
• Investment planning: In this section, you do an analysis of your investments for determining if your portfolio’s growth, income and diversification are consistent as per your Objectives.
• Estate planning: This is where you put a review of your lifetime gifts and the final transfer of assets for the reduction or elimination of gifts and income tax exposure.
• Assumptions: This is where you add your assumptions about future inflation rates, tax brackets, return on investments, years of work remaining, and your life expectancy.
• Implementation plan: In this section, you put a final implementation plan.
  

Lastly, to finish the process you need to ask yourself,

• What rate of return risk do I need to take in order to enjoy the same standard of living in retirement that I enjoy today?
• How long will I need to work before I can afford to retire?
• How much can I afford to spend and not run out of money?
• Am I saving enough to reach my retirement income goals?

What you Should and Shouldn’t do when Taking an Education Loan in 2021

The birth of a child of course is a cause for joy in your life. But with that joy comes expenses and a whole lot of responsibilities.

It is one of your life’s tasks to save up money for your child’s education. That’s all well and good, but with the rising costs of education for children, sometimes you may need an education loan, especially if it is for college. When taking such a loan, it is important to make a judicious choice and decision. To that extent, here are some things you should do and should not do when taking an education loan.

The thing about saving money for your child’s education on your own is that you have to factor in inflation, your changing lifestyle costs, shifting career goals, and much more. Because of this, and especially when it comes to college tuition, many parents need to take education loans. Here’s what to do before getting them, and what not to do.

Do’s

Think before you leap

Here’s a gold nugget for you: even if your child gets that additional degree, it does not guarantee a dream job or even a better job. What you need to do is to think before making the loan. Think whether your child’s course is in line with his/her future interests and prospects. STEM courses may give your child better prospects and job openings, but the same job is something the child has to keep for 30 years or more. So ensure that this is the career field he or she wants to go in for. Many colleges now offer the best of science and arts subjects, and even joint degrees.
Keep future salary expectations realistic

It will be a big mistake to take the maximum loan amount without factoring in your repayment capacity. If you won’t know when your child shall get a job, it’ll be risky to pick huge loans.

If you are a student opting for student loans or education loans, pick one which you are more or less certain you can pay off with your future salary. In such cases, your co-applicant can be your parent, but always try to repay on your own. So do keep a realistic salary expectation.

Don’ts

Choosing courses because loans are available

Here’s a big mistake people make, and more people make this mistake than you think. They pick courses because they see the college or institute being tied up with banks giving cheaper and easily-available loans. This is a bad choice because there are many institutions which hide their poor education quality by tying up with lenders. You should pick courses you like after scrutiny instead.
Take top-up loans

Many students take this facility to complete their PG courses. But this is not a good practice since it only increases your debt. It’s far better to repay an existing loan first before taking another.

Co - Guarantor - Things to Know about Co-Signing a Loan

You have heard it so many times. All the things you need to do to get a loan, a new credit card, a new line of credit, and on.

But how many times did you find anyone telling you about how to go on about becoming a co-guarantor or co-applicant for a loan? Lenders focus on attracting you to get the loan, and since most of us are more interested in getting loans than in learning about being a co-guarantor, there is comparatively less content online that deals with this subject.

In this article, we are going to break the trend.

Co-signing a loan and becoming a co-guarantor is a noble thing to do. You are helping someone you care about. But just like when taking a loan yourself, you need to be careful here as well. There are several things that you need to know while co-signing a loan with someone else. Co-signing means you too are responsible for the payment of the loan, especially if the other person is unable to pay up. Thus, it is risky for you just as if you had taken a personal loan.

So here’s what you need to know:

1. Your loved one needs a co-signer because they don’t qualify for the loan: Let’s face it. The real reason someone is asking you to be a co-signer with them is that they’ll be unable to get the loan otherwise. They don’t have a high enough credit score, and the banks don’t see them as creditworthy enough. With you in the picture though, banks will say yes to the loan application.
   
   
2. You won’t benefit from the money: Here’s another bummer! The loan is not for you, which means you can’t use it. It’s just another added responsibility from your side to repay the loan if the primary borrower is unable to do so. You can’t use the money for your own use, pay the bills, buy things, etc.
   
   
3. The loan will affect you: The loan will affect you if you can’t pay the EMIs on time, or at all. Yes it’s sad. You don’t get the loan, but are in charge or repaying it if the primary borrower is unable to repay the loan. If your co-signer is not able to, you’ll have to give the EMIs on time. Miss the payments and your Credit Score will be affected. This in turn shall affect your taking loans in the future yourself.
   
   
4. Your debt increases: When you are a co-signer to a loan, your debt ceiling increases. This means that you may not be able to take too many other loans yourself until this credit line has been repaid.
   
   
5. You’ll be responsible for the repayment: Even if your loved one can’t pay back the loan, you’ll be responsible for it since you’re the co-signer.

Think several times whether you really want to be a co-signer or not. Consider the risks and make an educated decision.

Refinancing Your Loan - When Should You Think about Refinancing Your Loan?

Have you ever taken a personal loan only to find out later that it is not suitable for you? Maybe you found out or decided later that it's too expensive! Well, if that’s your problem, we are going to show you a way out of it: loan refinancing.

Right now, pay cuts and LWPs (Leave Without Pay) have become very common, especially with the advent of the Covid-19. Since your income level has decreased, perhaps you are being forced to cut costs yourself. Maybe you are even in debt, especially when 40% to 50% of your income is going to meet the EMIS of a loan you took earlier. If there are such obligations, you need to stop and reevaluate your options. If you want better terms, look no further than refinancing your loans.

What is refinancing?

Refinancing is the process through which you replace your current loan with a new loan with different, and often better, terms. This new loan is used to pay off the current one, and since the new one has better terms and conditions, it is easier to repay back. You can therefore improve your financial condition quite quickly. Of course, refinancing loans depend on one lender to another, but generally, the process is similar.

• You have a current loan about whose terms and conditions you are not happy with, or which you are finding it hard to repay.
• You approach a lender and ask for a loan with better terms and conditions. You apply for this loan.
• You use this loan to repay the first loan.
• You keep making your EMIs for the second loan and repay it on time.
  

But why should you even think about refinancing?

There are downsides to refinancing, of course. It is expensive and takes time. Additionally, the new loan may not have the best features of the previous one. But despite this, there are many benefits.

1. You save a lot: Refinancing saves you money through interest. The new loan being better than the last one, it comes with a low rate of interest. Otherwise, why would you refinance in the first place, right? Over time, you save a lot of interest in the new loan.
2. Lower monthly payments: Refinancing can lead to lower EMIs, which again saves you money. Thus, you get a better cash flow management and get more funds to spend on other things in your life. Besides, the more money you free up, the more you can use to repay the loan faster. Additionally, the balance is smaller than the last loan, and thus the loan term is longer. This means you pay lower EMIs.
3. Get short term loans: You can opt for short term loans too. For instance, you can convert a 10-year loan into a 5-year loan. This leads you to become debt-free faster.
4. Debt consolidation: If you have a lot of loans, you can use refinance to consolidate all of them into a single line of credit at a lower interest rate.

Build Your Credit History - How to Build Credit History from Scratch

Your credit score is central to getting loans and credit cards. Need an emergency loan? Well, you need to have a high enough credit score. Want a credit card? You need that too. In fact, not having a high enough Credit Score and applying for loans will only damage whatever score you already have.

But how can you get loans and credit cards if you don’t have a Credit Score to speak of, or when the score is quite low? In this article, we are going to show you how you can increase the score. But understand that this is not magic. Your score won’t reach new heights overnight. It’s going to take time, but if you show sustained effort, you’ll get there!

Get a low-limit card from your bank

This is one of the best ways to build up your credit score. Get a low limit card from the bank where you already have an account. They will be most likely to give this to you when you are starting out. Now, since the card has a low limit, you are not borrowing much, and thus you won’t have much trouble in repaying the card. This easily builds up your credit score.

That being said, it is also important to use the card responsibly to start with. Don’t use it to buy anything you come across. Don’t use it to buy high-priced items which you know you’ll find it hard to repay. Pay off your bills and dues and always remain under 30% of the credit utilization ratio. Keep doing all this for 6 months and you’ll see your credit score increasing.

Get a secured card or a secured loan

To get a secured card, you place a monetary deposit with the bank as security. When taking a secured loan, you give a more physical security like property. In both cases, you are more likely to get these lines of credit since these are of less risk to the lender. When such loans are approved for you, always pay the EMIs on time, and even before the time if you can manage it. All of your actions shall be reported to the Credit Bureaus, who in turn shall determine your Credit Score.

Buy something in installments

Wanted to buy that luxury item? Well, go ahead. Buy it with a loan, and then start repaying it back on time. But make sure it is something you won’t have any problem in repaying at all.

Now that you are seeing your Credit Score increase, it is important to maintain it. To ensure that you do this, make sure that you:

1. Don’t delay payments and EMIs
2. Don’t ignore bills
3. Don’t reach your credit utilization limit

HDFC Home Loan - HDFC Home Loan Interest Rate at 6.80%

 

HDFC offers Home Loan interest rate of 6.80% for loan amounts up to 30 lakhs for Women Applicants. The offer has been in effect since 11th January, 2021.

This special Housing Loan Scheme is for a limited period only, and can be availed if the loan is disbursed on or before 31st March, 2021. HDFC decides eligibility for the offer based on parameters such as credit scores, segments, details of other loans, etc., and is applicable only for applicants with the credit score of 730 and above.

The offer can be availed on Home Loans including Home Improvement, Home Extension, and even Refinancing/ Balance Transfer from other lenders.

However, as the offer is applicable only for loans under the ‘Adjustable Rate Home Loan Scheme’, it is subject to change at the time of disbursement. The rates are linked to HDFC's BenchMark Rate. Hence, they are variable throughout the loan period as well.

Bank Merger - Will the Merger of Indian Banks Boost the Economy?

According to an announcement by the Union Government of India as of August 2019, 10 banks got consolidated into 4 banks on April 1, 2020. Here’s what happened: the United Bank of India and the Oriental Bank of Commerce merged with the Punjab National Bank, while the Syndicate Bank was merged with Canara Bank. The Allahabad Bank is now amalgamated into the Indian Bank while the Andhra Bank and the Corporation Bank are now consolidated with the Union Bank of India. Last year, Dena Bank and Vijaya Bank were merged with the Bank of Baroda.

Thus, on April 1, 2020, with the consolidation of various public sector banks, their numbers have come down from 27 t0 12.

What was the Plan?

Now, you may be asking whether the government had a plan to merge banks for a long time. The answer is yes, but it may surprise you. You see, the genesis of the idea to merge PSBs is from the time of M. Narshimham Committee Report of 1991. It was appointed to oversee, review and report on the functioning of commercial banks along with other financial institutions. This was done to improve their functioning through suggestion of better models.

The key recommendation of the committee was to establish a 4-tiered hierarchy for the Indian Banking structure. This was to contain three or even four large banks such as SBI at the top, 10 national banks with branches around the country, local banks to cater to the various regions, and lastly the rural banks for financing agriculture.

Will the Plan Work?

Now, the question is whether the merger of all these banks bode well for the customers. After all, it is for them, and for the bank’s own efficiency the merger took place, right? To know that, here’s something that needs to be understood first. Banks have two ways of looking at customers: liabilities and assets. The ones who borrow from banks are its assets, since from them the bank shall earn through interest. The customers who only deposit in their bank are liabilities because the banks need to pay them interest. For the depositors, there shall be problems like reduction of bank ATMs and branches. However, they should not have a problem because of mobile banking apps and other digital technology.

For the borrowers, these bank mergers will only help entrepreneurs. Merged economic entities and a stronger, consolidated balance shall have more power to give credit to entrepreneurs. Such a strong banking portfolio will also help get banks access to global markets on favorable terms.

Gold Loan Business Model in India - Economics of Gold Loan in India

Gold loans, till mostly an unorganized industry sector, may be uniquely positioned to capitalize on demands for loans in the post-Covid period. This is especially true for both individuals as well as for small business clients. A strong digital footprint and an expanded branch network may be just what’s needed to capture this sizable market segment.

Right now, the pandemic is creating a problem in the availability of loan funds. This is happening because the banks themselves are in a bad shape. Thus, they are keen to give money under a stringent and strict policy, to only those customers who are most likely to pay back loans. Banks may have considerable liquidity, but they are not willing to lend out, except to credit card owners. Because of all this, it is harder to get personal loans right now. Lenders are now looking beyond credit scores. For individuals and small businesses strapped for cash, this has created a unique problem. However, in such a situation, the savior can be a gold loan.

The Economics of Gold Loan in India

According to a KPMG report in January, the Indian organized gold loan market is estimated to be valued at around Rs. 467,200 crore. Approximately, this is 35% of the gold loan market with commercial banks. Small finance banks, Fintech companies and NBFCs are now the key players in the market. The unorganized gold loan sector is thrice as large.

Right now, there are a couple of big opportunities for the gold loan players in the organized market. Firstly, they have a big opportunity to bring unorganized money lenders under the organized market. This will ensure a tighter RBI regulation and a low rate of interest. Secondly, from out of the 22,000 tons of gold which Indian households have right now, only 5% are pledged as deposits of gold loans.

Now is the time to make the best effort

From all the rest, Muthoot Finance has been the preferred gold loan company for a long time. Compared to many NBFCs, its gold-lending business is de-risked.
How can gold loans rise to the challenge post COVID?

Muthoot Finance company’s chairman, George Alexander Muthoot, admits that after the pandemic, the market scenario can give a big opportunity for gold loan companies in the country. Here is how it can happen.

1. Small businesses will be in need of working capital. Since banks are reluctant to provide new risk for themselves, the role is taken by gold loan companies.
2. Because of the lockdown, payments are delayed to traders, small businesses and shopkeepers. They require finance in the meantime till regular cash starts flowing again. Gold loan can be the better credit choice here.
3. Both Mannappuran and Muthoot Finance are expecting a huge surge in demand for gold loans from retail customers as well. Many families are facing job loss and income reduction. For them, gold loan is the credit choice that is least risky.
4. Gold loans also have the Loan to Value advantage. Companies offering this service are giving 75% LTV.
   

For both small businesses and individuals, gold loans may be positioned uniquely to capitalize on the post-COVID demand for credit. A strong digital footprint and an expanded branch network may be able to capture this nascent market.

Is Technology Changing the Personal Finance Market?

Even as we speak, personal finance is being transformed by technology. The days of going to the bank to withdraw money or update your passbook, or worrying about your security online, are gone. There are many apps now, for instance, which makes it possible for you to carry out all the functions of a bank customer without going to the bank!

There are technologies that take good care of your online data, keeping it safe and secure from data theft. As we said before, the latest technologies are making it possible to have high levels of personalization, fantastic customer experiences, and guarding the integrity of financial data.

And the best thing? These technologies are not hard to operate or master. These are quite user-friendly. Field of personal finance, customers want apps with which they can get maximum results with minimal interaction. In other words, the technologies they need have to make effortless interaction, have to be easy to use, have a low learning curve if at all, secure and fruitful. In other words, customers expect financial service firms to understand their requirements, and do their best to fulfill these without asking them.

At the very heart of developing satisfactory customer experiences, data security and personalization, technologies like machine learning, AI and blockchain are at the forefront.

Here is how these technologies are changing how personal finance works.
Banks use Chatbots and DVAs

DVAs stand for Digital voice Assistants. DVAs and chatbots are quickly changing how customers interact with institutions in the personal finance industry.

For instance, imagine you are a bank customer. You lose your ATM card belonging to the bank. In a state of panic, you call the bank’s help number and the DVA helps you through the process of blocking the card.

Or imagine that you are interested in knowing about the services of a particular company. You visit their website and even before checking out the Service page, you are greeted by a Chatbot. After a few questions and answers, you now know how the company can help you.

Chatbots and AI-powered DVAs have grown quite sophisticated, so much so that many are not able to differentiate between responses provided by people and those given by DVA. DVAs even respond to you verbally like a real person.

Whenever you visit a financial institution’s website, you are greeted by a chatbot. After just a few simple questions, you have your questions answered and queries resolved. While chatbots are effective most of the time, yet they still are not able to replace human staff completely.

DVAs are a newer development. Unlike the chatbots that interact by text, DVAs interact verbally.

Customer service experience is becoming smoother gradually, with technologies like AI. These facilitate easy interaction with banks and customers.

DVAs are still not able to access individual photos, offer personalized services based on your needs, or perform transactions like trades. This is due to security concerns. However, it is hoped that in the future, when technology becomes more secure, DVA shall become more reliable.
Data makes personalization possible

Data is strong enough to propel the global economy. Every single decision is taken based on data. It is the key to understanding customers, and to provide a more personalized experience. All types of companies, and even banks, have access to customer data. Where do these data come from? These come from demographic information, website analytics, online purchase records, and more. With machine learning, companies develop easy-to-understand customer profiles.

For instance, financial institutions are using machine learning to learn about their customers. This technology is smart enough to recommend products to customers based on their preferences. These are also smart enough to offer products at prices at which customers are most likely to buy them.

In the future, personalization can reach a level in which technology can negotiate price with customers like a human.
Blockchain

Blockchain is used by financial institutions to make secure transactions. The most widely-recognized blockchain technology is the one that powers Bitcoin.

Blockchain allows sellers to sell items with the knowledge that payment is received. It keeps track of all transactions in a secure environment or “ledger”. The number of copies of a ledger is in thousands, which makes it virtually impossible for the information to be stolen.
Blockchain benefits customers globally

This technology is used to transfer funds around the world. Imagine hundreds of billions of US dollars sent exchanged across the world. Traditionally, such transactions were expensive and convoluted. Blockchain makes it simple and less costly.

Merchants use the technology to benefit a lot. They no longer need to fear that a customer will bounce a cheque. Customers already are already able to track the ownership of a product. Blockchain may also act as an escrow account by releasing products after receipt of payment.

As you can see, these technologies mentioned above are giving rise to a new era, an era when personalization in financial services is the norm. Over the next few decades, their use shall expand. Customers shall be serviced with a high degree of accuracy. Risk will be eliminated greatly as well.

Sovereign Gold Bonds - Things to Know Before Investing in Sovereign Gold Bonds

Gold price is rising right now, and investors are looking to use this opportunity to invest in gold. And right now, with the government’s Sovereign Gold Bond Schemes, investing in this widely-loved yellow metal is easier and more convenient.

Right now, the Sovereign Gold Bond Scheme of 2020-2021 is open for investor subscription. If you do wish to take the opportunity, you need to do this within 5 days from today. The RBI has announced in a press release that the government shall be giving these bonds in 6 tranches, starting from October 2020 to March 2021.

The RBI has placed the price of SGB at a rate that varies from tranche to tranche. On its part, the government generally gives a discount for those investors who are applying online. You need to pay digitally against this particular publication. When investing in SGBs through banks, you can make investments through their respective netbanking and mobile banking facilities.

Here are a few things which you need to know before investing in Sovereign Gold Bonds:

1. It is mandatory to provide your PAN number, as per RBI guidelines
2. You have to invest in a minimum of 1 gram gold, while the maximum limit is 4 kg for individuals. For trusts and similar bodies, the upper limit is 20kgs of gold during each fiscal year. The annual ceiling is inclusive of bonds subscribed under various tranches during the initial Government Issue as well as those bought from the Secondary Market.
3. The total tenor of the SGB shall be 8 years. There is an exit option from between 5th and 6th of the 7th year. However, it should be remembered that bonds shall be ready for stock exchanges within 2 weeks of RBI’s issuance date.
4. In case of joint holders, the limit of investment shall be 4 kg of gold, and this shall be applicable to the first applicant only.
5. Before a new issue, RBI will say what the issue price of the bond is. This shall be decided on the basis of the average closing price of gold of 999 purity as published by the RBI for the last three days of the week before the subscription period.
6. These gold bonds shall be issued as Government of India stocks. All investors shall get a holding Certificate. These bonds can be converted into their Demat form.
7. Most banks like ICICI and SBI will accept subscriptions. Investors shall get compensation in the form of a fixed 2.5% per year, payable twice a year on the nominal value.
8. Gold bonds can be used as loan collaterals. The loan to value ratio shall be set on par to the ordinary gold loan as mandated by the RBI.
9. On redemption of the Sovereign Gold Bonds, the capital gains tax for individuals is exempted. Indexation benefits shall be given in case of long-term capital gains by an individual on bonds transfer.

6 Best Ways Of Gold Investment In 2021

 In India, which is the world’s second largest consumer of gold items, MCX Gold Futures Index has reached an all-time high mark . This in turn spurred demand amongst those who feared they’d miss out on this opportunity. THe value for Gold Loans has also gone up accordingly.

The pandemic has noticeably bought down prices of many commodities, which is what is making gold metal such a safe haven. Here’s what is driving the interest in Gold in our country right now.

Watch Forex to understand Indian Gold Market

Here’s why India is witnessing a phenomenal rise in investments in gold.

As the rupee value has depreciated, investors have made big returns. However, it should be noted that currently the gold market cannot be understood without taking into account currency fluctuations. The pandemic situation shall keep risk premiums quite high, which means that one may not get regular returns. However, one can expect lumped up returns after every 3 to 5 years.

Market experts advise that one should hold at least 10% of their gold assets at any point of time. It is a part of a balanced portfolio asset class which includes real estate, bonds and equities.

How to Sell Gold In India - Documents needed to Sell Gold

Unless you have been living under a rock, you may have seen the quick rise of gold rate price globally and in India. Sure, even in between it had its ups and downs, but right now it is rallying hard. For the 9th straight day, MCX futures market is seeing a record high. The demand for gold is at an all-time historic high.

This is something seldom seen before. If you want to get some immediate cash, why not sell off the gold which is lying fallow at home anyways? Why not use something which you have not used nor have any plans of using? Right now the money you can get in return for the gold you sell can be considerable. You can get Rs. 52,846 per 10 grams, and that price is steadily rising.

However, just wanting to sell gold is the easy thing. Actually selling it is tough. But here is our advice on how you should go on to sell your gold.

Documents you need for selling gold

Perhaps you thought that you won’t need any documents while selling. That is not the case, although you won’t need to show a bunch of documents either. All you need to show are your PAN card, your Aadhar card, and your purchase bill of your gold if you have it.

 When you undertake to show that the gold actually belongs to you, there is a decrease in chance to sell stolen gold.

In an ideal scenario, if you are selling gold, you should go to the same jeweler from whom who bought the gold originally. In case you do not have that option anymore, go for a reputed jeweler instead. In both cases, you’ll get a fair deal.

Items you can sell are gold coins, gold ornaments, and gold bars that you have purchased from other jewelers. It is even better to get a hallmark certificate, but in case you do not have it, have your gold machine-tested for purity.

Gold purity

If you fear about the purity of your gold, just get it tested at the designated centers in cities. This will give you a bigger chance of getting the best price for your items. Besides, you can also approach NBFCs and gold loan companies. These offer doorstep service which is so useful during the current lockdown situation.

Taxation of non-physical and physical gold if you sell

 If you sell physical gold, there is a short-term capital gains tax if you have held the said gold for one year. In this case, the gain is added to your income tax and you are taxed according to your slab. If you have held the gold for three years, there is 20% tax for LTCG after indexing. For non-physical gold like ETFs and digital gold, the tax treatment is similar, except for SGBs.

For SGBs, the interest income is charged under your Income Tax head income from other sources. There is no TDS or TCS implication. However, no capital gains tax is levied for redemption of SGBs after maturity.

SBI Retirement Benefit Fund Launched - Retirement Benefit Fund

SBI Mutual Fund, India’s largest asset manager launched on Wednesday 20th January, its flagship retirement benefit fund. This fund is aimed at those interested in long-term investing. The plan offers 4 various investment plans. These different plans have different asset allocation strategies. The fund closes its doors on 3rd February 2021. SBI Mutual Fund has a target to gather Rs. 2000 crore.

The four different investment plans are aimed at those interested in the different investment strategies. These strategies are: aggressive, aggressive-hybrid, conservative-hybrid, and conservative. These schemes may also invest in gold exchange traded funds foreign equities, Real estate investment trusts, and infrastructure investment trusts. These plans may invest in various foreign securities as well, including ETFs up to 35% of the aggressive plan.

The fund house for this plan is targeting millennials who have varied needs. While the funds can be overseen by fund managers, the owners themselves can allocate and choose assets themselves.

How to Remove Delinquencies From Your Credit Report - Delinquent Account

Past mistakes can haunt you - and if it is a grave financial mistake, like a delinquent account, it can haunt you for seven years on your credit report. However, it has often been seen that delinquent accounts on your credit report keep nagging you although they should have been taken off your report after a period of seven years. What should you do in such a scenario? Read on to find out.

What Is a Delinquent Account?

If you have a credit account and you fail to make payments after the due date, your account is considered to be delinquent. Ideally, a delay by one day results in delinquency. However, in practice, the prevailing trend among lenders is to wait for two missed payments to declare an account as delinquent.

Delinquent accounts hurt your credit score significantly. They also spoil your credit history, as they appear on your credit report and stay on it for seven years. Delinquent accounts won’t help you when you want to remove the records either.
Consequences of Delinquency

Delinquent accounts can have short-term as well as long-term repercussions. These are the possible troubles that you may face if you drive one of your accounts into delinquency.

• A single delinquent account can cause an immediate drop in your credit score.
• Multiple delayed or missed payments can result in a 100 point drop in your credit score.
• Lenders will not trust you, and you will not be able to get credit in the future.
• Your credit report will be tainted for the next seven years, as the delinquency will be recorded on your credit report. Even after you settle the debt, the record will remain and serve as a warning to potential lenders that you might not be reliable with credit.
• The record might not be auto-removed after seven years, and you might have to spare a lot of time and effort to get the error rectified.

How to Remove a Delinquent Account

Credit bureaus strive to remove the negative information before the completion of seven years - roughly around six years nine months. However, they often make errors and fail to remove the records. In such a situation, the onus lies upon you to act quickly and get the matter resolved. Experts from mymoneykarma are here to guide you.

• Verify and Confirm the Age of the Debt: If you suspect that negative information is on your credit report for longer than it should be, the first step for you would be to pull out your credit report and scrutinize it to verify the exact age of the delinquency. It doesn't matter if your account was written off or sold off to an external collection agency. The date considered is the date on which you had initially missed or failed to make a payment to the original creditor. If your delinquency date was 1st January 2010, the information must not stay on your credit report for a single day after 1st January 2017. Keep your old credit reports handy - you might have to fish out the date on which the creditor reported your delinquency.
• Check with Each Bureau: Each credit bureau need not make identical credit reports. The creditors might not report to all the bureaus, and thus, your credit report from each bureau will differ. The delinquency may not be there in all the reports. Therefore, it is ideal that you get hold of a copy of your credit report from all three bureaus and inspect them.
• You are entitled to get a free copy of your credit report once a year from each bureau. However, you can access your credit report at any time by paying a nominal amount to the concerned credit bureau. You must find out which bureaus are still listing the outdated old debt and contact them to get the record removed. For regular updates, you can check your credit report with mymoneykarma.
• File a Dispute: Once you have zeroed in on the credit bureaus that haven't removed outdated or inaccurate information from your credit report, you need to contact them and file a dispute to remove delinquent accounts. The three main credit bureaus -  TransUnion, Equifax, and Experian - have their own dispute management system. You could fill up and submit the dispute form online or download the form and send it to the bureau via post. When you register a dispute, you should attach copies of all the documents needed to support your claim. You must make your plea convincing and foolproof so that the credit bureaus take it seriously. The credit bureau will contact the reporting creditor to verify your claim and settle the dispute accordingly. The issue should ideally be resolved in 45 days. Additionally, you could also consider approaching the reporting creditor with the issue to ensure quick redressal of the problem. In either case, try to obtain an acknowledgment of receipt of the complaint to keep proof of the date on which you had filed the dispute.

Why Late Payments Matter

Most money lenders charge a late payment fee nowadays. These penalty fees can vary according to how late you paid, the type of loan, and more. Some money-lending organizations even increase the yearly APR as the penalty, even if you make a single late payment.

Paying debts late can have severe financial consequences, as it can negatively affect your credit report. If the score drops significantly, you won’t get any new loans. Since the repayment history makes up for 35% of your credit score, you don’t want to be making late payments at all.

A single late payment may not do much harm, but several of those in quick succession may do a lot of damage, making it hard for you to get new loans at all. Even if you do manage to get a new loan, the terms would be strict, and the interest rate would be much higher.

If you fall far behind on your payments, and if the bank deems so, your debt account could be transferred to a debt collection agency. When this happens, the impact on your already bad credit score shall be more significant still. It will be tough to then improve a bad credit score.
Check Your Updated Credit Score

Delinquent accounts are something that you don’t want to have on your plate. Thus, you should regularly check your credit score report at least once a year. If there are debts to be paid or delinquent accounts to take care of, deal with them first.

Calculate Your Credit Score - How Is Your Credit Score Calculated?

A credit score is one of the essential components that banks and other financial institutions consider before approving any form of credit. It may be surprising for you to know that credit scores can vary when furnished from different credit bureaus, because every card issuer may not provide data to all the bureaus. The three main credit bureaus that offer credit scores are Equifax, Experian, and

TransUnion.

A credit score is determined based on several aspects, which we are going to discuss further.

Factors Accountable for Credit Score Calculations

• Types of accounts
• Used credit vs. available credit
• Payment history
• Hard inquiries
• Length of credit history
  

Let’s now break down these factors for a better understanding.

Credit Account Mix

While calculating the credit score, the credit bureaus check the type of credit accounts, such as multiple credit cards (travel, dining, shopping) or loans( education, auto, home), that you currently have. This is to determine your ability to manage multiple accounts.  Opening new accounts may affect other aspects of credit score like the length of credit history, the number of credit accounts, amounts owed, etc.

Used Credit Vs. Available Credit

Your used credit balance vs. available limit determines the credit utilization ratio, which helps banks assess your level of responsibility towards credit usage. If your credit utilization remains below 30%, your credit score is likely to stay high. However, if all of your credit cards are maxed out, rest assured that your credit score will slump by a few hundred.

Payment History

Your payment history includes that of credit cards, EMIs, and delinquent accounts (if any). If you have frequently been a defaulter of payments, no lender will trust you, and it will impact your credit score considerably. But, if you have been a disciplined credit payer, and repay either more than the minimum due or the entire amount on time, then you have nothing to worry about.
Hard Inquiries

Hard inquiries occur when lenders check your credit score in response to a loan or credit card application. A large number of hard inquiries at once can drastically impact your credit score. However, if you are seeking a new car loan and personal loan at the same time, the multiple inquiries can generally be counted as one for a given period. That period may vary depending on the credit scoring model, but typically it is from 14 to 45 days.

Note: Credit score calculations don’t consider requests that a lender makes for a preapproved loan offer or an existing credit account. Checking your credit report also doesn’t affect credit scores, as it comes under soft inquiries.

Length of Credit History

If you have been maintaining a positive credit history for a long time, your chances of getting a new loan or credit card become higher. The credit report is a compilation of your credit history and must contain at least one account that is active from the last six months to generate a credit score. Don’t close your oldest credit card/account, as doing so can harm your credit score by bringing down the average credit age.

Tips That May Help Increase Your Credit Score:

1. Pay your bills on time. Set an auto-debit system if you tend to forget the due date.
2. Don’t burden yourself with too many credit accounts at a time.
3. Don’t let lenders think that you are credit hungry by maxing out on your credit cards.
4. Monitor your co-signed or joined accounts regularly. Even if you are a responsible credit payer, your partner might miss some payments.
5. Try to pull your credit report from all the bureaus to identify the difference, at least once a year.
6. Also, tracking your credit report quarterly will ensure that it is error-free. In case you are thinking about the fee that you may need to access your credit report multiple times, here is the solution - check your credit score for FREE at mymoneykarma.

Fixed Maturity Plan vs. Fixed Deposit - Which One is Better?

Fixed Maturity Plan or Fixed Deposit? On one hand we have a traditionally prevalent method of earning returns from money and on the other we have a modern method of investing, which offers a relatively higher net return. Did you know that the major difference between these two financial instruments is the post-tax returns?

Read on to find out more about the difference between these two financial instruments, which have fixed tenures, are easy to manage but are strikingly different from each other.

What is an FD?

Fixed Deposit or FD is one of the most popular ways of saving in India. FDs are safe, easy to open and offer good returns to the investor. Fixed Deposits are generally preferred over the ordinary savings account since FD accounts offer a higher interest rate.

Things to Remember before Investing in FDs

• All banks do not have the same minimum deposit limit for FDs. While SBI has a very low minimum deposit limit of Rs.1000, many private banks have a higher minimum deposit limit.
• The interest payout frequency isn't fixed. Even though the interest earned on an FD is generally paid out along with the principal amount, you can change the frequency of interest payouts to quarterly, annually or even monthly!
• It is important to know the compounding frequency of the FD. Banks generally compound the interest on a quarterly basis. However, if the quarterly frequency is daily or monthly, the interest earned on the FD will be higher.
• Senior citizens can earn an additional interest rate of 0.25%-0.75%
• The investor will be required to pay a nominal penalty for premature withdrawal of a fixed deposit.

What is an FMP?

FMP or Fixed Maturity Plan is a debt-based scheme, and it has a fixed tenure. It terminates on a predetermined date, and FMPs are considered an excellent alternative for the investors who wish to park their funds for a specific period of time and earn relatively higher returns.

Recently, FMPs in India have increased in popularity due to the low level of risk involved. The investor can easily predict the returns from an FMP. The rate of return on FMP depends on the prevailing rate in the money market, which right now, is quite high!

Things to Remember before investing in FMPs

• According to the norms of the market regulator, FMPs cannot provide assured returns. FMPs can only indicate the returns on the investment.
• You must look for the investment objective of the scheme, investment strategy and the indicated yield.
• FMPs invest in commercial papers, high-rated securities, certificates of securities, money market instruments, etc.
• Since FMPs are held until maturity, the investors cannot exit before the date of maturity, which poses as a problem for liquidity. FMPs offer low levels of liquidity.
• FMPs can be traded only in stock exchange where they are listed. However, trading of FMPs is difficult in India since the secondary market is not yet developed

The Difference

Mutual fund advisors suggest that FMPs are a great investment for investors who opt for an FD otherwise, since the returns on FMPs have improved over the last few months. Let's list out some basic differences between FMPs and FDs to understand this rift better.

Risk of capital loss

FDs are known to offer negligible risk to the investors since the interest applicable on an FD is predetermined - depending on the amount that you have invested, you already know the interest that you'll be earning on the investment.

However, you might incur substantial capital loss by investing in FDs. Depending on the monetary policy devised by the RBI and economic environment, the banks tend to tweak their deposit rates to maintain a healthy profit margin.

For instance, the bank might offer an 8% interest rate two months after you have invested in an FD which incurs an interest rate of 6%. You end up effectively losing returns on that FD since you lost a higher earning opportunity.

For risk-averse investors, FMPs assure a low risk of capital loss compared to equity funds because the funds are invested in debt instruments (such as bonds, debentures, mortgages, etc) and the securities are held till maturity. Since FMPs are debt products, they have a negligible risk concerning interest rate as the schemes invest broadly in assets which mature on or before the maturity of the scheme.

Liquidity

If you're looking for liquidity, then you should invest in the bank FDs. If there is an emergency, then bank FDs can be easily liquidated by paying the penalty amount for premature withdrawal, but the investor cannot liquidate the FMPs since the funds are close-ended and they can only be withdrawn when the scheme matures.

Tax efficiency

FMPs offer greater post-tax returns than bank FDs, particularly for those in the highest (30%) tax bracket. These funds grant indexation benefits, which help in lowering the capital gains and thus tax outgo is also lowered. Comparatively, if you're in the 30 per cent tax slab, a 7 per cent FD may be providing you only 4.9% net returns, which is further diminished if you take the rising inflation into account.

If you have no obligation to liquidate the investments and fall in the 30% tax bracket, then the three-year FMP will suit your financial needs the best!

Why is Investing in FMPs a Better Option?

With the increase in the 10-year-old Government Securities yields over the last year, there has been a dynamic shift in the opinion of the investment analysts concerning investment in FMPs. However, it cannot be said that FMP is an absolutely risk-free instrument as it has credit risk, i.e, if the rating of any of the underlying securities is affected, the returns from an FMP could also get affected.

Analysts say that investors must exploit the current high-interest rate environment to invest in the FMPs for at least three years till the rates start coming down. FMPs are perfect for earning high risk-adjusted returns post-retirement.

Tax Saving Options - Tax Saving Investment Options

As the time comes for declaring your investments and filing your income tax returns, you might be in a state of confusion about where to invest so that you get the maximum rebate. There is no shortage of advice on things like fixed deposits, tax deductions, and insurance policies from friends, family, and colleagues. But that advice might be generic and may not give you the maximum benefits. You might be wondering how to juggle different modes of investment, which options are risky, and which are safe.

mymoneykarma is your friend in need. After carefully assessing several tax saving options for 2019 by their returns, risks involved, costs, transparency, and taxability of income, we’ve come up with a list of the top ten tax-saving opportunities designed to cater to your financial needs. You can invest in a combination of different options to get maximum benefits.

ELSS funds

Equity-linked savings schemes are excellent ways of saving your taxes under Section 80C. You can invest as much as you want, but any excess amount over Rs.1.5 lakh will not let you avail of the tax benefits under Section 80C. ELSS funds are of two main types: growth funds and dividend funds. Growth funds are suitable for investors who are looking to invest for an extended period and receive the full value of their funds only at the time of redemption. Under dividend fund, investors receive tax-free payouts that they can reinvest as fresh investments.

Contrary to a popular myth, all ELSS funds aren’t necessarily risky. While some funds dedicate more to small- and mid-cap stocks, some others stick with stable large-cap stocks.  You must choose the one that best suits your risk appetite.

National Pension Scheme

The National Pension Scheme or NPS is a government-sponsored pension scheme launched in 2004. A subscriber can regularly contribute in a pension account during his/her professional life, withdraw some amount from a lump sum and use the remaining corpus to buy an annuity to secure a regular income after retirement.

NPS can help save tax under different sections. You can claim contributions of up to Rs 1.5 lakh as deductions under Section 80C. There is a provision of an additional deduction of up to Rs 50,000 under Section 80CCD(1b). If the employer contributes up to 10% of one’s basic salary in the NPS, the amount cannot be taxable.

Public Provident Fund

Public Provident Fund (PPF) scheme is a popular long-term investment option offered by the Government of India. It provides a stable investment option with attractive rates of interest and other facilities such as loan, withdrawal, and extension of account.

PPF is an excellent option for the cautious investor because the interest is tax-free, giving the scheme a significant advantage over fixed deposits. PPF performs exceedingly well on safety, flexibility, and ease of investment.

Senior Citizens’ Saving Scheme

Investing in Senior Citizen's saving scheme is extremely beneficial for senior citizens in getting the most out of their tax deductions. It is an effective and long-term saving option that offers security and features of any government-sponsored investment scheme. These schemes are available at certified banks and post offices across India. Last year’s Budget has made the Senior Citizens’ Savings Scheme (SCSS) more attractive by offering senior citizens an additional Rs. 50,000 exemption on interest income. The total tax exemption for senior citizens is Rs. 3.5 lakhs.

Sukanya Samriddhi Yojana

For parents with daughters below 10 years of age, the Sukanya Samriddhi Yojana can be an excellent way to invest for their daughters. The interest rate of 8.5% is linked to the yield of government bonds and is subject to change every quarter. The Sukanya scheme offers a higher interest rate than PPF. There is an annual cap of Rs. 1.5 lakh on the investment. A parent can open accounts at any post office or designated banks with a minimum investment amount of Rs. 250. Any parent can open an account for their daughter. The account can be opened for at the most two girls, but the combined investment in the two accounts cannot exceed Rs. 1.5 lakh in a year, and the maturity proceeds have to be used for her education and marriage.

ULIPs

ULIP stands for unit-linked insurance plans. A ULIP contains both the elements of insurance and investment. The policyholder can either pay a monthly or annual premium. A small percentage of the premium goes toward life insurance, and the residue amount is invested just like a mutual fund. The policyholder goes on investing throughout the term of the policy years and collects the units later. These plans offer investors the option to invest in equity and debt.

Pension Plans

Also known as company pension plans, pension plans are set up by employers and can provide benefits including a tax-free lump sum (within certain limits), and pension income in retirement.

These benefits are based on the following parameters:

1. your final earnings

2. your average earnings throughout your career, or

3. the value of your pension fund at retirement.

Apart from benefits on retirement, pension schemes can provide benefits to dependants on the death of the account holder during service or after retirement. Pension benefits are also portable and need not be "frozen" when your employment status changes.

You should check if your employer has such a scheme and whether you are eligible to join. Or you may have been a member of such a pension scheme in the past and still have benefit entitlements under the plan.

NSCs

The best thing about the National Savings Certificates (NSC) is that unlike an insurance policy or a pension plan, they don't require a multi-year commitment. NSCs is perfect for those who don’t have time to browse through the features of an investment plan. At an interest rate of 8%, it is a good option for those who just want to invest in a hurry and forget about it. NSCs promise better returns than bank FDs. The interest earned on the NSC is eligible for deduction under Section 80C in the subsequent years. NSCs are suitable for senior citizens who want to invest safely but have exhausted the Rs 1.5 lakh limit of SCSS. Since there are no such restrictions in NSCs, they can use this instrument to save income tax.

Bank FDs

Tax-saving bank fixed deposit is an excellent choice for people who leave their tax planning for the last minute and then search for the best option. Although the interest rates are not as high as other savings instruments, FDs offer the convenience of online banking. If you have to show proof of investment this week, all you have to do is log on to your netbanking account, make the investment, download the proof and print it. However, this convenience comes at a high price. The interest earned on FDs is fully taxable, which reduces the post-tax return for people in the higher income bracket.

Life Insurance

Life insurance policies are essential for the safety and security of you and your family, but they are the least effective instruments to save income tax. They give fewer returns, have reduced rates of interest, and the interest collected is not even tax-free. However, it is a highly preferred mode of investment among the Indian populace; and if you wish to channelize your hard-earned money into insurance, then you must do a careful homework before taking a call.

Choosing the Right Option

Section 80C allows you to save up to Rs. 1.5 lakhs across different tax-saving investment instruments; so you might as well maximize your tax deductions. Investing in more than one option and taking calculated risks can pay off in the form of very high dividends that can be used to fund your dreams.

What is a PayDay Loan ? - When Does A Payday Loan Typically Mature?

Payday loans are actually short-term loans. These are typically taken when one has an emergency situation. Imagine you are in a tight spot, such as if one of your family members needs to be hospitalized and you are still waiting for the next paycheck.

Quite a problem, right? Well, getting a paycheck loan mitigates this problem. The disbursal and documentation process is faster in comparison to other personal loans.

However, the biggest downside to payday loans is that these come with very high interest rates. So, before you sign up for one, do be sure that you understand all the risks and costs involved.

When does a payday loan mature?

You may be wondering when a payday loan matures. We understand that you are asking this question with other typical personal loans in mind. Well, in the case of these loans, the maturity date is one of the shortest in the personal loan category.

To tell you what actually happens, let’s give you a little example. Let’s say that you need Rs. 50000 urgently. You get a payday loan and promise to repay as soon as you get your next paycheck or salary. When you do get that next month or so, you repay the loan, with interest.

But as said above, the interest here can be quite high. Make sure you can repay the loan. It is very easy to fall into a debt trap in which you keep on paying the interest without being able to see the end of the loan.
How much do payday loans give you?

This depends on the lender, but don’t count on getting a lot of money. How much money you get depends on your salary. If your salary is high, you may get high loan amounts, otherwise not.

Check with the lender how much they are able to give. If your situation is dire, ask them for a custom service, but know that the interest rate can be even higher because of it. You repay it as soon as you get the next paycheck. There are lenders who have loan terms of just a couple of weeks.

These are unsecured loans. The interest is quite high and if you cannot repay it at the due date, you can roll it over sometimes to extend the term. This means that you won’t have to repay it there and then, but you’ll have to keep repaying the fees. As you can understand, this is quite risky for the borrower as well. It all depends on your capacity to repay.
How expensive are they?

These loans are significantly more expensive than other personal loans. If you do feel that payday loans are too risky for you, think about other personal loan options like gold loans. Payday loans typically come with a very high APR, sometimes as much as 500%.
The good side of payday loans

One of the biggest benefits of payday loans is that you don’t need to show a credit score to get it. You don’t even need a credit history, bringing this loan type into the hands of most people, especially those facing emergency situations and financial difficulties.

What Is Loan Against Property ? - Things You Need To Know Before Taking Loan Against Property

A LAP or a Loan Against Property is a type of secured loan which banks, NBFCs and housing finance companies offer against commercial and residential property. Basically, you get a loan after giving over these properties as security.

One USP of these loans is that these are offered at a comparatively lower rate of interest as compared to other forms of personal loans and business loans. These are also provided within a time shorter than those loan types, which means that in the case of LAPs, you get your money faster.

If you have a pre-owned property, you can get this type of loan. It does not matter if you are self-employed or salaried. What is important is that you are the owner of the said pre-owned property. Yet another USP of this of a Loan Against Property is that the quantum of loan is higher in comparison to other options.

Did you know that the demand for Loan against Property is increasing?

Well, it is true. And here’s why!

• It is cheaper than personal loans
• Applicants can occupy and use the property even after getting the loan
• You can use the loan for emergencies, for fueling your business, for education, marriage and more.
  

LAP or a loan against property is truly a boon for both salaried people and for self-employed ones. Self-employed individuals who are seeking to boost or grow their business can get a Loan Against Property.

If you are salaried, you can similarly use it for anything as long as it is legal. For instance, you can use it for medical emergencies, for your child’s education, or just for raising funds. Here’s a big benefit of a LAP: it leaves your savings intact. Additionally, it comes with low-cost EMIs reasonable repayment tenures.

Repayment tenures are typically between 15 to 20 years, sometimes more. This may not seem like much, but the low interest mitigates the repayment burden.

As you can see, all the benefits are here to help you out, whether it is for your personal needs or for professional or business needs. The needs just have to be legal and legitimate!

If you are an existing customer at a bank, and want to get a Loan against Property from them, then it becomes easier. Banks favor existing customers. Besides, you don’t need to submit all your documents again since the bank already has copies and records of your important documents.

If you are not an existing customer, things you do have to furnish include evidence of repayment capacity, credit history, and the property’s market value.

Existing customers have yet another benefit: they can apply for top-up loans.

These have been the basic features of a Loan against Property. However, other aspects you need to know before getting a LAP include:

1.     Loan repayment: The loan amount you can get can be high, but you need to fulfill the criteria that you can actually repay it. You can repay it over 15 to 20 years, depending on the lender.
2.     Property’s value: In case of a Loan against Property, the value of the property is everything. The money you get depends on this. Before determining the loan amount, term and interest, the lender shall do a property appraisal. This depends on the property’s market value. Some like Housing Finance Companies give only 50% to 60% of the property’s value.
3.     Property ownership: The loan shall be given only when the lender is sure the property is indeed yours, and that it has a clean, marketable title. Besides, co-owners need to be a part of the loan and have to meet the necessary criteria.
4.     Loan tenure: LAPs have comparatively longer tenure than personal loans. Longer tenures translate to lower EMIS, and that brings the monthly repayment burden down.
5.     Capacity to repay: Loan shall be given after the evaluation of your ongoing loans, repayment history, savings, etc.