How fixed deposits help you save money

Whether you are a salaried employee or a self-employed professional, saving some amount of money is crucial. However, saving cash is easier said than done. Most of the time you end up splurging all the money. This could pose a threat in the future, especially during emergency situations. It is always a smart decision to save some expenses. Banks and other financial institutions offer you an array of investment options such as fixed deposits, mutual funds, market share, etc.

All the above options may sound good, but for beginners a fixed deposit account proves beneficial. How? You get to save your surplus amount securely, especially if you are looking for long-term investment.

What is a fixed deposit?

It is a type of term deposit that is considered to be the safest investment option available in the market. You can invest for 7 days or 10 years. A fixed deposit investment is deemed to be superior   to  a savings account purely because you earn higher interest that is  credited on a monthly, quarterly or annual basis. However, you have to invest your entire amount in one go.  If you wish to withdraw the cash before the tenure, banks and other financial institutions charge you a penalty.    
 
How do you save money through fixed deposit account?

1) You can save money for an  extended period without having the chance to withdraw  
2) You receive guaranteed returns on your investment
3) If you incur any loss in your business, the fixed deposit investment acts as a cover. Banks offer you 70 to 90 per cent of the amount in the account as a loan
4) There is guaranteed cash flow as you earn interest at maturity or annually or on a monthly basis at discounted rates
5) You have the freedom to choose your mandate. It could be anywhere from 7 days to 10 years 
6) You can make investments in various fixed deposit account based on your life events. They will mature on the tenure date you have chosen
7) You also receive a credit card against your fixed deposit. Banks and other financial institutions offer you 70 to 90 per cent of credit towards your fixed deposit amount
8) If you get loans and credit cards against your fixed deposit account, your interest rate remains unaffected
9) As per the Income Tax Act of 1961, you are eligible for a tax deduction   if the fixed deposit investment amount is up to INR 1 lakh for 5 years under section 80 C 

If you open a fixed deposit account, you will have no access to money for a specified period.    Take a call on opening one keeping in mind your financial status and profile.

Credit cards – its features and benefits

We live in a world where people are more connected over smartphones and chat messages than maintaining human relations. From hiring a cab to purchasing groceries, everything can be done online. India could very well become the second       largest online retail market in the next few years, as per reports.  Debit cards, credit cards, digital wallets and net banking are some of the modes of payments used  on these e-commerce websites. So, which one should you go for?
 
Most of these merchants run special discounts and offer on specific credit cards on a regular basis.  Some cards also provide reward points for shopping. Before we understand the features and benefit of credit card, what and how does it work?
 
What is a credit card?

They are plastic cards that offer hosts of goodies to the customers. You can borrow money to make purchases such as ordering food, booking tickets, etc. You, however, have to ensure to repay the amount before the next billing cycle starts. If you miss out on your payment, it could dent your finance history as interest will be applied on the same. Else, credit cards are a boon for those who do not wish to carry hard cash everywhere.

What are the credit card features?

Generally, features are dependent on types of credit card offered by the banks. Some of the basic ones are:

1) Global acceptance: Indian banks issue credit cards that are international today. They can be used to remove cash from ATMs, in e-commerce websites and  other merchants overseas. 

2) Transfer of balance: One of the best credit card features is that you can transfer your outstanding balance to the credit card account of the other bank. This way you save money and have to repay low-interest rate. 


3) Instalment repayment option: In case of hefty dues, banks offer you the option of payment via instalment, i.e. EMIs. You can choose your tenure and pay the desired amount on a monthly basis. They also come with attractive interest rates.

4) Loans: Banks also provide you loans on specific credit cards at a low-interest rate .      


5) Alerts: With the help of mobile banking, you can schedule your bill payments. You will receive the alert before the due date either over SMS or on your e-mail every month.

Apart from these features, they carry certain perks as well. The top benefit of credit card is:

1) Rewards: With every credit card transaction, you receive few reward points. The points that you get on your card is fixed and varies from card to card. You can retrieve these in the form of gift card  s, discounts, cashback offers, etc.  

2) Lifestyle advantages: You can also get numerous other privileges on a credit card that includes dining,  shopping, movies, etc.


3) Travel: Frequent travellers can enjoy plenty of advantages such as air miles, discounts on duty-free shopping, travel insurance, airline offers, hotel deals, etc.

4) Offers on VISA/Mastercard/American Express credit cards: These three cards are recognised world over. Based on the  types of credit card, you can use them on e-commerce websites or ATMs abroad.     

5) Add-on cards: Some banks allow customers to apply for an add-on card for their immediate family member. They do come for free, but you can apply for limited number of cards. Add-on cards carry the same primary benefits that a regular credit card comprise of.

Credit card eligibility is based on the kind of card you are applying for. It is also dependent on the bank. However, you must have completed 18 years of age and should earn certain income monthly.

The National Pension Scheme – A Retirement Plan for All!

When it comes to investment schemes, planning for your retirement should be on your top priority list. The Government of India launched the national pension system for the monetary benefit of its citizens. It is a retirement savings plan where both, employees and employers contribute towards building wealth which is then payable to the employee at the time of retirement. The programme is mainly designed to encourage systematic savings among citizens. The scheme was initiated on 1st January 2004 with a purpose of reforming the pension system in India and is said to be the cheapest market-linked retirement plan available in India.

Who is eligible for the national pension scheme (NPS)?

All citizens and state / central government employees falling between the age brackets of 18 to 60 years are eligible for investing.

How does the NPS work?

There are three types of national pension accounts that you can opt from and even make a switch over the years if you desire:

1) Tier 1- A non-withdrawable retirement account unless the subscriber reaches the age of 60. A subscriber has to contribute at least a minimum of Rs 6000 in a financial year for a Tier 1 account to save the account being frozen.

2) Tier 2- A voluntary savings option that allows subscribers to withdraw money. It is said to be an add-on to the Tier 1 account. The minimum contribution needed in Tier II is Rs 2000 annually. One must have a Tier 1 account to have a Tier 2 account

3) Swavalamban Account- The Government of India, contributes a sum of Rs 1000 every year over the early four years.

The applicant is required to appoint a nominee before investing in the national pension scheme. One can submit 3 nominees for the account. The applicant is allowed to change the nominees for the NPS account after obtaining the PRAN (Permanent Retirement Account Number), which is a twelve digit unique number provided to the applicant for the NPS account.

Offline account opening:

Several banks act as intermediaries that help you open NPS account, do the KYC and receive contributions on your account. You will be given a registration form to fill, and once the PRAN is allotted to you, you will obtain all relevant information and passwords regarding the account. The bank will charge you Rs.125 for account opening.

How can I access the national pension scheme online?

The e-NPS process began in 2015.
Visit

https://enps.nsdl.com/eNPS/NationalPensionSystem.html and select online registration.

Through Aadhaar card:

• For this method, your aadhaar card should be linked to your mobile number.
• Your registered mobile number will receive an OTP for authentication purposes. This will complete your KYC process.
• The data along with the picture will be extracted from the Aadhaar database
• The rest of the mandatory details have to be completed online by the applicant itself
• Upload your signature in jpeg format to complete the registration process
• For initial contribution to your national pension scheme online account, you can use Internet banking methods.

A guide on loan against property in India

Meaning:

The sudden urge for cash can leave us helpless. A loan disbursed against the mortgage of the property is known as the loan against property. The loan is sanctioned as per a certain percentage of the market value of the asset. Generally, banks offer up to 50 to 60% of the value of the property. The interest rate on loan against property is lower than personal loans. As your property is held as collateral with the financial institution, it is a secured loan. Failure to repay the loan, the lender has the right to auction your property and recover the credit.

Why should you apply for a loan against property?

• Fund your child’s education abroad
• For funding any medical emergency
• Wedding of your child
• Funding the dream vacation
• Capital for business expansion

What kind of property can be set for mortgage?

For a loan against property in India, you can mortgage a self-occupied house as well as a rented residential estate, or it can be a piece of land that you own. However, it is necessary that the title of the property should be clear.

Benefits of getting a bank loan against property:

1) Lower interest rate:
Often, the interest rates for loans against property are lower than that of personal loans. The interest rates for a loan against property generally range between 12% and 15% while personal loan the interest rate ranges are 15% to 25%.

2) Easy to get:
Banks are more than willing to sanction these loans as these are secured loans. Therefore, you won’t find it difficult to get the property loan.

3) Longer tenure:
Generally, the tenure for these loans is up to 15 years while the duration of the personal loan is only up to 7 years.

4) Unlock the potential of the assets:
You can generate quick funds by unlocking the potential of your asset through a loan against property and continue to retain its ownership as well.

What is the eligibility & documentation process for a loan against property in India?

The important eligibility factors for a loan against property are as follows:
• Income of applicant
• Credit score of the applicant
• Property type
• Property value

The bank would need the income documents and regular KYC documents (Photo ID proof and address proof) of the borrower. Also, the details of property papers that will get mortgaged with the lender and shall be returned post repayment of complete loan amount.

5 key benefits of buying car insurance online

With the increase of digital channels selling a variety of goods, a lot of consumers have switched to the internet to make all sorts of purchases. Thanks to the constantly increasing use of smartphones and apps, major financial institutions have ventured in the digital industry as well.

From conducting banking operations online to purchasing motor car insurance policies, banks are adapting themselves to the needs of modern customers. Hence to make an informed decision, we bring you some of the key benefits of buying car insurance online:

1) Free of middlemen:
Before the advent of the Internet, you would spend hours calling insurance agents to get rate quotes that you could compare. Dealing with agents can be a little troublesome as they might have their agenda to earn commissions. Buying car insurance online saves time and the hassle of paying hidden costs. You can simply pick out a policy and make the payment directly.

2) Convenience:
When you buy motor car insurance online, you can compare various options, read up reviews of users, and complete all the paperwork online itself. Through this, you can be sure of the reputation of the chosen insurance company and know how well they treat their customers if any incident occurs.

3) Security:
The online gateways of reputed financial institutions are secured, and there is hardly any chance of getting personal information being leaked. Selecting a policy provided by a well-known brand is more sensible, as they would have all their safeguards in place. While buying policies, consumers should also remember never to share their policy details with anyone online, posing as the company representative – they should only refer to the company’s official website and speak with the customer care agents listed.

4) Paperless transactions:
Policy paperwork can be often tedious and messy. The online facility of buying car insurance is quite simple and is down to minimal documentation. The processing of information is done instantly, and so is the issue of your policy. If you hold a netbanking account with the bank, you can access the digital wallet and store your documents in it. Through this facility, the policy documents are accessible 24*7.

5) Renewals and payment of premiums:
Timely reminders are provided to the policyholders so that they never miss out on making payments or renewing their motor car insurance policy, thereby ensuring that the plan does not lapse. Since everything is online, you don’t need to follow-up with agents during renewal.

5 pre-requisites of business loans

“Make in India” scheme by the Indian government has given rise to entrepreneurship in the country. Young minds are coming up with brilliant business ideas that are helping the Indian economy grow.  However, the struggle doesn’t end with great business ideas; you will need continuous cash flow to operate business operations.

To help you with it, major banks offer business loans. These loans aid you to accumulate sufficient capital investment and also for the working capital purpose. While there are many banks ready to provide business loan for start-ups, it is left up to you to understand what your actual requirements are. Based on them and ability to repay the repay amount, the loan should be taken from the bank.

We have listed down a few pointers to consider before you apply for a business loan in India:

1) Have clarity on your business plan:
Before sanctioning the new business loans, most lenders will ask you about your business plan. The blueprint of your plan will be a proof of how you will utilise the funds and your capability to pay back. A confident business plan can get you guaranteed business loans in a short span of time.

2) Build good credit:
If you plan to start the business operations in the next two years, then it is important to focus on building your credit and contacts. An applicant with good creditworthiness will get loan quicker with less documentation process and interest rates. To have a high score in your credit rating card, start paying your bills on time, stay away from the defaulter's list when it comes to credit card payments.

3) Documents:
The bank can demand a set of legal documents for business loan which includes:
• Proof of identity and address
• Statements of income, balance sheet, and cash flow information
• Franchise agreements
• Contracts by third parties
• Commercial leases (if any)
• Copy of registration, licenses for conducting the business

4) Security or collateral:
It’s a standard process of putting collateral or any valuable asset as a security for your business loans. In case if you fail to repay the loan, the lenders/bankers can seize the collateral and can get the loan amount recovered. Cash savings, deposits, business inventory, are some of the guarantee accepted by banks.

5) Choose the right lender:
It doesn’t matter if you are choosing a traditional bank or a private lender for your business loan, it is crucial that it suits your business needs. Banks have also made the process easier by allowing customers to apply for a business loan online through their official websites. You can check for your loan eligibility, and use business loan EMI calculator to understand the equated monthly instalment to be paid.

How to choose the right motor insurance policy?

Having motor insurance is a legal requirement in India. A car insurance policy ensures damage protection against damage to your vehicle and the third party. With ever-increasing incidents of on-road accidents in the country and strict government regulations, it is compulsory to buy motor insurance in India.

It doesn’t matter if you are 20-year old who recently learned driving or a motor enthusiast with a collection of cars, there is are motor insurance policies for everyone.

Following is a guide to find an insurance policy that suits your needs.

1) Third party insurance:

This is the minimum legal requirement of motor insurance policy. The Motor Vehicles Act 1988 has made it mandatory for all car owners to have this insurance, failure to do so can cause penalties. The coverage offered by this motor vehicle insurance plan includes protection to a third party for events such as injuries/death and property damage caused in an accident involving the insured vehicle. However, the third-party liability insurance policy does not offer own-damage cover, i.e., coverage for the insured vehicle or the owner-driver.

2) Comprehensive motor insurance:

The plan provides exhaustive insurance protection and is often referred to as a package policy. It encompasses both third-party liability coverage and own-damage cover. Details are as follows:
Own damage cover: You can claim the insurance during the following events:
• Personal accident cover including driver/owner
• Damages caused by natural disasters, such as earthquakes, floods, hurricanes, etc.
• Damages from man-made disasters such as strikes, riots, vandalism, etc.
• Theft of the insured vehicle

Third party liability: This motor insurance policy protects the policyholder from legal responsibilities to a third party from accidental injuries/death or property damage. The maximum amount of coverage under this insurance for injuries/death is unlimited. However, there is a cap of Rs.7.5 lakh on coverage for third-party property damage. The court decides the final claim payout for property damage.

3) Motor vehicle insurance add-ons:

Most motor insurance policies offer add-ons to enhance the coverage of the base policy you choose. Some of the details are as follows:

A. Engine protect cover:
Buying an engine protection cover offers to protect the vehicle from mechanical or electrical damages to the engine.

B. No Claim Bonus (NCB) protect cover:
NCB is the discount on the insurance premium that your insurer offers during the renewal of the policy. NCB benefits can only be availed if no claims were made in the previous year.

C. Roadside assistance cover:
This add-on motor insurance cover offers 24/7 protection to the policyholder from incidents such as flat tyre, fuel depletion, the requirement for expert scrutiny, etc.