Financial concerns to be aware of when traveling abroad!

Traveling to a different country raises financial concerns that don’t apply when traveling domestically. Here are some things to keep in mind if you’re planning a trip abroad:

Tracking exchange rates is easy. Thanks to the internet, it’s easier than ever to figure out the exchange rate for foreign currencies. Google has a simple converter that’s easy to use.

Get some foreign currency before you go. When you arrive in a foreign country, it’s a good idea to already have some local currency on hand to pay for expenses like transportation and meals. You can order foreign currency online through some banks and services, and most large chain branches can get you foreign currency if you give them advance notice. The rate they exchange your money for will be lower than what you see online, so you may want to shop around for the best rate.

Know how you’ll get additional cash while abroad. Check with your bank to see if your ATM card can be used at your destination to obtain additional cash, and ascertain what types of fees you’ll be responsible for. If the fees will be high, you may want to take as much cash with you as possible, but if fees are reasonable, you might want to wait to see if you actually need additional cash while you’re there.

Be aware of credit card conversion fees. You can likely use your credit card while abroad, but before you go on your trip, find out if you will have to pay any foreign currency conversion fees, or a fee for letting you make charges in a foreign currency. There are cards that don’t charge any conversion fees, so if your card issuer does impose a fee, you might want to get a new credit card before your trip. Alternatively, you can try to limit your card use while you’re abroad to locations that will charge you in dollars, rather than the local currency.

Carry a chip and PIN credit card. In other countries, merchants may only accept credit cards with chip and PIN technology because such cards are generally considered to be more secure (the card’s information is stored on the chip, rather than in a magnetic strip). If you intend to use a credit card while abroad, be sure to check which type of card is more common at your destination.

Consider the safety of your destination before departing. Some destinations, like Japan, are generally very safe for tourists, and many of the locals carry large amounts of cash without hesitation. In other countries, however, pickpockets are common, and tourists are a popular target of crime. Before you depart, check to see what kind of precautions are recommended for your destination. You may want to purchase certain types of gear, such as a money belt, to protect your valuables.

Travel with adequate insurance. Before you go abroad, check with your insurance providers – including your health insurance and driving insurance providers if you plan to drive – to make sure you’ll be covered. If your coverage is insufficient, purchase travel insurance for your trip. You hopefully won’t need it, but you’ll be happy you have it if you do.

Research the customs of your destination. Customs vary dramatically by country, so be sure to do your research before you leave home. Find out if tipping is common at your destination, and if so, is it normally added to your bill or are you supposed to calculate it yourself? How much is customary? Do merchants at your destination haggle, and if so, what’s the best practice for foreigners? If you know these types of issues before you arrive, you can avoid unpleasant surprises!

Declare your acquisitions when you return. When you return to the your country, you’ll have to fill out a customs declaration form and list what you acquired while abroad. Therefore, it can be extremely helpful to keep a list of your acquisitions as you make them, and to keep receipts for your purchases.

Visit: http://www.cibilconsultants.com/
Source- Secondary

Cash advances affect your credit score! Learn how?

Many credit card issuers provides a service to cardholders while allowing them to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate – even higher than credit card itself – and the interest begins to accrue immediately. On the plus side, cash advances are quick and easy to obtain in a pinch. Sometimes businesses with less-than-perfect credit use cash advances to finance their activities. In some instances these advances are even paid for with future credit card receipts. The amount of the cash advance depends on the credit score of a business and its credit card sales. In almost all cases, cash advances should be viewed as a method of last resort. Taking out a cash advance has no direct impact on your credit score, but it can have an indirect impact in various ways:
                                

• The interest on cash advances is significantly higher than the interest on regular purchases, and that interest will get paid off last, meaning it will collect high interest for a long time. This is true even if you are offered a no- or low-interest promotion, as it likely will not apply to the cash advance amount. If this affects your ability to pay the payment on the card, that could affect your credit score.
• It will raise your balance, which will raise your credit utilization, a measure that credit scoring models use when generating a credit score.
• A balance transfer or any of the resulting interest that puts you over the credit limit can lower your credit score. Even after the card is paid down, your credit report will show the highest balance reported, and other potential lenders will see that you were over the limit at one point, which could hurt your ability to get new credit.

All the above circumstances can lead in a cash advance negatively hurting your credit score.

Source: Secondary

Go debt free!

If you get tangled in a debt trap, what should you do? The most obvious advice you will receive is to cut down on your expenses and save up to pay off your debt. You need some quick steps in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.
                           

Forecast debt plan

The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first.

Low interest rate

One can low the credit card interest rates by doing a balance transfer. This refers to move your credit card to another bank that might lower the interest rate to get your business. Shop around and try to get the lowest interest rate for the longest duration.

First repay your expensive debt

You should look over the interest rates of every credit card you use to make purchases and sort them from highest to lowest. By paying off the balance with the highest interest first, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards.

Allocate your investments

You may need to do a little reshuffling. Ideally, begin by liquidating any investments, other than insurance products, that are paying you a low tax adjusted rate of return. Then pay off your higher cost debt before lower cost ones. To put it simply, the credit card bills and personal loans must be the first to go. At the same time, you would need to insure that you continue making payments of EMIs on asset loans, used to purchase a home or an automobile, etc.

Negotiate with creditors

Try to explain creditors that you got trapped in bad financial duress and about the hardship the business is going through. Then, ask if they have a plan that may provide better payment terms. If the creditor doesn’t offer one, request a payment plan or a reduced settlement amount.

Visit: www.cibilconsultants.com
Source: Secondary

Credit card hacks!

Why do cyber thieves take the time to wreak havoc? Since hackers are going after the companies that hold your information, it’s hard to stop them from getting your information. All the same, you can take steps to minimize the damage. Here’s our guideline to deal with the uncertainty.

Ask for the new card

Call your bank and demand a new card. It’s not likely to put up a fight as the bank is responsible for paying false charges. In the event that the bank does, don’t back down on your demand.

Renew your password

If you have done any online business with the affected company – or you have an account with it – change your password right away. Make it more than 8 characters and difficult to figure out. If it’s easy for you to remember, it’s easy for a hacker to crack. While you’re at it, change and strengthen all of your passwords.

                    

Filing a complaint

Call the non-emergency number of your local police department. Say that you were a victim of identity theft and wish to file a report. This makes your status as a victim official.

Block your credit

You don’t want anybody opening up new lines of credit in your name. Blocking doesn’t allow anybody to access your credit report without your approval. Creditors probably won’t approve an application without having access to the person’s credit report.

Monitoring your account online

Don’t wait to check it when the statement arrives; check today. Keep monitoring daily for at least 30 days after your new card arrives. If you see fraudulent activity, call the bank and report it immediately. Often you can dispute charges online, but calling and talking to somebody assures that the issuer has record of your dispute.
Visit- www.cibilconsultants.com
Source: Secondary

Home Loan Closure Adversely Impact CIBIL Score! Why?

Home Loan is a secured loan and it impacts your CIBIL Score positively i.e. after availaing Home Loan, your CIBIL Score will increase because of its secured nature. Contrary to popular belief, closure of Home Loan negatively impact CIBIL Score. Let’s understand why

Recently Ramesh cleared my Home Loan and he was very happy about this fact but this happiness was short lived. It is very important to check that your Home Loan account is closed by lender in CIBIL Score database after Home Loan is closed. When he checked my CIBIL score, it was a shocker because his CIBIL score reduced by 12 points after Home Loan Closure. He was expecting improvement in my CIBIL Score as he cleared huge debt of Home Loan.

When he studied in detail, he observed following reasons for drop in CIBIL Score post Home Loan Closure: 

1.  Question mark on Future Re-Payment Capability:

During Home Loan tenure, we pay regular EMI and it reiterate our re-payment capability every month but after Home Loan Closure CIBIL does not have any secured parameter to check re-payment capability. You must be wondering what about credit card payment. Credit card is un-secured loan/credit and has limited positive impact on CIBIL Score even in case of timely payments but has huge negative impact on CIBIL Score in case of even single default of small amount.

2. Reduced Credit Worthiness:

In laymen term credit worthiness of individual is magnitude of risk which a lender is ready to take on individual i.e. max credit he is willing to offer. Home loan increase credit worthiness many fold but after Home Loan Closure Credit Worthiness is back to square one thus lower the CIBIL Score.

3. Secured Loan in Credit Portfolio:

Any secured loan like Home Loan in credit portfolio improve CIBIL Score thus Home Loan Closure takes away crucial points from CIBIL Score. Personal Loan and Car Loan are unsecured loans and negatively impact CIBIL Score.

4. Lender’s Negative Outlook:

Though last point has nothing to do with CIBIL Score directly but as the Average duration of any Home Loan in India is 7-8 Years and if you are closing your Home Loan much before 8 years then there is a probability that you might face difficulty in availing 2nd Home Loan in future. Reason bank borrow money at a cost and any pre-closure/pre-payment is liability for bank. If money remain idle due to low credit take off then its a loss for bank. Therefore besides CIBIL Score, pre closure of Home Loan too early can impact future credit worthiness despite good CIBIL Score.

It's better to be debt free as early as possible because of uncertain economic conditions, unstable job market and forced early retirement even if there is slight negative impact on CIBIL Score it’s fine.
Visit- www.cibilconsultants.com
Source: Secondary

Improve your credit score with the help of credit card limit!

CIBIL Score is becoming increasingly important to avail any kind of debt. CIBIL Score less then 750 is fatal. 

If you are carrying a Credit Card, First and foremost discipline is to pay credit card dues on time. Many times credit card provider offer to increase Credit Limit on Credit Card and we refuse. Reason, we think that current limit is sufficient for current needs. This is disastrous for CIBIL Score.

Normally credit card provider offer to increase credit limit when you start exhausting 40%-50% of credit limit on monthly basis. They have selfish motive to increase your spending on credit card by increasing credit limit but indirectly they are helping you to improve your credit score. You must be thinking HOW? Let’s understand

If credit card provider is increasing credit limit on your credit card then they are showing more confidence in your repayment capability and indirectly certify that probability of default is minimum in your case to the extent of credit limit. Secondly if you are exhausting 40% of credit limit on monthly basis then by increasing credit limit you can bring down this % to 20%-25%. These 2 factors are taken positively by CIBIL while calculating your CIBIL Score i.e. Approved Credit Limit and % Spend of Total Credit Limit on Credit Card.

If you maintain healthy mix of Credit Limit and % spend of Credit limit then it will help to improve CIBIL Score fast. At the same time do remember that you should not hold more 2-3 credit cards. It shows hawkish behavior towards credit.

So next time when you receive call from your Credit Card provider to increase your credit limit or Card upgrade offer with enhanced credit limit. Happily accept the same. It will help you to improve your CIBIL Score.
Visit- www.cibilconsultants.com

Use Credit Cards Smartly!

A judicious credit card spending help in substantial saving over a period of time. In this post we will discuss, how we can increase our savings by juggling between 2 credit cards.

Please note that if you have more than 2-3 credit cards then it shows credit Hungary Behavior which can impact your CIBIL credit score adversely so it is advisable to carry only 2 or max 3 credit cards.

Billing date of a person's 1st Credit Card is 15th of Month (Payment date is 5th of next month) and billing date of 2nd Card  was 25th (Payment date was 15th of next month). After few billing cycles he requested second bank to change my billing date to 30th (Payment date changed to 20th of next month) and they obliged happily.  In past, he requested 1st bank to change his billing date multiple times but despite being super premium customer they refused. They told him that billing date once fixed cannot be changed. Small players are very flexible in their approach, which he realized late.

For his own benefit, he decided to divided my business between 2 credit cards to get maximum benefit & to save maximum during recession. All his purchases between 16th and 30th of the month are through 1st bank i.e. he use 1st credit card for 15 days from the billing date of 1st bank (15th of Month) & all the purchases from 1st of month to 15th of month are through 2nd credit card i.e. 15 days from the billing date of 2nd Credit Card (30th of Previous Month). In short, use the credit card only for 1st 15 days from the billing date and ensure that billing date of 2 credit cards are approx 15 days apart. 

Now you must be wondering, how he is going to gain out of it and answer is very simple that by doing this he is getting an extra 15 days credit for all my purchases every month. In these tough times of recession and high interest rate 15 days extra credit means lot of savings.

Lets take 2 examples to understand better

Example 1:

Scenario A:  Assume he made a purchase on 5th of the month and he have only 1st credit card. For this purchase his billing date is 15th of same month and he need to pay for this transaction by 5th of next month. In short he will get credit for 30 days on this transaction.

Scenario B: Now if pay for this transaction by 2nd credit card then his Billing date is 30th of same month and he need to pay for this transaction by 20th of next month. In this scenario he will get credit for 45 days.

Therefore, in Scenario A credit period is 30 days and in Scenario B credit period is 45 days i.e. extra credit period of 15 days, simply by juggling between 2 cards

Example 2:

Scenario A:  Assume he made a purchase on 25th of month and he have only 2nd credit card. For this purchase his billing date is 30th of same month and he need to pay for this transaction by 20th of next month. In short, he got credit for 25 days on this transaction.

Scenario B: Now if pay for this transaction by 1st credit card then his Billing date is 15th of next month and he need to pay for this transaction by 5th of next to next month. In this scenario he got credit for 40 days.

Therefore in Scenario A credit period is 25 days and in Scenario B credit period is 40 days i.e. extra credit period of 15 days, again simply by juggling between 2 cards.

From Example 1 and Example 2, it is clear that if we have 2 credit cards with billing dates 15 days apart then we can simply time the swiping of each credit card to get maximum credit period for each transaction. If we assume revolving credit of 50k every month for 15 days & extra credit of 15 days on this amount then annually you can save Rs 2250 assuming 9% interest on bank FD.

Credit cards, if used judiciously can help to save a lot but only word of caution is that credit card should be used only for necessary purchases not for impulse buying else it can land us in deep mess of debts.

Disclaimer: All the examples used in above post are for illustration purpose and to simplify the subject.
Visit- www.cibilconsultants.com
Source: Secondary

Low Spread Of Credit Cards leads to increasing Loans In Kerala

The credit demand in the country is on the rise as the number of applicants for new loans has increased by 150 per cent in the last three years. Out of the total loans disbursed in Kerala, 82 per cent is used to purchase two wheelers, reveals the latest data trends report of Credit Information Bureau (India) Limited (CIBIL) released here on Wednesday.

As compared to other states, Kerala has the highest number of credit applicants who are above 45 years and 21 per cent borrowers in Kerala had a credit score of 800 and above and 40 per cent has a credit score of 750 above, the data stated.

CIBIL score assigned to a borrower ranges from 300 to 900. The higher an applicant’s credit score the more the likelihood of the loan application getting approved.
                 

Releasing the data, CIBIL Managing Director Arun Thukral said that Kerala has 46 per cent credit seekers who are less than 35 years.

“The state has very low penetration of credit cards and personal loans. Banks and financial institutions today consider the CIBIL score as a crucial parameter before sanctioning any new loan. Now telecom, insurance and stock broking companies have started accessing the score,” he said.

He hinted that in the future the details of utility bill payments will be linked with the credit score of an individual.

Speaking on the occasion, Harshala Chandorkar, Senior Vice President-Consumer Relations, CIBIL said that there has been a 200% growth in consumers reaching out to us for their CIBIL report across metros as well as Tier II and Tier III cities since 2009 indicating the rising financial awareness in the country.

CIBIL is India’s largest credit information company that maintains information on over 317 million consumer trades and 15 million commercial trades.
Source: Secondary

Credit Health: Plastic money can also affect

There is little doubt that credit cards are a more convenient way to carry money compared to hard cash. From daily expenses to buying luxury goods, credit cards are extensively used even in India.

And it’s almost a norm to keep more than one credit card. Nothing wrong with that, as long as you can manage them with expertise. How to use the credit card is more important that the credit limit of the cards or how many you possess.

What will happen if your credit card is lost in the market while you are shopping? What if you use your credit card more than the prescribed limit?

Such things can cause a serious damage to you and your financial health.

Pooja and Ravi were living happily in Mumbai till the banks refused to grant him an auto loan. Ravi was a manager in a multi-national company, and drew a handsome salary. Puja, being a housewife, bought all essential household goods including fancy stuff to decorate her house.
              

She preferred to make the payments through credit cards instead of using cash. Ravi had two cards, one he had given to Puja and the other he kept to himself. Like any young couple they often went out for dinner and movies.

Then one day they decided to buy a car and applied for a loan.

 To their utter dismay, the loan application was rejected. In spite of Ravi earning good money, they failed to get a loan because of bad credit history.

Credit score

Credit score is a three digit numerical number which ranges from 300 to 900. Credit score is a snapshot of the credit history of an individual. It is calculated by the credit bureaux. The banks and financial institutions provide all the details of the individuals to the credit bureaux to check the creditworthiness of the individuals.

Credit history is the result of all past payments of an individual. It is an analysis of the payment history of an individual. Since the credit history of Ravi was poor, the bank was not confident to lend him money for purchasing a car as he had been not been regular while repaying his dues.

Also the card that Pooja used for shopping had crossed the maximum limit.

The use of credit card should be done efficiently. Mistake made while using credit cards can snowball into a major crisis.

On the other hand if used efficiently, credit cards can help you in increasing your credit score. But if used without care they can harm your financial health.

Source: Secondary

Debit Card OR Credit Card?

If you’re looking for the convenience of a credit card but don’t have the credit to qualify for one, or want to avoid incurring any debt, a prepaid debit card might be the best alternative.

Prepaid Debit Card vs. A Credit Card
A prepaid debit card is a smart way to budget money since you’re required to pre-load funds onto the card before using it. Once the money’s gone, you either have to stop spending or reload the card’s balance.
However, with a credit card, anything you charge to the account will have to be paid off, making it a lot easier to get into debt. Research has shown that it’s a lot easier to overspend using a credit card, while a prepaid debit card is like spending your own cash.
Here are three reasons to consider using a prepaid debit card instead of a credit card.
                                       
                                                   

1. Allows you to earn cashback. 

One of the biggest reasons that many people prefer to use credit cards over prepaid debit cards is because they can earn cashback or rewards on all their purchases. However, many prepaid debit cards allow you to earn the same perks without having to charge up debt on a credit card.

Credit Card Information

Use your prepaid debit card for all your daily purchases and keep track of the rewards you’ve earned. Nearly all prepaid cards are accepted everywhere that regular credit cards are, so there’s no limit on where you can use them.

2. Has much lower fees.

Credit cards come with a wide variety of fees, including late charges, high interest rates, and over-the-limit fees. Some even come with an annual fee you have to pay in order to simply use the card.
Prepaid cards do not come with any of these fees, and may only have small monthly fees or ATM charges when withdrawing cash. You’ll never pay an interest charge, or late fee (because there are never any payments due). 

3. Make safe and secure purchases online.

Whether you’re doing some online shopping, or need to pay bills online, a prepaid debit card makes it easy, safe, and secure.
In some cases a prepaid debit card can be considered more secure for online transactions than a regular debit card. It’s not connected to your bank account, so you don’t have to worry about your account number being compromised, or having your identity stolen.
While credit cards do have their perks, like allowing you to build credit, there are many other disadvantages to them. If you have some credit card debt, or have trouble overspending, a prepaid debit card is smart way to help keep your finances on the right track, while avoiding high interest rates and fees.
You can keep more of your money, not overspend, and even earn cashback on everyday purchases. For these reasons, using a prepaid debit card is a win-win.
Looking for the credit card that’s best fit for you? Find one that matches your needs and credit history.

Visit- www.cibilconsultants.com
Source: Secondary

Cyber Crime Cell Deactivates nearly 100 Social Media Accounts

Nearly 99 complaints of misusing a social networking website, Facebook (FB), were received by the state cyber crime cell in the past one year, of which 84 accounts were deactivated by the cell.

It was stated by the crime investigation department (CID) inspector general Satwant Atwal Trivedi in a statement issued here on Tuesday.

In a survey conducted by the state CID wing, it was revealed that cyber crime cell, which was set up to provide technical assistance to all police stations, received 99 complaints regarding fake and hacked Facebook profiles.

From March 2013 to March 2014, the cell received 280 complaints relating to various types of cyber-crimes such as debit or credit cards frauds, online lottery scams and abuse by social media.

Trivedi said there were some cases where fraudsters used to pose themselves as debit or credit card company representatives and called people asking the details of cards. Most of the time, in such cases cards were used in online shopping, mobile recharge and online bill payments. 

She added, “There were cases of hacking and fake accounts on social networking site. In such cases precaution should be taken on part of the account users and if something doubtful is found they should inform the cyber crime cell.”

To learn about identity theft, visit www.cibilconsultants.com
Source: Secondary

Fraudsters evolve new methods says, Cyber Crime reports

MUMBAI: Cyber crimes on debit or credit card usage have more than doubled as fraudsters evolve new cloning methods to stay ahead of banks which are improving security features with chip and pin cards, according to preliminary industry data. 

The number of such crimes has increased by about 125% since a year ago, a senior official from the National Payments Corporation or NPCI, a settlement platform for e-payments, told ET on condition of anonymity. 

Every month there are up to 50 cases of travelers who have used their cards in smaller towns and when they leave it gets swiped again even though they are carrying their original card, according to data provided by cyber crime experts. 

"The rate of cyber crime on debit/credit card usage is tremendously rising at the national level," said Rakshit Tandon, Director - A&R Info Security Solutions & Advisor- Cyber Crime Unit, Uttar Pradesh Police, Agra. "Awareness about security measures is abysmally low from both customers and banks. People are falling victim either of cloning or identify theft." 

On an average there are about between 40 and 50 cases compared with between 10 and 12 cases Tandon had to deal with every month two years ago. 

It was not a joke played out on April 1, when Delhi's Santosh Pandey had read six cash withdrawal texts on his mobile phone in the morning wiping out Rs 80,000 in just five-ten minutes during midnight from Navi Mumbai ATMs, the place he has not visited even once in life. 

The country's largest lender, the State Bank of India BSE -0.73 %, will shortly make two security mechanisms fully operational: a one-time password or OTP and SMS card block facility with a brief narration. Besides, SBIBSE -0.73 % is set to run a media campaign on do's and don'ts for a customer to protect the person from any cyber attacks. 

"We have been running extensive campaigns to create awareness among customers and will pace it up. We are compliant to all RBI guidelines in this regard," said SBI's Pulak Sinha, general manager (payment solutions). The bank keeps on receiving complaints of debit card cloning, he said. 

NPCI runs a system called Fraud Monitoring Solutions where 45 scenarios have been fed to detect any possible manipulation. "It will decline transactions in such scenarios. Cloning related frauds are on the rise," said the NPCI official on condition of anonymity. But this will not trace transactions where debit cards are used within the parent bank's ATM network. 

Most of us are using debit cards encrypted with black magnetic strip on the flip side, which can easily be cloned unlike a chip-enabled card. "The entire industry hardly has one or two percent cards with chip and pin. This will not expand unless it is mandated by the regulator," said a head of a public sector bank. 

Here's how some ploys work: 

A cyber swindler typically uses skimmers, a device to take image of your cards. There are several innovative ways to use such tool. This mostly happens with travelers. 

For example, a customer uses card to pay her bills at restaurants, bars, hotels and malls. Now, a person with malicious intentions, will drop her card deliberately and bent to pick it up when the skimmer planted on his shirt pocket will take images within fraction of seconds. The same image is transferred to personal computer and then, given to manufacturers to get a duplicate card. 

For password, fraudsters take the help of "shoulder surfing", where one can trace password closely observing finger movements standing just behind user's shoulder. 

Similarly, a customer leaves potential space for skimmers when he gives his card to a third party at a petrol pump to pay bills. 

The most latest con game is that some glue is put below the key pad at ATMs so that the circuit does not function properly even if you press button but the ATM can read your card data once it gets swiped in the machine. Later, when you exit from ATM terminal, the prowler will immediately enter the same and remove the glue and will receive the desire access but for only one time. 

Con men can also get your card data cloned from the ATM slips, which almost every user drops at dustbin without destroying it completely.

To learn about Identity Theft visit www.cibilconsultants.com
Source: Secondary

Reasons behind your credit card refusal.

BANGALORE: Sir/Madam your card got declined after swiping! Have you ever faced such situation in your life? It’s actually embarrassing even when you think about such situations. Reaching or exceeding your limit is one of the most common explanations as to why your credit card would be declined but it’s by no means the only reason. Listed below are some other, lesser-known reasons why your credit card could be declined.

 

1. Exceeding your card limit: One reason that your card got declined is you have exceeded your credit card limit. In simple words if you continue to make charges once you have hit the maximum amount your credit card company will allow you to borrow. To avoid such situations the best way is, when you reach the limit, pay down your balance or request you issuer an increase to your credit limit. There are few credit cards those have per-day spending limits. Thus before making any purchases always check how close you are to your limit by checking your account online or calling the number on the back of your card.

 

2. If you have suspicious charges: If the credit card company suspects any fraud then they can quickly freeze your credit card. This move from a credit card company will actually work in your favor if you are a victim of identity theft. But it can also happen if your own credit activity has created a security risk for instance shopping in an unusual place, doing too much of transactions in one day, making a very large purchase or trying to withdraw a lot of money from an ATM. To avoid all the confusion the best way is to call your card company and find out why there is a security problem. By doing this if there is fraud then you can stop it quickly or if you have made the charges, you might be able to resolve the issue by simply answering a few questions from the card company.

 

3. Holds on your account: There are chances that before you return a rented car or check out of a hotel room the traveling, hotels and rental car companies might place a temporary hold on your account. The hold can be for a costlier amount than your eventual charge, possibly eating up your available credit if your card is highly utilized. In simple words the hold ensures that the company gets the amount of money it needs from your use of its services and prevents you from spending beyond your credit limit. Thus while making reservations in such huge hotels do a thorough check with your credit card issuers.

 

4. Your card got expired: If you are not regularly using your credit card or not purchasing much online where you need to put your card’s expiry date then it is difficult for you to realize its expiry date. Often the credit card companies send their customers with new credit card when the old one expires. Thus it is better to check out all the mails even if it looks like junk. If your card is outdated then the merchants in both the store and online will not accept your card. Not being able to buy something is a pain, but simply placing a call to your credit card company could bring you a new one in about a week’s time.

 

5. Your personal information is outdated: Most of the merchants may require you to enter your zip code while using your credit card. By entering the wrong information can cause a rejection when you attempt to pay. To prevent such rejections, login to your account and make any necessary changes. Then proceed to swipe with confidence, knowing all your details are up-to-date. By putting in the wrong information your card will be declined. Always make sure that the card company has your current billing address and telephone number. If you move to a new place, then try to update your new address and contact number on the bank's website as soon as possible.

Know from experts, about Credit History and Credit score, visit www.cibilconsultants.com

Source: Secondary

Is someone ruining your Credit score?

Your credit history is a major part of your financial life. Even if you don’t think that you will borrow money anytime soon, the information in your credit report can influence your auto insurance rates, whether or not you can rent an apartment, and can even keep you from getting a job.

Keeping tabs on your credit history, and keeping up with the information in your credit report is an important part of protecting your finances. While it’s possible to monitor what goes on with your credit with the help of credit consultants like CIBIL CONSULTANTS  , the reality is that protecting your credit is your job.
It’s important that you protect your credit from others. Here are some of the ways that others can damage your credit — and how to stop them from ruining your financial reputation:

Loaning someone your card

“Sure they promised to pay, but if they don’t it’s on your credit report, not theirs,”.
When you hand over your card, you are offering the other person access to your available credit. They can use as much of it as they wish. If they run up more bills than you can afford to pay, you are still responsible for the balance, since you gave your permission for the use of your credit card.
Someone’s use of your credit card can impact your debt utilization, which in turn can bring down your credit score. And don’t forget about the costs that come if the person goes over your credit limit with your card.
“Don’t ever give someone your credit card, regardless of how desperate their plea may be,”. “You can offer to help them out of the jam, but not by handing over your credit card.”

Authorized user

Maybe you don’t hand over your credit card. Perhaps, instead, you decide to add someone (like your college-bound child) as an authorized user on the account. He or she gets a personal card. However, the reality is that it’s still your account. “The authorized user has charging privileges, but is not responsible for repayment,”. “Activity is reported in both names.”
This can be a way to help someone else, like a spouse or a child, build credit, but you are still responsible for repayment of the loan. “If they spend recklessly and you can’t repay the debt, it’s a real problem,”.
If you decide to add someone as an authorized user, recommends that you set clear boundaries, and carefully watch spending activity online. That way, it’s possible to head off any spending disasters before they get out of hand.

Cosigning a loan

It can be tempting to help someone out by cosigning their loan. After all, you aren’t actually borrowing the money, and the “real” borrower is responsible for repayment. It’s a bit different from adding an authorized user to your credit card, since the bill isn’t coming directly to you when you cosign. Unfortunately, there are major pitfalls associated with cosigning a loan.
“Some people think that you’re each responsible for half of the debt". “Actually, each cosigner is responsible for payment in full.”
All payment activity is reported to the credit bureau in each signer’s name, she continues, "so nonpayment by the borrower can wreck an otherwise good credit report and score for the cosigner.”
Even if the cosigner pays regularly and on time, the fact that there is debt on your credit report means that your ability to borrow could be hampered. If you plan to make a major purchase with debt (like a home or a car) in the near future, your ability to borrow or get the best possible interest rate could be significantly reduced.
If you decide to cosign, make sure that you set clear expectations for the borrower. Monitor payment, and insist that the borrower talk to you if he or she runs into trouble so that you can salvage your credit. “Only cosign on a loan if you’re willing to pay it all yourself,". That way, you are prepared for the worst-case scenario.

Identity theft

Of course, it’s not just people you know who can ruin your credit. You might be the victim of identity theft that can cause problems. “Identity theft and scams can damage your credit at least temporarily,”
Loans taken out in your name can reduce your ability to borrow. Additionally, if a fraudster takes out a loan in your name and doesn’t pay, it can be a fast way to tank your credit.
In order to catch identity theft early, it makes sense to monitor your situation.You can also get access to your free credit scores if something goes amiss with a credit application.
Keeping up with these actions can help you see red flags and remedy the situation as quickly as possible. You don’t want others to ruin your good financial name, so take steps to keep your credit in tip-top shape.

Source: Secondary

Punching card PIN at shops may prove to be risky

As per the guidelines of the Reserve Bank of India (RBI), effective from December 1. The debit card holders will have to punch in their personal identification number (PIN) every time at Point-of-Sales (PoS) at merchant outlets to minimize frauds.

But many bankers as well as merchants in the city pointed out that this is far from fool-proof and the system has an alleged drawback of lack of privacy.

First, the debit card holders will have to enter the PIN of their ATM cards in the swipe machine and then sign on the transaction slip, for any purchase at any shop.

This may prove to be risky, as thieves may misuse the system by keeping an eye during the swipe, memorize the PIN, clone the card to easily withdraw large sums of cash from any nearby ATM .

But it has been found that none of the merchant outlets in the city have made arrangement for privacy of the customers while punching the ATM PIN while purchasing goods.

Glenn Serrao, the son of a hotel owner in sector 17, Vashi, said, "Debit and credit cards are accepted only on the first floor of our restaurant premises. Around 80% of our regular customers do not mind revealing their PIN to the waiters, who in turn, swipe the cards to pay the bill and issue the payment slip for the customer's signature. If any customer demands privacy to punch their PIN, then we will surely provide that service."

Pradeep Kumar, the manager of IDBI bank, Vashi branch said, "Logically, due to lack of privacy at shops, there is a possibility of misuse of the system. Now, to resolve this alleged lacunae in the customer service, our bank will suggest to our product team that the shops need to provide a secluded place for the ATM card swipe machine which should offer adequate privacy for the customer while punching his/her PIN." The product team will then forward the suggestion to the RBI authorities for corrective measures in the guidelines.

"Anyone who thinks that this system can be misused by miscreants, should come forward with their suggestions on the RBI's website, as well," added Kumar.

Susaant Patnaaik (41), an LIC consultant said, "The need for privacy to use one's debit or even credit card is a must. The swipe machine should be kept separately near the establishment manager's counter and be hidden by a partition to prevent onlookers from reading the secret digits being punched by the customer. "

Patnaaik also said that the banks have warned their ATM debit card holders not to read out or enter their PIN when someone is standing behind them.

"One must never swipe in front of any onlookers to ensure the safety of their card," he added.

Learn more about identity theft at www.cibilconsultants.com

Source: Secondary

Guaranteeing a loan can affect your credit score and history

Nowadays, access to your house or car or that dream holiday has been made easier by lending companies offering credit and loans at increasingly competitive rates. However, one must note that taking a loan doesn’t solely depend on the borrower’s financial standing. If lenders feel that the financial health of the end borrower cannot be determined standalone, or in case the borrower has no source of income, another option to get a loan processed includes involving a guarantor. Apart from facilitating an individual to fund his education or business, such an arrangement propels financial inclusion, thereby enabling the economy to grow holistically. 

Naturally, for a financial institution, it is of paramount importance to make sure that the borrower has the capacity to repay the loan with due interest. In case the primary borrower defaults, a guarantor’s role is extremely crucial, as they become the fall-back option for the lender. Lenders insist on guarantors for loans in which there is no appropriate collateral, such as education and unsecured installment loans. For other loans too, lenders can insist on one, especially if the lender has a reservation on the repayment ability of the primary borrower. Data shows that loans backed by guarantors have lower default rates than the average of the portfolio in products like commercial vehicles. Hence, the creditworthiness of the guarantor is of substantial importance.

  

In India, several loan accounts, specifically education loans, are backed by guarantors. In the case of education loans, over 80 percent of the loans are booked with guarantors since the primary borrower would not be earning for the duration of his/her education. In most cases, a loan gets approved at the behest of a guarantor, who indirectly assumes the responsibility of furnishing the loan though he is not the end borrower. Guarantors are legally responsible to assume the liability if the primary borrower defaults. A guarantor’s role doesn’t end with the disbursal of the loan; this is where the responsibility actuality just begins. There are several issues that guarantors need to know, who choose to be good Samaritans for their friends’ or family members’ cause. 

Most importantly, a loan sanctioned will directly impact the guarantor’s credit report and score. Though a guarantor might be financially prudent and disciplined in paying his or her own equated monthly installments (EMIs), credit card bills, the friend or relative who they are backing might not emulate that same responsibility. Should the friend or family member miss a payment or make a late payment, the guarantor’s credit history and score would be negatively impacted. Therefore, one should keep in mind that the moment they sign as a guarantor for a loan, it shows up in their credit report with a clear indication that they are the guarantor. The guaranteed loan will reflect on the guarantor’s credit report and will be used by the lending institution when eligibility for a loan is calculated. 

Additionally, it is advised that the following facts are taken into consideration before signing up as a loan guarantor. One must also remember that a guarantor cannot take a stance on deciding the limit of liability towards the loan. The very purpose of getting a guarantor for a loan is to make sure that the bank has an alternate source of recovery if the principal debtor defaults. So, one must not always go by the credit repaying capability of the end borrower alone. Instead, a guarantor must calculate his own financial capability before signing up. 

At the same time a guarantor needs to bear in mind his own financial goals. If the prospects of purchasing a new home or starting up a business are on the horizon, the guarantor should stick to backing small loans that will not weigh heavy on a credit report. A financial institution might refuse credit or might reduce the amount of credit to the guarantor if he or she is already backing another loan of a fairly large amount. If at all one has to become a guarantor, getting another guarantor to go in on the loan, as the liability could then be split between the two guarantors. The strength of the relationship with the primary borrower based on which one becomes a guarantor needs to be borne in mind as especially in long term loans. 

There have been cases where a guarantor has been penalized for the principal applicant’s delinquency. Hence, it is not wrong to assume that a guarantor’s liability could be more than the principal borrower’s. Even if the guarantor has a good track record of repayments or good credit history, a delinquency could act as a deciding factor for creditworthiness when banks access credit reports. So before signing on the dotted line, a guarantor should weigh all of the pros and cons associated with the financial backing of friends and family.

Source: Secondary