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.

Current Account - Features & Benefits

Contrary to savings accounts, a Current account is primarily used not to save and grow your money. It is used to preserve an amount of money which you will be using soon over a period of time.

A current account is ideal if you have plans to make large transactions regularly. These do not come with a huge interest rate either, which means your money there won’t grow so much.

Yes, there is a modicum of interest rate, yet the primary function is to enable you to access your money whenever you want to. A savings account won’t give you this benefit. It is for this reason all merchants, traders, etc. have at least one Current Account.

What are the types of current accounts?

You can get different kinds of current accounts from banks according to your requirements. You should pick one which is best suited for your needs. For instance, for the transactions you want to carry out, some types of current accounts are more suited than the rest. Below you'll see the various types. However, before you run off to a bank to start one of them, know that these accounts can differ from one bank to the next.

• Standard current accounts: In this type of current account you need to maintain a minimum monthly average balance. It gives no interest on your deposit by giving you various facilities like debit cards, cheque books, overdraft and more.
  
  
• Basic current accounts: If one has a low wage or salary, or if one is young, this type of current account is ideal. It helps them to manage their money with ease, although there are some daily cash withdrawal restrictions.
  
  
• Premium current accounts: Just like the name says, this type of account offers various exclusive benefits and offers. If you routinely carry out large transactions, this is the type of account you may want.
  
  
• Packaged current accounts: It offers a range of perks and benefits, along with exclusive features like travel insurance, medical support, and more.
  
  
• Foreign currency accounts: This is ideal for NRIs and for those who wish to carry out foreign currency transactions frequently.

What are the features and benefits of current accounts?

• Current accounts are beneficial for all, but especially for traders, businessmen and professionals. Here are all the various benefits and pros of a current account.
• Current accounts are there to facilitate frequent transactions especially
• Customers can be individuals, both private and public companies, associations, proprietors, trusts, and others.
• It is similar to a savings accounts and you need to follow KYC guidelines here as well
• There is no maximum ceiling for the number of daily transaction
• There is no limit for the amount you can keep at the home branch
• Current accounts makes it easier for business transactions to be made through a variety of means like DD, cheques and pay orders.
  

Who can open a Current account?

People who can open this type of account can be:

• Individuals
• Sole proprietors
• Limited companies
• Trusts
• Clubs, societies and Associates
• Partnership firms
• Hindu Undivided Families
• Administrators, executors and liquidators
  

How can you open a current account?

There are two ways to do this. One is by visiting the nearest bank and filling up the application documents. The other way is to apply online.
What are the documents you’ll need to open a current account?

The documents you’ll need are:

• PAN card
• Certificate of Incorporation, AOA and MOA in case of companies
• Partnership deed in case of a partnership firm
• Firm’s address
• Certificate of sales tax in case of a proprietorship firm
• ID proof and address proof
• Cheque for the opening of the bank account
• One’s photo
  

How to pick the best current account for yourself?

When choosing, pay attention to these criteria.

• The minimum balanced you need to keep
• Fees, costs and charges
• The required cash deposit limit

What is Insurance ? All Types & Benefits

You may think that you are financially secure and safe. Then up comes an unforeseen and sudden expense which derails your savings plan and financial security. Yes, life is weird that way. You never know what it might throw at you next.

That is why, instead of wondering, thinking and believing you are financially secure, you need to make sure you actually are. There is no way to foresee and thus plan for emergencies and accidents, but one can prepare for them from beforehand. The way to do this is through insurance. These offer some support to minimize your financial problems due to unforeseen circumstances.

Here are the various types of insurances:

• Property insurance
• Mobile insurance
• Life Insurance
• Motor insurance
• Health insurance
• Travel insurance
• Cycle insurance
• Bite-size insurance
  

Just knowing these types won’t help you. Instead, it helps to know how these work. This is because without enough knowledge you may choose the wrong insurance plan, or have a wrong idea about insurance plans together.

A Fact of Life - Life Insurance

Life Insurance is a type of insurance plan in which a policy holder invests for the financial benefit of his or her family after death. These plans are essential if you are the only earning member of your family or if there are dependents on you. For instance, your wife and children depend on you for finances each month.

Your death can devastate your family, not just emotionally, but financially as well. Even if you are not the sole earning member of your family, your death can result in a big gap of income loss. Life insurance policies make sure these things do not happen to your loved ones after your demise.
Various types of life insurance policies

There are many types of life insurance policies. These are:

• Term plan: A term plan’s benefit can be availed only after a specific period originally agreed on, such as 40 years after you bought the policy. The downside here is you can’t get it sooner if you need it.
  
  
• Endowment plan: These are life insurance policies in which a part of your premiums go towards your death benefit. The amount that remains is invested. This life insurance policy type gives you benefits like periodic bonuses, death benefit, and maturity benefit.
  
  
• ULIP: These stand for Unit Linked Insurance Plans. These are quite similar to Endowment Plans. In the case of ULIPS, a part of the premiums are invested in mutual funds and the rest go towards your death benefit.
  
  
• Whole Life Insurance: These policies cover the entire life of a person. They are not for a specified term. However, some insurance companies can restrict the tenure to 100 years.
  
  
• Child’s Plan: This is a type of investment and insurance policy. It gives financial help to a child of your choice after a certain interval. After the death of parents, the child gets a lump sum payment.
  
  
• Money Back: This is a type of survival benefit in which a part of the sum assured is paid to you at regular intervals.
  
  
• Retirement Plan: Known as pension plans, these fuse insurance and investment plans. A portion of the premiums given by you go towards the development of a retirement corpus. After the policyholder’s retirement, he or she gets a lump sum or monthly payment.

Benefits of Life Insurance

There are several benefits in getting life insurance:

• Tax benefits: You get tax benefits if you pay LIC premiums in India after the Section 80(C) and 10 (10D) of the Income Tax Act.
  
  
• It encourages the habit to save: When you pay premiums at regular intervals, you develop the habit of saving money.
  
  
• It secures your family’s financial future: With a life insurance policy, you won’t need to worry about what shall happen to your family after your demise.
  
  
• It helps plan for your retirement: A big benefit of certain insurance plans is that you can save for your retirement, which can otherwise be very difficult without any type of saving plan.

Investing in Cryptocurrency vs Investing in Stocks

People who are not entirely sure about investing in the stock market may look for other investment options - such as cryptocurrencies like Bitcoin, Litecoin and Ethereum. While taking cryptocurrencies into consideration, however, make it a point to calculate your investment goals and risk tolerance as well.

Take the time to learn about investing in cryptocurrencies, such that you know for sure whether having a cryptocurrency in your portfolio will be beneficial or not.

Cryptocurrency Risk vs. Stock Risk

To mention the obvious, investments come with risk. The market could end up crashing for reasons beyond casual comprehension. Companies going bankrupt is not a novelty. On the other hand, a particular stock could shoot up at any time, or even grow gradually. Assessing these risk and gain factors is essential when deciding on the assets to be added to your portfolio.

Although there are risks common to most investments, stocks differ in that to some extent you can be guided to gain some understanding of how prices may change. Things like the ratio of stock price and earnings provide a good understanding of a company’s financial health.

It is this particular indicator that cryptocurrencies lack, when compared to stocks. As it is entirely based on supply and demand, cryptocurrency is speculative in nature. To some degree, all currencies get their value from the willingness of people to pay for it, but this does not necessarily hold true for a cryptocurrency. As it operates in a much smaller market, certain big swings can influence it as a whole.

All said and done, cryptocurrencies are a relatively new development that has not yet been widely adopted. This adds an altogether new level of risk as it is possible that they could get replaced by other efficient alternatives, or could even be banned due to regulations!

Cryptocurrency History vs. Stock History

While past performance is certainly not a surefire indicator of the future, it can help assess how well investments have done over a period of time. For convenience, let’s take the case of the most prominent cryptocurrency out there itself - Bitcoin.

Bitcoin price was seen fluctuating between ₹15000 and ₹40000 per coin in 2015. Come 2017, and the value shot up, to a high of nearly ₹1450000. However, it dropped down to below ₹255000 in December 2018! In 2020 itself, the prime cryptocurrency’s value has shuttled ₹280000 and ₹660000. So no matter how high the price of any cryptocurrency stands right now, an abrupt drop is all but to be expected.

On the other hand, stock growth spurts and drops are not nearly as dramatic, and have been quite stable. The S&P 500 index, which was at $2,000 in early 2015, grew steadily to around $3,100 mid 2020, although it did go through some ups and downs along the way. Similarly The Dow Jones Industrial Average (DJIA)  also grew from $17,000-18,000 to around $25,000 during the same period.

Historically, stocks have given more or less 10% returns annually (6-7% considering inflation). However, in the case of Bitcoin and cryptocurrencies, this is far from being true.

Who Is a Good Fit for Cryptocurrencies?

People in search of some serious diversity in their portfolio can definitely do with some Bitcoin or Ethereum, as they provide a potent alternative to more traditional assets. They also help if you want assets which are not denominated in terms of regular currency.

Generally, even if you gravitate towards having a lot of cryptocurrencies in your portfolio, it ideally shouldn’t be the primary focus of your investment drive. The extent of it must depend on how your risk-tolerance, i.e., you should be comfortable losing the amount you invest in cryptocurrencies. If nothing else, try to keep it to 1-5% of your portfolio.

Who Is a Good Fit for the Stock Market?

Most investors tend to keep stock options as a majority of their portfolio, and experts agree that that is the way to go as well. Thanks to its base characteristics, it is a more stable and reliable investment that you can account for in terms of profits over time. Even in the face of short-term irregularities, it is safe to assume that most companies will continue to exist, if not flourish, hence providing a decent amount of stability. Broad-based index funds & exchange-traded funds (ETFs) constituted by stocks, chances are that your investments will hold up well long-term.

Is It Still Worth Investing in Cryptocurrencies?

Affording even a whole unit of a certain cryptocurrency is quite a feat these days - that is to say the prices have gone up really high. Considering this fact, and combining the idea that even such a large investment is not a safe bet, you’d be forgiven for wondering if it is already too late to invest in cryptocurrency.

Here, again, it has to be said that the call is yours. If you believe in the concept of blockchain technology and cryptocurrency, certainly devote whatever you can spare to have them as a small share of your investment portfolio. If you are still doubtful, it is better to not invest in cryptocurrencies at all.

How To Save or Invest Money - Savings or Investing?

Even seasoned investors sometimes have trouble deciding where to put their money: in Savings or in Investing. The thing is that these two fulfil different functions and fulfil different needs. For instance, if you want to grow your wealth, investing may seem like the better option. And if you want to save your money, going for a Savings account is certainly your best bet.

Why people get confused

Basically, it is all easy to understand, and yet many people still get confused. One of the reasons for this is that either way, people are parting with their money, even if for a short time. This makes many people indecisive, something which is important especially if you want to go down the Investing path.

These are the common questions people have about Savings and Investments.

What is investment?

What is savings?

Where should one invest?

Where should one save?

The problem is that there is no one answer for everyone. It all depends on your individual needs and financial plans for the future.

In this article, we shall be giving you a basic know-how of both savings and investments, what their differences and benefits are, and how you can use them.

First, let us learn about Savings.

What is Savings?

Basically, saving is not spending your money, or rather the money you do not have any desire to spend. Now, this has many benefits. For instance, if you have saved enough, you will be able to deal with healthcare and other situational crises better than those who don’t save. Saving can also enable you to splurge now and then. While you may not be able to buy a car with just your savings, you may be able to splurge on pretty big purchases from time to time.

What is Investing?

Investing refers to the processing of earning money or building wealth through buying assets. This can be for the short-term as well as for the long-term. Investing is far more risky than saving money yourself, but the rewards are greater as well. There is always risk when you are investing, but know that the best investment instruments come with a certain safety margin, generally as assets. The best options for investment are stocks, real estate, bonds, mutual funds, and others.

Benefits of investing

There are several benefits in Investing, despite its obvious risks. And look, even saving has some risks, although such risks are different. For instance, you may believe what you have saved up is enough, but during moments of need you may find your savings is not enough at all. Now, let us see the benefit of investing.

• Your money creates money: When you invest your money, the same money earns you even more money! Isn’t that magical? This happens due to the increase in price or value of stocks, mutual funds or other instruments you own. Thus, you earn a profit when an instrument you own can be sold at a higher price than what you bought it for.

• You save tax: When you invest for the long haul, you save on taxes.
  
  
• You benefit with compound interest: Compounding is said to be one of the wonders of the modern world. Rightly so, because it allows your invested money to keep growing in mathematical progression. This gives you a big profit over time. Compounding creates wealth for you, and doubles it in much less time.
  
  
• You stay ahead of your personal finance yardsticks: If you are new to investing, it shall allow you to buy things others cannot. Besides, your investments work as a safety net during unforeseen emergencies.

The Real Difference between Savings & Investment

Saving only preserves your money, but there is no growth to that. Investment makes your money grow over time. Thus, your money works for you, and that is a huge benefit! Yes, there is little risk in Savings and there is considerable risk in Investment, but it all matters what your financial goals and plans are and what your risk tolerance level is. Investing gives you higher returns over time, which savings does not. Savings is for a shorter time while investment is for a longer period of time.

Personal Loan & Home Loan Top Up Eligibility & Benefits

Imagine having taken a personal loan or home loan, only to realize a few days later that you need more money.

You fear your lender won’t give in to your wish this time unless you repay the first loan.

Thankfully, you’re in luck!

Did you know that you can take an additional personal loan on top of an existing one?

Yes, it is true. You can take what is known as a Top-up loan.

Top up loan meaning

A top up loan is an additional personal loan that you can take on top of your current ongoing loan. The catch is you can only get this when you have given a certain number of EMI payments for the existing loan.

Top-up loans are quite similar to personal loans in that they give flexibility in loan end-use. That means you can use one to fund a wedding, a dream vacation, get money during a medical emergency, renovate your home, enrol in an educational institution, and do a lot more.

The biggest benefit here is that your interest rate remains the same as the original personal loan, and that there is minimum documentation to worry about.

Now that you have seen what a Top-up loan is, let us learn about its many features.
Features of a Top-up loan

Here are some features of this type of loan:

• You can get it only if you have an existing personal loan: A top-up loan is not a standalone loan, meaning that you can’t take one independently. To get one, you need to have an ongoing personal loan.
• Loan amount: The maximum amount you can hope for depends on your lender. However, the amount of your top-up loan will not be more than your existing personal loan.
• Attractive rate of interest: You can get a top-up loan at the same interest rate as your existing personal loan. Since their interest rates vary from one customer to another, your top-up loans interest loan won’t be the same as your neighbour’s.
• Fast processing and disbursal: Since these are given to you if you already have a personal loan from the same lender, it follows that the lender already has most of your required documents. Your documents were already checked previously by the lender, and thus your application for a top-up loan shall be faster.
• Flexible repayment tenure: Depending on the tenure of your existing loan, the tenure of your top-up loan can be anywhere between 12 months to 60 months.
• You won’t need to give any collateral: There is no need for these things in case of a top-up loan.
• You benefit from flexible end use: You can use the loan for any personal need.
  

Now that we have learnt about its features, it’s time to learn about its benefits.

Top-up personal loan benefits

Need a reason to take a top-up loan? Well, we have way more than one! These are:

• It reduces your interest burden: If you have high-interest credit card dues, a top-up loan can help to reduce your debt burden. Thus, you get to consolidate your debt and repay with more ease.
• Minimal documentation: There shall be minimal documentation to worry about since your current lender already has copies of your required documents. Besides, you got the existing loan because your lender trusts you and your repayment capacity. That said, the time taken to get a top-up loan will still depend on which lender you are approaching.

• Fast processing: Since the lender already knows and trusts you, the application process is faster than when asking for a personal loan.
• Attractive interest rates: Your interest rate for a top-up loan shall be the same as your existing personal loan, and never higher than that.
• No need for collateral: Your personal loan did not require any collateral, and neither shall the top-up loan. There is no need to have a guarantor either. After all, the lender trusts you!
• Consolidate your EMIs: Having to pay EMIs of various loans separately costs you a lot over time. It is better to consolidate your loan and get a lower interest rate. Besides, consolidating your loans means you’ll never miss a payment!
  

Top-up home loan benefits

Getting a top-up home loan will provide you with several benefits, such as:

• Compared to home loans and personal loans, these come with lower interest rates.
• You can use this for anything between constructions to extension to renovation.
• You can use it for your business and personal purposes, but only if your lender agrees to it.
• If you use it only for home construction and renovation, you get tax benefits.
• There is faster loan disbursal.
  

That’s all well and good, but how do you know you are qualified?

Here’s how.

Top-up personal loan eligibility

Here’s the criteria you need to fulfil.

• You need to have an existing personal loan with the same lender
• You can take a top-up loan only after you have paid certain EMIs for your existing personal loans
• Your should have a spotless repayment track record
• You need to have a stable job or a stable source of income
• Your should have a high credit score
  

Top-up home loan eligibility

• You should not have bounced more than one EMI last year.
• In case there was a bounce, it should have been cleared before the next EMIs due date.
• You need to show a clear repayment of your existing loan.
• If you want to combine Balance Transfer with a Top-Up loan, you need to show a year’s worth of unblemished repayment history.
• Your age should be between 21 and 65
• You should be an Indian citizen
• One can be either salaried or self-employed
  

How can you apply for a Top-up Loan?

There are two ways to go about it:

• Visit the nearest branch of your lender
• Go to the lender’s website and apply online.

Is Home Insurance Mandatory For a Home Loan?

Your home is not just the building or the physical property itself. Your home is made up of your family, your feelings, aspirations, dreams and hopes. Yes, that is what makes a home, not just bricks, cement, etc.

Now imagine losing your home all of a sudden. That’d spell huge emotional and financial setbacks surely. After all, most of us don’t sit on enormous piles of money to buy new homes just like that. Buying a home is one of the most important decisions and times of one’s life. That’s why losing it for any reason hurts so much.

However, there is one thing you can do to ensure that a setback like this won’t destroy your finances, and that you can still get a home easily. For this, you need to insure your property. This is just like insuring your car. If your car gets damaged, you can get your insurance money to get another car or to repair the one you got. Insuring your home is just like that. For instance, if your home gets damaged or destroyed completely, you can get it repaired or can buy a new one from your insurance money.

Here are 5 reasons to go for a home insurance:

Natural disasters

Let’s face it. The real estate boom is all fantastic, but it also means many properties are not being built according to plan, or properly. Earthquakes are the cause of the total destruction to homes more than anything. If you have your property insured though, you won’t have to worry about much except to get out of harm’s way. As you can see, it gives you a great peace of mind. Properties can also fall prey to cyclones, tsunamis, tornados, hurricanes, and fire. However, remember that floods are not covered by this insurance type, and you need to take separate insurance for earthquakes.

Protect your property from theft and robbery

You may think that since you live in metro cities, your home will never be robbed, or that there shall never be theft. But if you have been seeing the news, these cases are on the rise. If you have home insurance, the insurance company shall reimburse you for all damages and stolen items. To make sure the reimbursement process goes smoothly, you need to keep a list of all costly items you keep at home. Thus, if anything is stolen, companies can’t deny you the money.

Paying medical bills

You can be held responsible if anyone has an accident within your property. To make sure you won’t face difficulties, you need home insurance as it protects you from these instances. For anyone injured within your property, the insurance shall give the person’s medical bills.

You get peace of mind

When you have home insurance, you don’t have to worry about anything untoward happening to your home or property. If anything happens, the insurance company shall take care of it.

Mortgage lenders shall be satisfied

Some lenders and banks need you to have your home insured since it protects their investments against various risks. Thus, depending on the mortgage amount, you need to pay an amount for your home coverage insurance.