Why your kids deserve a debit card today

Why give a debit card to a kid?

Your experiences as a child shapes you as an adult. The things you learn and interpret, develop your character and personality. That is why it is important for children to grow up independently although under a parent’s tutelage. This allows them to learn from their mistakes. Similarly, handling their finances, enables them to take better charge of their finances after growing up.

Most kids are encouraged on the habit of saving. Piggy banks came into practice to encourage
Children to save for future requirements or for their desired toys. This practice helped them maintain the equilibrium as an adult.

Responsibility and maturity is attained by children at different ages. With maturity kids learn to be more responsible and after becoming responsible adults they tend to handle their money better. To nurture the children of our society into responsible adults we need to instill lessons that make them respect money. A bank account with a debit card can prove to be a step in the right direction. It allows the child to manage his expenses, under the supervision of his/her parents. This means he/she is given a budget and they can spend it however they feel like until they reach the minimum balance in the account. Also, they will educate themselves on how to earn rewards and discounts from the bank, which initiates ‘good financial learning’.

Features of Children’s Debit card

Today there are a variety of savings bank account and debit card options for minors. With banks coming up with diverse debit card plans parents should analyze the way in which they think the child should use the card and accordingly enroll the minor in one plan. For instance, the ‘Kids Advantage Account’, a plan put forth by HDFC is a popular scheme among Indian parents. The debit card allow a withdrawal limit of Rs.2500. It also includes a shopping limit of Rs.10000 with no overdraft on card value. This means the minimum balance has to be maintained, below which the card cannot be accessed. Similarly, there are several plans like this and as such parents could choose from know from various plans that would help your child learn important financial lessons.

Parents also benefit if they start maintaining an atm card for their kids instead of handing out ‘liquid pocket money’. In this manner you are definitely going to teach your child the basics of personal finance at home such as to plan a budget after receiving income, spend on things that are necessary and affordable and try to save as much as possible.

This definitely does not happen overnight, or as a matter of fact over a week or month(s) also. It is a procedure where you sow the seeds years before it bears you fruits. The child at first, will overspend, not keep the minimum balance required, will be denied access to payments and then learn the value of the procedure. It also allows parents the access to their bank statements, to get an idea of where the money is going.

Monitoring their card activities can be important as the parents would get insights on their children. There are one too many types of debit card and selecting the best for your child should be your priority. It is advisable to opt for the card which allows you to set a minimum limit and no access to spending over that. It might place them in unwanted situations, but that is what shall help them learn valuable lessons.

Make the most of your investment with the RD Calculator

What is a recurring deposit?

Recurring deposit is a type of deposit scheme where you deposit a fixed amount of money on a monthly basis. You earn an interest at a fixed rate on the deposit amount, till the deposit matures. Once the maturity period is over, you will receive the amount at maturity which is a sum of the interest and the deposit amount. One may use an rd calculator to compute the amount beforehand.

A recurring deposit calculator takes the following into account –

1. Tenure
The tenure of a recurring deposit usually differs from bank to bank. The minimum and maximum tenure are 6 and 10 months respectively.
2.  Interest
The interest earned on the recurring deposit account is based on the duration and the contribution amount of the recurring deposit.
3. Maturity period
On reaching the maturity period, you will get the sum of the principal amount and the interest earned.

Features of Recurring deposits:
       1. Collateral for loans
You can use your rd as a collateral for applying for a loan.
       2. TDS
Your recurring deposits are eligible for Tax deducted at source or TDS. 10% is deducted if the interest amount on a recurring deposit exceeds Rs 10,000 per annum.
3. Withdrawals before maturity
A penalty is levied if the recurring deposit account is closed before the maturity period is over.
4. Late payments
In some cases, if you miss a monthly payment then a penalty is levied by the bank.

What is a recurring deposit calculator?

A recurring deposit or rd calculator is a tool which can be used to determine the maturity value of a recurring deposit. In a recurring deposit, each month’s deposit earns interest that is different from the other. This is due to the fact that compounding only occurs at the end of the financial quarter and not at the end of a month.

The interest for a recurring deposit is calculated by using the following formula –

Interest on a recurring deposit is calculated on a quarterly basis. The compounding effect takes place only at the end of each quarter. The formula used to calculate recurring deposit is –

M = R [(1+i) n -1]
M= maturity value
R = the monthly installments
i = rate of interest / 400
n = number of quarters

Thus to pick a scheme that meets your requirements, use the recurring deposit emi calculator to calculate the monthly payments and the maturity value.

How to save for your retirement with a recurring deposit?

A recurring deposit is a type of saving cum deposit scheme offered by banks. Another type of deposit scheme offered by banks is a fixed deposit. A fixed deposit has rigid frameworks where the amount you invest remains locked in for a period of time.

However, you may make withdrawals from the fixed deposit account only against stiff penalties.
An rd account on the other hand offers you the flexibility to deposit money in installments, much unlike a fixed deposit where you deposit the money at one go. You can invest money at periodic times of your choosing, and earn interest on the amount.

Features of a recurring deposit account –

1. The minimum deposit period is 6 months whereas the maximum deposit period is 10 years.
2. The rate of interest offered on a recurring deposit is equal to that of fixed deposits.
3. You may also take a loan from the bank by keeping the deposit as a collateral.

The interest on an rd account is usually calculated on a quarterly basis. The interest rates are compounded, where the interest amount is added to the principal. The new amount (principal + interest) is taken as the new principal on which the successive interest rate gets calculated.

The procedure –

To start a recurring deposit scheme, you will initially have to decide upon the tenure and type of deposit scheme. Once the plan starts, you will have to invest the required amount till the concerned period of time is over. The rate of interest for a recurring deposit varies from 7% to 8%, depending upon the deposit amount and tenure. The risks in a recurring deposit is very low where you can easily calculate the final amount you will receive at the end of the tenure.

You need to choose a bank where you would like to open an RD account. Once the scheme and tenure is decided, you need to make a provision for payment. You can allow the amount to be deducted through the convenience of an ECS (Electronic Clearance System). ECS is a process where the required amount is directly debited from your bank account on a periodic basis.

Advantages of a recurring deposit –

1. The minimum amount required to invest is very low.
2. The rate of interest for a recurring deposit account is higher than that of a savings account.
3. No tax is deducted at source or on the interest earned.
4. It is a low risk instrument.
5. Higher interest amounts owing to quarterly compounding
6. Eligible for loan up to 75% of outstanding amount

How to strategize your two wheeler loan application with the right tools?

Getting a two wheeler loan can be a cumbersome process, especially if you have not strategized it carefully. Strategizing a two wheeler loan means calculating the right loan amount, interest rate and the tenure according to your requirements. You can use a two wheeler loan emi calculator to help you strategize your two wheeler loan application.

A two wheeler loan calculator is the first step in a two wheeler loan application. Before you begin the loan application process, you need to have an estimate about how much the loan is going to cost you. The cost here means the monthly payments that you need to pay to the bank which are known as equated monthly installments or EMI.

The EMI can be calculated from the loan amount, the interest on the amount and the processing fee to be paid.

An EMI calculator uses the following formula to arrive at the result –

E= P * r * (1+r)^n/((1+r)^n-1)
The variable in the formula are –
E = the monthly amount or EMI that needs to be paid
P = the loan amount that you will borrow
r = rate of interest (monthly basis)
n = the time period or duration of the loan amount (monthly basis)

In some cases, the processing fee to be paid for the loan amount is also added in the calculations.

Information provided by the calculator

The two wheeler loan calculator provided information in three parts –

a. The EMI
The equated monthly installments or the EMI is the monthly amount that you need to pay. It included a combination of the principal component and the interest component. Using this information you can come to the conclusion regarding the affordability of a loan.
b. The segregation
The segregation is a breakup of the entire loan amount which needs to be paid back to the financial institution. You will get information on the processing fee, principal amount and the interest amount.
c. Amortization tables
The amortization table can tell about how you will have paid back to the financial institution, year by year, as the loan progresses. These tables also help you comprehend how the interest part of the loan will be repaid.

Thus before you decide to go through, use the two wheeler loan EMI calculator to find out all the required information regarding the loan. It can help you decide whether a particular loan fits your requirements.

Two wheeler loan and their benefits all you need to know

The growth rate of two wheelers in India for the last five years has been in the range of 3% to 8%, according to a report by economic times India. Industry players have predicted that the growth rate will be in the high single digits for the first quarter of 2017. Factors like declining fuel prices and interest rates are driving up demand in this sector.

A rise in demand for two wheelers is linked with the loans for two wheelers. The demand for two wheeler loan is also expected to receive a boost as the demand for two wheelers picks up. A 2 wheeler loan can either stand as an unsecured or secured loan. A secured loan requires you to pledge a collateral and generally has a lower interest rate. Whereas an unsecured loan requires you to make a down payment of 10%-15% of the value compared to a collateral. The rate of interest in case of an unsecured loan is naturally higher.

Where can you get a two wheeler loan?

Two wheeler loans are provided by banks as well non-banking financial companies (NBFCs). The interest rate offered by banks are slightly lower than the NBFCs. You should make an informed choice before taking a loan. The showroom from where you are purchasing the vehicle may also connect you with financial institutions that offer two wheeler loans.

Features of such loans–

1. An identity and residence proof is required before procuring a two wheeler loan.
2. You may be required to furnish your salary slips, bank statements and income tax returns.
3. A documentation charge up to 2% of the loan amount is usually levied.
4. A loan processing charge of 1%-2% of the loan amount is charged.
5. You will be asked to make a down payment of 10%-25% of the vehicle cost.
6. Depending on the loan tenure, the interest rates can vary from 10% to 11%.

The benefits of a two wheeler loan –

1. Two wheeler loans are now available online where the process is easier and quicker.
2. Some companies offer a discount of 0.5% on the interest rate.
3. A large number of non-banking financial companies offer two wheeler loans. In some cases, a low credit score may act as a deterrent for getting a loan from banks where the NBFCs can step as a better option.
4. The loan sanctioning process usually takes less than 2-3 days.

Why do you need to open a Demat Account today?

What is a Demat Account?

Shares and securities in India are electronically held rather than in their physical forms i.e. in terms of certificates and this is where a demat or dematerialized account comes into play. In order to be able to invest in shares or securities, a shareholder needs to have a demat account.

Being a shareholder you need to open a demat account with your investment broker or at times the sub broker. Your account number acts as your unique identification number and is used for all the electronic transactions of shares. Without this number, transaction cannot be initiated.

This account however is similar to that of a regular bank account but with an exclusive purpose i.e. it is used only for trading shares. To gain access to a demat account, a transaction password and an internet password is however needed.

Features of a Demat Account

There are various rewards of having a demat account. These are mentioned below:

1. A Demat account enables electronic storing of shares and securities saving you from the task of manually storing all the certificates and the relevant documents.

2. Once you have a demat account, the bonus shares or the right shares which you may get occasionally get directly transferred to your account thus nullifying the risk of loss due to untoward incidents like fire, damage or theft.

3. Demat account eradicates all the problems you might have faced in the physical transaction of shares or securities like lost in transit, theft, forgery, delay in receiving, signature mismatching, etc.

4. The brokerage or the transaction cost that you need to pay is minimal often below 1% and this also paves you the way to avoid the stamp duty charges which subsequently reduces transaction costs.

5. A Demat account makes the transaction process easier and hassle free with no minimum number of purchase or sale specified. You can also purchase or sell some shares if you want.

6. You can deal with both equity and debt instruments via a single demat account.

7. You can operate your demat account from anywhere inside the country provided you have an internet access.

8. When you change your address with the Depository Participant (DP) who acts as an intermediary between the investor and the institution (depository) that maintains the huge number of shares from numerous companies, your address automatically get updated in all the companies whose shares you have been holding thus eliminating your task of informing them separately.

Why is internet banking the need of the hour?

With the current government policy focusing on promoting a cashless economy, internet banking has naturally picked up pace. A McKinsey report stated that 7% of the total 200 million bank account holders in India transact online, which is around 14 million people.

So what is Internet banking?

Internet banking is an umbrella term which includes all the banking services that are available online. Some of the services that banks offer online include money transfer, scheduled bill payments and viewing account information. You can avail the benefits of internet banking from a smartphone or a computer which is connected to the internet. Mobile banking, which involves availing banking services via a smartphone is also a part of internet banking.

One of the main advantages that internet banking offers is transfer of funds. Transactions through electronic payment systems like Electronic Clearing Service (ECS) credit & debit and National Electronic Fund Transfer (NEFT) have provided a boost to financial arrangements across and around the country in terms of speed of transactions.

Current Scenario

India has seen a spurt in the number of e-commerce websites, where a good amount of transactions are processed online. A cash intensive economy is difficult to monitor as it provides a conducive environment for unscrupulous transactions. The current dispensation has taken major steps in curbing a cash intensive economy and facilitating a move to a more cashless economy instead.

In order to move to a more cashless economy, internet banking is emphasized. Transactions carried by internet banking are easier to monitor. The other two factors are internet propagation in India and a surge of smartphone users.

With more people having access to internet, internet banking in India is the need of the hour. The increase in the number of smartphone users is another factor that has helped internet banking grow.

Some of the benefits proffered by Internet banking

1. Customers are no longer bound by geographical boundaries. One can access their accounts from any place at any time.
2. Internet based banking services take up little time. You can thus spend less time on banking activities.
3. You can schedule online bill payments like electricity, gas and mobile bills.
4. Transfer funds instantaneously with internet banking. You no longer have to go to the bank to send money to another person.
5. Track the activities in your account simply by the click of a mouse.

While the benefits are there, it is not entirely a rosy picture. Internet banking has its share of problems. The major problem being the security of the backend infrastructure. A robust mechanism and a stronger infrastructure is needed to help internet banking grow to its desired standards.