Know how your interest is taxed with your recurring deposit

A recurring deposit is very similar to a fixed deposit, except one does not have to lock in the entire sum at one go. In case of a recurring deposit a fixed amount of cash has to be transferred to the account on a monthly basis for a certain period of time.

To open a recurring deposit account, one has to first open a savings bank account. Each month, money will be automatically deducted from the savings account and transferred to the recurring deposit account. If one opts for a recurring deposit of 5 years, the rate of interest that he may get is about 8.4% annually.

How is interest taxed in case of a recurring deposit?

While before the year 2015, there were no taxes charged on interest earned from recurring deposit investments, the government came up with a new rule during the financial budget of 2015-2016, that TDS (Tax Deducted at Source) would apply henceforth and 10% would be deducted from the interest that is earned on recurring deposit.

But TDS is only deducted if the interest earned is above Rs10, 000. In case one fails to submit their PAN card information to the bank, they are charged 20% on the interest earned.

In case one has a recurring deposit account and their income falls below the non-taxable income category, form 15G still needs to be submitted in case of fixed deposits as well as recurring deposits.

How can you opt for tax exemption on a recurring deposit?

In order to reduce tax payment it is best to opt for tax saving recurring deposit accounts. One simple way of saving tax payment on recurring deposit is by opening an account with the Post Office. Tax exemption is only applicable if the account has tenure of about 5 years.

The income tax is generally cleared at the end of every financial year or after the recurring deposit matures. The same applies for fixed deposit accounts. The choice is generally made by the tax payer. But, once the time of tax payment is chosen it cannot be changed.

Are taxes liable for a minor holding a recurring deposit account?

In case a recurring deposit account is held by a minor, the parents are entitled to pay the tax on the earnings.

Calculation of income on recurring deposit
For the most accurate results it is best that one uses a recurring deposit calculator, which is available on a number of bank websites. A RD calculator is simple to use and saves time.

Essential factors you need to keep in mind when investing in a fixed deposit.

A fixed deposit (FD) account is offered by banks as a form of investment either for a short period of time or a long span at attractive interest rates. In case of a savings account, cash can be withdrawn at any point of time, but an FD works differently. In case of an FD the amount deposited is locked in for a certain span of time at a high rate of interest.

A fixed deposit is a great way of saving money, especially for aged individuals who do not want to take much risk with their investments. Agreed, it gives back lower returns as compared to mutual funds, but an individual’s money stays secure in an FD and returns are definitely guaranteed.

The best way to calculate investment and consequent returns when planning to open and FD is through a FD calculator. The FD calculator will give one a clear idea about his investment, the amount of interest earned and the term of the FD.

There are also a few factors that should be kept in mind when investing in a fixed deposit account. They are-

Opt for a deposit insurance when opening a FD

Banks offer a deposit insurance up to 1lakh rupees only. Thus, if one wants to invest more than a lakh in an FD, it is best that you open more than one FD account at different banks or under different family member names, to ensure safety of investment.

Ensure a good interest rate deal

Do not end up locking in a large sum of money, for a long period of time at a very low interest rate. In order to ensure a good deal, split the investment between different FDs at different interest rates and terms. Thus, if one FD account has a tenure of one year, the other can hold a tenure of about 2-3 years.

Opt for a FD at public sector bank

This is primarily because a public sector bank is a safer option than a private sector bank. Moreover, the returns are also higher when investing in a FD at a public sector bank as compared to the private sector. Calculate the returns with an FD calculator to compare.

Consider co-operative societies and non-financial institutions

FDs are also offered by co-operative societies as well as non-financial institutions. Because of the high risk factor in investing in an FD with such institutions, the rate of interest offered to the customer is also quite high as compared to banks. Thus, while high returns are ensured, make sure to choose an institution that is reputed and reliable in order to ensure some safety of investment.

Internet Banking: Things to avoid for safe banking

Today, mostly all transactions and payments are done through internet banking. It is not only simple, but also one of the easiest modes of transacting money. It is also quite safe, but because this means of transacting money is very popular, cyber-crimes are on the rise.

Cyber criminals keep finding new methods through which they breach security. Thus, it is best to stay safe than sorry when it comes to handling hard earned cash. Here are a few things that should be avoided in order to ensure safe internet banking-

Avoid using same passwords for a long time

This is one of the easiest ways to ensure that a net banking account is secure. Keep changing the password from time to time. Also make sure that the password is strong, use both upper as well as lower cases and add in numbers whenever possible. Special characters should also be used. In case, you have a number of different bank accounts for internet banking, ensure the use of different passwords for all accounts

Avoid sharing account passwords

This is a definite No! In case one does have to share their password during any emergency, change it as soon as possible.

Avoid connecting the net-banking account with an E-mail link

Do not sign into an online bank account through an E-mail link. Most E-mail links are no good and may be designed to steal confidential data.

Avoid using any other app for internet banking

It is best that one uses the official bank app when internet banking. An official bank app is more secure as compared to third party applications. Also ensure that you are downloading the app from authentic application stores such as the Google app store or the Apple app store. Avoid downloading any apps through ‘aggregator’ applications.

Avoid internet banking through a Wi-Fi network that is public

Unless and until the transaction or payment is extremely important, avoid internet banking when using an open Wi-Fi or shared network. This is primarily because such Wi-Fi connections can be hacked easily and confidential data can be stolen in no time.

Avoid internet banking at a Cyber café or through a shared computer

Just like in the case of open Wi-Fi, it is very easy to hack into cyber café computer systems and get access to account information. These computer systems are meant for public use and generally have a lot of harmful malware.

One should also ensure that they always log out of the net-banking account after using it. This will keep one’s confidential data safe from hacking means, such as- session hijacking as well as cross-site scripting exploits.

Enjoy the conveniences of online mobile recharge

The advancement of science and technology has resulted in the constant evolution of the telephone. This means of communication which once began with bulky home telephones have now transformed into smart touch phones. The development of Android and Apple technology has made communication even easier. Today, everyone owns a smart phone and an internet connection is a must.

Recently, transactions and transfers, especially online mobile recharge and payments have become easier, as a number of banks and other institutions have come up with their own apps through which payments and transactions can be made.

For instance, in case of online mobile recharge, payments can be made through personalised apps that have been introduced by banks or various mobile phone companies like Airtel, Vodafone and Reliance.

Online transactions and payments are easy and simple. Here are a few advantages that you can enjoy when doing an online mobile recharge-

Anytime time recharge

Now there is no need to go to a store and get a recharge done. One can just learn how to recharge online and do it from the comfort of their homes. Moreover, online mobile recharge can be done anytime as the facility is available 24X7!

Convenient payment

Through online mobile recharge, one saves himself from the hassle of producing the exact change as demanded by the store keeper. Online payments and recharge can be easily done via a debit, ATM or a credit card. Moreover, net banking has also been introduced making online transactions much simpler. One only has to fill in the details of their card and an OTP is sent via message. Once the OTP is typed in, the transaction is processed and the payment is completed.

Great offers, discounts and cashback options
While many consider that online mobile recharge is a hassle and takes too much time with the app download and setting up of payment details, this is only a onetime thing. Once the payment setup is done, you can do online mobile recharge within a few seconds. Moreover, attractive cashback offers and discounts can be availed while making online payments. There is generally no cashback offer when one goes to the store to do a recharge.

It is not only banks and mobile companies that have come up with apps that help in online mobile recharge as well as other transactions. There are a couple of apps in the market that only help with online payment. One can book film tickets, recharge their mobiles and even shop online with the help of these apps. For example, Paytm is a popular app for online mobile recharge as well as for other payments.

Organise your personal loan repayment with this financial tool

A personal loan can be easily availed at the time of a financial emergency. A number of people opt for a personal loan in order to finance their child’s education or wedding. Personal loans are also taken to meet medical needs or make home improvements.

While a personal loan is unsecured and can be availed much faster as compared to other loans, one should thoroughly consider his options before applying for this type of a loan. This is primarily because any type of default in the repayment of the loan, can put a person in greater debt and gravely affect his credit score as well as history.

Before applying for a personal loan, compare the rate of interests and benefits that are offered by various banks and calculate if you can meet the monthly instalments in time. One can do such calculations with the help of a personal loan EMI calculator.

A personal loan EMI calculator is a tool that one can use in order to find out the EMI that one needs to pay as per the rate of interest offered by the bank. To use a personal loan EMI calculator one needs to feed in basic information like the loan amount that is required, the tenure of the loan you are looking for and the rate of interest that the bank is offering.

This calculator can be used to make comparisons of the different rate of interests that various banks are offering and if you can afford repayment. The tool prepares a person by informing him about the exact amount of loan that he can borrow. Thus, it is an effective tool that helps one organise their personal loan repayment plan.

This is how one can take the help of a personal loan EMI calculator in various situations-

• In case of a car upgrade, one can use a personal loan EMI calculator to check if they should opt for a secured or unsecured loan.
• In case of home improvements, this calculator will help in planning just how much you can borrow. Thus, you will be able to decide on improvements that are affordable and those that are expensive.
• When planning a holiday, a personal loan EMI calculator will help one decide the amount that he can borrow. One can also check the tenure he should opt for in order to make repayments easy.
• One can also use a debt consolidation EMI calculator to check if opting for a personal loan at low interest rates, will benefit their payment of debts.

Why personal loan has become a popular option for financial aid?

A personal loan is availed by individuals who need money urgently to meet their financial needs. While other loans, like a home loan or a car loan are given against some sort of security, a personal loan can be given without a security. Most banks only see if the borrower holds a credit card to approve a personal loan.

Here are some advantages of a personal loan that make it one of the best options for people seeking financial aid-

Can be used for various purposes

While a home loan can only be used to finance a home, or an auto loan can only be used to buy a car, a personal loan can be taken to meet any financial requirements. It can be used for a variety of purposes such as meeting medical expenses, organizing travel plans, educating children or even getting them married. Sometimes a personal loan is also taken in order to make home renovations and improvements.

Can be availed easily

One can get hold of a personal loan very quickly. In case of some banks, the loan approval and sanction of the amount takes about 24 hours only, depending on the urgency of the loan. Thus, in case of a sudden emergency it is best to get a personal loan.

The documentation required is minimal

As compared to a home loan or an auto loan, which require a number of documents to be produced at the time of loan application, a personal loan requires very little. Thus, the loan processes faster.

Unsecured loan

This may be one of the biggest benefits of a personal loan, it is unsecured. One can get hold of a personal loan without offering any security. The term of the loan is also shorter when compared to a housing loan or an auto loan. This ensures safety of assets.

Moreover, a personal loan also greatly improves one’s credit score as well as history, in short it enhances one’s credit profile to a great extent.
 
But while opting for a personal loan, one should also keep in mind that they should only borrow the amount that they can afford to repay. One should also try to clear their personal loan well before their tenure comes to an end, in order to maintain a good credit history.

Before opting for a personal loan, it is important to consider how urgent the money is and the purpose of use. While the loan can be easily availed and is quite convenient, default of any payment can result in problems.

EMI Calculator: Using this tool to calculate the ideal loan amount

EMI, which means Equated Monthly Instalments, is a sum of money that has to be given every month in order to clear a loan. The EMI is generally fixed, but the amount of principal or interest that has to be paid varies from one month to another. During the first few months of clearing the loan one is likely to pay more of the interest as EMI than the Principal amount.

When it comes to taking a loan, the first step involves calculating the loan amount that one requires and preparing for loan approval. The cost of the loan needs to be calculated and it can be best done with an EMI calculator.

A loan calculator will effectively help an individual calculate the amount of EMI that he will need to pay, along with the rate of interest that will be charged on the loan. Once this calculation is effectively done and the loan amount is fixed, an application to the respective bank should be made.

How does an EMI calculator function?

One needs to provide information like the loan amount one wants to acquire, the tenure of the loan, the rate of interest and the overall loan processing charges, in order for the loan calculator to calculate the EMI.

Once the above information is provided to an EMI calculator, it will offer the EMI that will have to be cleared, the entire breakup of the loan payment and will also offer view of the amortisation table, which will include the amount that needs to be cleared after every year of the loan tenure.

Some more advanced type of EMI calculators may also show a pie chart, offering the entire breakup of the loan.

Benefits of using a loan calculator

• An EMI calculator offers accurate numbers in a matter of seconds. One just needs to feed in relevant information into the calculator to get a clear breakup of the loan amount that needs to be paid back.
• It helps simplify the hassle of manually calculating the EMI of the loan and other related numbers. Thus, it effectively reduces the borrower’s confusion when it comes to complex calculations.
• An EMI calculator is a great tool when it comes to managing and planning finances. Comparisons can be easily made between the various interest rates and other offers given by different banks. One can put in a number of different combinations and choose the bank that offers the best deal.

A number of different loan calculators are available on the website of various banks online. One can easily take the help of this calculation tool to plan his loan.