What is the 20/10 Rule? - Diverging from the 20/10 Rule

If you find yourself constantly on the verge of overspending with your credit cards, consider using the 20/10 rule to keep your spending in check. The 20/10 rule is a simple guideline for keeping your debts at a manageable level.

What is the 20/10 Rule?

The first part refers to your overall debt. Excluding mortgage debt, you should keep your borrowing total below 20% of your annual after-tax income. This includes credit cards and debts such as student loans, as well as car loans and any similar installment debt.

Mortgage debt is excluded for two reasons. A mortgage debt has some positive aspects, allowing you to build equity in an appreciating asset as compared to buying depreciating or disposable assets. On a more practical level, the sheer size and long-term aspect of a mortgage relative to other debts generally swamps the other types of debt you are trying to analyze.

The second part of the 20/10 rule relates to monthly payments and cash flow. Your goal is to keep your payments on all the loans and credit cards to no more than 10% of your monthly after-tax income. Again, mortgage payments are excluded, along with rent (since it is just another form of monthly housing payment).

In practical terms, if you have a large mortgage payment or live in a high-rent area, you may have to adjust the rule. If you are spending up to half of your net income on housing – not an unfamiliar situation for some who are underemployed – you probably cannot afford to extend your credit to 20% of your net income.

Diverging from the 20/10 Rule

You are just one surprise expense away from a debt spiral and need to focus instead on saving to build an emergency fund. If you do have an emergency fund, you can consider loosening your credit somewhat – just use common sense.

This illustrates a point about the 20/10 rule – it is a general guideline that makes general assumptions, such as starting with some degree of initial financial stability, stable regular income, and proportionate housing expenses. Your situation may require a different strategy.

Keeping your debt at 20% of your income, without a regular income, is somewhere between difficult and impossible.

For example, if you are recently unemployed, have suffered a pay cut, or have an unpredictable income, keeping your debt at 20% of your income is somewhere between difficult and impossible. You do not need a general guideline – you need a more detailed plan to guide your debt strategy until you get to a more stable place financially.

Student loan debt can also skew this equation, because of the massive increase in size, which can approach that of a modest mortgage. Defaulting on student loan debt also carries significant penalties, and limited options for discharge. Creditors can repossess your house for partial recovery, but they cannot repossess your education… yet. (Let’s hope that no agency is researching that.)

You may run into an unavoidable expense, such as an uncovered medical bill, that throws you over the 20/10 level. In that case, you need to evaluate the situation and make your plan to get back slowly to the 20/10 mark – unless your situation requires cuts that are more drastic.

What Should You Do?

In summary, there may be times where you should bend the 20/10 rule. If you are in a difficult financial situation, you will have to cut spending even further and focus more on reducing your high interest debt. However, for most borrowers, the 20/10 guideline provides an excellent rule of thumb to keep from overextending credit – or at least make you think hard about certain purchases before you whip out your credit card.

IDFC First Bank - Apply for IDFC First Bank Credit Cards

IDFC First Bank is a public Indian Banking company. It was formerly known as

IDFC Bank before its merger with First Bank. The bank’s headquarters are in Mumbai. IDFC First Bank is a part of the IDFC group, which is an integrated infrastructure finance company. It began its operations on the 1st of October 2015. IDFC First got its universal banking license from the RBI in July 2015 and on 6th November it was listed on BSE and NSE.

Company information

Company details:

Founding date: October 2015
Headquarters: Mumbai
Products: Consumer banking, Home loans, Loans against property, Personal loans, Consumer Durable loans, Vehicle loans, Business loans, Micro Enterprise loans, Private banking, Wealth management, Investment banking, Corporate banking, Wholesale banking
Revenue: $46.79 billion as on Q3 FY20
Operating income: $6.82 billion as on Q3 FY20
Parent company: Infrastructure Development Finance Company

In 2014, the RBI gave IDFC Ltd. an in-principle approval to enter in the private sector. After this, IDFC Ltd. divested its assets and liabilities to form a new entity: the IDFC Bank. The bank was launched in November 2015. The bank began its operations on 19th October 2015 with a total of 23 branches in Madhya Pradesh, Mumbai, Delhi, Hyderabad, Kolkata, Bangalore, Chennai, Pune, and Ahmedabad. 15 branches were opened in areas having less than 10000 population.

IDFC Bank and Capital First merged in January 2018.

The bank’s business focus

IDFC First serves private and corporate customers in the country, including the infrastructure sector which IDFC has a specialization in since its very beginning. The bank aims to give services to the rural areas of the country too, as well as to the growing numbers of self-employed people. The bank’s operations are only within India.

Products

Credit Cards

FIRST Millennial Credit Card

• 10X Reward Points on all Spends above Rs.20,000
• 6X Reward Points on Online Spends
• 3X Reward Points on all Offline Spends
• Your reward points are not capped and they don’t expire, ever!
• 10X Rewards on all spends done on your Birthday
• 1X = 1 Reward Point per Rs. 100 spent | 1 Reward Point = 0.25
  

FIRST Classic Credit Card

• 10X Reward Points on all Spends above Rs.20,000
• 6X Reward Points on Online Spends
• 3X Reward Points on all Offline Spends
• Your reward points are not capped and they don’t expire, ever!
• 10X Rewards on all spends done on your Birthday
• 1X = 1 Reward Point per Rs. 100 spent | 1 Reward Point = 0.25
  

FIRST Select Card

• 10X Reward Points on all Spends above Rs.20,000
• 6X Reward Points on Online Spends
• 3X Reward Points on all Offline Spends
• Your reward points are not capped and they don’t expire, ever!
• 10X Rewards on all spends done on your Birthday
• 1X = 1 Reward Point per Rs. 100 spent | 1 Reward Point = 0.25
  

FIRST Wealth Card

• 10X Reward Points on all Spends above Rs. 20,000
• 6X Reward Points on Online Spends
• 3X Reward Points on all Offline Spends
• 10X Rewards on all spends done on your Birthday
• 1X = 1 Reward Point per Rs. 100 spent | 1 Reward Point = Rs. 0.25

What are the benefits of IDFC First Credit Card? - IDFC First Bank Credit Cards

Most people know that IDFC First offers only loans of various types. However, it is recently providing credit cards as well, credit cards which you can apply for only and receive at home! With IDFC First credit cards, you can get 10x reward points. As you know, the more reward points you accumulate, the more you can save up later, apart from buying things with the points. One of the best things about these cards, which is already making people excited over it, is that these credit cards have an interest rate of just 9% a year.

As if that’s not enough, you also get interest-free withdrawals from all ATM machines and no annual/joining fee for the card.

Interested in knowing more about IDFC First credit cards?

In this article, we shall learn about the features and benefits of these credit cards from IDFC First Bank.
 
What are the benefits of IDFC First Credit Card?

• They are lifetime free
• They have no annual fee and renewal fees
• Interest rate starts from 0.75% a month to a maximum of 9% a month.
• The foreign markup fee is 3.5% on all the cards
• There are no charges for redeeming reward points
• There is no Over Limit Fee
• There is no expiry date for your reward points earned from the credit cards
• There are no limits to earning reward points
• These credit cards give you free visit to railway lounges
  

Types of IDFC First Credit Cards

There are 4 types of IDFC First Credit cards. It’s better to learn about all of these first before picking or finalizing one. After all, you don’t want to go home happily with a new credit card only to learn later that another choice would have been better, do you?

The 4 types of IDFC First credit cards are:

1. IDFC First Millennia Credit Card
2. IDFC First Classic Credit Card
3. IDFC First Select Credit Card
4. IDFC First Wealth Credit Card
   

Features of IDFC First credit cards

IDFC First Millennia Credit Card

• Get a Gift Voucher of Rs.500 on spending Rs.15000 within 90 days from card issuance.
• Get 5% Cashback on your first EMI transaction done within 90 days from card set-up.
• Earn 10x Reward Points on all the transactions that are above Rs.20000.
• Spend online through this credit card and earn 6X Reward Points.
• Have a blast on your birthdays because you can earn 10X Reward Points on that day.
• Enjoy 25% Discount on Movie Tickets with a Maximum of Rs.100.
• Enjoy a 20% Discount at more than 1500 restaurants in India.
• Get a Discount of 15% at above 3000 Health and Wellness Outlets.
• Enjoy 4 Complimentary Visits to the Railway Lounges per quarter.
• Get a Cover of Rs.2 Lacs and Rs.25000 for Personal Accident and Lost Card Liability respectively.
• IDFC First Classic Credit Card
• Get a Gift Voucher of Rs.500 as a welcome benefit on spending Rs.15000 within 90 days from card set-up.
• Get a Cashback of 5% on your first EMI transaction done within 90 days from card issuance.
• Earn 10X Reward Points on all the transactions that are above Rs.20000 and on your Birthday.
• Spend online and earn 6X Reward Points and Spend offline and earn 3X reward points through this card.
• Get 4 Free Visits per quarter to the Railway Lounges through the IDFC First Bank Credit Card.
• Get free roadside assistance of Rs.1399.
• Enjoy Personal Accident Cover of Rs.2 Lacs and Lost Card Liability Cover of Rs.25000.
• Get a Fuel Surcharge Waiver of up to Rs.200 every month.

IDFC First Select Credit Card

• This card gives you a welcome give of a Voucher worth Rs.500 after you spend Rs.15000 in the first 90 days.
• Get a Cashback of 5% on your first EMI converted within 90 days from the card set-up date.
• Multiply your Reward Point 10 Times on your birthday and while spending Rs.20000 and above.
• Earn 6X and 3X reward points on online and offline spend respectively.
• Enjoy the Buy One Get One Free offer on movie tickets of up to Rs.250 per ticket twice a month.
• You can enjoy a fuel surcharge waiver of up to Rs.300 per month.
• Get Personal Accident Cover of Rs.5 Lacs and Lost Card Liability Cover of Rs.50000.
• Have free roadside assistance of Rs.1399.
• Get 4 Complimentary Visits per quarter to the Railway Lounges and Domestic Airport Lounges.
• Enjoy a 20% Discount at 1500+ Restaurants and 15% discount at over 3000 health and wellness outlets.
• Get a comprehensive Travel Insurance Cover of Rs.22500.

IDFC First Wealth Credit Card

• Enjoy a welcome give of a Voucher worth Rs.500 once you spend Rs.15000 in the first 90 days from the card issuance date.
• Get 5% Cashback on your first EMI converted within 90 days from the card set-up date.
• Enjoy 10X Reward Points on your birthday and on every spending of Rs.20000 and above.
• Earn 6X and 3X reward points on online and offline transactions respectively.
• Enjoy Complimentary Golf Rounds through the IDFC First Credit Card.
• Get the Buy One Get One Free offer on movie tickets of up to Rs.500 per ticket twice a month.
• Get a fuel surcharge waiver of up to Rs.400 per month.
• Have a Discount of 20% at 1500+ Restaurants and a discount of 15% at over 3000 health and wellness outlets.
• Enjoy 4 Complimentary Access to Domestic and International Airport Lounges and Spas every quarter.
• Get 4 Free Visits to the Railway Lounges per quarter.
• Get a Comprehensive Travel Insurance Cover of $1200.
• Have an Air Accident Cover of up to Rs.1 Crore and Lost Card Liability Cover of Rs.50000.
• Get a Personal Accident Cover of Rs.10 Lacs.
  

Documents needed to get IDFC First Bank Credit Cards

• Identity Proof:- Any one of the following- PAN Card, Aadhar Card, Voter I.D. Card, Passport, Driving License.
• Address Proof:- Any one of the following: Ration Card, Electricity Bill, Telephone Bill, Driving License, Passport, Voter I.D. Card, Last 2 Months Bank Statement.
• Income Proof:- Any one of the following: Form 16, Latest Salary Slips, Income Tax Return Documents, Audited Financial Document, Business Continuity Proof.
• Age Proof:- Any one of the following: Pass Certificate of 10th Standard, Passport, Birth Certificate, Voter I.D. Card.
  

Fees and other charges

• Joining fee: Lifetime free
• Renewal fee: Lifetime free
• Minimum interest rate: 0.75% per month or 9% per annum
• Maximum interest rate: 2.99% per month or 35.88% per annum
• Foreign markup fee: 3.5%
• Late payment fee: 15% of total amount due. Minimum of 100 and maximum of 1000
• International cash advance fee: Rs. 250
• Domestic cash advance fee: Rs. 250
• Fee for redemption of reward points: No fee
• Validity of reward points: Unlimited

ICICI Bank Personal Loans - Benefits of ICICI Bank Personal Loans

ICICI Bank provides personal loans to its customers for different financial needs at very affordable rates of interest along with benefits like reasonable repayment options, hassle-free documentation process, top-up loan facilities, and quick loan disbursals. mymoneykarma gives you all the information you need on ICICI Bank personal loans.

Benefits of ICICI Bank Personal Loans

ICICI Bank personal loans are loaded with a host of customer-oriented benefits and features. Here are a few highlights of ICICI Bank personal loans.

• Significant loan amounts ranging from a minimum of Rs 25,000 to a maximum of Rs 20 lakhs. The loan amount depends on the applicant's repayment capability, credit score, credit history, and yearly income.
• Long loan tenures ranging from a minimum of 12 months and a maximum period of 60 months.
• Attractive interest rates ranging between 11.50% - 16.75% per annum.
• Loans available for salaried individuals, public and private company employees, and government employees.
• Special offers on the applicant being an existing customer of ICICI Bank.
• Various feasible repayment channels such as NEFT, post-dated cheques, and ICICI net-banking.
• Facility of personal loan transfer from other banks to ICICI Bank.
• Simplified loan application and approval process with minimal documentation.
• Dedicated 24/7 customer service desk for query resolution.
  

Types of ICICI Bank Personal Loans

ICICI Bank offers the following types of personal loans to its customers.
Holiday Loans

These loans from ICICI Bank can be used for planning holidays to exotic locations in India and abroad.

Eligibility Criteria

• Minimum income of Rs 17,500 per month in non-metro cities.
• Minimum income of Rs 20,000-25,000 per month in metro cities
• Sound repayment capability
• Competetive credit score
• An age range of 25-58 years for salaried individuals.
• An age range of 28-65 years for self-employed individuals.
• Minimum work experience of 2 years for salaried people, 5 years for self-employed people, and 3 years for doctors.
  

Wedding Loans

These personal loans from ICICI Bank can be used to cover the costs of a wedding in the family or of the applicant.

Eligibility Criteria

• Minimum income of Rs 17,500 per month in non-metro cities.
• Minimum income of Rs 20,000-25,000 per month in metro cities
• Sound repayment capability
• Competetive credit score
• An age range of 25-58 years for salaried individuals.
• An age range of 28-65 years for self-employed individuals.
• Minimum work experience of 2 years for salaried people, 5 years for self-employed people, and 3 years for doctors.
  

Home Renovation Loans

These personal loans from ICICI Bank can be used much like a home loan, to upgrade or renovate the applicant’s house.

Eligibility Criteria

• Minimum income of Rs 17,500 per month in non-metro cities.
• Minimum income of Rs 20,000-25,000 per month in metro cities
• Sound repayment capability
• Competetive credit score
• An age range of 25-58 years for salaried individuals.
• An age range of 28-65 years for self-employed individuals.
• Minimum work experience of 2 years for salaried people, 5 years for self-employed people, and 3 years for doctors.
  

NRI Personal Loans

These personal loans from ICICI Bank can be to mitigate costs of medical and family emergencies and is available for NRI customers.

Eligibility Criteria

• Minimum income of Rs 17,500 per month in non-metro cities.
• Minimum income of Rs 20,000-25,000 per month in metro cities
• Sound repayment capability
• Competetive credit score
• An age range of 25-58 years for salaried individuals.
• An age range of 28-65 years for self-employed individuals.
• Minimum work experience of 2 years for salaried people, 5 years for self-employed people, and 3 years for doctors.

Axis Bank Personal Loan - Benefits of Axis Bank Personal Loans

Axis Bank provides personal loans to its customers at very affordable rates of interest, and other benefits such as hassle-free documentation process, reasonable repayment options, top-up loan facilities, and instant loan approvals. mymoneykarma gives you all the information you need on Axis Bank personal loans.

Benefits of Axis Bank Personal Loans

Axis Bank personal loans are loaded with customer-centric benefits and features.

Here are a few highlights of Axis Bank personal loans.

• Significant loan amounts ranging from a minimum of Rs 50,000 to a maximum of Rs 15 lakhs. The loan amount depends on the applicant's repayment capability, credit score, credit history, and yearly income.
• Long loan tenures ranging from a minimum of 12 months and a maximum period of 60 months.
• Attractive interest rates ranging between 11.25% – 24% p.a.
• Loans available for salaried individuals, public and private company employees, and government employees.
• Special offers if the applicant is an existing customer of Axis Bank.
• Various feasible repayment channels such as NEFT, post-dated cheques, and online banking.
• Simplified loan application and approval process with minimal documentation.
• Dedicated 24/7 customer service desk for query resolution.

Types of Axis Bank Personal Loans

Axis Bank offers only one type of personal loan. This loan is suitable for a large pool of customers.

Eligibility Criteria for Axis Bank Personal Loan   

Applicants must meet the following criteria to get a personal loan from Axis Bank.

• Minimum income of Rs 15,000 per month
• Sound repayment capability
• Competetive credit score
• Minimum age of 21 years
• Maximum age of 60 years
• Must belong to the salaried class of public and private company employees, government sector employees, employees of public sector undertakings, government and other public bodies.  
  

Documents Required for Axis Bank Personal Loan

Applicants need to submit the following documents while applying for an Axis Bank personal loan.

• A filled loan application form with necessary details such as income, occupational details, and personal information.
• Two copies of recent passport sized photographs
• Copies of the applicant's PAN card and Aadhaar card.
• Copies of income proof such as salary slips of the previous three months, bank statements of the last three months, and a copy of Form 16.
• Copies of residence proof such as telephone bills, electricity bills, or rental agreement attested by the applicant.
  

How to Apply for Axis Bank Personal Loan Online

Customers can directly apply for Axis Bank personal loans online by visiting the Axis Bank website. They just need to follow the on-screen instructions from the personal loan section, download the loan application form, and submit the filled form and upload the necessary documents on to the portal. The bank then evaluates the applicant profiles and deposits the loan amount in the applicant's account upon the approval of the loan.

How to Apply for Axis Bank Personal Loan Offline

Applicants can also directly walk into the personal loan centers of Axis Bank along with all required documents. They need to fill up the Axis Bank personal loan application form received at the bank and submit it with the documentation. The loan is approved within a few working days. Use a personal loan EMI calculator to know your obligations if you are applying offline.

IndusInd Bank Home Loan - Eligibility Criteria of IndusInd Bank Home Loan

IndusInd Bank is one of the prominent private sector banking entities in India, renowned for offering a wide array of products to its customers ranging from credit cards to housing loans.

IndusInd Bank understands the desire and requirement of its customers to own a house. Like various other products that are offered by the bank, home loans are designed to suit the needs of numerous modern-day banking customers.

Features of IndusInd Bank Home Loan

Security/Collateral:

• The security or collateral in the home loan is the title deed of the property which the customer wants to get financed. Apart from the title deed, there can be few additional requirements on a case-to-case basis.
  
  
• Provision for co-applicant in the home loan: Co-applicants are always advisable in home loans to ensure higher eligibility for the loan amount and risk mitigation for any default in payments. The income of the co-applicant is summed up along with the primary applicant.
  
  
• The borrower can include their spouse/parents/children as a co-applicant, where their income will also be considered to enhance the loan amount. If there is any other co-owner of the property, he/she has to become a co-applicant mandatorily. Here the point to be noted is that the co-applicant need not be a co-owner, but a co-owner will always be a co-applicant.
  
  
• Equated Monthly Installment (EMI): The loan amount is repaid in the form of EMI or 'Equated Monthly Installment.' The EMI is predetermined, and the customer is informed about it during the time of loan sanction. The amount of EMI is proportional to the principal amount, loan tenure, and the interest rate offered. In other words, EMI is the sum of interest amount and a part of the principal amount, which the customer needs to pay monthly.
  
  
• Home loan processing: Prospective customers who have finally decided on availing the home loan from IndusInd Bank can check their eligibility online and even apply before deciding on the property. A lump sum amount as per the ability of the customer to repay is sanctioned on the records. After deciding on the property and its related value, the customer has to submit the property-related documents. The swift processing method of home loan in IndusInd Bank brings delight to those customers who don't want to lose on time once they decide to purchase a property.
  
  
• Co-applicant: The potential buyers who have decided on borrowing the home loan from IndusInd Bank may also include the co-applicants in the loan. Including co-applicants ensures that the risk is duly shared between two individuals and also brings higher eligibility amount. The income of co-applicants is clubbed together to derive the final eligibility amount.
  

Home Loan Process

Apply IndusInd Bank Home Loan Online

• The customer may apply online for a home loan through mymoneykarma website.
• The prospective applicant needs to provide some critical details to receive a comprehensive list of home loan offers as applicable to the situation.
• The customer may choose the home loan offer provided by IndusInd Bank and can apply online without providing any documentation at this stage.
• If the loan applicant fits into the eligibility criteria of the bank, a bank representative will contact the applicant to complete the rest of the formalities.
  

How to Get IndusInd Bank Home Loan Offline

Visit the nearest IndusInd Bank branch and meet the home loan officer to start the process.

Types of Home Loan Products

IndusInd Bank offers attractive interest rates and a multitude of products under its home loan category to cater to the needs of numerous customer segments:

Home Purchase Loans

This loan is provided for purchasing houses or apartments. The banks usually offer a loan at 80%-85% of the market value of a property. They are available for various tenures and at fixed and floating interest rates.

Land Purchase Loans

This loan is offered for the purchase of land for any residential activity, construction, or investment purposes. It cannot be used for buying any agricultural land. Unlike home loans where the loan is provided at 80%-85% of the property value, land purchase loans are offered at 70% of the value of the land.

Home Construction Loan

Home construction loans are offered for constructing a home on an existing land of the borrower. The plot can be empty or created by demolishing the already existing house and building a new one in its place. The loan amount given by the bank for this purpose is usually at 85%-90% of the construction cost.

Home Improvement Loans

These loans help the borrower in all types of a home renovation or improvement works which include paint job, new flooring work, plumbing, and exterior elevation works, etc.

Home expansion loans

These loans are provided to the borrowers for expanding their existing homes. The expansion of home may include the construction of a single room or multiple rooms to build a new floor above the existing house. In these projects, the loan amount could vary from Rs. 20,000 to Rs. 10 lakhs based on the project.

Eligibility Criteria of IndusInd Bank Home Loan

IndusInd Home Loan is offered to all applicants who are either salaried or self-employed or independent professionals. The home loan products have been designed to meet the expectation of a more extensive section of Indian Economy, specifically the middle-class Indian families. The home loan eligibility is determined in a very transparent manner wherein various factors such as age, salary, number of dependents of the individual comes into consideration.

Home Loan Eligibility Based on Salary

Minimum salary to avail this loan should be Rs. 25000

How Do You Know If Your Credit Needs Repair?

It is always important to understand what leads to a problem if you want to fix it. The same goes for a bad credit score. Factors that can negatively impact your credit score include not paying bills on time, having a balance on credit cards, and many more such reasons.

As these are capable of bringing down your credit score significantly, it is essential to identify and remedy such factors, while also checking for credit report errors.

What Is a Credit Score?

A credit score is a 3-digit number that indicates how well an individual has been managing credit - especially with regard to loans and credit cards. In India, it ranges from 300 to 900. The closer you are to 900, the better your chances are of getting loans and credit cards, especially at good terms and rates of interest. Conversely, if your credit score is in the lower range, you may not get any reasonable offers at all.

Your credit score is based on the information provided on your credit report, which is a detailed account of your credit-related behaviour. For lenders and banks, the score is quite essential, as it lets them know whether you are trustworthy enough to give loans to.

Signs of a Bad Credit Score

• Loans rejected or credit card rejected: If you have a low credit score, lenders will be less inclined to give you further credit. Hence, your loan or credit card application being rejected could be indicative of a bad credit score. After such rejection, however, you are eligible to get a free credit report for checking.
  
  
• Credit account closed by a lender: If you do not pay on time very often, lenders may write off your account as bad debt. If this happens to your account, it is a clear sign of a bad credit score.
  
  
• Low credit limits, bad credit offers, and high APR: Even if some lenders are willing to give you loans, these loans would come with high APR and low credit limits. With a bad credit score, it is pretty much a given that you will not be getting good deals.
  
  
• You get calls from debt collectors: When you get calls from debt collectors, it means you have debts that you have not paid back on time, which can significantly undermine your credit score.

The Solution

If you notice any of the signs mentioned above, it is time to check your credit report to see what is wrong. Reviewing the report can tell you whom you have to pay, which accounts need more attention, etc. In case any of the credit bureaus have made an error in calculating your credit score, checking the report can alert you to that as well.

The good news is that you can check your credit score on the mymoneykarma website. As the service comes free of cost, you can use it regularly to keep a tab on your credit score. That way you can readily identify when and where your credit health needs repair.

Types of Credit Cards - Different Types of Credit Cards

When thinking about credit cards, many people think that there is only one type of credit card. But this is not true. There are various types of this product. It all depends on what you require, or rather what your requirements are.

Right now, the credit card market is seeing an unprecedented growth. If you thought people would be more careful before taking new debt instruments after last year’s Covid-19, you’ll be incorrect. The opposite is the truth. More and more people desire credit cards since these financial instruments have the power to bestow immediate financial assistance.

Now, without any further ado, here are the various types of credit cards you need to know about:

1. Basic credit cards: If you are buying these for the first time, it is a good idea to start with a basic credit card. It’ll give you a small credit limit depending on your income level. You can use this credit limit to buy things. However, there are no additional benefits.
   
   
2. Secured credit cards: If you have a poor credit history, a secured credit card is what you should opt for. These are called secured because to get one of these cards, you deposit a certain amount of money. That’s your collateral.
   
   
3. No annual-fee credit cards: So most credit cards have an annual fee, right? Well, this type does not. You can say this is almost near to a basic credit card, with some added benefits. If you are getting your first ever credit card or have a low credit score, go for this.
   
   
4. Low-interest credit cards: This type of card charges low interest on spending. However, it is not a balance transfer card since its interest rate shall never be as low as 0%.
   
   
5. Balance Transfer Credit Cards: Most credit cards will offer you a balance transfer facility or service. However, this card type has the benefit of giving you a low interest rate for a certain period of time. So if your current credit card is having an oppressive high interest rate, getting a BT credit card can help since some of these come with an opening rate of 0%.
   
   
6. Rewards credit cards: These credit cards actually reward in one way or another each time you spend or use the card for purchases. A lot of cards come within this type. Generally, rewards are by giving you points which you can accumulate and use to buy things.
   
   
7. Cashback credit cards: These credit cards give you cash back rewards for your card use and purchases, for instance when you buy petrol. A lot of credit cards fall under this category.
   
   
8. Travel credit cards: If you travel frequently, travel cards give you tons of benefits like travel insurance, lower currency conversion rates, more lounge access, global acceptance and more.
   
   
9. Shopping credit cards: If you are an avid shopper, get this card! It offers attractive deals, offers and discounts for shopping.
   
   
10. Premium credit cards: These are not available to everyone, but only to a few people. Such people are invited to receive these premium cards because they have been long-term loyal customers with a spotless credit utilization record.

A Complete Guide to Credit Card Basics - Learn the Basics of Credit Cards

When I was a newbie in the world of credit, I was quite apprehensive of credit cards. I had been warned about the infamous credit card debt. I had heard alarming stories of people suffering at the hands of credit card companies. I was scared to get myself a credit card.

Little did I know back then that credit cards come with an array of benefits as well! If you can learn the tricks of the trade, you could use credit cards to save money as well as build your credit score. However, you must learn to use them wisely to enjoy their benefits. If you use them irresponsibly, you will most definitely invite trouble. Therefore, it is better to understand how credit cards work before you sign up for this financial venture.

What is a Credit Card?

A credit card is basically a plastic card issued by a financial institution, which allows the cardholder to borrow funds from the issuer. Whenever you use your credit card for a purchase, you take a small loan from the card issuer. You have to repay the money within a preset date each month.

How Do Credit Cards Work?

When you wish to take a credit card, you approach a card-issuing company or a bank and submit an application. The lender refers to your credit report and your credit score to check if you are worthy of getting credit. If you qualify the requirements of the lender, a credit card is issued to you.

Once your application for a credit card is approved, the lender evaluates your financial health and accordingly sets a credit limit. Your credit limit is the maximum amount that you can borrow. Your credit report influences the range of your credit limit. As you use the credit card, the amount you spend is known as your credit card balance.

Each credit card has a billing cycle and a due date by which you must repay the money you owe to the lender. You could pay the balance in full or a portion of the balance as per the lender's policies. Payment networks like Visa, MasterCard, etc. oversee and process these credit transactions.

Paying off the balance in full ensures that you don't pay any interest on the borrowed amount; in case you decide to pay the minimum amount required, you should be prepared to pay a high interest as well.

All credit card issuers report your activities to credit bureaus. Credit bureaus are companies that prepare your credit report. TransUnion, Equifax, and Experian are the three most popular credit bureaus. These bureaus use a complex mathematical algorithm to evaluate your financial activities and assign you a credit score, which is a three-digit number, typically ranging from 350 to 800, which determines your creditworthiness.

A small financial mistake, such as forgetting to pay your credit card bills within the due date, can reduce your credit score.

Costs Involved in Owning a Credit Card

There are various fees and charges that come with credit card use. If you learn to spend and repay responsibly, you can evade some of these costs.

APR: APR stands for Annual Percentage Rate. There are different types of APRs - the normal APR applies to the balance that you carry forward after paying the minimum balance in every billing cycle. The penalty APR is imposed on your balance when you miss a payment.

Annual Subscription Fees: Some credit cards charge an annual fee, whereas some don't. You should pay an annual fee only when the card in question offers outstanding perks and benefits. If not, go for a credit card without annual fee.

Late Payment Fees: When you make a delay in repayment or fail to pay within the due date, the bank or the card issuer can impose a late fee on the balance due. These charges are generally quite high and vary from company to company.

Balance Transfer Fees: Balance transfer cards usually have a low rate of interest, but a few cards might ask you to pay a fee whenever you transfer a balance. You should check with the issuer before getting a balance transfer card.

Why You Should Get a Credit Card

• First and foremost, credit cards help you build your credit history, which gives you access to more credit opportunities in the future.
• Many cards give you sign-up bonuses or shopping vouchers.
• Rewards programs give you many benefits such as cash back and point redemption.
• Credit cards with a 0% or low-interest rate can come of use if you wish to make a high-value purchase.
• Credit cards give you flexibility regarding payment. It is ideal to pay off the full balance; however, you have the option to repay the money over time as well.
  

Credit Card Vs Debit Card

When you use a debit card to make a purchase, you are essentially using your own money, whereas using a credit card for purchase means borrowing the amount from the lender. Hence, your debit card is linked to your savings account and it pulls money out of your account.

Both credit and debit cards have perks and reward point programs, but credit cards generally have more lucrative offers. Credit cards also have strong fraud protection policies which debit cards lack. Hence, using credit cards is actually much more safe and reliable than debit cards. Additionally, credit cards build your credit history,  whereas debit cards don't.

Types of Credit Cards

Rewards cards

Many credit cards have reward programs, and they give you something in return for your purchases. 'Cash back cards' cards give money in return; 'airline credit cards' give airline miles or points which you can redeem for free flight tickets. Then there are 'travel cards', which you can use to pay for your travel expenses.

'Store credit cards' give loyalty points or discounts for shopping at particular stores. Although these cards offer a lot of tempting benefits, they are generally difficult to get. You would need a high credit score to get one, and they are ideal for people who pay their credit balance in full every month.

Low-Interest Cards

Instead of rewards, low-interest cards provide lower interest rates. If you are struggling to repay your balance in full every month, this could be a viable option for you as it doesn't impose a higher rate of interest on the balance that you carry. A few low-interest cards provide introductory offers of 0% interest for a limited time. You would need a good credit score to qualify for one of these.

Balance Transfer Cards

A balance transfer credit card comes in handy when you are in debt. It allows you to transfer a high-interest credit card balance to a new credit card that has a lower interest rate. You might find a few balance transfer cards which offer 0% introductory APR for a limited period. You can transfer your outstanding balances from multiple credit cards to a balance transfer card. It can streamline all your payments into a single payment, which is much easier to manage.

Secured Credit Card

These cards are designed for people who are looking to build their credit score but lack access to a regular (unsecured) credit card as they haven't yet established enough credit score. It is known as a ‘secured’ card because it is secured by some money that you have to deposit against the card's credit limit.

Secured credit cards can serve as a supportive start for someone without any credit history or for someone trying to rebuild their damaged credit history.

What is minimum due on credit card - Minimum Due on Credit Cards

Maya was 23 when she got her first credit card. Fresh out of college, she was just adjusting to adulting. Although she had bagged a job for herself, she wasn't earning a lot.

Maya worked hard to make ends meet. After paying rent, utility bills and other basic expenses, she barely had anything left. Her expenses shot up in her birthday month, when she not only pampered herself with a few lovely gifts but also threw a party for her friends, cousins and colleagues.

Her credit card bill was way more than what she could afford. Ignorant of how the mysterious world of credit cards works, Maya found an easy solution to the looming problem - she chose to make the minimum payment and decided to handle the remaining balance in the next month. Her next credit card bill hit her with a huge shock.

Like Maya, many credit card users are oblivious to the intricate mechanisms of the credit card payment system. When you only pay the minimum amount due on your credit card, you aren't really solving a problem - it's just temporary relief. In reality, you are committing to repay more in interest charges and taxes later on. Such a trade-off can get you into grave financial trouble over time, especially if your card charges a high interest rate.

What is Minimum Due?

The minimum due on credit card is the bare minimum bill amount that you have to settle each month to evade paying penalty charges. While some lenders fix a flat amount as 'minimum due,' some others calculate it as a certain percentage of the outstanding credit balance in a particular billing cycle.

If your bill amount for January is Rs.10,000, and the minimum due is 5% of your outstanding balance, then you just need to pay Rs.500 within the due date to avoid late payment charges. The minimum amount due is much lower than the total outstanding due. Convenient and affordable, right?

What's the Problem?

Well, many fail to recognize the danger hidden behind the garb of convenience. You might manage to escape the late fees by paying the minimum due, but the remaining outstanding amount will get heftier in the next billing cycle due to the addition of interest and taxes. Before you realize it, you might slip into a deadly credit card debt trap that can escalate rampantly, ballooning the debts out of proportion within a blink of an eye. Let's explore why.

Time Trouble

When you are making just the minimum payment on your credit card, you're basically telling your debt, "See you next month."

Credit card issuers usually set the minimum payment requirements at rock-bottom levels. As I've already mentioned, you'll either be required to pay a fixed amount or a percentage of the outstanding balance. Some credit card companies require you to pay barely 1% or 2% of the credit balance each month, along with any fees and accrued interest.

Making such tiny amounts of payment on time will definitely keep you safe from late fees, but you will hardly make any real progress on repaying your balance.In fact, if you keep paying the minimum due each month, it'll take you years to pay off the debt. Moreover, you can easily end up paying more than double the amount you had actually borrowed. You pay, and you pay, and you pay, but you never pay it off.

The best way to avoid this mess would be to settle all your current dues within the current billing cycle. If a tight budget impedes you from doing so, pay off as much as you can - paying at least the double of your minimum due will reduce the debt burden to a large extent.

Incredible Interest

Credit card interest rate is an enigma. We all know that credit cards are accompanied by notorious APRs (Annual Percentage Rate), but we barely know how to calculate credit card interest rate. Credit card APRs are usually in double digits; it can be as high as 30-35% per annum. Credit card users are charged interest only when they carry a credit balance from one month to another.

So, if you're paying your credit card bills on time, you wouldn't have to pay any interest at all. However, if you are simply paying the minimum due, the hefty APR applies to the remainder. The longer and the heftier outstanding balance you have, the more is the interest payable. Additionally, a GST of 18% will also be applicable to the amount. And don't forget, credit card interest is compounded. You'll be buried deep in debt even before you realize!

So, unless you're using a credit card with 0% credit card APR, your interest charges will rise along with your rising outstanding balances. Making only the minimum payment will barely wipe out your last month's interest. And assuming that you keep using the card every month, your outstanding balance will pile up, attracting a huge amount of interest and taxes, and you will fall further and further behind in settling the amount.
Credit Catastrophe

Although you have a credit limit of Rs.1 lakh, you are expected to keep your expenses (technically known as credit utilization ratio) within Rs.30,000, i.e., 30% of the credit limit. Credit utilization ratio plays a major role in determining your credit score. If your credit balance rises, so does your credit utilization ratio, and your credit score takes a hit. A serious blow to your credit score can take years to repair.

A bad credit score can mess up your life - it will not only be harder for you to qualify for new lines of credit, but it can also affect your ability to find a job or get a new phone connection or rent an apartment, as employers and service providers often review your credit score to evaluate your credibility.

10 Interesting Credit Card Facts - The Specialty of Credit Cards

Credit cards might come off as a mystery to those who are new to the world of credit. You may have been warned; you may have felt scared; you may feel utterly confused. Don't worry - we are here to simplify it for you. Your friendly financial guides from mymoneykarma are here with 10 interesting facts about credit cards that everyone should know.

The Specialty of Credit Cards   

A credit card is just a plastic card. It looks very similar to a debit card and various shopping cards. So, why is it different? What makes it so special?
Well, you can do a lot of amazing things using your credit card. Credit cards provide an array of lucrative facilities: building a good credit history, availing loans at a favorable rate of interest, getting insurance at cheap, buying things under EMI schemes, earning rewards for purchases made - you name it, credit cards have it! You just have to learn how to use it in the right way.

The Reason to Get One   

Why should you get a credit card? Well, why not? It opens a new door of opportunities! Credit cards help you build credit and gives you access to more credit opportunities in the future. Many cards give you sign-up bonuses or shopping vouchers. Credit card reward programs are popular among customers - you can earn points for every purchase, and later use those points for more purchases! You can add flexibility to your finances by using a credit card - buy something now and pay the amount a month or so later.

The Difference Between Secured and Unsecured Cards   

There are two types of credit cards - secured and unsecured. All regular credit cards are unsecured ones. On the other hand, secured credit cards are issued against a cash deposit which acts as collateral. These cards are designed for individuals who are looking to build credit but lack access to a regular (unsecured) credit card as they haven't yet established enough credit score.
The only difference between the two is that a secured credit card is issued against a security deposit, which unsecured credit cards don't require. Secured cards often have higher fees than unsecured ones - you might have to pay an application fee and yearly subscription fees as well. The penalty APR could be quite high for these cards. Apart from these aspects, secured credit cards are just like regular unsecured credit cards and function on similar terms. They could be extremely useful for new customers who are looking to build credit.

The Gracious Grace Period   

Credit cards can give you access to interest-free loan and a grace period of three to four weeks. This is how it works: Let's assume that your billing cycle is from 3rd January to 2nd February with the due date on 1st March. All purchases that you make from 3rd January to 1st March will be free of any interest. In case you miss your payment within the due date, interest will be levied upon your average daily balance.

The Enigmatic Credit Card Interest   

Most of us assume that credit card interest is calculated on the credit balance that remains after the payment due date. However, if you fail to pay your balance in full, you will accumulate interest on your average daily balance. If you fail to repay your outstanding credit balance in full within the due date, the free credit period will be ignored and the interest will be imposed on every purchase made during that billing cycle until the entire outstanding balance is cleared. Credit card interests are notoriously high; a single default or late payment can turn into a huge loan within a short span of time.

The Merciful Minimum Payment   

What if you have spent a lump sum amount on a particular billing cycle but you cannot afford to repay the whole amount immediately?
Though you should develop the habit of repaying your balance in full every month, credit cards offer a facility of making 'minimum payment.' It is the smallest amount that you have to pay each month to avoid incurring a late fee or damaging your payment history. However, you might wonder how your minimum payment is calculated. Mostly it is calculated as a percentage (typically between 1% and 3%) of your credit balance. So if you have spent Rs.2,00,000 and the minimum payment is 2% of your balance, you will have to pay Rs.4000 at least in order to stay in good standing. If your credit limit is relatively low, your issuer might set a flat amount as the minimum payment.

The Curious Case of Credit Scores   

Your credit card usage has a great impact on your credit score. It can make your credit as well as break it. The following aspects of your credit card can affect your credit score:

• Payment history has the most impact (about 35%) on your credit score. Make payments on time and your credit report will shine; miss a payment and you are you could be doomed.       
• Credit utilization is the second important factor. It refers to the percentage of your credit limit that you have used up at any point in time. It has about 30% weight in determining your credit score.       
• Length of credit history or your average credit age has around 15% impact. The longer your credit age, the better it is for your credit score.
• Credit Mix is another determinant of credit score. You must have diversity in credit accounts to establish that you have been trusted with credit by various types of lenders. This has a low impact (of about 10%) on your credit score.   
• Hard inquiries are conducted by lenders whenever you apply for a new line of credit. They have about 10% weight in bringing down your credit score. Don't apply for multiple cards in a short span of time.

The Conventional Credit Utilization Rate   

Credit utilization refers to the portion of your credit limit that you spend in each billing cycle. You are not expected to spend the entire credit limit available, as a borrower is expected to be mature and spend responsibly. Your credit utilization rate reflects your spending habits, and thus, the credit bureaus treat it as an important determinant while calculating your credit score. If you desire a good credit score, you better keep a good credit utilization rate. Most financial advisors say that a credit utilization of 30% and below is ideal for your credit health.
Let's assume that you have three credit cards with credit limits of Rs.25,000, Rs.30,000 and Rs.45,000. Add them to get your total credit limit, which is Rs.1,00,000 in this case. Now you have made total purchases worth Rs.30,000 using these credit cards. Here is how you can calculate your Credit Utilization:
(Total Balance/ Total Credit Limit) x 100 = Credit Utilization %
In this case, ( 30,000 / 1,00,000 ) x 100 = 30%

The Amazing EMV Chip   

Take out your newest credit or debit card from your wallet and look for a small embedded golden/silver square. Found it? That's an EMV chip.

These chip-enabled cards are more secure than the erstwhile popular magnetic stripe cards. The EMV chip cards work on technology superior to that of the magstripe cards; it is more difficult to hack into your account information through chip transactions than the ones through the magnetic stripes. With the advent of these chip cards, the world has breathed a sigh of relief as it promises more security from credit card fraud.

The Confusing Credit Card Costs   
Credit cards bring along a bunch of different fees. If you learn to use your card responsibly, you can easily evade these costs.

• APR: APR stands for Annual Percentage Rate. There are different types of APRs - the normal APR applies to the balance that you carry forward after paying the minimum balance in every billing cycle. The penalty APR is imposed on your balance when you miss a payment.
• Annual Subscription Fees: Some credit cards charge an annual fee, whereas some don't. You should pay an annual fee only when the card in question offers outstanding perks and benefits. If not, go for a credit card without annual fee.
• Late Payment Fees: When you make a delay in repayment or fail to pay within the due date, the bank or the card issuer can impose a late fee on the balance due. These charges are generally quite high and vary from company to company.
• Balance Transfer Fees: Balance transfer cards usually have a low rate of interest, but a few cards might ask you to pay a fee whenever you transfer a balance. You should check this in particular with the issuer before getting a balance transfer card, as it could sometimes outweigh the benefits of getting a balance transfer itself.

Tips for Paying Credit Card Bills Quickly - 3 Tips to Help You Stay on Top of Your Payments

"Change your life today. Don't gamble on the future - act now, without delay." - Simone de Beauvoir.

Whether you are a lazy fellow or a busy guy, no excuse can save you from the damages of delayed payments. Your payment history has a huge impact on your credit score. Missing a single payment can leave a dark mark on your credit report for a long time. So what exactly should you do? Well, once you know what you must look out for, managing timely payments shouldn’t be a big hassle. Read on to know how you can stay on top of your payments.

3 Tips to Help You Stay on Top of Your Payments

Life these days can be extremely hectic and busy, and most of us handle multiple lines of credit simultaneously. Getting confused and forgetting a due date is quite natural amidst multitudinous items on our minds. How do we ensure that we never miss a payment? The solution can be a simple one.

Synchronize the Due Dates: If you have multiple credit cards with different billing cycles and due dates, you could consider talking to your card issuers and change the billing cycle in such a way that all the due dates synchronize. Most creditors will agree to this proposition. You could schedule all your due dates on a particular day right after you receive your salary. This will considerably reduce the chances of missed payments.

Reminders: If you are an absent-minded person, you must set up reminders for yourself. It could be a wall calendar, sticky notes, cell phone reminders, or even text/email reminders - set up something that will notify you of the approaching due dates.

Autopay: Setting up automatic payments for your credit card bills will take all your worries off your head. You can link your credit card accounts to your savings account and set up autopay. Make sure that the savings account has enough money to pay the credit card bills. Sit back and relax!

Carrying a Balance on Your Credit Card

Has anybody ever told you that you must carry over some balance on your credit card from month to month in order to build credit? Well, you have been duped. It might be a popular belief, but take my word for it - it is just a myth.

If you wish to build credit, you should always pay your credit card bills on time. Carrying a balance isn't good for your credit health - you might end up paying a hefty APR - which doesn't benefit your credit score in any way.

Avoid carrying a balance. If your hands are tied, then make the minimum payment and later try to pay off the full amount as soon as you can. If your credit balance grows to become a huge amount with a high APR, consider a balance transfer card to economize your debt repayment and interest.

Pay off Your Credit Card Balance

How much of your credit card balance should you pay?

The answer is 'entirely'.

When should you make the payment?

Well, within the due date.

Paying the balance in full each month positively impacts your credit report. It also shows that you are able to borrow money responsibly and stay within the limits of your affordability. It makes you a creditworthy borrower in the eyes of lenders.

If your credit utilization rate tends to shoot up, you should try to balance it by making multiple payments each month. Reduce your credit utilization rate as much as possible - preferably keeping it below 30%, which is considered healthy for your credit score.

Let's say your credit limit is Rs.1,00,000, and you have spent around Rs.50,000. The card issuer will report your credit utilization at 50% in your monthly statement. This will bring down your credit score. However, if you pay off Rs.25,000 before the statement is generated, your credit utilization will be reduced to 25% in your statement, thereby boosting your credit score.

Before you proceed with this strategy, you must get in touch with your card provider and find out when exactly they report your information to the credit bureaus.

Dos and Don'ts of Cancelling Your Credit Cards - Dos and Don'ts of Cancelling Your Credit Cards

Credit cards can sometimes become a great nuisance. You might have to pay subscription fees for a card that you barely use; one of your older cards might have an unreasonably high APR; the cards in your wallet might tempt you to spend more. A quick solution to all of these problems would be to cancel the cards and close the accounts.

But pause and think - is that a constructive solution? Canceling credit cards might set off far-reaching ripples that can jeopardize all your efforts of building a good credit history. You must not act upon a whim. We, at mymoneykarma, want to help you comprehend the consequences of such a move so that you take the right action.
Account Closure Affects Your Credit Score

When you close an account or a line of credit, your credit score takes a blow. Let's quickly recapitulate how an account closure can affect your credit health:

• Your credit limit gets reduced
• Your credit utilization rate increases
• You lose the variety in your credit mix
• Your average credit age falls
  

All of these can negatively impact your credit score. There are certain advantages and disadvantages of closing a credit account. So before you decide to close one of your accounts, read this article and find out about the dos and don'ts of closing a credit card account.

DOs

Close Your Old Credit Card if It Costs You Unnecessarily

Do you have an old credit card that you hardly use, yet you pay a subscription fee for it? Well, that doesn't sound economical. But at the same time, an old credit account is healthy for your credit record.

You could go ahead and close the account, but we suggest that you talk to the card issuer before doing so. Many companies wouldn't want to lose their customers, and would easily give you an annual fee waiver if you approach them.

Keep Some Accounts Open

You must keep a few credit accounts open if you wish to keep your credit score healthy. Creditors will consider you trustworthy if you can show some active and responsibly maintained credit. Closing too many accounts will shoot up your credit utilization rate and negatively impact your credit score.

Check Your Credit Reports Even After You Close the Accounts

If you assume that all your credit card activities will be reported by the end of your billing cycle, you may be wrong. Card-issuing companies might delay the process. Credit bureaus might also take some time in updating your recent record.

Check your credit report from time to time to ensure that there isn't any discrepancy. Reporting errors are quite common and might go unnoticed if you don't take the necessary action to get them rectified. You wouldn't want your credit report to show an error pertaining to an old and canceled credit card.

DON'Ts

Don’t Close the Oldest Account on Your Credit Report

Your oldest credit account serves as a timestamp and sets the history of your credit age. If you close it, your credit history appears shorter and pulls down your credit score. Consider upgrading or downgrading your card, but make sure that you keep the account open and active.

Don’t Ignore Old Credit Cards

Sometimes things out of our sight go out of our minds. Don't let that happen with your credit cards. If you wish to close an account, find out the process and follow it strictly. Don't ignore or throw away the card and forget about it. You must not leave such loose ends. Don't expect that inactive accounts will close automatically. Follow the necessary formality. You will receive a closing-confirmation letter from the issuer when the process is completed.

Don’t Cancel Several Accounts at Once

Doing so is a suspicious move, and it will leave creditors wondering if something is amiss. Moreover, it would also magnify the negative impacts of a single closure. It's preferable that you space out the account closures over time to reduce the impact on your credit health.

Don't Rely Solely on Balance Transfers to Settle High-Interest Debt

Balance transfer cards could be an easy solution to repay an outstanding credit card amount which has a high APR. However, balance transfer cards don't make your debt disappear. They just give you relief from high-interest rates for a short period.

You must have a foolproof plan of repayment chalked out in your mind before opting for a balance transfer. You should be able to repay the amount within the limited promotional period when your new balance transfer card offers a low interest rate.

Use Credit Cards to Save Money While Traveling -

Using credit cards while traveling is a pocket-friendly as well as a convenient technique. You can earn points, miles and cash back rewards. However, these are the basic benefits of using a credit card overseas.

If you wish to make the utmost advantage of all the travel benefits that a credit card can offer, you must know which doors to knock on. Here are a few unbelievably amazing benefits that could help you save a lot more on your vacation.

Finding the Perfect Card

Credit cards are the best pocket-companions during travel. Traveling with cash can be quite risky, and the advent of credit cards has made it safer for people on a trip. Whether you choose to shop, go out for dinner, or buy flight tickets - credit cards are the best mode of payment. Certain credit cards also offer excellent travel offers and services.

However, the biggest bitterness sets in when the credit cards levy exorbitant charges for foreign transactions. What should you do when you have to fund an overseas trip - should you pay such high charges or should you look for alternatives?

Well, cheaper travel options are abundant. You just need to browse your options and find the right credit card to suit your purpose, which can be a tedious task. However, you ought to be aware that you can save a considerable amount of reserves if you just research enough to find the suitable card.

Most credit cards in the US and UK charge low foreign transaction fees, sometimes even as low as 0%. Unfortunately, we Indians are not that lucky. All Indian credit cards charge at least 2% foreign transaction charges, and these are the premium travel cards that are difficult to get.

Ordinary credit cards that most Indians easily qualify for might charge an insanely high fee. Do not be myopic while sorting through available credit cards; devote some quality time and search extensively for the best credit card deal.

These are the criteria that you must check before deciding on selecting a credit card for travel:

• If you are a frequent overseas traveler, the first prerequisite for your apt credit card should be a decently low currency conversion charge and foreign exchange rate.
  
  
• Look for cards offering reward points that can be converted for Air-miles or direct Air-miles that can be redeemed while purchasing flight tickets.
  
  
• Check for cards that give you free access to Airport Lounges.
  
  
• Credit cards levy a markup fee of 3% to 5% on foreign transactions. This essentially means that if you spend Rs.1 lakh on your foreign trip using a credit card with a 5% markup fee, you will end up paying an extra Rs.5000 to the issuer. Hence, you should look for a card that has low markup charges.
  
  
• A few credit cards levy a fee on swiping the card for purchases. Avoid those. You will find many cards that do not charge this absurd fee.
  
  
• Most credit cards charge varying rates for cash withdrawals through ATMs. Find the card that charges the least.

Tips to Manage Your Credit Cards During Festivals Season - Give Your Credit Card a Rest

A Country of Festivals

India is a spiritual country at heart, and thus, celebrates many festivals over the whole year. Some of these festivals can only be seen in a specific state, while others are celebrated all over the country.

In brief, here are some of the most well-known festivals: Holi, Durga Puja, Eid, Ganesh Chathurthi, Navratri, Ramzan, and Dussehra, Diwali, Christmas, Janmashtami, Onam, and others. However, in the festive spirit, we tend to spend more during such times. As a result, credit card use shoots up very often. This blog tells you how to manage your credit cards during the festival season.

The fact of the matter is that we can hardly keep track of how much we spend during these festivities. There is something different to buy for each festival as well. For instance, during Diwali, we buy firecrackers, sweets, new clothes, gifts, and much more.

Unless one is careful, one can end up spending a great deal of their monthly savings. The problem becomes more significant when we start using our credit cards for all of these purchases. If you let this go unchecked, you could even find yourself deep in debt, which is not something you want either before or after the good times. Thus, it is essential that you manage your credit cards well during the festival season.

The Problem with Credit Card Spending

Nowadays, banks are ready to give away credit cards for free, without any yearly charge! Now, even if the annual charge clause is valid, it is still a credit card. You will be charged interest for all purchases unless you pay within a stipulated period.

The more money you spend with a credit card, the more you are borrowing from the bank. In such cases, the bank is going to charge interest that is heftier, or for a more extended period. In short, credit cards encourage indiscriminate and unnecessary spending. Credit cards are advertised as free money, but it is anything but that.

Due to this very nature credit card usage, people tend to spend without second thoughts, especially during the festive seasons. The result is enormous bills and subsequent credit card debt. To keep this predicament at bay, it is vital that you manage your credit cards well during the festival season.

Five Ways to Plan Your Finances During the Festive Season

Here are a few tips on how to plan your finances during the festive season. Some of the tips will also tell you how you can avoid using any cards in the first place!

1. Set a budget: Having a budget is one of the most effective ways to avoid overspending and to plan your finances during the festive season. When you know the limits of your expenditure, you are less likely to splurge needlessly. With a budget, even when purchasing with a credit card, you are less likely to overspend.
   
   For instance, during any festive season, if you have a budget of Rs. 20000-40000, you can consciously make sure that you don’t spend beyond that. Now you know why you need to set a budget for festivals season.
   
   
2. Make a purchase list: Sometimes, when our shopping trips are unplanned, we tend to buy similar yet unnecessary items. At other times, we tend to buy anything that we think is needed but is not so. This is because the trip is unplanned.
   
   If, however, you make a purchase list, you know exactly which items to buy. Thus, there is much less chance to buy anything unnecessary.
   
   
3. Utilize credit card offers: One smart way to avoid ending up with credit card debt is to use credit card offers. Today, banks offer credit cards to benefit specific lifestyles such as shopping, traveling, dining, entertainment, health, wellness, online shopping, and more.
   
   You get benefits like reward points, cashback, free tickets, discounts, 1+1 deals, gift cards, and vouchers. Use these! For instance, if you want to buy furniture during the festive season, get an HDFC credit card that offers a discount of up to Rs. 5000 off all Pepperfry purchases.
   
   
4. Redeem reward points: When you make purchases with a credit card, you get reward points. You may also get reward points in the form of a credit card welcome gift, and when you reach certain milestones. When you have enough RPs, you can redeem them to purchase items without using any money! This will certainly come in handy during the festive season.
   
   
5. DIY Gifts: The best gifts are not the most expensive ones, but ones behind which the most thought and care has gone. If you can craft something beautiful and useful as a gift, then you not only save money, but are also giving away something thoughtful.

How Do Credit Cards Work? - Learn the Basics of Credit Cards

A credit card is basically a plastic card issued by a financial institution, which allows the cardholder to borrow funds from the issuer. Whenever you use your credit card for a purchase, you take a small loan from the card issuer. You have to repay the money within a preset date each month.

How Do Credit Cards Work?

When you wish to take a credit card, you approach a card-issuing company or a bank and submit an application. The lender refers to your credit report and your credit score to check if you are worthy of getting credit. If you qualify the requirements of the lender, a credit card is issued to you.

Once your application for a credit card is approved, the lender evaluates your financial health and accordingly sets a credit limit. Your credit limit is the maximum amount that you can borrow. Your credit report influences the range of your credit limit. As you use the credit card, the amount you spend is known as your credit card balance.

Each credit card has a billing cycle and a due date by which you must repay the money you owe to the lender. You could pay the balance in full or a portion of the balance as per the lender's policies. Payment networks like Visa, MasterCard, etc. oversee and process these credit transactions.

Paying off the balance in full ensures that you don't pay any interest on the borrowed amount; in case you decide to pay the minimum amount required, you should be prepared to pay a high interest as well.

All credit card issuers report your activities to credit bureaus. Credit bureaus are companies that prepare your credit report. TransUnion, Equifax, and Experian are the three most popular credit bureaus. These bureaus use a complex mathematical algorithm to evaluate your financial activities and assign you a credit score, which is a three-digit number, typically ranging from 350 to 800, which determines your creditworthiness.

A small financial mistake, such as forgetting to pay your credit card bills within the due date, can reduce your credit score.
Costs Involved in Owning a Credit Card

There are various fees and charges that come with credit card use. If you learn to spend and repay responsibly, you can evade some of these costs.

APR: APR stands for Annual Percentage Rate. There are different types of APRs - the normal APR applies to the balance that you carry forward after paying the minimum balance in every billing cycle. The penalty APR is imposed on your balance when you miss a payment.

Annual Subscription Fees: Some credit cards charge an annual fee, whereas some don't. You should pay an annual fee only when the card in question offers outstanding perks and benefits. If not, go for a credit card without annual fee.

Late Payment Fees: When you make a delay in repayment or fail to pay within the due date, the bank or the card issuer can impose a late fee on the balance due. These charges are generally quite high and vary from company to company.

Balance Transfer Fees: Balance transfer cards usually have a low rate of interest, but a few cards might ask you to pay a fee whenever you transfer a balance. You should check with the issuer before getting a balance transfer card.

Why You Should Get a Credit Card

• First and foremost, credit cards help you build your credit history, which gives you access to more credit opportunities in the future.
• Many cards give you sign-up bonuses or shopping vouchers.
• Rewards programs give you many benefits such as cash back and point redemption.
• Credit cards with a 0% or low-interest rate can come of use if you wish to make a high-value purchase.
• Credit cards give you flexibility regarding payment. It is ideal to pay off the full balance; however, you have the option to repay the money over time as well.
  

Credit Card Vs Debit Card

When you use a debit card to make a purchase, you are essentially using your own money, whereas using a credit card for purchase means borrowing the amount from the lender. Hence, your debit card is linked to your savings account and it pulls money out of your account.

Both credit and debit cards have perks and reward point programs, but credit cards generally have more lucrative offers. Credit cards also have strong fraud protection policies which debit cards lack. Hence, using credit cards is actually much more safe and reliable than debit cards. Additionally, credit cards build your credit history,  whereas debit cards don't.

Best Credit Cards for Overseas Travel - Credit Cards for Travelling

Ready to set off on an overseas adventure? Before you pack up your suitcases, make sure that your wallet is packed well for the trip. Your well-wishers at mymoneykarma don't want you to fall in trouble and hence urge you to keep the following in mind while prepping for your trip.

Your Credit Card Should Be Suitable for Overseas Travel

You might have a great card with innumerable benefits, but it doesn't mean that it is fit for traveling abroad. Before setting off, make sure that your credit card has EMV compatibility and doesn't charge you for foreign transactions.

If your credit card has a small embedded golden square, be sure that it is EMV-enabled. These chip-enabled cards are more secure than the erstwhile popular magnetic stripe cards. The EMV chip cards work on a superior technology than the erstwhile magstripe cards and it is more difficult to hack into your account information through chip transactions than the ones through the magnetic ones. Travelers are prone to becoming victims of fraudsters. With the advent of these chip cards, the world has breathed a sigh of relief as it promises more security from credit card frauds.

Most Indian credit cards typically charge a fee on every foreign transaction. It could be as expensive as 5% of your total purchase per transaction. You would end up paying a lot of money for purchases. Instead, look for a credit card that doesn't levy the foreign transaction fee. You could actually save a lot this way. Consider getting a forex card as well.

You Should Carry Multiple Cards

Now that you have a credit card with EMV chip as well as no foreign transaction fee, do you think you are completely prepared to fly off? I don't think so. You need at least another card for backup. Are you wondering why? Well, be prepared for emergencies. Think of the worst - what if your card is lost or stolen? Expecting a replacement card immediately would be impractical. You would be inevitably stranded at a foreign location without any access to funds. It is better to be safe than sorry. Get yourself that backup card asap.

You Must Understand Your Card Network

Visa and MasterCards are more or less accepted universally, but there are quite a few other card networks like Discover, Amex, RuPay, etc. that do not work in all countries. Check whether your card network works in the destination country.

Inform The Card Issuer about the Trip

Credit card issuers lookout for fraudulent transactions. Overseas transactions generally come off as potential red flags. Your card could get blocked. Don't let it roll so far. Inform your card issuing company about your upcoming trip - convey the location and duration of travel. You could do this by calling up their customer service department. Some companies provide this facility on their websites.

Carry Some Cash

In spite of carrying multiple credit cards, you might run into unexpected exigencies. Your itinerary might include an obscure location where cards aren't accepted. You should carry some cash for such emergencies. It need not be your primary mode of payment, but it might come to use just in case.

Use Credit Cards to Save Money While Traveling

Using credit cards while traveling is a pocket-friendly as well as a convenient technique. You can earn points, miles and cash back rewards. However, these are the basic benefits of using a credit card overseas.

If you wish to make the utmost advantage of all the travel benefits that a credit card can offer, you must know which doors to knock on. Here are a few unbelievably amazing benefits that could help you save a lot more on your vacation.
Finding the Perfect Card

Credit cards are the best pocket-companions during travel. Traveling with cash can be quite risky, and the advent of credit cards has made it safer for people on a trip. Whether you choose to shop, go out for dinner, or buy flight tickets - credit cards are the best mode of payment. Certain credit cards also offer excellent travel offers and services.

However, the biggest bitterness sets in when the credit cards levy exorbitant charges for foreign transactions. What should you do when you have to fund an overseas trip - should you pay such high charges or should you look for alternatives?

Well, cheaper travel options are abundant. You just need to browse your options and find the right credit card to suit your purpose, which can be a tedious task. However, you ought to be aware that you can save a considerable amount of reserves if you just research enough to find the suitable card.

Most credit cards in the US and UK charge low foreign transaction fees, sometimes even as low as 0%. Unfortunately, we Indians are not that lucky. All Indian credit cards charge at least 2% foreign transaction charges, and these are the premium travel cards that are difficult to get.

Ordinary credit cards that most Indians easily qualify for might charge an insanely high fee. Do not be myopic while sorting through available credit cards; devote some quality time and search extensively for the best credit card deal.

These are the criteria that you must check before deciding on selecting a credit card for travel:

• If you are a frequent overseas traveler, the first prerequisite for your apt credit card should be a decently low currency conversion charge and foreign exchange rate.
• Look for cards offering reward points that can be converted for Air-miles or direct Air-miles that can be redeemed while purchasing flight tickets.
• Check for cards that give you free access to Airport Lounges.
• Credit cards levy a markup fee of 3% to 5% on foreign transactions. This essentially means that if you spend Rs.1 lakh on your foreign trip using a credit card with a 5% markup fee, you will end up paying an extra Rs.5000 to the issuer. Hence, you should look for a card that has low markup charges.
• A few credit cards levy a fee on swiping the card for purchases. Avoid those. You will find many cards that do not charge this absurd fee.
• Most credit cards charge varying rates for cash withdrawals through ATMs. Find the card that charges the least.

Rebuild Credit Score with Secured Credit Cards - What is a Secured Credit Card?

Secured credit cards are quite popular and highly sought after. However, there are a few limitations to them too. In this blog, you’ll learn how to rebuild your credit score with a secured credit card, how to convert to an unsecured credit card, and much more.

What is a Secured Credit Card?

It is a type of credit card designed for individuals who are looking to build credit. However, it is often used as a result of lack of access to regular (unsecured) credit cards, as they haven't yet established enough credit score. It could be a supportive start for someone without any credit history or for someone trying to rebuild their damaged credit history. It is known as a "secured" card because it is secured by some money that you have to deposit against the card's credit limit. A secured credit card can safely hold your hand and guide you to a prosperous credit history.

Secured Credit Cards Vs. Regular Credit Cards

The only difference between the two is that a secured credit card is sanctioned against security (cash) deposit, which unsecured credit cards don't require. Secured cards often have higher fees than unsecured ones. You might have to pay an application fee and yearly subscription fees as well. The penalty APR could be quite high for these cards.

If you are wondering why, the answer is quite simple: a person who isn't creditworthy, is unreliable with credit. Hence lenders impose high interest rates on them. Apart from these aspects, secured credit cards are just like regular unsecured credit cards and function on similar terms.

How Do Secured Cards Work?

If you are looking for a chance to build or rebuild your credit, a secured credit card could be a suitable option for you. You just need to approach the bank and apply for a secured credit card. You should know that there isn't a guarantee of getting a secured card just by paying a deposit. Your documents will be scrutinized, and the application will be approved only when you meet the requirements of the issuer.

Once your application for a secured card is approved, you must pay the security deposit to get the card. The issuer sets a credit limit for you, which is secured with the cash deposit. After you make the initial deposit, secured cards work precisely like the unsecured ones. You can use the card wherever credit cards are accepted. As you make purchases, your credit utilization rate rises.

The card issuers report your monthly activities to credit bureaus - your credit score fluctuates accordingly. You must not assume that you don't have to pay monthly credit card bills since you have already paid a deposit. The deposit is for security reasons so that lenders don't run at a loss if you ever fail to repay your dues. Just like regular credit cards, you have to repay your credit card bill every month within the due date. If not, an APR is imposed on your outstanding balance.

You can use these cards judiciously to repair your credit report. In general, you should be careful with the way you are using your secured credit cards. You should always ensure a clean record of positive activities to improve your credit health. Use the card responsibly and pay your balance on time. In this way, you can build or rebuild your credit using the card. What more? You can gain and redeem reward points as well!

What are the drawbacks of a Secured Credit Card?

Secured credit cards seem to be the ideal solution to all your problems. But wait, is it?

Let's take look at the disadvantages of using a secured credit card.

• There is a greater likelihood of higher interest rates.
• Secured credit card fees are between $30 to $50.
• It gives you a low spending limit.
• The security deposit shall not be accessed until the account is closed.
  

How can Secured Credit Cards Improve Your Credit Score?

Secured Credit Cards help improve your credit score to a large extent. Listed below are the scenarios in which your credit score could benefit from a secured card.

• New Users: You must be aware of the fact that a credit card is the best way to build credit; a good credit history gives you access to better credit facilities. However, if you are new to the financial world, you might not have a good enough credit score to qualify for regular credit cards. A person with a low credit score is not creditworthy in the eyes of potential lenders. Secured credit cards come of use in such a scenario. It is easier to qualify for a secured card than the unsecured ones, because you are paying a security deposit to the lender - in case you fail to repay, the lenders have a fall-back option and won't incur a loss. If you make payments on time and maintain a perfect credit utilization ratio, your credit scores will increase for sure. Once you have successfully earned enough credit score, upgrade to a regular credit card, and follow mymoneykarma’s tips to use it efficiently.
  
  
• Rebuilding Credit: Your credit could take a severe blow due to many reasons - missed or delayed payments, delinquency, accounts in collections, repossession, foreclosure, etc. In such a scenario, your credit history would be spoilt, and you might have to rebuild it from scratch. A low credit score doesn't let you take new credit cards. How would you rebuild your credit then? Secured credit cards could be the perfect solution. It is easier to qualify for a secured credit card than the unsecured ones. If you get approval for a secured card, you could maintain a spotless credit history of low usage and timely payments to improve your credit score significantly. If your application is rejected, get help from mymoneykarma and learn. how to re-apply. Keep track of your credit score at mymoneykarma as well.
  
  
• Improving Credit: Secured cards can come to use even though you already have good credit with endless opportunities for new unsecured cards. Let's assume that you have reached the maximum credit limit that you are entitled to, yet you wish to increase your credit limit by another Rs.2,00,000. Unsecured credit cards might not help you here as your request won't be approved, but secured ones definitely will. You could make a security deposit of Rs.2,00,000 and reap the benefits of a bigger credit limit.

How Do I Convert to an Unsecured Credit Card?

If you maintain a steady and clean credit history, your secured card can be considered for an upgrade. Most issuers have their terms and conditions which you need to qualify to upgrade. If you maintain a history of timely payments and low credit balance, you are more likely to get an upgrade soon.

A few secured credit card issuers review your account after a year of usage and upgrade you to a regular card if you meet the requirements. For some cards, you might have to apply for an upgrade. Once you have reached the target credit score and successfully improved your credit history, you can apply for a new unsecured credit card with another credit card issuer.

What to Do If You Have a High Credit Balance?

During my initial encounter with credit cards, there was this one time when I was at my wit's end to see the big numbers on my credit card bill. I immediately scanned the detailed expenditure report and wasn't able to find anything odd - grocery, petrol, rent, a few restaurant bills, a bit of shopping here and there - the usual. That's when I realized that I was overspending.

I was a young individual, just starting my adult life. I wasn't particularly wealthy and was running on a tight budget. However, the moment I got a credit card, I developed a tendency to be a spendthrift. The expenditures were the on the same things as before, but much more in amount. I was spending much more than I could afford.

If you are a spendthrift young adult, you might be able to relate to my situation. Most credit card newbies fall into debt as they couldn't don't manage to pay off their balance on time. These tips might help you climb out of the debt if you are dealing with a high credit card balance.

Find the culprit

A high credit balance should be your wake-up call, and you must realize that you are indeed overspending. Maybe you don't yet understand the how credit cards actually work, or maybe the idea of the available 'free money' tempts you to spend a lot.

What initially comes off as a few swipes here and there, might later become a heavy burden on your pocket. It is imperative that you inspect your spendings, find the culprit and tackle it. Here are two of the most common culprits:

Overspending

You are probably sending too much without realizing it. It's a natural tendency for most first-time credit card users - it tempts you to spend more than what you would have spent with cash. Identify those unnecessary spendings and curb them.

Insufficient income

Well, adult life is expensive - rent, electricity, groceries, utility, insurance, fuel, medical bills, phone bill, internet - you need to pay for innumerable things. As a novice, you might not be earning a lot and it's natural to falter at times. You could consider these strategies to plan your finances well.

• try to reduce your bills - go for a lower plan for internet and phone services
• cut down on rent - consider a cheaper accommodation
• avoid eating out at expensive places
• use public transport more than cabs
• try to take up a part-time job or a freelance project if time permits
  

Assess the damage

Don't freak out and run for cover. Never ignore a debt. It could severely damage your credit history and you might a long time to recover from it. Assess the damage, how much ever scary that might be. List your balances, your minimum payment amount and your interest rates for every debt. Get a clear vision of your current standing. Plan accordingly. This will give you a good start. Don't panic.

Act on it

After you note down your credit card balances, interest rates and narrowed down to the cause of debt, it's time for you to take action.

Start paying off the debt. Carrying a large balance can adversely affect your credit utilization rate as well as your credit score. You could follow the 'Debt Avalanche' method and pay a high-interest debt first, followed by a minimum interest on the rest; this helps you save some money.

Or you could opt for the 'Debt Snowball' method wherein you start with paying off the smallest balance amount first while paying the minimum on the remaining balance; this keeps you motivated as you feel that you're steadily progressing on your debt.

If your debt is too much and you are helplessly in need of money, you could consider taking a personal loan or apply for a balance transfer card to help settle a high-interest debt.

Henceforth, develop the habit of not exceeding 30% of your credit limit and pay off the entire balance within the due date of your billing cycle. It will keep you safe and away from possible debts.