Fixed Deposit: Top 5 reasons to open a fixed deposit now

For most people, when it comes to safe investment avenues, a fixed deposit is one of the most popular investment options. Many senior citizens and retirees open fixed deposits to ensure a regular inflow of cash from their retirement monies.

A fixed deposit is a type of deposit where the funds are locked in for a particular period. The fixed deposit interest rates vary on the basis of the period of the deposit. The bank regularly revises FD interest rates depending on economic conditions. The rate of interest on FDs is not as high as other investments, but it has certain benefits, which make it an attractive investment alternative.

Here are the top 5 reasons to open a fixed deposit now:

1. Convenience:
Opening a fixed deposit is no more a tedious procedure which requires you to visit the bank physically. Using net banking, you can open a fixed deposit of your desired duration in a matter of minutes. FDs can also be opened using mobile banking.

It is not only convenient to open a fixed deposit, but it is also equally simple to liquidate a fixed deposit. Both net banking and mobile banking allow a customer to settle a fixed deposit.

2. Tax saving:
Investment in 5-year tax saving fixed deposits gets a deduction up to Rs. 1,50,000, under Section 80C of the Income Tax Act, 1961. However, you need to pay tax on the interest earned from such a fixed deposit.

The interest on fixed deposits attracts TDS, however, banks will not deduct TDS unless it crosses Rs. 10,000. This provides relief to small investors.

3. Insurance up to Rs. 1 lakh:
Fixed deposits are generally safe investments. However, each fixed deposit is usually insured up to Rs. 1 lakh by the DICGC (Deposit Insurance Credit Guarantee Corporation of India). To take the maximum benefit of this provision, you can split up your deposits to ensure they get covered by this protection.

4. Flexible investments:
Fixed deposits are flexible investments in the sense the minimum amount to invest is Rs. 500 but there is no cap on the maximum amount. This makes it possible for a person to open small fixed deposits with their savings.

5. Senior citizen concessions:
Senior citizens get special concessions when they open fixed deposits. Generally, senior citizens get higher FD rates as compared to other depositors. Also, under Section 80TTB of the Income Tax Act, savings and fixed deposit interest up to Rs. 50,000 is deductible from the total income of the senior citizen. This gives them higher income.

What are the benefits of current account?

A current account is a type of bank account with unique facilities. These types of accounts are preferred by businesses, companies, public enterprises, educational institutions because they have a higher volume of low-value transactions.

Almost all commercial banks offer a current account, i.e. both scheduled and non-scheduled commercial banks. One of the main features of a current account is that it does not earn any interest on its balance.

Benefits of a current account:

1. Liquidity:
One of the best features of a current account is that it provides complete and unrestricted liquidity to the customer. Unlike a savings account, there are no restrictions on daily withdrawals or deposits of cash. Unlimited free deposits are allowed up to a particular limit. There are no limits on withdrawals of funds. This provides a lot of liquidity for businesses to manage their operations.

2. Easy account opening:
Opening a current account is very simple, especially since several lenders have the current account opening formalities entirely online. You have to fill up a form, and the customer representatives from the bank will contact you for further formalities to open a current account.

3. Overdraft facility:
One of the benefits of getting a current account is that the business can get an overdraft facility where funds are borrowed at a cheaper rate of interest as compared to a regular loan. These funds can be repaid by depositing cash into the account. An overdraft is the easiest way of infusing funds into the business.

4. Net and Mobile Banking:
Most banks extend mobile and internet banking to current account holders. A current online account makes it easy to check balances, make transfers, and have a check on the account.

5. Multi-city banking:
A current account provides a business with multi-city operations. It is possible to deposit funds from all over the country which is very useful for businesses spread geographically.

6. Other value-added services to business owners:
With the competition among banks, business owners can get a whole range of different value added services such as:

• Higher free withdrawal and deposit limits
• Cheque collection facilities
• Monthly account statements
• Relationship managers
• Discounts on other services

These value-added services help a business to save costs and expand.

7. Bank guarantees:
Having a current account with a healthy balance can help a business get a bank guarantee which is useful for companies looking to get into foreign trade.

What is a Demat account?

Investing in the stock market is one of the best ways of growing your capital. The stock market is an essential tool to increase your money in the long term. It is also possible to make a sizeable earning by trading in the stock market. However, to invest or trade in the stock market, you need a Demat account.

What is a Demat account?

A Demat account is an electronic repository of financial instruments. Instead of holding physical copies of shares, bonds, debentures, mutual fund units etc. a demat account holds it all in electronic form. A demat account shows the number of units, the date of purchase, and the price at which the unit was purchased. It also shows the current value of the investment. Thus, a demat account can tell you the financial position of your investments at one glance.

Demat accounts also contain information about bonus issues or rights issues of shares. They also show partly paid and fully paid-up shares and debentures. Some demat accounts also give information about dividend paid or interest paid. 

Features of a demat account:

• A Demat account holds the securities of an investor. When the investor purchases or sells any securities, they are credited or debited to his demat account
• Since all the securities are held in electronic form, it lowers the risk of theft and loss that was associated with physical securities.
• Selling securities through the Demat account can be done for odd lots or a different number of shares since order matching is completely electronic on the stock exchange.
• Demat accounts facilitate easy share transfers.
• Pledging shares for any purpose through the demat account is convenient. Some lenders offer loans against stocks and mutual funds by using this facility. 
• It becomes easy to invest in debt instruments since they are automatically credited to the demat account.

It is important to remember that a Demat account itself is not enough to invest in the stock market. It is necessary to open a trading account, to carry out the purchase and sale of shares and other securities. A lot of brokers or depository participants will open a demat account and trading account for you. However, it is entirely possible to open a trading account separately from the demat account.

The best demat account in India for an investor is one that provides an accurate and thorough statement accessible to the investor and trader at all points of time. Having demat accounts that are completely accessible online will ensure a stricter control and faster decision making for the investor.

Top 5 reasons why one should open a PPF account

PPF or Public Provident Fund is a scheme started by the National Savings Organization in 1968 with the objective of promoting small savings. Any resident Indian can open a PPF account. Only one PPF account is allowed to be opened per individual, and there can be no joint holders for this account.

The PPF account is one of the most popular investment alternatives that people enjoy in India today. This instrument has a 15-year lock-in period after which it can be renewed for 5 years at a time. But what makes the account so popular? Here are the top 5 reasons why one should open a PPF account:

1. Tax-free income:
The income earned on investments made in a PPF account is exempt from income tax. This makes it an attractive source to earn tax-free income. The interest is compounded for future years, and the interest earned on this compounded interest is also tax-exempt. This increases the returns from PPF.

2. Guaranteed income:
The PPF has a sovereign guarantee. What this means is that the Government backs the PPF. The returns on investment are guaranteed. This makes it a secure form of investment. Since minors can have their account, it is an excellent investment that parents can make for their children.

3. Tax break for investments:
Any investments made in Public Provident Fund get a deduction under Section 80C of the Income Tax Act. This makes it a lucrative investment option since it not only saves tax at the time of investment, but the income is tax exempt.

4. Flexible investment amounts:
While most investment modes have a fixed investment amount that should take place periodically, the PPF gives the investor the flexibility to make investments between Rs. 500 and Rs. 1,50,000 every year. These investments can be made any time during the year, up to 12 instalments. This flexibility means the investor can invest in this account any time he has the funds to invest.

5. Withdrawals:
The only major drawback about PPF is the liquidity. PPF accounts have a lock-in of 15 years from the year of account opening. For example, if you opened the account in July 2017, the account and the funds are locked in till March 2033. However, in spite of this lock-in, partial withdrawals can be made at any time subject to the terms and conditions. On maturity, the investor can choose to close the account and entirely withdraw his balance.

Top benefits of using UPI

UPI or Unified Payments Interface is a type of payment developed by the National Payment Corporation of India (NPCI). UPI has simplified the hassles involved with the transfer of money from one party to the other. 

How does UPI work?

To make a UPI payment, the first step is to create an account, either on the BHIM UPI app or through the different UPI apps available. Different banks offer their versions of the UPI app which work similar to BHIM.

After creating the account, the next step is to decide a UPI ID. Traditional payments use the bank account number and the bank’s IFSC code to receive payments, which presents a security risk. With UPI, the UPI ID becomes the mode that is used to receive payments. The UPI ID can be shared with people to receive payments instead of the bank account number, and this step provides an additional layer of security.

The next step is to create a PIN. To make a UPI payment, the person making the payment needs to authenticate it with a PIN. Once this authentication is done, the amount is debited from the bank account directly.

Top benefits of using UPI:

1. Secure mode of making and receiving payments:
UPI is a very reliable mode of making and receiving payments. There is no need to share bank account details. All that is required is a UPI ID. In case the UPI ID is not available, payments can be made using the bank account number and IFSC code. Using merely the UPI ID is of no risk since the transaction does not get authenticated without the PIN. This makes the UPI safe.

2. Instant transfers:
The Unified Payments Interface works on the IMPS system. This is not dependent on the bank’s working hours. UPI works 24x7 regardless of a bank strike or holiday.

3. Integrates different bank accounts:
One of the best features of UPI is that the app allows you to incorporate different bank accounts. You can receive payments in one bank account and make payments from the other.

4. Cost effective:
UPI is a free method of fund transfer. At the moment, banks have agreed to not charge for any transfers done via UPI. The proposed charges for UPI may be around Rs. 0.5 per transaction which is much lesser than NEFT and RTGS.

5. Easy to use:
Making payments using UPI is very easy even for a layperson. The process of registration is simple and hassle-free. The user interface is clean, and the process is well explained.

What are home loans?

Getting a house of their own is a dream that many people in India have. However, the prices of a home in many cities, especially metros are very high. It is not possible to finance the purchase of a house out of one’s own savings. One of most popular ways of meeting this gap in funds is to take a home loan.

A home loan is a loan that gives out funds to purchase a home. The home loan does not distinguish between the type of house purchased i.e whether it is an apartment or whether it is a house built on a plot of land. Home loans in India are a very popular way of financing house purchases, especially in metro cities where real estate prices are very high.

Features of a home loan:

1. The home loan value is based on the value of the property. The LTV (loan to value) for a home loan is generally 70% to 80%, which means 70% to 80% of the property value is issued to the borrower depending on his requirements.
2. A housing loan is a secured loan. This means the original property purchase papers and agreements are with the lender. In case of repeated default, the lender can dispose off the property to recover their dues. However, during the repayment of the loan, the borrower can stay in the house.
3. Home loans are repaid through EMIs (equated monthly installments). These EMI depend on the tenure of repayment and the rate of interest.
4. Most lenders do not charge any prepayment charges for extra principal repaid. This works out in the borrower’s favour since they can repay the loan faster and saves on interest cost.
5. The maximum tenure of such loans is generally 20 years. However, most borrowers tend to prepay their loan and pay it off over a shorter duration.
6. Home loans are available at both fixed interest rates and flexible interest rates.

Types of housing loans:

1. Home loan:
This is the standard home loan for purchase of a house.

2. Home extension loan:
A home extension loan works for people who are looking to expand and extend their homes. Some of the common extensions done are:

• Addition of bedrooms
• Addition of bathrooms
• Pulling in a balcony or carving a balcony
• Addition of office rooms

3. Home improvement loan:
A home improvement loan funds home renovations.  Some of the common renovations that can be funded with these types of loans are:

• Waterproofing work
• Paint work
• Reconstruction of walls with cracks or structural problems
• Plumbing
• Electrical work
• Building or removing false ceilings

4. Home loan for land purchase:
These loans fund the purchase of plots of land. The plot can be used either for constructing a house or for investment.

5. Home construction loan:
A home construction loan is taken to construct an entire house. A detailed estimate of the costs of construction is required for this loan.

Credit cards: 5 reasons to apply for one

With the advent of plastic money and digital banking, a credit card has become a common item for people to have in their wallets. But what is a credit card?

A credit card is a type of card that lets you borrow up to a certain limit (the pre-decided credit limit of the card) from the bank for your purchases. This has to be repaid before the due date. You can swipe the card at merchants or use for online transactions. Some credit cards can even be used internationally.

Because credit cards give you credit for a particular time and the freedom to swipe and use in a wide range of transactions, they come with an annual charge. This charge depends on the benefits that come with the card. Typically, credit cards come with their point system which can then be redeemed for free air tickets, discounts in restaurants, in outlets etc.

A credit card is a useful item to have. Applying for a credit card is very simple, and there's a fair bit of competition among different banks which has simplified the process. 

Here are 5 reasons to apply for a credit card:

1. It builds your credit score:
One of the strongest reasons to apply for a credit card is that it creates your credit score. The score is the snapshot of your financial history and is frequently referred to by lenders to identify the creditworthiness of a person. Regularly using a credit card ensures the person has some credit history.

2. Emergency funds:
An online credit card is one of the best sources of funds in an emergency. It can be swiped up to the credit limit to provide funds immediately. The best part is that the funds are not payable until the end of the grace period. This makes a credit card a dependable source of cash to have.

3. Points and airline miles:
Depending on the type of card and the bank, each transaction will earn you either points or airline miles. These can be redeemed for benefits in the future in the form of cash back, reward flights, hotel stays etc.

4. Offers and discounts:
With digital banking becoming popular, it is easy to get offers with an online credit card. If you want best suggestions for applying for credit cards online, especially in the case of co-brand cards, which give double the benefits regarding points. However, it is essential to check the yearly fees before applying for a credit card.

5. Grace period:
Credit cards come with a grace period. A transaction done in one month is payable at the end of the next month, thus giving a grace period of almost 60 days. This type of interest-free borrowing can be used beneficially to spend money without paying interest on it.