Secured credit card for building credit

There is a very old saying that goes “It takes money to make money.” This means that you need credit for building credit. You must learn responsible credit management if you wish to rebuild your bad credit or have zero credit history so far. Using secured credit cards for building credit can definitely prove to be the right decision for you.

Secured Credit Card:

The credit score that you get is determined by the credit history that you build over a long time. If you have a very strong history of making payments, you will get a great credit score. Experts have recommended that one must start with secured credit cards. You get approval for these cards easily. The secured credit cards can serve as the perfect starting point for you when you want to build credit.

Almost anyone can get approval for secured credit cards. The regular credit cards are all unsecured and do not require collateral that can be recovered by the creditor. However, in case of secured credit cards, collateral is required. This particular safety net allows individuals with no credit or bad credit an opportunity to get approval.

If you wish to avail a secured credit card, you must deposit a particular amount in the card issuer’s account. This amount, in turn, becomes the limit that you can spend using your secured credit card. Some secured credit cards have low deposit requirements and some have high deposit requirements. Choose the one that suits your needs.

Secured Sbi credit cards can be used like other regular or unsecured cards. The credit card issuer will keep your deposited amount in its account and will use it to cover losses, if any. A debit card and a secured credit card work in the exactly same manner. As long as the credit card issuer sends reports to credit bureaus, you keep building your credit. The issuer must send the reports to bureaus like Experian and Equifax.

Building credit with the help of secured credit cards:

After you get the secured credit card, you must use it for building revolving credit. Lenders will realise that you can handle credit responsibly if you establish a good payment history. However, do not spend too much using your credit card. Ensure that you only spend what you can repay in full at the end of the billing cycle. Ideally, the credit card usage should be below 30% of the total limit on the card.

For example, you can refuel using your credit card every month. This amount will be easy for you to repay and you also build credit. Paying off the entire debt at one go helps you to avoid interest charges.

Practicing patience and remaining dedicated to the entire process of credit building can prove to be challenging. If you want to see some real progress in scores, you will have to build a perfect payment history for a substantial period of time. There is no quick fix or short cut when it comes to credit building.

You can plan on advancing in the world of credit after you have worked towards building credit for a period of 6 to 12 months by establishing great payment history. You can easily apply for a regular credit card, provided to continue to make due payments on time. Getting a car loan can also help you in the credit building process. An auto loan acts an instalment credit. So, when you pay the instalments on time, your credit score goes up.

Bottom Line:

Credit building is of utmost importance if you wish to avail loans from banks or other lenders. Credit score is the first thing that lenders would wish to see before approving your loan request. Ensure that you spend within your limits and pay off your debt on time.

How to make the most of your Fixed Deposits

For a vast majority of Indians, Fixed Deposits was one of the few investment options available. Besides, they were relatively risk-free and would accumulate a small percentage of interest every month and was all in all the most sought after investment avenues.

Fast forward to 2017, where SIPs, ELSS, and countless other products have popped up with the promise of offering bigger and better returns. But, despite all their advantages, they are still connected to the market, making them a riskier proposition, especially considering the trigger-happy economies of the world right now.

In this article, we will talk about the best ways to make use of an FD. Curious to find out? Read on.

• Choose the right tenure

FixedDeposits are typically available for tenures ranging from 7 days to 10 years. The catch with these is that, longer tenure deposits often provide higher returns as well as benefits. But, when you enough money to open an FD, you should never be overly enthusiastic about the returns alone. Take you time and understand your financial requirements.
Say, for instance, you have a major expense planned for an occasion that is two years down the line. Make sure to open an FD that corresponds to that exact period. While at it, you can also consider special tenure FDs for 333 days and 666 days that banks offer when they are in need of immediate funds. Such schemes come with a marginally higher interest rate than regular FDs.

• Get the best payout option

FDs usually come with different payout options. For instance, you can choose to withdraw the interest your money earns on a monthly, quarterly, half-yearly and yearly basis, or let it accumulate so as to collect the principal + interest at the time of maturity. Choosing the reinvest the interest into the deposit will give you a considerably larger corpus after the tenure.

• Never go for premature withdrawal

You may already know that premature withdrawals are possible on fixed deposits, but what you might not know is that every time you do so, you will have to pay a penalty. Meaning, you are likely to lose whatever interest your money has accumulated. An alternative to this would be to split your amount and invest in multiple FDs for varying tenures. This will help you mobilise funds for emergencies without needing to pay any sort of penalties.

• Always go for a tax-saving FD

The entire reasoning behind going for an FD is to save money but your attempts are mooted if you are liable for tax deduction. For instance, FDs that offer returns of more than Rs.10,000 will be taxed depending on the investor’s tax slab. A way to beat this would be to submit Form 15 H/G to the bank. Note that these forms will not absolve you from paying tax for your returns and to mention the money in your IT returns. To skip paying tax on your FD altogether, you should invest in tax-saving FDs, which often come with lock-in periods.

Overall, FDs, like any other investment, can offer you good returns but only when you use the right strategy and following the aforementioned points will help you make the most out of your FD.

Benefits of Balance Transfer Cards

Balance transfers are a term almost every cardholder comes across. Whether it be during the time of application, being advertised as a benefit or as a promotional offer being pushed their way. While some cardholders may be well versed with the term, first time cardholders might find this term vague and confusing. Balance transfers are a way of managing overdue credit card balances accrued on other bank credit cards by transferring them to a new credit card. Doing so would grant the cardholder the ability to pay off the balance in installments over specific tenures at interest rates that are much lower. As a result, it is a great way of clearing out dues before compounding interest rates spiral the debt out of control.

But a balance transfer plan can do much more than stem the debt from overflowing. Below are ways in which a balance transfer enabled credit card can help a cardholder.

• Opens up more room for cardholder’s money: The balance transfer plans can work for people who have debt that they can afford to pay off. Debt transferred onto balance transfer cards don’t accrue high rates of interest for the tenure chosen. This allows cardholders to make minimum monthly payments on the debt and gives them more room with their cash to spend on other expenses. The low rates of interest mean that even though minimum monthly payments are being made, the debt will still get serviced. The money freed up can be used on more productive avenues such as investments or deposits into a high yield savings account. One thing to note when using this strategy is that the balance of the debt should be cleared as soon as possible once the balance transfer tenure expires. Balance transfer plans revert to original interest rates when the tenure is up and failing to clear the balance will begin accruing interest at higher rates undoing all the benefits gained from the strategy in the first place.
• Other Benefits: Balance transfer cards also come with a slew of ancillary benefits that can help a cardholder financially. Benefits include complimentary travel insurance policies and rental car insurance policies. They help save the cardholder the added expense of purchasing these policies separately. The balance transfer cards also come with a credit dashboard. This dashboard allows cardholders to monitor their credit score with every payment that they make and is a very helpful tool for those who have debts and have missed a few payments in the past.
• Protect credit scores: Using a credit card bill payment, cardholders can ensure they repair some of the damage caused to their credit score when they accrued the loan in the first place. The cards allow cardholders to pay off the debt quicker and easier through lower interest rates and can bring up the affected credit rating of the cardholder.

Things to look out for:

• They should be opted for if they have low transfer fees. Some cards might charge upwards of 5% for transferring balances which can eat away the benefits of having lower interest rates.
• Ancillary benefits such as complimentary insurance policies are not comprehensive and do not cover a wide range of claims.

Best avenues to invest in 2017 to get higher returns

The last quarter of 2016 saw one of the most landmark decision taken by an incumbent Prime Minister in the country’s 69-year history since its freedom. PM Narendra Modi, with inputs from the Finance Ministry, brought into effect the demonetisation of Rs.500 and Rs.1,000 notes. This move, although took the country into a near meltdown, has somewhat appeared to stabilise the economy for the long haul.

However, one of the prime effects of demonetisation was that avenues that were deemed profitable for investors lost their charm. In this article, we will talk about a few instruments you can invest in to get better returns for your money.

• Post Office Recurring Deposit

The age-old Indian post office has undergone a major paradigm shift over the last few years in a number of ways. Of the many, one of the things that stand out is the introduction of deposit schemes. These schemes offer good returns for investors and is almost matchable with fixed deposits of similar terms. At the time of writing this article, post office deposits offer 7.3% returns, which compounds quarterly, for a 5-year period. Read More

For instance, a regular Rs.100 investment will yield a return of Rs.7,250.50 returns once the scheme matures.

• Public Provident Fund (PPF)

Public Provident Funds (PPFs) has long been one of the most preferred investment avenues for a vast majority of risk-averse working professionals. These funds mature after a 15-year period and offers an opportunity to renew for 5 years every time from there on. Besides, PPF is also eligible for tax deduction under Section 80C of the Income Tax Act.

• Sukanya Samriddhi Account (SSA)

SSA is basically available for parents of a girl child, which enables them to invest so as to build a corpus to fund the education and other things relating to the girl. This account requires a minimum of Rs.1,000 to be opened and the guardian can add multiples of Rs.100 every time they want to add to the account. The account has an upper limit though, meaning parents can only invest a maximum of Rs.1.5 lakhs per calendar year. A benefit of this account is that it is available for tax deduction while the returns non-taxable. Also, the maximum interest such accounts offer stands at 8.5%

• National Savings Certificate

National Savings Certificate (NSC) is yet another save avenue that offers guaranteed returns. Currently, the returns offered stands at 8% for a five year term. An account can be opened for as less as Rs.100 while there is no upper limit to the amount that can be invested. An advantage of this fund is that you can use it as collateral for any loans.

These are some of the best investment options you can invest in if you are tired of fixed deposits and their falling interest rates.

Best credit cards for millennials

It is no longer a secret that every business in this world has made millennials their target audience. Be it selling fast food, clothes or smartphones, demands of the millennials are a priority for all business groups. Banks are also keeping up with the pace and aggressively seeking the attention of millennials.

There are several payment apps in the market today which offer tough competition to the banks. In order the give their credit card business a boost, banks provide lucrative perks to millennials. These perks include sign up bonuses, reward points, etc.

Some of the best credit cards available in the market today are as follows:

• Standard Chartered Manhattan Platinum Credit Card
• SBI Simply Click Credit Card
• ICICI Instant Platinum Card
• Yatra SBI Credit Card
• Citibank Premier Miles Card
• SBI Gold Credit Card
• Citibank Cashback Credit Card

Standard Chartered Manhattan Platinum Credit Card:

This particular credit card is great for shopping needs. It can be used to purchase groceries and pay dining bills. The benefits that can be availed with this credit card are as follows:

• Avail 5% cashback at various departmental stores and supermarkets.

• Enjoy 5X rewards points when you pay your dining bills, hotel bills, etc. using the Standard Chartered Manhattan Platinum Credit Card.

• Avail cashback of Rs.500 when you purchase products worth Rs.1,000.
• The cash withdrawal fee for this card is 3%. It is subject to a minimum amount of Rs.300.
• The rate of interest associated with the Standard Chartered Manhattan Platinum Credit Card is 3.1% per month.

SBI Simply Click Credit Card:

This particular credit card focusses on online shopping and offers great features for all the online shoppers. The benefits offered by the SBI Simply Click Credit Card are as follows:

• Enjoy 10X Rewards Points when you spend online with partners like BookMyShow, Amazon, Foodpanda, Cleartrip, Ola Cabs, etc.
• Avail 5X Rewards Points on other spends using the SBI Simply Click Credit Card.
• The annual fee is waived off when you spend a minimum of Rs.1 lakh in a year using this credit card.
• Avail gift vouchers from Amazon worth Rs.500.
• Avail fuel surcharge waiver of 2.5%.

ICICI Instant Platinum Card:

This credit card is ideal for people using credit cards for the first time. ICICI offers this credit card against a fixed deposit that you must open with the bank. You can avail this card without any credit history. The benefits offered by the ICICI Instant Platinum Credit Card are given below:

• No joining fee is required for this credit card.
• No annual fee is associated with the ICICI Instant Platinum Credit Card.
• The rate of interest associated with this card is 2.49% per month.
• 2 Payback Rewards Points can be availed when you spend a minimum amount of Rs.100 using this credit card.
• Avail Global Emergency Assistance with the Instant Platinum Card.
• At more than 800 restaurants worldwide, you can enjoy discounts of up to 15% on your dining bills.

Yatra SBI Credit Card:

If you wish to travel and pay your utility bills, this card can prove to be the right choice for you. The benefits offered by this particular credit card are given below:

• Enjoy vouchers worth Rs.8,250 from Yatra,com as a welcome gift.
• Avail 6X Rewards Points on all your bookings done with Yatra.com.
• Enjoy 6X Rewards Points for all your purchases at grocery and departmental stores.
• Enjoy the Easy Bill Pay facility for paying your utility bills on time.
• Avail fuel surcharge waiver of 2.5%.

Citibank Premier Miles Card:

This credit card can prove to be a great choice for millennials who are frequent flyers. The air miles that you earn can be redeemed for car rentals, hotel stays and flights. The benefits offered by the Citibank PremierMiles Credit Card are given below:

• Spend a minimum amount of Rs.1,000 and earn 10,000 miles. However, you must spend this amount within a period of 60 days from the date of card issuance.
• On all your airline transactions, you can earn 10 miles for spending Rs.100 using this credit card.
• The air miles that you earn can be redeemed at more than 100 airlines, both international and domestic.
• Interest rate associated with this card ranges between 37.20% and 42% per annum.
• Avail access to VIP airport lounges across India using this credit card.

Bottom Line:

There are several credit cards in the market today. Different credit cards are equipped with specific features and benefits. All other credit cards are not designed as per your requirements. Understand your spending pattern before you pick a card for yourself. Choose the one that suits your needs.

5 Lesser Known Term Deposit Features

Term deposits are one of the best known and most widely used savings scheme available to Indian citizens. The reason behind this is easy to guess. Term deposits are the most secure investment program in the country right now. The payout at the end of the lockin period is a certainty. For people who don’t understand market-linked investments, term deposits are the safest bet.

But besides safety, there are many other features of term deposits that make them an investment darling of the masses. Following are a few lesser known facts regarding term deposits that make them a good choice:

1. Term deposits allows you to select from a variety of maturity period starting from 7 days to 10 years. Deposits for longer durations usually earn a higher interest rate. You can also gain tax benefits on deposits longer than 5 years in duration.
2. You get the choice to reinvest the interest earned back into your term deposit (cumulative) or have the interest deposited to your bank account at specific durations, usually quarterly. This either increases the maturity amount you get or lets you invest the interest in another source.
3. Depending on the term you select, you can choose to have your interest paid monthly, quarterly, half-yearly, annually, or at maturity. Four of these payment options, depending on your term, can give you access to the interest before maturity if you want to use the money to invest elsewhere.
4. Term deposits can be opened online in less than 10 minutes with your net banking account. You can get the initial investment deducted from your savings bank account, set the tenure and register nomination, all with the click of a few buttons.
5. You can link your term deposit and savings bank account for seamless integration at maturity. You will be able to view the status of your deposits and maturity amount.

So, if you have any extra cash to spare, don’t just put it in your savings account. Put them in a term deposit account today and earn more interest on your money.

Things to Keep in Mind When Applying for a PAN Card

PAN cards  which have been a long standing identification card is an alphanumeric number having 10 digits is issued by the  Income Tax Department and is a pivotal ID proof when applying for a slew of various financial products including opening of bank accounts. This card is linked to numerous transactions such as payments towards tax, filing one’s tax returns, to TDS certificates and many more.

The card can be applied for by anyone over the age of 18 years and is used to link all tax related documents to bring about ease of retrieval of information, tax payment histories, to get information related to any investments made by the cardholder and even to check credit worthiness of an applicant when they apply for loans. The main idea behind the PAN card is to have a single point of data collection to detect and rectify cases of tax evasions thereby increasing the baseline of taxpayers. A PAN card can be applied through a simple process described below.

Application for PAN card: For first time applicants, a PAN card application form for Indian citizens can be found online. This form is titled FORM 49A and can be found on the NSDL website. The forms are also available through NSDL facilitation centres or centres that offer PAN creation services and are managed by the NSDL. All applicants will have to fill out this form. The PAN card does not provide any form of Tatkal facility to acquire the PANcard instantly. The forms need to be filled out and submitted at the centres along with the required supporting documents. For applications made online, acknowledgement receipts and supporting documents can be mailed to the Income Tax PAN services Unit located in Pune.

Supporting documents required: Now that the application forms have been filled out, they need to be submitted along with the required supporting documents. These supporting documents comprise of key details such as one coloured passport photograph of the applicant to go on Form 49A, valid proof of identity and address of the applicant and designation and code of the concerned assessing officer of the I-T department. The designation and code should be entered into the Form 49A.

Address proof will have to be in the form of a utility bill such as an electricity bill or telephone bill or a credit card statement or bank statement of the applicant. Drivers’ licenses and voter Ids can also qualify as valid address and identity proof.

In case the applicant has none of the above documents or does not own a property then they can provide a copy of the rental agreement and rent receipt signed by the MP, MLA or a gazetted officer representing the concerned locality.

If the applicant is a minor, then his/her parents or guardians can submit their address and identity proof documents listed above.

Fees for PAN card application: The fee for application of PAN card for Indian citizens residing in India is Rs.107 whereas Indian citizens currently residing outside India will have to pay an application fee of Rs.994. both charges depicted are inclusive of tax and dispatch fees.

Clauses: Only one PAN card can be held by an applicant at any time. Holding multiple copies of a PAN card is strictly against the law and those found to have more than one copy will face legal action as well as hefty fines of up to Rs.10,000. Holders with multiple PAN cards can voluntarily give up their additional cards and avoid any legal action. Application for request to change in PAN mentioning the one an applicant wants to retain and the one they want to surrender can be done on the Income Tax Department’s website.