Why millennials should opt for credit cards today

Banking tools such as the credit card offer plenty of financial benefit especially for those who are earning. These benefits can go a long way to help you build and furnish your financial profile, which in turn, allows you to opt for other financial products as per your need.

However, the benefits of this card can only be taken care off, if one opts for it. However, a large fraction of the working employment industry, that comprises of Gen Y also known as millennials are failing to utilize these benefits of a credit card to apply for. Although these credit cards do have their share of risks, completely ignoring them can also be detrimental the financial wellbeing in the long run. Given below are certain aspects of the credit card you should take advantage of in order to set up the future:

Credit cards are the best way to build a credit history:

No matter how much you will earn, there will be a time where you will need to rely on loans to satisfy your financial requirements. But in order to be eligibility for the best of the loan rates, you will need to have a credit history to support your application. Most banks and financial institutes are becoming stringent with loan applications. In other words, if your credit history is not up to mark, you risk getting a loan application rejection. Surely, at a young age, factors such as purchasing a home or opting for an education loan for your child may seem far distant. But when the times come, you realize you may not have the required financial profile to get the best rates for these loans. With the right awareness, you can start building your credit history as early as possible. You can take advantage of this benefit when you opt for a credit card to apply for.

Save more with credit card rewards:

Young adults who are looking to save more funds can always benefit from using a credit card that specializes in reward systems. By opting for this type of credit card, you can collect points, miles and cash back for your daily expenditures. These features can also be used whenever there is an urgent requirement for a particular product or service, wherein you don’t have enough funds. Opting for a credit card that is tailored to your specific need will do the trick. Opt for a card that will suit your financial spending profile while offering you the highest possible returns.

Credit cards may seem like a huge responsibility even for young adults who are just making their way into the real world. Keeping this mind, plenty of financial institutes and banks are offering credit card offers and deals with the highest transparency features that ensure you get the best of rates to suit all your financial needs.

Discover these tips that will help you pay off your car loan faster

With more and more cars models being launched, the sentiment of purchasing a car is slowly rising over time. In addition to this, plenty of these car models are now becoming more affordable. With the readily available finance solutions such as the car loan, you can now easily purchase a car of your choice in a matter of a few steps.

But keep in mind, opting for a car loan is as big of a responsibility as purchasing a car. No doubt, a car loan will provide you with the required finances to purchase the car of your choice. But there still remains the fact that you will need to repay back the borrowed funds along with the added interest. If you do not plan this loan with proper and strategic decisions, you may end up with a loan debt that is beyond your means. This in turn can affect your financial profile, and in turn, any further loan applications.

However, these tips will help you manage your car loan with ease, thus allowing you the opportunity to enjoy your newly purchased car.

Tip 1: Communicate with your financier

Once you have settled on all the loan requirements and loan details, approach your loan financer. Talk to them and work out a payment schedule that suits your needs. Opt for a bi – weekly basis repayment over a monthly payment scheme. Although you may not realize it, this arrangement will make repayments easier as compared to the standard monthly payments.

Tip 2: Look out for additional income and invest it for your car loan repayment

Somewhere down the lean, you will most likely get a lump sum payment. This can be in the form of a bonus, bank deposit maturing or even a dividend receipt. In this case, you must take measures to ensure that this added income will be diverted to your car loan. Although the urge to spend it impulsively may strike you, paying off your loan faster will offer you more benefits in the long run.

Tip 3: Look out for alternate sources of income

An extra income will not only ease off the financial pressure but also provide you with a faster means to pay off your loan. Look out for different scopes that will allow you to earn an extra income. The funds you gain from this Endeavour can be directed to paying off your loan. Do ensure that it does not affect your current employment scope.

Purchasing a car is a great achievement, especially with a car loan. However, with the right tips, you can easily be on your way to be a proud owner of your dream car with the right finances to purchase it.

Credit card vs personal loan: Which is the best source of emergency funds?

There will come an occasion where you will require additional funds on a short notice. This is a prominent case in any financial emergency. In this case, you can opt either for a personal loan or a credit card loan.

But how do you know which option is the best choice for yourself? Each of these options offers a unique set of features and benefits that will suit different financial profiles and requirements. Let us take a look at each step taken for each option.

Comparison between the application processes

Although most loan applications follow a similar process, they both include unique additions. In this case, both the loan applications offered due diligence. Nevertheless, the credit card loan was more easily available as compared to the personal loan. With the personal loan, one would need to submit pay slips, form 16, bank statements and KYC documents in order to get the personal loan processed. However, with the credit card loan, you only need to contact your bank for a loan and the loan amount will be credited to your account after it has been processed.

Comparison of processing fee and tenure

Both loans come with a processing fee that ranges between 0.5 to 1% depending on the institute you are applying to. However, the tenure of the credit card is considerably favourable as compared to the personal loan. The personal loan tenure is at a minimum of 12 months to 3 years as compared to 6 months of a credit card loan.

Comparison of quantum of loan

The quantum of the loan plays an important role, as it also determines the interest rates and tenure of the loan. However, it also reflects on how much funds you would want. For a small loan, the credit card is valuable, as there is a credit limit to the amount. However, if you need a loan of a larger amount, the personal loan will be a better option.

Comparison of Interest rates

Normally, the personal loan interest rate is in between 12 to 20 % depending on the institute you apply to. However, credit card interest rates are in between 10 to 18 %. However, credit card loans are normally offered at a flat interest rate. As compared to the personal loan, the interest rate for this loan is offered at reduced balance rate.

In the end, each of the loans has its own benefits and features. These features and benefits will suit your needs depending on your financial requirements. However, it is crucial that you consider factors such as the personal loan interest rate or even the credit card benefits before you apply for each option.

How to use credit cards to boost your low credit score?

Credit cards are a great way to manage your finances, especially if you have multiple expenditures. However, in today’s financial industry, plenty of financial institutes are rejecting credit card application based on the applicant’s poor financial history.

However, all is not lost. Although you may possess a bad credit score, there are ways and means you can still get this credit card. One way to do so is by opting for a secured credit card. A secured credit card is provided to applicants who provide a collateral of equal value. In most cases, it is a termed deposit.

In this case, most banks and financial institutes will offer a credit limit which is up to 85% of the amount stored in the termed deposit. In the event you default on your card payments, the amount in your termed deposit will be seized. During this time, the termed deposit will continue to earn interest like a normally termed deposit.

Who should opt for this credit card?

For those who possess a low credit score or even a low credit history, this card is the best option. Additionally, those who are currently self – employed or unemployed can also opt for this card. Individuals who also do not match the income criteria of certain banks can opt for this type of card. Applicants who also reside in a blacklisted area or address can use this card. This also works for a company that has been blacklisted by banks or financial institutes.

What is the advantage of this type of credit card?

There are plenty of advantages of possessing this type of credit card. They include the following:

• An applicant can use it to improve one’s credit score. By using this credit card on a regular basis with timely repayment, the credit score of an applicant will improve over time
• Bad history is as valuable as no credit history. If you are not part of the credit score system, secured credit cards are your way in. Although possessing a bank account with a debt component will improve your financial profile, a credit card will go a long way. Eventually, you can apply for a loan with the required loan rates you want.
• Although you may put up your termed deposit as collateral, you will still continue to earn interest. In this way, your investment is still secured while improving your financial profile.
• A secured credit card is a better alternative to liquidating your termed deposits in the event you need emergency cash.

You can also increase your credit limit for your credit cards, to a better rate. Depending on the collateral value you provide, you can get a higher rate of credit limit that what a bank would provide you on a normal card.

Loan basics 101: How to keep your income to EMI’s ratio low

There are plenty of factors that are taken into consideration when you apply for a loan. However, not many are aware of the different factors that can affect your loan applicant, simply because there are too many to consider. One of the main factors is the EMI’s to income ratio. In most cases of a loan application, if the total EMI’s are high, there is a high chance that your loan application will be rejected.

So how can you reduce the chances of a loan rejection, keeping in mind the EMI to income ratio? Here are some suggestions that can assist you.

Managing your EMI’s

The first step to lowering your EMIs to income ratio is by managing your EMI’s. In the last few years, it is easy to get tempted into opting for different loans for different financial requirements. No doubt with loans such as two-wheeler loans, car loans or even a home loan, EMI’s will help you get what you want. But how do you manage it? The first step you should do is calculate your Emi’s to income ratio. You can always use the loan EMI calculator for this purpose. This ratio should not be over 50%. However, that does not mean you should also try for a loan amount that will touch this high of a ratio. You will need to consider your daily expenses along with the possibility of the different taxes you will need to pay. By reserving 20 to 30% for you income, for EMI’s you can ensure a low ratio, thus reducing your chances of a loan application rejection.

Borrow wisely

Debt may seem like the end of the world for you, but in reality, it help keeps you financial focused. However, as long as you ensure that the debt is something you can eventual manage, you should not be worried. In this case, when opting for a loan, you must borrow wisely. Match your debts to your income. If you discover you are spending more than what you earn or expect, then you need to make adjustments. If you need to borrow funds, ensure that you need to borrow it for realistic and practical purposes. Avoiding takes a loan to further invest in other financial products such as the stock market or other equities.

Plan the tenure of your loans

All loans work on a simple formula. The longer the repayment tenure, the more money you will end up paying in total. Depending on your financial profile, you can always opt for a high EMI over longer repayment tenure. Even funds from your bonuses or promotions will help you pay off a higher EMI, thus reducing your repayment tenure. Use the loan EMI calculator to calculate the ideal loan tenure that will suit your needs while helping you repay your loan off in ease.