Credit utilisation ratio: How to use multiple credit cards to reduce this ratio

Credit cards are one of the ideal ways to make payments. Not only do they offer the convenience to make any transactions, but it also offers a mean to track your record. It also shows your availability of credit on tap. However, this can be optimally utilised only if you maintain a prudent use of your credit card. This is also the place where the credit utilisation ratio can be used as a parameter, to keep a tab on your credit card use.

The credit utilisation ratio (CUR) is an outstanding credit balance expressed in a percentage that is compared with the total credit limit across all your credit cards. As a card holder, it is crucial that you keep this ratio as low as possible, as most lenders and financial institutions will use this as a parameter of an individual’s credit management. Given below are some of the factors pertaining to the CUR and why should you be aware of it:

Why a high CUR is not good for you: Running up your credit card will not only lower your credit score, but it will also make your CUR look credit hungry. It will always make you look like you are in a financial crunch. When your CUR is high, lenders will assume that you are defaulting on your payments. This can affect your credit score negatively. This, in turn, will affect you especially if you are planning to apply for a loan. Therefore, as a precaution, you should keep your credit expenditure less than 30% either by using multiple cards or paying off your debt as soon as reaches its limit. Ensure that you do not overuse any of your cards, especially on a regular basis.

How can you benefit from using multiple cards?:While it is a good practice to make your expenditures through your bank cards, it is an ideal option to split your expenditures through multiple cards. This helps reduce the CUR for each credit card. As mentioned previously, this card is calculated separately and collectively on each credit card that is allotted to you. You can easily use these cards judiciously in order to maintain a healthy CUR. All you need to do is identify your monthly spending patterns and plan your expenditures accordingly to minimise your CUR or even the use of your credit cards. If you think you are spending a bit too much, opt for a higher credit limit.

When should you use these multiple cards? No doubt, it may be easy to opt for these credit cards when you are in a financial crunch. However, it is important to consider using these cards only when you need it. Opt to use the cards wisely, only to increase your purchasing power. Compare the different cash back offers and rewards for specific products, and then use the appropriate card to optimise your shopping experience.

Questions you need to ask yourself before opting for a personal loan

For any emergency or miscellaneous financial requirement, you can always opt for a loan, especially a personal loan. This loan, comes under the classification of unsecured loans, meaning, you need not submit any collateral in order to apply for this loan. Additionally, it can be used for several purposes, such as paying off several debts, medical purchases, planning a vacation, and many others more.

But unlike other loan types, the personal loans have a high risk associated with it. For one, it has a high-interest rate. Additionally, it also comes with a tenure that can be short. By any chance, you cannot pay back the borrowed funds along with the interest rate; it will affect your credit score. Keeping these factors in mind, it is crucial that you be aware of the requirements and factors pertaining to personal loan. Here are a few questions you need to ask yourself before opting for this loan:

Why should I consider this loan?
Different individuals will have different financial profiles and different requirements. In the occasion that an individual requires quick and easy finance, such individuals can easily take a loan against whatever available assets they have. However, for individuals who do not have sufficient or any asset, as a matter of fact, can opt for a loan without such requirements. The personal loan is one such option. However, depending on your profile, you may or may not get the loan amount to satisfy your needs. Nevertheless, you can always check with your lender on how much of credit you can avail through this loan.

Can this loan affect my credit score?
When it comes to any loans, it is crucial that your credit score is as high as possible. The reason behind this is that lenders will check your credit score to see if you are a low or high-risk candidate when you apply for this loan. While this can be applicable before your loan application, this is also crucial when you already have an existing loan which you are repaying. Any delay in the repayment will affect your credit score. Since the personal loans are already a high-risk loan, you need to consider a proper repayment strategy when it comes to this loan, as taking on such a loan will have a chance of affecting your own.

Finally, is the personal loan right for me?
In reality, the personal loan will suit any individual. However, this should be considered only if other financial options are unavailable. Additionally, if you do not have the required assets to liquidate for a loan, this would be the ideal choice. Nonetheless, it all depends on your financial requirement and the urgency for it. Would you be opting for this loan to pay back previous debts, or would you be using it to pay off a purchase for a car or bike? Keeping these factors in mind, it is crucial that you opt for this loan only if it feels right.

How can you benefit from an EMI calculator for your loans?

At some point in one’s life, you will face a financial crunch or a requirement for a larger financial amount that goes beyond your income. At this point in your life, you can either opt to borrow from your friends or family, or you can either opt for a loan from a financial lender. With the latter option, not only will you get plenty of options to consider, but you will also get plenty of benefits along with these options.

But while you may or may not get the required amount when borrowing from your friends and family, you can be well assured that you will have a higher chance of getting the required funds through a loan from a financial lender. But before you can take this loan from a lender, it is crucial that you first take the necessary steps to plan your loan. Tools such as the EMI calculator will help you plan your loan, as well as take the necessary step to repay the borrowed funds. Here is how this loan will help you:

Know how much of interest rate one is eligible for: Different loans have different interest rates. Additionally, each applicant will have a different financial profile, meaning you, as an applicant will be eligible for a different interest rate which may be above or below of what is offered for that loan. No matter the loan type or amount you borrow, opting for the right interest rate is crucial as it determines how much you are eligible to pay back to the lender, along with the principal amount. You would not want to be in a position where you end up paying more for you an interest rate, as compared to the principal amount, would you? This is where the EMI calculator will assist you, as it will it help you determine how much of an interest rate you are eligible for and how much you can afford. Since it also tied up with the tenure of the loan, you will also know how long you will be paying for the loan and the added interest rate.

Know how much of a tenure one can afford: As mentioned previously, the interest rate is tied up with the tenure. At the same time, each loan type will have different repayment tenures. For example, the home loan has a tenure of 10 to 30 years, which is a considerably long time, especially with a high-interest rate. But can you afford such a long tenure, especially if you will be taking on additional debts in the near future? Therefore, it is crucial that you are aware of your loan tenure so that you not only know how long you will be paying the tenure but also how much you can afford. Using any of the online EMI calculators, you can calculate the ideal amount that will suit your requirements.

Apart from these benefits, there are plenty more which you can consider. However, you must remember, that your lender may or may not provide you with the loan rates you have calculated through any of the online EMI calculators. But you can always use the information you get through the calculator to leverage for better loan rates.

NRI Banking: Key aspects of the account and the benefits you can gain from it

The NRI banking accounts are one aspect of the Indian banking system that is useful for NRI’s and OCI’s living or travelling all over the world. For those who are looking to invest back in their home country and yet remain flexible with their foreign funds, the NRI accounts can be a handy vehicle.

Given below are some of the key aspects of the NRI accounts and the benefits you can get from it:

Status when opening the account: When it comes to opening the NRI accounts, there is one major prerequisite for the application. An NRI or OCI status is required to be qualified to open this account. To be applicable for either status, you need to satisfy certain criteria as per the government’s requirements. You can always check the government’s website to know more about this pre – requisites.

Bank selection: There are plenty of banks that cater to the NRI needs while providing global services. As an NRI, you can always opt for an NRI banking account or service based on your personal or geographical preferences. If you need to compare the different options, rates or even offerings, you can always check their online website or call their representative to know more. However, ensure that the bank you have opted for is authorized by the Reserve Bank of India for NRI accounts.

Account type: One of the many benefits of the NRI banking is the different account types offered to NRIs. These different accounts cater to different needs while offering different features and rates. Most of the major banks provide plenty of information pertaining to the account and how it will match your financial requirements, along with the country you are residing in. You can always check out the different schemes available to the NRI’s on the official RBI website.

Account application:Traditionally, you would be required to approach the bank and fill out a form in order to open an account. However, keeping in mind the requirements of applicants who have settled or travelling abroad, major banks are now offering online applications. You can easily get the complete list of documentation requirements on the website apart from the account rates and banking rules. At times, there is an online account calculator that will help you calculate the ideal outcome you would want with adjustable rates.

The benefits of NRI banking account includes:

• Convenience: Your NRI account would provide access to the banking system, depending upon your local or foreign needs. This means that you can make a quick transfer of funds or exchange of currencies when required.

• Time saving: You can easily access your funds online. Now you don’t need to run to the bank before closing hours or even before the weekend.

• Interest: Most major NRI bank accounts allows the functionality to compare interest rates and potential earnings between home and abroad.

FCNR (B): All you need to know

While the financial market is known for its volatile trends and conditions, one of the upcoming trends that have captivated investors is the FCNR (B) schemes.  The FCNR (B) was a three-year foreign currency deposit scheme, which was held by Indian banks, sourced from NRIs in 2013. It was set to mature between back then and December 2016. While the RBI has taken the necessary precautions and steps to prevent a volatile outcome, there is a concern that the outflow could lead to an increase in demand for dollars. This, in turn, may lead to rupee unpredictability.

What is the FCNR (B) scheme?

During the financial year of 2013, the value of INR had dropped down to an all – time low of 68.85 Rs. against the USD. To bring about stability in theshaky, exchange rate, the RBI initiated a ‘swap programme’, which encouraged banks to attract sizeable dollar inflows in the form of the Foreign Currency Non-Resident (Bank) deposits.As a part of this programme, banks were encouraged to convince their NRI clients to deposit surplus USD at a fixed interest. At the same time, the RBI promised to shield banks from the exchange rate risk. On receiving the USD deposit in 2013, banks were allowed to switch these funds with RBI for a period of three years. At the same time, they would be required to pay a fixed cost of 3.5 % per annum. An amount of $26 billion was raised from the FCNR deposits to the RBI, in order to receive the rupee equivalent under this scheme.

What happened in the process?

Assuming that Rs. 60 per dollar was the exchange rate that was fixed for the swap agreement, an amount of Rs. 1, 56,000 crore would be given to the banks by the RBI. However, this would only happen after receiving the $26 billion from them under the swap agreement. After the three year period was fulfilled, banks have an obligation to swap back the sum that has tobe raised with the RBI. In turn, the central bank will provide the dollars needed for banks to repay their NRI depositors.

Why is it important for you as an investor?

In reality, the redemption amount of $26 billion, would be an enormous outflow of foreign currency. At the same time, the RBI has a build an immense reserve of approximately $367 billion, while bringing forward contracts on the USD to repay the banks. However, if the parties who have already sold these forward dollars to the RBI are unable to afford the payments, they will be required to step into the open market to purchase dollars. This in turn may spark an unpredictable volatility in the currency markets sooner or later. At the same time, the sudden outflow of capital from India could also restrict the domestic market liquidity during a short period.

Conclusion: If you were an NRI lucky enough to invest in the FCNR (B) deposits, you would have earned a comfortable ROI, especially with the strengthening of the dollar against the rupee. However, if you have had any foreign obligations, in the later part of the year, you might face a slightly weaker rupee value.

5 mistakes to avoid when making an international money transfer

For many individuals, making a money transfer has become a necessity, if not a part of their daily habits. Such individuals send money from one location to another for various purposes such as sending money back home, making a purchase or a donation amongst many others. While there are several vehicles that facilitate this transfer, one of the most popular options is the telegraphic transfer. While this may be one of the most effective, quick and cheap ways to send funds, any mistake you make will cost your time and money.

Given below are a few mistakes to avoid when you want to make an international money transfer through this vehicle:

Getting the account details wrong: As a part of the telegraphic transfer process, you will need both the sender and the receiver’s bank account and routeing numbers. However, at times, these details aren’t always straightforward. These factors, which together identify the bank accounts on either end of the transfer, had different formats that vary by country. A simple transposition of the account or routeing number can lead to wrong account details being provided.

Not converting dollars to the local foreign currency: When making an international transfer, you normally will start with your local currency while expecting the right currency to arrive at the receiver’s bank account. However, you must take into consideration the current conditions when the currency conversion occurs. If you skip converting the currency at your end, the transfer can be rejected. Alternatively, the receiver’s bank may convert the funds at a higher exchange rate or for a higher fee. This can not only lead to a delivery delay but also a reduction in the amount that is being said.

Looking only at straight fees: There are only two costings when it comes to international money transfers. One of the main costings is the service fee providers that is charged for sending fund. The second costing is the amount you normally pay for conversion charges. These costing will depend on the lending institute you are sending the funds too, and the foreign exchange rate between the two currencies. If you can, do check the approximate transfer rates before you make the transfer.

Failure to compare different transfer providers: There are plenty of transfer provider services in the market that offer different yet competitive rates. In other words, you will have plenty of choices in terms of different exchange rates and fees. While it may seem like a waste of time to shop around, it will give you an idea of how much you are spending on your transfers and how much you can save if you switch to a cheaper service.

Failure to check the estimated time of delivery:Not all transfers possess the same speed overseas. NBFC’s often provide several choices of payment methods with different delivery options that can affect the speed of the transfer. For example, you can pay with a banking card to speed up the delivery, and yet face an expensive cost for that. Being aware of the available options in terms of providers, cost and delivery will help you send funds the best way that suits you.

What are the common costings you should be aware of when remitting to India?

Plenty of individuals uses money transfer services to send funds from one country or one location to another. While the reason for these transfers may vary, some of them include financing one’s education, facilitating the maintenance of retired family members amongst many others.

However, when it comes to choosing the option to remit to India, there are several factors you need to take into consideration. These factors will play an important decisive factor when it comes to selecting the vehicle to make your transfer. Amongst the factors that will influence your decision, is the costing.

Ask any individual who regularly sends funds, and they will tell how tricky it is to calculate funds. Depending on your option to send funds, the fees, charges, and margins are not completely obvious. This can leave you with an immense bill at the end of the transfer, or the excessive funding will be required to be taken on by the receiver.

In order to be aware of the amount of funds you will be spending on a money transfer, there are certain common charges you should be aware of. They include:

• Transfer fee: This is one of the most basic fees for all money transfer services. This is also known as the TT or telegraphic transfer, wire or remittance fee. Normally, this fee is fixed but differs based on the lending institute.

• Exchange rate margin: It is understandable that most money transfer services aim to make some profit in order to run their services. This is normally due when your local currency in converted into the intended foreign currency, with an added amount known as the margin rate. This is basically the difference between the wholesale exchange rate and the rate in the market.

• Corresponded bank fees:This is the fee that the sender’s bank will charge, for sending funds to the right bank or NBFC account. Normally, this is deducted from the amount that is deposited in the receiver’s account. While it may be impossible to estimate or reverse, you can always approach the sender’s institute to get more details about it.

• Receiving bank fees: If you are planning to deposit foreign currency into an account, then the receiving bank will charge you for it. For example, if you are sending INR to a Dubai bank, the Dubai bank will charge you a fee to convert it.

Using this information, you can now easily remit to India with ease.It is crucial that you are aware of the different costing factors that occurs when you want to remit to India. Not only does it allow you to calculate the funds you will need to transfer, but it will also help you reduce and avoid any unwanted expenditures.