Why term deposits make the ideal rainy day funds

A term deposit is an investment in cash held at a financial organization. You invest your money for a fixed interest rate over a fixed period of time, also called term. Term deposits may be invested in any financial institution like banks, union credits, etc. When you deposit the money, you are to understand that the money will be there for the agreed period. This period may range from 1 month to even 5 years. The interest rate is ensured not to change during that period of time. Normally, you can only withdraw this money on completion of the fixed term. If you withdraw it earlier, a percentage of it is to be paid as penalty to the institution.

Term deposit are preferred by investors who prefer security of capital and a fixed return as opposed to fluctuating investment options like the share market. Investors also use term deposits as a portion of their total investment in combination with other forms of investment. Term deposits are preferable when you have a planned expenditure up ahead in a fixed period of time. However, they may also be used as emergency funds in certain circumstances.

• Emergency funds are usually parked in savings account, from where money may be withdrawn easily. Term deposits allow withdrawal after the term is over, while a penalty has to be paid in case withdrawal is done earlier. In case of a long term deposit, the penalty is proportionately less, allowing you access to a substantial portion of your money even after paying the penalty.

• Some banks have a ‘sweep in’ facility, where you deposit money in a savings account, and when the total balance reaches over a certain amount, a fixed portion of it is transferred to a term deposit. If money is withdrawn, it is done by breaking the deposit. The advantage you get is that interest rate for a savings account is usually low, while interest rates for term deposits are high. So the money you get in return is high.

• Short-term deposits of one year serve best as rainy day funds as the money takes less time to mature but still increases in amount. The short period gives a better chance of you being able to withdraw the money without penalty in case of an emergency.

• Debt funds are short-term deposits that offer variable interest rates according to the market, but the term of deposit is very small. Also, withdrawal of money before the fund matures usually does not have a penalty.

Will your personal credit score affect your business loan application?

Many business owners require financial backing in order to start, expand the business or for business upkeep. Ready capital is extremely important when it comes to running a business.

A business loan may come quite handy for business owners who want a capital in hand to either buy more stock, expand the company or rent an office etc. But before applying for a business loan one should consider some factors that may affect their eligibility for such a loan.

Some of these factor include age of the borrower, type of business, the amount of loan that is required, the reason why one wants the loan and the most important is the borrower’s personal credit score.

While most people try to keep their personal life and work life balanced and separate, this becomes highly impossible for those who own small businesses. Now, when it comes to acquiring a business loan a number of banks do take the owner’s personal credit score into account. Thus, one does not only have to ensure that their business papers and balance sheet are on point, but also have to make sure that their personal credit score and history are made to the satisfaction of the bank.

What is a credit score and why does it matter?
A credit score is a number that is designated by a certain institution that examines and analysis one’s credit history. The higher the credit score, more are the chances of the lenders sanctioning a loan. A good credit score will make a borrower more eligible for a loan, while a bad credit score will make him less eligible.

Thus, when it comes to a business loan, especially a new business loan banks make sure to check the personal credit score of the business owner. One’s credit history and score directly reflect on their capability to return the amount along with interest. If a person cannot take care of their personal finances properly, it is assumed that they will not be able to take care of the business finances well.

Banks scrutinize the personal credit score of new business owners more carefully than old business owners, to ensure that they are creditworthy.

Individuals, who have a bad credit history are less likely to get approval for a business loan. Thus, it is extremely important that one checks his credit score and credit history before applying for a personal loan. If there are a few problems such as pending credit card bills etc. make sure that they are cleared before sending in the business loan application.

Is mobile banking the future of digital banking?

With the ever growing access to smart phones, more and more consumers are choosing to go mobile. Banking services have been made easier with the growing use of online banking. Mobile banking apps offer several advantages over the online banking system. Apart from completely changing the traditional banking scenario, mobile banking is fast becoming the new future of digital banking after online banking.

Here are some of the benefits you can enjoy through the mobile banking app today:

Manage banking better:

Traditional banking process requires you to go to the bank to make any transaction, even for something as simple as depositing or withdrawing money. ATMs made this easier, and online banking brought these activities right into the comfort of your home. However, with mobile banking, you have much easier access to your funds from anywhere and at any time. Just log into your account with your unique customer ID and password and make the required transaction. This takes away the need to be present near a computer.

Simple banking tasks:

For simple banking tasks like checking balances and transactions, you would have to go to the nearest ATM, or open your computer, log in and perform the task. This is tedious and time-consuming. However, with the mobile banking system, you can do this within seconds wherever you are. The mobile banking app is used to sign into your bank account, and you have direct access to your banking account history, transactions made, as well as the final balance, right at your fingertips.

Get real-time alerts:

The mobile banking apps are designed to track all the activity of your bank account. These include activities like funds in the account reaching a particular value or a certain amount of funds being withdrawn or deposited, etc. Since the app is directly linked to the account through the ever-present internet network, you can get instant alerts. Developers have designed the apps to provide real-time alerts for selected activities, allowing you to customize the alerts to your preference. As your mobile is portable and you can carry it around with you, you are instantly updated about your account wherever you are.

Greater security:

In order to access your bank account through mobile banking apps, you need to sign in with a unique customer ID and password, which you can change later. Keep your login details to yourself, and no other person can have to access your account. In the unfortunate event, you lose your mobile, your account will still be protected, as your personal information is password protected. At the same time, it is secured by other additional identity confirmations, like fingerprints, facial recognition, etc. Some devices and apps also have features with which you can remotely wipe out all your login details in such cases.

How to avoid these mistakes with the auto loan calculator

Innumerable banks and non-financial institutions offer car and auto loans today! While various types of auto loans are available in the market and can be easily availed, one should be careful when finalizing the terms and conditions of the loan.

Calculating the EMI of the auto loan, tenure, rate of interest and other technical details can be quite tricky for most individuals. In order to avoid calculation mistakes, one can take the help of an auto loan calculator.

An auto loan calculator is a calculating formula which allows one to play with numbers with just a few clicks. Here are a few mistakes that one can avoid with the help of the auto loan calculator-

• A number of individuals avoid making a fair comparison between various types of auto loans because they do not want to deal with the hassle of complicated calculations. This is a big mistake!
Comparing loan details and offers is extremely important so as to get the best deal in the market. An auto loan calculator allows an individual to make a fair comparison between various loan deals, the EMI, interest rate and overhead charges that will work the best for them.

• While some individuals definitely take out time and energy to make a comparison of various loan offers, calculation mistakes can lead to wrong decisions which are later regretted.

With the help of an auto loan calculator, one can definitely avoid calculation mistakes. All an individual needs to do is go online, locate a reliable car loan calculator, fill in the required spaces and hit the calculate button for prompt answers. Thus, an auto loan calculator has not only made calculation fast but 100% accurate as well.

With the help of an auto loan calculator, one can effectively negotiate the terms and conditions of the loan. The calculator often comes in handy when one wants to try out a combination of options to find out what works best form them.

In fact, the auto loan calculator is of great help when one wants to negotiate the rate of interest on a car loan. One can quickly calculate the EMI and tenure of the loan on the particular interest rates, and renegotiate with the lender on the spot.

Thus, it is very important that a borrower makes use of the auto loan calculator to avoid certain essential mistakes when availing a car loan. Make an effective comparison and be careful to negotiate the loan terms and condition, keeping in mind that the interest rate and overhead charges are fairly incorporated.

Why do more women need to buy health insurance?

An individual’s health insurance should essentially be formulated as per specific needs. Thus, it should be tailor-made depending on a person’s finances and the health issues that he is likely to suffer from. This is primarily why men and women should have separate health insurances.

Recent studies have revealed that about 80% of the women in the country do not have their own health insurance, even though they are financially independent. But one has to realize that a medical emergency or a chronic illness does not really announce itself before it arrives. Medical treatment today can really drain out one’s hard earned money. Therefore it is important that both men, as well as women, apply for medical insurance.

Here are a few reasons why women generally do not get themselves covered by medical insurance-

1. financial dependence
Most of the women in India are well educated and literate. In fact, they may be earning a good sum of money as well. But women in the country even today generally depend on their spouses or a male member to take decisions that concern budgeting and finance.

While prior to getting married it is their father, after marriage it is generally the husband making money-related decisions.

2. No awareness
In India, health insurance is not given much importance because many people are yet not aware about the perks of being insured.

3. No employment, no insurance
In India, the only insurance people seek are group covers which are generally offered by corporate or public sector employers. While women who work do enjoy the benefits of this type of insurance a majority either work from home or are full-time wives or mothers, without an insurance plan.

Here are a few reasons why women should opt for a health insurance-

• Their lifestyle is comparatively more sedentary.
• Women are more susceptible to critical diseases like breast cancer, diseases of the heart or osteoporosis.
• Most health insurance companies also offer maternity benefit as a part of the plan. This may come in handy in case a C-section is needed at the time of birth.
• Accidents are also covered by a health insurance plan.

Opting for a health insurance does not only offer a person medical security, but a chance to make a positive investment- an investment towards one’s well-being. Moreover, it is also a great way to save taxes, as medical insurance generally provides a number of tax benefits to an individual. 

Choose a reliable insurance company offering and effective health insurance plan for women today!

Net banking versus Mobile banking: What are the benefits?

In a world that is going increasingly digital, we all live fast-paced lives that do not leave us much time to do anything redundant. So, instead of disrupting our busy schedule to physically visit a bank, we prefer to use net banking from the comfort of our own home or office. Now, what about those who want to attend to all their banking needs on the go? This is where mobile banking comes into play.

A digital user prefers banking to be fast and convenient. And that is exactly what has happened with internet banking and mobile banking. This digitization of banking started with internet banking that brought our banks to our fingertips. Earlier, we would have to visit a bank even for something as simple as the transfer of funds between accounts. But now we can do that and so much more than sit on the sofa or lay on the bed at home by the virtue of online banking. All you need is your unique customer ID and password, and you can access your account round the clock and make transactions as and when needed. Credit card payment, loan repayment and mutual fund debits and all other possible transactions fall under the purview of internet banking. Net banking facilities are available round the clock and simplify banking to a huge extent.

Mobile banking is the same, only that it comes in handy even when you are travelling. Net banking is typically used via a browser on the customer's computer or laptop. A computer is not mobile and we seldom carry our laptops other than during business trips. You may need to do an emergency transaction at any point in time and mobile banking will help you to do that. It really is like internet banking, just that you do it on your smartphone using your bank's app. Be it a transfer of funds, phone recharge or bill payment, your mobile banking app is really your one stop shop for all your banking needs. Mobile banking allows the users to make transactions 24×7 from any place. You may be travelling or killing time at the railway station or airport, the mobile banking app is always available and comes handy.

Internet banking and mobile banking are the two sides to the same thing really and both have given the objective of a cashless Indian economy a huge impetus. While net banking is the perfect banking solution for us when we are at home or office, mobile banking is sometimes even more useful for a digital user who is frequently on the go.

What are factors that can affect your EMI value?

Banks offer a number of different loans to people for a range of different purposes. People normally apply for a personal loan, a car loan, a home loan, a business loan or an education loan. However, it is of utmost importance to calculate the EMI using an EMI calculator on his/her loan before borrowing. He/she needs to understand what factors influence his/her EMI value and how the cost of the EMI is actually calculated. EMI or Equated Monthly Installment is the fixed amount of money that is to be paid to the bank or lender by the borrower. This instalment is to be paid by the borrower until the entire amount of the loan is repaid. The EMI basically consists of two components: the principal amount and the interest on that amount. The interest is divided across every month of the loan repayment period. A person can use an EMI calculator to calculate the monthly instalment that he/she will have to pay.

The main factors that affect the EMI on loan are:

• Principal – This is the amount of money that you have borrowed from a bank or from a lender. This is one of the most important factors while calculating the instalment that you have to pay. This is because the interest is calculated as a percentage of the principal.

• The second factor that affects the EMI is the interest rate at which the money is loaned from the bank. You should carry out some research and understand what factors will affect the interest rates. Getting a loan at a good interest rate is essential as it will have a direct bearing on the amount of money that you have to pay to the lender every month. The interest rate on any loan depends on factors like credit score of the individual, the amount paid as initial down payment, the tenure of the loan and whether the rates are adjustable or fixed.

• The third factor is the tenure of the loan. This is basically the period for which you have taken the loan. If you want to pay smaller amounts every month, you can opt for a longer loan tenure. Similarly, a person who has availed the loan for a shorter duration of time will need to pay a higher sum of money every month.

The EMI value may change when you are paying back the loan. Some of the reasons that may cause this are if you have made partial repayment of loan, if there is a change in the rate of interest in case of a floating rate of interest or if you have chosen flexible EMIs.