Influencing your child’s financial behaviour for the best education loan

Higher education can be extremely costly when one pursues his/her studies from an institute of repute. It would, therefore, be wise on the part of the parent/s to plan in advance. In the present time, an education loan has become almost necessary for parents to give higher education to their children. Such loans are generally granted to meritorious students whose family members do not have the capability to fund their education on their own. An extremely important benefit of education loans in India is that the bank or financial institution will give a person time after completion of his/her course to get a job and then repay the loan.

The eligibility criteria for getting an education loan are as follows:

• Firstly and most importantly, the candidate has to be an Indian National.

• The person must have gotten admission via an entrance test for a higher education course in an institution of repute in India or in a foreign country. However, if the student has taken admission in an institution without sitting for an entrance test, the bank can decide on the criteria of employability and also take into account the reputation of the college/university.

• Generally meritorious students are given this loan even if they get admission under management quota.

One of the most important benefits of an education loan is that interest that is paid on loan can often be subtracted from your income and this helps to reduce the amount of tax that you have to pay. This benefit traces its origin from Section 80C of the Income Tax Act. The tax deduction is on the income tax filing and not on the other taxes paid.

Some other benefits of an education loan are:

• A person is not required to pay any early repayment fees for his/her student loan.

• You can take advantage of lower interest rates if you make your loan repayments on time.

• These loans are very flexible in the sense that individuals can take their time to repay the loan. However, the interest to be paid increases if someone takes a longer time to repay the loan.

• You do not need to mortgage anything while availing an education loan. However, a guarantor is generally required.

• Depending on the discretion of the bank, a student loan can also cover tuition fees, travelling expenses and even hostel fees.

• Education loans can be taken to pursue different courses like diplomas and other professional courses as long as they are taken from a bank or financial institution for the purpose of higher education. Necessary documentation may be required to be furnished to the bank.

The RBI has fixed some ceilings regarding the maximum amount that a person is eligible to get as an education loan. For studying in India, the maximum amount that a person can get is Rs 10, 00,000. On the other hand, the maximum limit is Rs 2000000 for students who want to study abroad. Education loans are one of the best options for meritorious students to continue their studies.

GST Made Easy: Important factors you need to know

The GST or Goods and Services Tax was implemented in all parts of India on July 1, 2017. GST is a destination based tax that is being hailed as a turning point in Indian economy. GST replaces numerous Central taxes like Excise Duty, Counter Veiling Duty (CVD), Service Tax, Special Additional Duty of Customs (SAD), other charges and the state taxes.

GST was introduced to get rid of tax cascading both at the Centre and in the state to reduce the tax burden on the common citizens of the country. It simplifies the tax system with an integrated Goods and Services tax that is the sum of Central GST (CGST) and State/Union Territory GST (SGST/UTGST).  GST ranges from 0% to 28% and the tax slabs are fixed at 5%, 12%, 18% and 28%. Petroleum products, alcohol and electricity have been kept outside the purview of GST. Now a lot of changes have been made to the GST guidelines since it came into being on July 1. Keeping that in mind, here are the important factors you need to know about the gamechanger that GST is.

• Earlier, a total of 228 items were in the highest 28% GST slab. Now the number of items in that slab has been reduced to just 50. Only sin and luxury goods are currently in the 28% tax bracket and the rest of the daily use items have been shifted to the 18% tax bracket.

• Eating out has become much cheaper as restaurants now impose a GST of 5% as opposed to the 18% they charged earlier. Only five-star restaurants at starred hotels where rooms cost above Rs. 7,500 charge 18% GST and can also utilize Input Tax Credit (ITC) benefits. Outdoor catering also falls in the 18% tax bracket and can take advantage of ITC benefits.

• 13 commodities have been removed from the 18% tax slab and shifted to the 12% tax bracket.

• Two things have been moved from the 28% tax slab into the 12% GST bracket and six articles have been moved into the 5% bracket from the 18% bracket.

• Armored vehicles and wet grinder have been moved from the 28% tax bracket to the 12% tax bracket.

The financial experts, industrialists and businesses have welcomed the revised tax rates. They hope that the revised and reduced rates will increase consumption which will result in the growth of the retail industry and the consumer goods sector.

All you need to know about co – branded credit cards

There are so many credit cards available in the market today. Currently, more than 30 million people in India using credit cards; the demonetization of Rs.500 and Rs.1000 notes and the Digital India campaign have given a huge impetus to the usage of credit cards in the country. Now, there are so many different types of credit cards that it can be quite a task to choose one from the lot. There is a special variety of credit cards called the co-branded credit cards that offer some additional benefits. A bank or financial corporation and a retailer come together to launch a co-branded credit card that provides some special benefits to regular customers.

If you are loyal to a particular brand or retailer, a co-branded credit card might actually get you some financial benefits. Co-branded credit cards can be used like regular credit cards all over the world; when you use the card to buy something from the sponsoring retailer, you earn attractive discounts and rewards. Some of the cards even offer 10x rewards including cashbacks, refunds and discounts. Co-branded credit cards are not just beneficial for the card-holders but also for the banks and the merchants as it ensures building a large customer base. Most such cards do not charge any transaction fee and are also known for waiving surcharge. Among all the cards that are out there, the airline and fuel co-branded credit cards are the best and can be the most rewarding. Every time you use an airline credit card, you win points that you can later redeem against you next ticket purchase. If you are a frequent flyer, a large number of points accumulated over a period of time can even result in a free class upgrade.

Now co-branded credit cards can charge high annual fees and the rates of interest can be slightly higher than that of regular credit cards, So, before getting a card, make sure you have full understanding of the fees and hidden charges because then only you can figure out the actual financial benefits that you can enjoy.  Almost all the major Indian banks have co-branded credit cards that offer many facilities.

Almost all the major Indian banks have co-branded credit cards that offer many facilities. It's not about choosing the best credit card in India but about choosing the right one for yourself.  You should choose a co-branded credit card depending upon your needs so that you can reap its benefits to the fullest. Go through the terms and conditions of each of the cards and then choose on wisely to make some clever savings.

Should you park your emergency funds in a liquid or savings account?

Savings account is a simple traditional bank account where money is saved with a fixed rate of interest. Liquid assets refer to your properties, both immovable (homes, land), and movable (furniture, vehicles, etc.). By selling assets, its value is converted to cash or the ‘liquid’ form, meaning you can use it directly in the market.

So if you are trying to save money, you can either save it in liquid assets, or you can opt for a savings account. In most cases, going for a savings account provides many advantages over liquid assets.

• Savings account give you interest at fixed rates on the money you save in the savings account. More you save, you get more returns as interest, effectively increasing your funds. This is the greatest advantage of a savings account over liquid assets.

• Savings accounts have a small minimum balance requirement, which means you can start saving with a small amount of money and keep adding to it as you save along. The interest you get also multiplies your funds.

• Savings accounts do not need a fixed rate of saving money. You can deposit whatever little amount you save in your savings account anytime you want to save some money, adding to your funds little by little.

• As the saying goes, ‘Little drops of water make up the huge ocean’, saving your money in a savings bank account slowly builds up your funds over time into a considerable amount. During emergencies, this money is readily available to you in bulk to use however you need to.

• Interest on money deposited in savings accounts is tax-free up to a certain amount.

• When kept in liquid assets, money is more likely to be spent easily. If you had been saving it for an emergency, spending it on something tempting would not be a very good decision. When kept in a savings bank account, your money remains yours, but you are less likely to spend it on a whim.

• Saving your funds in a savings bank account protects your money from untoward incidents. Liquid assets may be stolen, may be lost or misplaced, or may be vulnerable to calamities like natural disasters. This can be devastating, especially if the money you saved was for emergency purposes.

When stored in a bank, your money is safe and secure, giving you complete peace of mind.
Therefore, if you are looking to save some money, savings accounts provide a far better option than liquid assets.

Why should you avoid multiple personal loan applications?

A financial emergency can occur at any time, and a personal loan can really help an individual get out of a sticky situation. But when applying for a personal loan, one should ensure that they do not send in their application to multiple banks.

This should be avoided primarily because it can lead to the rejection of the personal loan application.

What is a personal loan?

A personal loan, popularly also referred to as an ‘unsecured loan’ can be opted for in case of an emergency situation. A personal loan is given without any security, thus banks do not ask for collateral when one applies for this type of a loan, instead they sanction the loan amount depending on the credit score and history of the loan applicant.
The rate of the interest in case of a personal loan is generally higher in comparison to other types of loans. This is primarily because it is an unsecured loan.

Why should one avoid multiple personal loan applications?

As a personal loan in India is an unsecured loan, banks generally make a thorough inspection of the CIBIL score of the applicant. If the CIBIl history and score show multiple applications of a personal loan made to different banks, the lender will assume that the loan applicant is credit hungry or has been previously rejected by other banks. This will definitely lower his loan eligibility and his application may be rejected.

Thus, one should first find out detailed information about the personal loans offered by various banks. This would include the rate of interest they offer, loan duration and overhead charges. Once this information is collected, make a fair comparison between the banks and choose one bank that you want to send in the application to.

If that bank rejects the application then you may consider submitting a personal loan application to a different bank.

In case you are applying for a personal loan via the ‘direct sales’ passage of various banks, make sure to inform them to avoid applying to various banks at the same time.

There are times when an individual does not have a great credit score, because of the lack of a credit card or he has not taken any other loan before. Even so, banks consider the application of the individual and sanction personal loan in India. But in this case, if the individual applies for the loan in multiple banks there are high chances that he will be rejected.
Thus, one should be careful when applying for a personal loan. It is important to consider all the factors before sending in the application.

How to ensure your internet banking is as safe as traditional banking?

With today’s fast paced lifestyle, many individuals are looking for alternate means to manage their daily activities. This also includes managing their financial habits, such as making payments, transfers or even checking your banking accounts.

While traditional banking was the only channel to perform the above mention activities, today we have the option of mobile banking. Through this option, you can now easily perform the same options you would have done at the bank, through your smartphone. You only need to download the bank mobile app and utilise it to your requirement.

However, many of those who are transitioning from traditional banking to the new age banking, have concerns about safety in terms of money transfer and access to accounts. After all, the internet platform is one medium that isn’t fully explored, especially by the older generation. Naturally, the fear of the unknown will lead to fear of usage.

However, there are some steps you can take to ensure that your mobile banking will be as safe as the offerings of traditional banking. Here are some of the steps you can take:

Know the tricks of protecting your passwords: Just as you would need to put in your account number and provide your signature to make a transfer or access your account, through the bank mobile app, you would need to use a password. This password will be unique to your account. But here, you have an opportunity to change your password on a regular basis. Furthermore, you can change your password to a strong password with a mix of different casings and special characters. By doing so, you prevent any unauthorised access to your account.

Controlling the access to your account: In order to access the funds in your account or make a transaction through the traditional channel, you would need to approach the bank. However, through the internet banking app you can easily access your account anytime you need it. Furthermore, you can also easily control the access to your account via the app. You can easily check when you have signed in, and from which location, such as which device you have logged in from. Therefore, if there is any joint account holder to your account, you will also be well aware of when they have signed in and made a transaction. Once done, you can easily log out of your account and stop any financial activity.

Guarantee access to official banking products: In order to access your bank account, or any other banking product, you would need to approach the bank. But what if you could access all the official products you need, right from the banking app itself? Not only would it save you time and resources, but you can also be well assured that any product you have access to, through the app, will be a genuine product. You will also get a full transparency when it comes to access this product, thus ensuring you are fully aware before making any investment decision.

How can a bank app help you safely execute your financial transactions?

Today’s fast pace life often leaves individuals with minimum free time to pursue other activities. Very often, individuals would be left with minimum time to carry out daily activities and habits. In most cases, it is your financial habits that gets affected the most.

Whether it is paying bills on time, or even getting any financial transactions done, the lack of time often makes these executions difficult, if not cumbersome. After all, it would require travelling to your closest banking branch to make most of your transactions or even accessing any financial product. This would often lead to delays in payments, late charges and even missed deadlines.

So how can you make your banking habits easy?

For one, you can shift from your traditional banking channels to banking apps. They key aspect here is your smartphone. With every passing day and year, the smart phone is evolving into a platform that is part and parcel of our daily lives. It partakes in your daily activities, whether it is communicating with your loved ones, purchasing groceries for the day, or even booking a transport home. Banking transactions and access to banking products has now become a part of this process, especially since you can easily download the bank mobile app and use it for your requirements with a single click.

Here is how you can make your banking habits easy:

Instant access: In order to maintain and regulate your banking habits, you will need to access your accounts or other bank products on a short notice. The best way to do so is through the bank app. You can easily register your bank account through the app, and through it, can access any financial product that is attached to it. You can even use your app to make transfers or payments in a single drop of a hat.

Set regular transactions: If you regularly make banking transactions, then you can easily download the bank mobile app and set your transactions as per your requirement, in a single click. Furthermore, you can easily automate your transactions at a particular date or time after the initial transaction. Through this process, there is no requirement for you to visit the bank at occasion a transaction or access is required.

Get instant alerts: Do you need to make an emergency transfer? How do you know if your transfer has been made?  Banking apps will give you instant alerts on each transaction you make. It will also give you reminder alerts on the payments to be made in the coming future. This will help you plan your finances, in such a manner where you can coincide your payments on dates well before the deadline passes.