Paisa Bazaar https://www.paisabazaar.com/learn Compare & Apply Fri, 20 Apr 2018 12:42:46 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.2 Want to Avail Government Subsidies? Provide Aadhaar and Get it Easily https://www.paisabazaar.com/financial-planning/articles/23883-want-to-avail-government-subsidies-provide-aadhaar-and-get-it-easily/ https://www.paisabazaar.com/financial-planning/articles/23883-want-to-avail-government-subsidies-provide-aadhaar-and-get-it-easily/#respond Wed, 28 Mar 2018 10:10:08 +0000 https://www.paisabazaar.com///23883-/ There was a time when a huge chunk of subsidy issued by the government failed to reach the beneficiaries. The flaw was in the system where majority of these subsidies went untraceable because of corruption. To clean the mess in the system and benefit the actual entity, the government came up with an unbeatable solution […]

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There was a time when a huge chunk of subsidy issued by the government failed to reach the beneficiaries. The flaw was in the system where majority of these subsidies went untraceable because of corruption. To clean the mess in the system and benefit the actual entity, the government came up with an unbeatable solution – transferring the money directly into the bank account of the beneficiary. Thus, it clubbed the bank account and the scheme together and linked both with Aadhaar.
 

A majority of the Indians still live below poverty level. The government made it easier for them to get subsidies by opening Jan Dhan bank accounts for free. The Central Government provides subsidies on hundreds of schemes to eligible citizens and today, this subsidy goes directly into the bank account of the beneficiary as opposed to the cheque or cash received by them in the past. There are a number of government schemes that have either been linked with Aadhaar or are in the process of getting linked with Aadhaar.
 

However, for those people who have a number of bank accounts, the latest bank account linked with Aadhaar automatically becomes the default bank account for receiving government subsidies under various schemes. Let us have a look at some of the prominent government schemes for which linking Aadhaar has been made mandatory to avail subsidies.
 

Direct Benefit Transfer (DBT)
 

DBT is a mechanism through which the subsidy amount issued by the government is transferred directly into the beneficiary’s bank account. Previously, the subsidy amount was provided either in cash or through cheque. Currently, more than 90 Central Government-sponsored schemes under 19 Ministries have been clubbed under DBT. Pahal or the LPG subsidy to Indian citizens is one of the most prominent schemes falling under this category. Schemes like MGNREGA, food subsidies, etc. have also been kept under DBT.
 

Pradhan Mantri Ujjwala Yojana
 

According to the Pradhan Mantri Ujjwala Yojana (PMUY), women of Below Poverty Level (BPL) household, who do not have access to LPG connection can apply for a new connection and the government will fund their initial investment of Rs 1600 for new gas connection, cost of the gas stove, hose, regulator, etc. along with first refill. The subsidy amount would be transferred directly to the bank account of the beneficiary. The scheme requires the beneficiary to verify using Aadhar to get the subsidy amount transferred to his/her account.
 

Emeritus Fellowship
 

Under this scheme, UGC provides the honorarium of Rs 31,000/- per month up to two years to selected candidates. In addition to that, the highly qualified, experienced or superannuated teachers also get contingency grant up to Rs 50,000 per annum. As per the latest notification by the government, this facility can be availed by only those teachers who link their Aadhar with the form as well as their bank account for the subsidy.
 

Pradhan Mantri Awas Yojana – Gramin (PMAY-G)
 

Under Pradhan Mantri Awas Yojana – Gramin (PMAY-G), the government provides Rs 1.2 Lakhs in plains and Rs 1.3 Lakhs in hilly areas for the construction of pucca house for BPL families. The government aims to construct more than 1 Crore houses under this scheme by the end of FY 2018-2019. All payments under this scheme will be made to the bank account or Post office Account of the beneficiary only when it is linked with Aadhaar.
 

Cash Transfer of Food Subsidy Rules, 2015
 

According to the Cash Transfer of Food Subsidy Rules, 2015, the government pays a certain amount of money to the deprived people under BPL at a price pre-determined by the Central Government. To make the system efficient, the government has linked ration card of the users with their Aadhaar and the subsidy amount is transferred to the Aadhaar-linked bank account.
 

Aam Aadmi Bima Yojana
 

Under Aam Aadmi Bima Yojana, rural landless households get insurance coverage as well as coverage against partial/permanent disability to the head of the family/earning member of the family. The Social Security Scheme is undertaken by the Department of Financial Services. In order to get the benefits under this scheme, it is mandatory for the beneficiary to link his Aadhaar with the scheme as well as with the bank account where the amount would be disbursed.


Maternity Benefit Programme
 

Under Maternity Benefit Programme launched by the Central Government, women will receive Rs 5,000 in three instalments directly in their bank account. This programme ensures that women can take proper care of themselves during pregnancy and post child birth. In order to receive the benefits under this scheme, it is necessary for beneficiaries to link their Aadhaar with bank account and the scheme.
 

The government has made it mandatory for beneficiaries to link their Aadhaar with more than 100 such schemes to avail benefits under them. This push towards digitisation has enabled the government to plug the leakage of funds and re-route it to actual beneficiaries efficiently and in lesser time. This has helped the government save over Rs 57,000 Crores under DBT in just 2016-2017 out of which the government saved more than Rs 29,769 Crores just through Pahal scheme.
 

Linking Aadhaar with various schemes has not only improved the targeted delivery of subsidies but has also reduced the time taken to reach the beneficiary. This has also helped in reducing corruption in the system. There are a number of other facilities as well for which linking Aadhaar has been made mandatory such as bank accounts, PAN, EPF account, mobile number, etc.

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5 Financial Hurdles of Youngsters and Ways to Overcome Them https://www.paisabazaar.com/financial-planning/articles/23577-5-financial-hurdles-of-youngsters-and-ways-to-overcome-them/ https://www.paisabazaar.com/financial-planning/articles/23577-5-financial-hurdles-of-youngsters-and-ways-to-overcome-them/#respond Wed, 21 Mar 2018 06:31:03 +0000 https://www.paisabazaar.com///23577-/ Youngsters who are taking their maiden flight towards financial freedom encounter several challenges. On stepping into the financial world, they suddenly get saddled with financial responsibilities. Since they have relied on their parents too long for their financial matters, therefore, most of them don’t have much knowledge and experience to handle their finances themselves. Without […]

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Youngsters who are taking their maiden flight towards financial freedom encounter several challenges. On stepping into the financial world, they suddenly get saddled with financial responsibilities. Since they have relied on their parents too long for their financial matters, therefore, most of them don’t have much knowledge and experience to handle their finances themselves. Without further ado, let’s have a look at some of the financial problems that youngsters face and also their solutions.
 

Issue 1: Financial Illiteracy
 

Once youngsters enter the professional world, they start bearing bigger financial responsibilities. They have to face real-life challenges such as living in a new city or country, paying rent and so on. Blame it on bad parenting or poor education system, youngsters know nothing more than a few basic things about personal finance. Without proper knowledge about finance management, youngsters cannot handle these responsibilities on their own. With incomplete or no knowledge about money, they are more likely to do harm than good for themselves.
 

Solution: For starters, parents and even educational institutions must take initiatives to educate children early regarding money. Those who have completed their education can learn financial management themselves. One must read articles, news and discussions on topics such as budgeting, living within one's means, managing credit and debt, savings and retirement planning. Financial literacy will help you avoid chaos and make an informed decision in future.
 

Issue 2: Student Debt
 

In India, the cost of higher education is at odds with the income of a common man. This is where the need for education loans comes. The loan helps youngsters complete their studies without trouble. But once, students graduate and start earning, repaying loan repayments become difficult. There are two major reasons for this. Firstly, lack of discipline and secondly, starting salaries are low. Resultantly, the debts keep growing. Irregular loan repayments not only bury them under debts but also dent their credit scores.
 

Solution: Repaying loan that too at the beginning of your career is a difficult proposition. To make things easier, don’t take any more loans. Get the longest possible tenure on your education loan to keep EMIs at a manageable size. Once your income increases, lower your loan tenure. It is needless to say but keep your expenses under check.
 

Issue 3: Emergencies
 

Financial emergencies don’t come with a warning. It can present itself in any form and at any time. Starting salaries of most youngsters are low, which leads to meagre savings. Even a single emergency situation can blow your savings off in an instant. If due to any reason you’re hospitalised, you will not get your monthly salary. Surviving the time until you resume your job will need substantial amount of money for which youngsters must always be prepared.
 

Solution: Fight financial, health, and other life’s uncertainties with an emergency fund. This fund helps you survive even when you don’t get your pay checks. For planning of an emergency fund, youngsters need to wisely divide their income. For starters, youngsters can aim at having 3 to 6 months of their income saved in a savings account for emergencies. Youngsters should also start estimating insurance needs. The advantage of getting insurance in a young age is that your premiums are going to be the lowest they’ll ever be.
 

Issue 4: Wants versus Needs
 

Youngsters get easily confused between what they want and what they need. Your needs are what you require essentially in your life such as clothing, food, shelter and so on. Your wants are defined by your purchasing power and therefore, are unlimited such as entertainment, exotic vacations and so on. It has been observed that the prime reason why youngsters are unable to save is because they spend heavily on their wants rather than on their needs.
 

Solution: It is okay to spend money on wants but these expenses if not made with careful consideration can cause dents on your financial health. We are not asking you to be harsh on yourself and not enjoy life. We are just asking you to seek your wants while controlling your finances. To do so, identify and fulfil basic needs. Also avoid discretionary spending on your wants and track your expenses. As your income increases, you can be more lenient about your wants.
 

Issue 5: Finding the Right Balance
 

To create wealth, one needs to find the right balance between saving and investing. Before finding the right balance, first understand what these two terms mean. Your savings are what remain after you meet your expenses. When you put your savings in financial instruments where your money can increase, it is called investing. It is quite difficult for youngsters due to obvious reasons to save a generous amount of money. This further implies that investing is a bigger challenge for them. Often, youngsters don’t even consider investment as an option.
 

Solution: Anytime is a good time to start planning your finances. Make a rule to save at least 10% to 20% from your salary for the future. Out of that money, invest a portion in an investment plan that suits you. If you’re investing in stocks, think long term and the earlier you invest the better results you will get through it.

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5 Mistakes Women Must Avoid to Ensure their Financial Security https://www.paisabazaar.com/financial-planning/articles/23572-5-mistakes-women-must-avoid-to-ensure-their-financial-security/ https://www.paisabazaar.com/financial-planning/articles/23572-5-mistakes-women-must-avoid-to-ensure-their-financial-security/#respond Wed, 21 Mar 2018 06:06:48 +0000 https://www.paisabazaar.com///23572-/ Modern women are so busy in juggling household chores, family responsibilities and their careers that they often forget to think about themselves and their future. While family and career are important but so is taking care of yourself, thinking about your retirement and planning for your financial security. Considering inflation and other future uncertainties, neglecting […]

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Modern women are so busy in juggling household chores, family responsibilities and their careers that they often forget to think about themselves and their future. While family and career are important but so is taking care of yourself, thinking about your retirement and planning for your financial security. Considering inflation and other future uncertainties, neglecting your financial interests now may hurt you in future.
 

Women who in every sense want to be financially independent must start making right moves now before they’re left with nothing but regrets. It takes a lot of efforts and well-thought decisions to achieve financial security; however, a few mistakes can ruin all your hard work and take you back to square one. In this post, we have compiled five financial mistakes that women must always avoid to lose less and save more for future.
 

  1. Leaving financial decisions on your partner

Many women in India despite earning money are not financially independent. This is because they leave financial decisions entirely on their spouses. As a result; they get no experience in handling their finances or investments. Some women even give their entire salaries to their partners to manage. It is good that you trust your partner but giving your income entirely to your partner leaves you with nothing in the end. If this is not enough, women are not even actively involved in monitoring or handling financial assets of their family. They know nothing about their family assets, or investments.
 

To go beyond managing household budget, women must start taking charge of their personal finance first. They must handle their income on their own. They must take interest in their family’s financial decisions. To understand finances better, you can discuss it with your partner or consult financial experts. Tell your partner to involve you in every financial decision. Don’t become guarantors or co-borrowers to loans or a joint signatory to investments blindly. Understand the rights and liabilities before signing a dotted line.
 

  1. Compromising professional aspirations

While there is no harm in taking a short break for yourself, to take care of your new born child or to attend to someone sick in the family. However, such breaks should not lead to the ending of your career aspirations. More often than not, women are expected to quit their jobs for the sake of their family and children, which not only causes a dent on their confidence but also on their financial independence and future security.
 

The reasons for quitting your job may be unavoidable but it is still advisable to women to not give up their jobs easily. Try to find a solution where you can continue with your family commitments while continuing your job. Always remember, your job empowers you financially to deal with a monetary loss, death or divorce. If you can’t go to office every day, you may consider working-from-home or opting for a freelance work.
 

  1. Avoiding decisions on investments

Women are different from men in plenty of ways including the way they approach money. Blame it on genes or social upbringing but women are more afraid to take risks than men. Even when it comes to making investments, men choose to invest in stocks and other unpredictable investment options whereas women put their money in safe avenues such as fixed deposit and PPF (Public Provident Fund). There is no problem in investing money in safe avenues such as fixed deposits or PPF as they are easy to understand and manage. But while trying to be safe women lose opportunities to get higher returns.
 

If women want their money to grow, they must invest in equity-linked investment options such as stocks or mutual funds instead of fixed deposit or PPF as the former is known to give better returns than latter. Women are considered to be patient investors therefore; long-term investment strategies will better suit them.
 

  1. Not preparing for emergencies

Since future is unpredictable, we should always be prepared even for worst situations. To ensure that unforeseen events do not negatively affect the overall financial wellbeing, women must get insurance policies. Get adequate cover for yourself and your family. Teach yourself more about insurance policies and choose the one that benefits you the most. Besides, life insurance and health insurance, women must also consider insuring belongings such as cars under the car insurance.
 

In addition to insurance cover, you will also need cash to tackle unfortunate situations. To ensure adequate cash is available at the time of emergency, women must create an emergency fund. Every month, they must take a portion out from their salaries and add it in the emergency fund. There is no limit to how much money should be collected in this fund – the more the better. However, the fund should have value that covers at least six months of your monthly expenses.
 

  1. Delaying plans for retirement

Delaying planning for retirement, irrespective of gender, can prove to be a big financial mistake. Many men start thinking about retirement after the age of 40 and for women ‘retirement planning’ is not even on their priority list. A ‘mother’ or a ‘wife’ in you might want to spend all your money for the betterment and security of your family but you also need to think about your security and how you’re going to spend your life in your senior years. Women must start investing for their retirement as soon as they start earning. Doing so will give their retirement investments more time to grow and compound.
 

By investing early for your retirement, you will not have to depend on your children or relatives for every expense. Having money of your own in old age will give you the freedom to use it wherever you like. You can spend it to go on a world tour, pursue your hobbies, help your children in need or buy gifts for your children and grandchildren. Most importantly, with an effective retirement plan, no matter what lies in the future, you will be financially prepared for the worst financial condition.

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5 Ways a Credit Card Can Hurt Your Creditability https://www.paisabazaar.com/credit-report/articles/23537-5-ways-a-credit-card-can-hurt-your-creditability/ https://www.paisabazaar.com/credit-report/articles/23537-5-ways-a-credit-card-can-hurt-your-creditability/#respond Tue, 20 Mar 2018 06:31:22 +0000 https://www.paisabazaar.com///23537-/ Your credit score is a key to unlock various financial opportunities. Therefore, one must never take their credit scores lightly. If you thought that only loan defaults can hurt your credit score, think again. The plastic card that has become an indispensable part of your life is one of the major causes of dent in […]

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Your credit score is a key to unlock various financial opportunities. Therefore, one must never take their credit scores lightly. If you thought that only loan defaults can hurt your credit score, think again. The plastic card that has become an indispensable part of your life is one of the major causes of dent in your credit score. Don’t believe? Take a look at five ways a credit card can bring down your credit score.
 

  1. Applying for credit cards frequently

Lending money is a risky business, therefore before approving a credit card or loan application, creditors enquire about the applicant’s credit report from bureaus to assess their creditworthiness. Such an enquiry is called hard enquiry, which hurts your credit score. Therefore, apply for credit card only when you need it. In addition to this, lenders avoid credit profiles with multiple credit card accounts as according to them it is a sign of desperation. Instead of applying for multiple credit cards at different banks, use the one that you can handle efficiently and fits your requirements the best.
 

  1. Maintaining high credit utilization ratio

Credit bureaus will lower your credit score if they find your credit utilization ratio high. For those who don’t know, a credit utilization ratio is the ratio of your credit available and credit utilised. According to credit bureaus and financial institutions, individuals who use more of their available credit frequently are risky prospects. Even if you pay your credit card bills full and on time, lenders after looking at your credit history will fear that you might max out your cards and have trouble in making future payments. Therefore, ensure that you do not utilise more than 30% of the credit available on your credit card. If you think that your expenses might increase, you may consider increasing the credit limit to avoid the impact.
 

  1. Defaulting on credit card bills

Credit cards are easy to use at the time of a financial emergency. But one should not take the perks of using a credit card for granted. Not repaying credit card bills on time will ultimately make your credit score fall, which can further jeopardize your chances of getting credit approvals from lenders. Therefore, spend only what you can repay on time to lenders. In addition to this, avoid partial repayments as it gives an impression that you’re struggling with your finances, which again negatively impacts your credit score.
 

  1. Defaulting on an add-on card

Today, credit cards are a necessity and banks know it that is why to widen its reach, they introduced add-on cards that can be extended to spouse, children and parents. The expenses incurred on an add-on card are billed to the primary cardholder. If the payments are not handled right, it can pull down the credit scores of both the primary and add-on card holders. To avoid such a situation, give add-on cards to those who can manage credit wisely and responsibly. Keep a track of the expenses as other’s negligence can impact your access to credit. To monitor the credit utilization, take a credit report from any one of the credit information companies or an online lending marketplace such as Paisabazaar.com to ensure that everything is in order.
 

  1. Closing a credit card account

It’s a common belief that closing a credit card will increase credit score. But in reality, closing your credit card will not erase your credit history from your credit report. Therefore, it will not help you in increasing your credit score. However, it may hurt it. Lenders consider profiles with short credit histories riskier than those with longer histories. Closing your old credit card account will not impact your credit score immediately but over the years once the credit card no longer appears on your credit report, you might see an unexpected decline in your credit score. Therefore, one must carefully evaluate their decision to close a credit card before taking action.

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Paisabazaar.com, BOB Financial enter partnership for 5X Rewards Credit Cards https://www.paisabazaar.com/press-release/media/23362-paisabazaar-com-bob-financial-enter-partnership-for-5x-rewards-credit-cards/ https://www.paisabazaar.com/press-release/media/23362-paisabazaar-com-bob-financial-enter-partnership-for-5x-rewards-credit-cards/#respond Fri, 16 Mar 2018 06:06:40 +0000 https://www.paisabazaar.com///23362-/ Gurgaon, March 15, 2018: Paisabazaar.com, India’s largest online lending marketplace, announced today that it has entered into a partnership with Bank of Baroda’s wholly owned subsidiary BOB Financial Solutions Limited (earlier known as Bobcards Limited) for its recently launched 5X Rewards Credit Cards. Along with Bank of Baroda’s 5,500 branches, 5X Rewards range of Credit Cards will […]

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Gurgaon, March 15, 2018: Paisabazaar.com, India’s largest online lending marketplace, announced today that it has entered into a partnership with Bank of Baroda’s wholly owned subsidiary BOB Financial Solutions Limited (earlier known as Bobcards Limited) for its recently launched 5X Rewards Credit Cards. Along with Bank of Baroda’s 5,500 branches, 5X Rewards range of Credit Cards will now also be available online on Paisabazaar.com.


These new range of cards from BOB Financial offer benefits and rewards to different customer segments basis specific spend categories. All three cards in the 5X Rewards range of Credit Cards – Easy, Select and Premier – are available for customers on Paisabazaar.com. Easy carries 5X Rewards on regular spends like grocery, movies etc. Select provides 5X Rewards on categories like online spends, utilities and dining spends. Premier, targeted at premium customers, offers the 5X Rewards on dining, travel and international spends.


Naveen Kukreja, CEO& Co-founder, Paisabazaar.com, said, “At Paisabazaar.com, one of our biggest focus areas is to meet the credit needs of each customer segment coming to our platform. In line with this, we are delighted to partner with BOB Financial for their new range of Credit Cards that have been designed for specific customer segments.”


Sahil Arora, Head, Payment Products, Paisabazaar.com, said, “Our partnership with BOB Financial will help us further in meeting the credit needs of customers coming to the Paisabazaar platform and also, enable us to  provide maximum value on their spends through the 5X Rewards Credit Cards.”


Rohit Chhibbar, National Head, Sales, BOB Financial, said, “Along with providing innovative and personalized products and services to our customers, we are also committed to enhancing our overall customer experience. By partnering with Paisabazaar.com, we have now made access to our 5X Rewards range of Credit Cards extremely convenient through a completely digital process.”


BOB Financial’s new range of cards also has features like no cost EMI, zero fuel surcharge and membership fees waiver basis annual spends.

 
About PaisaBazaar.com
 

Paisabazaar.com is India's largest online financial marketplace for loans and Credit Cards. It offers all a complete spectrum of lending and investment products for retail customers. Paisabazaar.com currently partners with more than 75 partners across lending and investment categories with 300+ products on offer. Since its inception in early 2014, the company has marked a staggering growth.


It is the only marketplace in India to disburse loans worth Rs 360 crore in a month to more than 450 cities and towns. The company is targeting a 3X growth and aims to cross Rs. 6000 crore annualized disbursal run rate by the end of this financial year. It plans to touch annualized disbursal of Rs 25000 crore by 2020.


The portal has been conferred with Economic Times “Best Fintech Brand” (2018) Economic Times “Best BFSI Brand" (2016), Money Tech “Startup of the Year” (2017) and Money Tech “Best Customer Experience Innovation” (2017) awards.


Paisabazaar is part of Policybazaar group, India's largest online insurance platform and has backing from host of investors including the likes of Temasek, Tiger Global Management, True North, InfoEdge (Naukri.com), Premji Invest, besides investments from other PE funds and family offices.


Please contact Sandeepa Santiago (09599423244, sandeepa@paisabazaar.com) for more information.

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This is How Personal Loans can Improve Your Credit Score https://www.paisabazaar.com/personal-loan/articles/22971-this-is-how-personal-loans-can-improve-your-credit-score/ https://www.paisabazaar.com/personal-loan/articles/22971-this-is-how-personal-loans-can-improve-your-credit-score/#respond Wed, 07 Mar 2018 13:20:14 +0000 https://www.paisabazaar.com///22971-/ Personal loan can be a great companion for your financial emergencies as it does not require any collateral and comes with easy formalities. Though infamous for being an expensive borrowing, personal loan, when managed smartly, can go a long way in improving your credit score. Now you might think that a good credit score is […]

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Personal loan can be a great companion for your financial emergencies as it does not require any collateral and comes with easy formalities. Though infamous for being an expensive borrowing, personal loan, when managed smartly, can go a long way in improving your credit score. Now you might think that a good credit score is also needed to take a personal loan in the first place. Yes, that is correct! But you should also keep in mind that credit score is not the only thing that lenders consider to determine your credibility. There are a few lenders who are ready to grant unsecured loans to people with ‘fair’ scores, if they successfully meet the other criteria.

 

Taking a personal loan for the purpose of credit building is especially helpful in two scenarios.
 

Using Personal Loans for Debt Consolidation
 

Outstanding credit card bills will do more harm to your credit score as they are instalment debts and carry huge interest rates in case you miss the payment. Over limit charges are also there to add to your worries. And when you have two or three cards with such debts, it is a total nightmare. The interest will keep adding on to your outstanding balance which will wreak havoc on your credit score.
 

One of the most viable options in this case is to avail a personal loan to consolidate the debts on different credit cards. You must do this as soon as you realize that your credit card bills are going out of hand because it is possible to get a personal loan with a fair credit score, but a ‘bad’ score does not help. A personal loan works out best for credit card debt consolidation because-
 

  • Personal loan is cheaper than credit cards
  • You will save on the interest charged on different credit cards and replace the same with a single personal loan
  • Single EMI will be more manageable than three different EMIs
  • Over a period of time, your credit score will gradually improve
Your credit score will not shoot up as soon as you pay off the debts. As you make regular payments towards your personal loan, the score will gradually recover. Also the banks might consider you as a less creditworthy person for a few months down the line as delayed payments are the most detrimental for your credit profile. So, it is advisable to pay off your piled up credit card debt with personal loan as soon as possible.

 

Using Personal Loans to pay off a High-interest Loan
 

Even if you are not facing any difficulty in paying off a loan, it is still not wise to keep paying high interest when you have other choices. You can choose to pay off your high-cost borrowings if you can avail a personal loan at competitive interest rates. Banks in which you have savings account or deposit account will be eager to give out personal loans at lower rates.
 

When you pay off your high-cost loans with a personal loan, you can save on the interest cost. It will also be less of a burden on your finances so you will be able to make regular payments which will improve your credit score.
 

So if you are thinking of using a personal loan to build your credit rating, here are a few things you need to keep in mind.
 

Do not apply for multiple loans- You should not present yourself as a credit hungry person in front of the lender. Also, a hard enquiry is initiated on your credit report every time you apply for a loan and it impacts your credit score. Too many hard enquiries are considered negative for a borrower.
 

Decide the amount carefully- We cannot emphasize more on the fact that you should take personal loan for an amount you actually need. Now since you are taking the loan for repairing your credit score, the amount of loan becomes a very important factor. Assess the need and then take the loan.
 

Make regular payments- Taking a personal loan for credit improvement will not make any sense if you default on EMI payments or delay them. Credit cards and personal loans, both being unsecured, impact your credit score the most. So make a habit of paying your EMIs on time.
 

Do not pre-pay your loan- If you have taken a loan for the purpose of credit building, you should not pay before your loan matures. A longer credit history is considered better. So if you keep making regular payments till a longer tenure, your credit score will be better.
 

A personal loan is not just meant for financial emergencies but is also helpful in building a good credit rating. Consolidate your debts or take a personal loan for an amount that you can easily pay off.

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7 Additional Things You Can Do With your Savings Account https://www.paisabazaar.com/savings-account/news/22968-7-additional-things-you-can-do-with-your-savings-account/ https://www.paisabazaar.com/savings-account/news/22968-7-additional-things-you-can-do-with-your-savings-account/#respond Wed, 07 Mar 2018 13:03:19 +0000 https://www.paisabazaar.com///22968-/ The primary objective of savings accounts is to help you in earning interests on your savings. Various banks offer different rates of interest for a range of savings accounts. However, there are a lot other things that you can do using your savings account.   Nowadays, you can open savings account, get your KYC done […]

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The primary objective of savings accounts is to help you in earning interests on your savings. Various banks offer different rates of interest for a range of savings accounts. However, there are a lot other things that you can do using your savings account.
 
Nowadays, you can open savings account, get your KYC done and carry out financial transactions online. You can avail a number of additional facilities as mentioned above on your savings account and save a lot on your daily purchases. Do you use your savings account only for stacking your hard earned money? Let us discuss about a number of additional benefits that you can avail through your savings account:
 
Bill Payment & Mobile Recharge
 

You can pay your utility bills such as electricity bills, water bill, LPG connection bill, DTH bill, etc. online through your savings account. Your savings account also allows you to recharge your mobile and pay your postpaid connection bills through your bank’s mobile app. These bills can also be paid by logging in to your internet banking account. Some banks also offer amazing discounts and cashbacks on the payment making it a convenient and money-saving method of bill payment.
 
Tax Payment
 

People had to face a lot of problems while making payment of various taxes offline. Savings account holders can now pay taxes directly through their savings accounts. Various taxes such as tax deducted at source (TDS), tax collected at source (TCS), interest tax, wealth tax, etc. can be paid online either through your mobile app or through internet banking. You can fill Form 26AS as well through your savings account.
 
Amazing Discounts and Offers on Shopping
 

You can now save a lot of money on your shopping bills done either online or by visiting a retail store. Banks offer a range of exciting discounts and deals on making purchases through their debit cards. Not only this, you can save a huge amount of money when you dine out at selected restaurants. Many online retail marketplaces offer amazing cashbacks and rewards when you make purchases either online or through the bank’s debit or credit card.
 
Mutual Fund Investments
 

Investing in mutual funds was never this easy. Your savings bank account now allows you to invest in mutual funds directly and save a comprehensive amount through section 80-C. The bank allows you to purchase, redeem and switch mutual fund schemes through your savings account. You can also invest in Systematic Investment Plans (SIPs). The bank also allows you to track your NAV and mutual fund portfolio quite easily through your bank’s app or by logging in to your internet banking account.
 
Credit Cards
 

You can not only apply for a credit card with reference to your savings account but also can make payments online 24×7 to prevent from being penalised for missing the deadline to pay your bills on time. You do not have to visit the bank to clear your dues by submitting a demand draft or cheque. You can now make payment from the comforts of your home. You also get option to upgrade your credit card if you can maintain a considerable account balance.
 
Insurance Schemes and Premiums
 

Banks offer insurance schemes with higher benefits to their existing account holders. You can insure your home, vehicle, health, travel and vacations and get a life cover as well at premiums lower than the market rate. Your savings account allows you to get instant insurance quotes, buy an insurance policy, renew the scheme or register your claim. Your premium amount will automatically be deducted from your savings account.
 
Travel and Vacation Deals
 

Various travel and vacation companies enter into tie-ups with banks these days and they offer amazing deals on both domestic as well as international trips to account holders. You can not only save huge amount on hotel bookings but also on flight, train or bus ticket bookings.
 
In order to make sure you utilise your savings account and reap maximum benefits from it, you can check various deals and rewards offered by the bank through the bank’s app and grab the opportunity to enjoy these extra features. These facilities offered by the bank will help you to make additional savings apart from earning interests on your hard earned money.

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Should You Avail a Top-Up Loan? https://www.paisabazaar.com/home-loan/articles/22912-should-you-avail-a-top-up-loan/ https://www.paisabazaar.com/home-loan/articles/22912-should-you-avail-a-top-up-loan/#respond Tue, 06 Mar 2018 13:23:32 +0000 https://www.paisabazaar.com///22912-/ Loan, an easy way to borrow funds and then repay later through monthly instalments, is getting popular by the day among consumers. Let’s assume you took a home loan a few years ago and you are currently servicing its EMIs periodically however you now find that your home requires further extension or improvement. To complete […]

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Loan, an easy way to borrow funds and then repay later through monthly instalments, is getting popular by the day among consumers. Let’s assume you took a home loan a few years ago and you are currently servicing its EMIs periodically however you now find that your home requires further extension or improvement. To complete it, you do not need to avail another loan; you can just get a top-up loan similar to a balance top-up you get on your prepaid mobile connection.
 

However, one may wonder why get into the trouble of modifying an existing loan and why not just borrow a new one. This concern is not misplaced. Top-up loans like everything else have their own advantages and disadvantages. It depends to which side the balance is tilted more in your case for you to come to a conclusion.     
 

The thought process you must be going through while contemplating from where to arrange funds is that how can I easily arrange funds at the lowest interest rate available in the market, isn’t it? You have two options – either avail a brand new loan which comes along with a new application, evaluation, bargain and execution or avail additional amount (top-up) on the loan you already took.
 

The brand new loans can be a personal loan, a loan against property, a gold loan or any such loan which you can avail against collateral or even without collateral – however it will be a new loan. On the other hand, the top-up loan can only be availed on your existing loan – whether it is a personal loan or a home loan. Availing a top-up loan entails less documentation and easier processing when compared to a fresh loan.
 

The basic premise of a top-up loan binds the borrower to avail the loan as per his/her new eligibility. Let’s say when you originally took the loan your eligibility was for Rs. 60 lakhs and now you have paid off Rs. 10 lakhs from the principal amount of the loan. Also, your salary has increased during this tenure and thus your repayment capacity has increased. Thus if you take a top-up on your loan now then the bank shall consider awarding you a top-up loan of at least Rs. 10 lakhs. Top-up loans generally are of two types, Top-up personal loan and Top-up home loan.
 

Let’s first understand top-up home loan through an example:
 

A guy named Amit took a home loan 5 years ago for 50 Lakhs at an interest rate of 8.5% with tenure of 20 years. Since then Amit has paid off Rs. 26.03 lakhs as EMIs (Rs. 43,391.17 per month). In this 5 year EMI amount, principal value is Rs. 5.93 lakhs. This means that after 5 years, Amit has paid Rs. 5.93 lakhs out of his 50 lakhs principal amount.
 

Conclusively, now Amit is eligible to take a top-up home loan of Rs. 5.93 lakhs from his housing lender for tenure of 15 years (=20-5 years). Amit will have to take this top-up home loan at higher interest rates as interest rates for top-up home loans are 0%-1.5% above their home loan interest rate.
 

On the other hand if Amit goes out to take a personal loan of Rs. 5.93 lakhs, he will be needed to apply for a new personal loan for which the interest rate shall start at 11.25% p.a. (as per current market trends).
 

Case 1:
 

Considering above figures, let’s assume that Amit’s housing lender quotes an increase of 0.75% (median of 1.5% increase) in the loan’s interest rate. This makes the top-up home loan interest rate = 8.5+0.75 = 9.25% for the remaining loan tenure (15 years) and let’s assume that Amit is able to attain his personal loan for 11.25% for a tenure of 5 years. 
Based on this, let’s compare the two options where Amit avails a loan of Rs. 5.93 lakhs:

 

Basis Top-Up Home Loan Personal Loan
Interest Rate 9.25% 11.25%
Tenure 15 years 5 years
EMI Rs. 6,103 Rs. 12,968
Total Interest Paid Rs. 5,05,558 Rs. 1,85,039

 

*Above calculation are done considering the interest rates of the loans remain constant throughout the loan tenure.
As you can observe from the above table that the EMI value is half in case of a Top-up home loan but the total interest paid is way higher than that serviced in case of a personal loan. So, now it is you who have to decide whether you want less value EMIs and massive interest pay-out or double the EMI value and considerably less interest pay-out.
 

Case 2:
 

As you can infer from the above example, the major factor due to which the top-up home loan’s total interest pay-out is through the rooftop is that the loan is spread across the tenure of your original home loan which is generally the case as a top-up loan runs parallel to the original loan’s tenure. However, currently there are no prepayment charges on MCLR-linked home loans and hence you can prepay your top-up loan within 5 years just like you would have paid the personal loan. On a case by case basis, your housing lender may also consider keeping your top-up home loan’s tenure as per your choice rather than stretching it for the entire balance repayment tenure.
 

Based on this, let’s compare the second option where Amit avails a loan of Rs. 5.93 lakhs:

 

Basis Top-Up Home Loan Personal Loan
Interest Rate 9.25% 11.25%
Tenure 5 years 5 years
EMI Rs. 12,382 Rs. 12,968
Total Interest Paid Rs. 1,49,907 Rs. 1,85,039

 

As you can see that if the top-up home loan is paid within the time range of a personal loan then the top-up home loan proves to be a way better option than a personal loan. The top-up’s EMIs and interest pay-out both remain downward of that of the personal loan.
 

Now, along with the top-up home loan we should also talk about top-up personal loan.
 

A top-up personal loan is a loan which is availed over and above the personal loan you took from your lender. This is generally considered not to be an ideal borrowing option since a personal loan is already an unsecured loan. If you will go to your lender and ask for a top-up loan on your personal loan, the lender who is already charging you upwards of 11.25% interest rate will add a 1% – 5% on your existing interest rate which will obviously be extremely costly for you. So if you want a personal loan then it is suggested that you apply for a fresh personal loan rather than opting for a top-up.
 

I hope the circumstances when you should opt for a top-up and when you should go for a new loan are clearer to you and you will be able to judiciously decide which one to opt and when. 

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4 Different Ways of Repaying Your Gold Loan https://www.paisabazaar.com/gold-loan/articles/22904-4-different-ways-of-repaying-your-gold-loan/ https://www.paisabazaar.com/gold-loan/articles/22904-4-different-ways-of-repaying-your-gold-loan/#respond Tue, 06 Mar 2018 12:59:45 +0000 https://www.paisabazaar.com///22904-/ Gold ornaments are not only a piece of jewellery. They are a form of backup which have the power to rescue you from financially tough times. One of the quickest and easiest ways through which your gold ornaments can help you is if you avail a loan against them. Loans availed by pledging your gold […]

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Gold ornaments are not only a piece of jewellery. They are a form of backup which have the power to rescue you from financially tough times. One of the quickest and easiest ways through which your gold ornaments can help you is if you avail a loan against them. Loans availed by pledging your gold ornaments with a lender are called Gold Loans.
 

You would have read about or seen a representation of such gold loans in books and films where gold ornaments were handed over as collateral to a moneylender and then he/she gave the borrower the much-needed cash. This traditional way of lending-borrowing gold ornaments have transcended into the modern financial ecology and now gold loans are being provided by all major public and private sector banks and non-banking financial institutions too.
 

There are other loans, similar to gold loans in the market. These loans fulfil a similar purpose of providing the borrower desired cash without much hassle. They are personal loans and credit card loans. All of, gold, personal and credit card loans have various advantages and disadvantages. However an area where gold loan scores above them is that it is always a secured loan i.e. availed against collateral, in this case, gold ornaments.
 

Precisely due to this reason it is easy to pay off gold loans since the collateral enables the lenders to grant you the loan at lower interest rates in comparison to the interest rates of personal loans and credit card loans. Gold loan applications are also comparably quickly processed and require minimal documentation. Since gold loans are easier to process and grant, lenders including banks and non-banking financial companies have come up with 4 types of gold loans by altering the way they are repaid. Let’s find out more about them below:-
 

  1. Pay Interest as EMI & Principal later: Through this option, you can repay the interest amount as per the EMI schedule of the gold loan however the principal amount borrowed is to be paid, in full, at the time of maturity. Such an arrangement works wonders for most borrowers as throughout the loan tenure one is liable only to pay the interest and not worry about principal repayment.  
     
  2. Make Partial Payments: Make partial payments of both interest and principal amounts as and when you desire. Conforming to the EMI schedule is not important in this kind of gold loan repayment schedule. Now this is a customer-centric approach for gold loan customers! Partial or even complete payment of both the interest and principal components is allowed irrespective of the pre-set EMI schedule. If you repay your principal initially, then your total interest pay-out, which is usually calculated daily on amount of loan outstanding, is bound to reduce. This way you can save on a lot of serviceable interest.
     
  3. Bullet Repayment: In the Bullet Repayment method, you have to repay the entire amount of both the principal and interest amount at the end of the loan’s term. Yes, you heard it right! No need to pay principal and interest during the loan tenure! Just pay the entire amount after your loan is finished. You need not service EMIs in this type of gold loan; just pay the entire due amount at the end of the term in a single shot, hence the term bullet repayment. Moreover, in this repayment mechanism, interest is calculated each month however its payment (along with principal repayment) becomes due only at the end of the term.
     
  4. Regular EMI option: Catered towards the salaried class, the regular EMI Gold loan is developed for those who have cash inflows to their bank accounts monthly. Here the EMI amount includes both interest and principal amount pay-outs. Granting this loan is also a quick process since it is going out to salaried applicants.    
You can pre-pay most gold loans as and when desired as most of them do not have prepayment penalty or a minimum lock-in period. Gold loans have short repayment tenures, most with tenure of a maximum of 5 years and with an average tenure of 1 year or less.   

 

 

When you visit the lender to close your gold loan account, you will have to deposit the outstanding loan principal amount with updated interest amount and then the loan account will stand closed. Once the closure of loan account is confirmed, the concerned authority (mostly bank branch manager) will hand back the collateral gold to you and obtain your acknowledgement. And so it will be an end of it, the gold jewellery which not only provided you with much-needed cash at a time of financial urgency will again be at your service, shining with eternal glow and mesmerizing beauty to embrace your ownership

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Minimum Balance: What amount you need to keep in your savings account? https://www.paisabazaar.com/savings-account/articles/22870-minimum-balance-what-amount-you-need-to-keep-in-your-savings-account/ https://www.paisabazaar.com/savings-account/articles/22870-minimum-balance-what-amount-you-need-to-keep-in-your-savings-account/#respond Tue, 06 Mar 2018 05:31:40 +0000 https://www.paisabazaar.com///22870-/ People having their savings accounts in various banks have to maintain a certain sum of money in their bank accounts. When this account balance falls below the required threshold amount, the bank levies a penalty on the account holder for failing to meet the requirements. If you also find it difficult to maintain the required […]

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People having their savings accounts in various banks have to maintain a certain sum of money in their bank accounts. When this account balance falls below the required threshold amount, the bank levies a penalty on the account holder for failing to meet the requirements. If you also find it difficult to maintain the required minimum balance in your savings account then what you are going to read further is of utmost importance to you.
 

While maintaining minimum balance in your savings account is one thing, protecting yourself from paying penalty on non-maintenance of your account’s minimum balance limitations is another important aspect that you must look into. First of all you need to understand that, banks charge you penalty on non-maintenance of monthly average balance and not on minimum balance. Thus, if you maintain the required MAB in your account, you won’t be charged by the bank. Let us discuss about monthly average balance in detail.
 

Monthly Average Balance (MAB)
 

Monthly Average Balance is the sum total of all end of the day closing balances in your account divided by the number of days in that month.
 

formula
 

  • In the calculation of monthly average balance, banks consider all holidays as well.
  • The account balance considered in calculation of MAB is the amount in the account at the end of the day.
  • Average daily balance of the day has nothing to do with the MAB unless specified by the bank
  • If you don’t maintain the minimum balance but maintain the MAB, you won’t be penalised.

Let us assume that an account holder needs to keep Rs 3000 MAB in his account.


For the month of November,


His Sum of closing balance at the EOD= Rs 3000 x 30 (days) = Rs 90,000

 
mab calculation
 

Thus, as per calculations, for a 30-day month, he needs to maintain a total of Rs 90,000 in his account at the EOD. In case he fails to maintain the amount in his account, he will be penalised. If he somehow manages to maintain this amount in his account, he won’t be charged for non-maintenance of MAB.
 

Tips to Manage Your Minimum Average Balance (MAB)
 

Here are situations in which he can save himself from paying any penalty:
 

  • He maintains a balance above Rs 3000 every day. Thus, he will have a minimum of Rs 90,000 as MAB for the month.
  • He maintains a balance of Rs 3000 every day except for a couple of days when his balance fell to Rs 1000.
     

     

    • Here, his total EOD closing balance for the month would be Rs 86,000
    • He is thus short of Rs 4000 from maintaining the MAB
    • He can be penalised for non-maintenance of the required amount in the account
    • He can deposit the required Rs 4000 on the last day of the month to complete his total MAB of Rs 90,000 and save himself from paying the fine.
  • He does not maintain any balance in the account for the complete month and is on the verge of getting penalised.

     

    • Even if he has not maintained the MAB requirement, he can prevent from being fined.
    • He can deposit Rs 90,000 in his bank account on the last day of the month and complete his MAB prerequisite during the month to Rs 90,000
    • Since his total EOD balance for the month is Rs 90,000 now, he won’t be fined by the bank.

Penalty on Non-maintenance of Minimum Balance
 

Not every bank charges the same penalty for non-maintenance of MAB. Here is a list of some popular banks and the penalty charged by them:
 

Bank MAB (Rs) Penalty for Non-maintenance of MAB (Rs)*
SBI
Metro & Urban 3000 40 – 100
Semi-urban 2000 25 – 75
Rural 1000 20 – 50
ICICI Bank
Metro & Urban 10,000 100 + 5% of the shortfall in required MAB
Semi-urban 5000 100 + 5% of the shortfall in required MAB
Rural 2000 100 + 5% of the shortfall in required MAB
Gramin 1000 5% of the shortfall in required MAB
PNB
Rural 1000 From 25 to 250 as per location, category and deficit in QAB as per brackets in 100
Metropolitan, Semi-urban and urban 2000
Bank of Baroda
Rural / Semi-Urban 2000 350/- per quarter
Urban / Metro 10,000 625/- per quarter
Axis Bank
Metro/Urban 10000 100-500
Semi-urban 5000 100 – 250
Rural 2500 100 – 250
HDFC Bank
Metro/Urban 10000 150 – 600
Semi-urban 5000 150 – 300
Rural 2500 270 – 450

*Excluding GST
 

Also Read: 6 Savings Account Charges you must know about


Bank Accounts free from Minimum Balance
 

There are a number of bank accounts where MAB or minimum balance is not applicable. Though they may have different names for different banks, some of the most common bank accounts that do not have minimum balance requirements are:
 

  • Pradhan Mantri Jan Dhan Yojana Accounts
  • Salary Package Accounts
  • Basic Savings Bank Deposit Accounts
  • Kids/Minor Savings Account
  • Pensioners Savings Bank Accounts
  • Small Accounts
  • No Frills Accounts

List of Bank Accounts Having No Minimum Balance Requirements
 

There are some other bank accounts as well for which you need not maintain any minimum balance in your account. Some of these accounts are:
 

  • digiSavings Account by DBS
  • Kotak 811 by Kotak Mahindra Bank
  • IDFC Bank Zero Balance Account
  • ICICI Bank Edge Savings Account
  • FedBook Selfie Account by Federal Bank
  • Aasaan Account by Standard Chartered Bank

Now that you know all about what amount you need to maintain in your savings account and how to manage in case you do not want to pay fee on non-maintenance of the minimum balance requirement, you can plan your finances and utilise your money to earn more and save yourself from paying any penalty.

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