Right time to shop for credit cards

There’s no uncertainty that credit cards are extremely portable, ideally, they should be used as a temporary substitute for carrying cash. Often credit cards come with various discounts and additional benefits about which you must be acknowledged. However, when you decide to acquire a credit card, there are abundant elements to be reviewed to obtain the ace advantages for using credit cards.

Credit Limit

This is the amount of money that you are granted to borrow subjected to credit card without involving other costs. Depending on your credit history, the credit limit will be decided. You don’t want a situation in which you’re close to maximizing out your credit limit, as you are likely to attract the over-limit fees. It can hurt your credit score – and some credit card issuers have cut customers’ credit limits to an amount that’s lower than their current balance.

The interest rate

The interest imposed as the annual percentage rate on a credit card. You can opt either for a fixed rate or a variable rate that is bound to another financial symbol, usually the prime rate. With a fixed-rate card, you can predict how much you will be charged as it maintains the same interest every month; a card with a variable rate fluctuate every month. However, even a card with a fixed interest rate can change based on certain parameters, such as paying your card – or any card – late, or going over your limit.

Ease of balance transferring

Almost every credit card company provides the facility of balance transfer. Due to this option availability, you can easily transfer existing debt from one credit card to another as per the usability. The new card credit limit will be lessened subsequently. While transferring the balance, you cannot exceed 80% of the credit limit. The transfer procedure takes more than seven working days.

Fees and other penalties

Go for cards which offer moderate fees. Common charges include fees for transactions, such as balance transfers and cash advances, or for asking to increase your credit limit or paying your bill late. The annual fee varies among card issuers as well as cards depending on the negotiation at the time of purchasing the card.

Incentives

While using the card, one can earn reward points every time as an added benefit to users of credit card. These reward programs does not get expired and you can redeem them anytime as per the convenience. Assuming you’re going to make the purchases anyway – and the card issuer doesn’t charge extra for the rewards program – it can be a good advantage. Opt for a program that offers more elasticity and rewards you will really utilize.

Access to cash withdrawal

The banks gives an ATM PIN to the credit card holder as per to make cash withdrawal from your credit card easily. Keep in mind, doing cash transaction against credit card attracts the high interest rate from the ATM. However, it is suggested to use this facility at time of urgent needs only.

Visit: www.cibilconsultants.com

Source-secondary

Tips for new home buyers

Are you hunting for a home? A home loan helps you achieve peace of mind by providing you with one of the basic necessities of life – a roof over your head. But if you don’t exercise prudence wisely and take extra care while going through the process, a home loan can rob you of that very peace of mind. Here are a few quick tips that you should know before climbing onto the property ladder. These key tips could assist you choose the right home loan and save some money at the same time.

Market Research – Searching for the perfect home loan may seem hard work but if you do your homework and take your time, the whole thing will be a lot easier. Those hoping to climb onto the property ladder may be in for a bit of a shock – loan options are vast and can at first seem a little overwhelming. The key to getting the best deal on your loan – and that means the most sensible option, as well as the cheapest – is being armed with as much information as possible… so be prepared! Clear your doubts regarding the loan scheme before finalizing on anything.

Calculate the EMI – Estimate the amount of EMI that you can afford beforehand. Keep in mind your income and financial commitments to determine the amount of EMI you can pay before applying for a loan. Don’t make abrupt decisions on this one because if you get delayed on making repayments on time then it could be burdensome for you to pay penalties if you don’t have a stable income source. So, keep in mind the other aspects also that are worth to consider before you agree to take up the new loan and you’re your decision wisely.

Eligibility criterion – Having documents ready before you apply for a loan can speed up loan approval. A lender will consider your credit history; you must make sure you have paid all your credit cards and other loans timely to score good on eligibility. And if you have a clean record in your credit history for making payments on time, then you can use it as an asset when applying for a loan. Also, scrutinize the duration of your loan. If you prefer a long tenure loan then interest rate would be comparatively high and you will be bound to pay more overall.

Borrowing costs – When you apply for a loan, it’s mandatory to know about other additional charges that the lenders would add to the current home loan schemes. The lender may impose a range of administrative and service charges or processing fees. These additional charges will be considered under the sanctioned amount in your name and not considered under the amount that you take home. Before you agree any deal, you should examine the other charges that the lenders put into the scheme.

Study the fine print – Make sure you thoroughly read the home loan agreement documents with your bank or financial institutions. The lenders may acknowledge certain points to you but whatever is written on the paper will only be considered at the end. So, it would be appreciated to contribute some time on reading the documents to avoid any hassles later on. Get your queries cleared, if any, related to terms and conditions mentioned in the loan before signing your documents.

Learn more about credit history and its impact on your credit score at www.cibilconsultants.com

Source- Secondary

Beware First-time home buyers!

Buying your dream home is a massive investment of one’s lifetime and requires tremendous research about the property, the builder, the policies etc. Taking a home loan is a long term commitment; it becomes crucial that the buyer doesn’t get carried away by lucrative deals and offers. You may end up paying more or getting inefficient service if you choose the wrong scheme or lender for your home loan. There are many mistakes committed by first-time home loan borrowers, which can prove to be destructive for their finances.

Here are the top 5 mistakes committed while taking a home loan:

Avoid selecting your lender first

Most people prefer to go to banks calculate their eligibility as per to know whether their finances will be adequate or not for a loan. Mostly, they are deceived, since the lenders may offer some thriving deals to make money. It’s beneficial to check your eligibility factor online and know easily how much approximate amount of loan you are eligible for.

Borrowing beyond means

Obtaining money more than their income source allows is another misstep which most people make. Banks grant the loan on the basis of your eligibility, income and liabilities, but they don’t scrutinize your existing expenses. However, if your current expenses are immense, despite of that, if you take a loan which results in high EMI payment, you may end up in a bad debt trap. It is always better to lower your budget if your current income and expenses levels are not favourable.

Opting a false loan scheme

In the current economy times, banks are initiating different overwhelming schemes for home loans. Remember, there are some loan schemes in which the rate of interest remains fixed for the initial years and thereafter the loan becomes a floating one, which is linked to the bank’s base rate or prime lending rate. People choosing such schemes should be careful to understand if they have the scope to keep the EMI or tenure changes that will be unveiled when the floating rates kick in, which can be considerably higher! A lack of understanding over a loan scheme or a lack of repaying capacity when higher interest rate kicks in can only result in difficulty in servicing the loan!

Ignoring to review cost

It is always advisable to bargain regarding the interest rates, EMIs, etc. Since, apart from your income and payment structure potential, your negotiation skills will also be considered. And as a prudent loaner, get all the information about the processing fees, legal charges and other hidden costs before deciding on the loan amount.

Neglecting insurance for your home loan

Most borrowers do not recognize this risk, in case, any demise happens to you unfortunately during the tenure of the loan. The home loan that you have taken should not be a burden on your family. By insuring your home loan with a life insurance and a critical illness policy you can benefit your family members with a home and not a home loan. In case of the death of the borrower, the life insurance cover can provide the family with a monetary cover. And for the critical illness policy, if in case the borrower is not able to earn due to any critical illness, this policy will provide financial assistance wherein the interest amounts can be paid.

Visit www.cibilconsultants.com
Source-secondary

Hidden costs disclosed!

While availing the home loan, most of us forget to factor in the hidden costs involved. Customers normally notice these fees or charges once the deal is done and by then, it is too late. These costs can influence the total cost of the product. The benefit of knowing about hidden costs involved is that these vary from one financial entity in the market to another and some institutions may wave these completely, if you negotiate. Let’s take a sneak peek at some of the additional costs that is borne by the borrower but not mentioned to him clearly at the sanctioning of the loan.

Processing Fee: A valid amount of money is charged by all housing finance companies which comprises a processing fee and other administrative charges. The specific amount for this fee differs from one bank to another however, is less for public sector institutions in comparison to private lenders.

Legal Valuation Fee: Before sanctioning the home loan, all housing finance companies carry out a thorough legal verification of the property. The borrower has to bear the charges as legal fees of the lawyer undertaking this kind of verification.

Interest on term before EMI initiate: There lies a certain division between the disbursement of the first loan installment and start of the EMI. During this period, definite interest is imposed by a financier which is termed as the broken period interest.

Prepayment Penalty: If the borrower chooses to prepay the home loan before the tenure gets completed, the bank will charge a prepayment penalty from the borrower. Plus, a service tax is also imposed on the prepayment penalty. But, as per RBI, this clause has been abandoned for floating interest rate home loans

Rescheduling fee: When the interest rate gets altered by the bank or in case the borrower determines to prepay certain portion of the outstanding loan amount. The home loan tenure and EMI structure has to be rescheduled to match the prevailing conditions, the borrower has to borne a rescheduling charge assessed by the bank.

Conversion Charges: The bank charges a certain amount, when a borrower decides to convert the home loan from a fixed rate type to a floating rate type or vice versa. Additionally, a service tax is levied as applicable.

Miscellaneous Fees: The banks may charge the customer several types of miscellaneous fees that are not mentioned earlier. Such fees incorporate charges for obtaining a copy statement of account and copy of original documents that have been submitted by the borrower while availing the loan.

So, ask the financial institution to give you details on the fees and charges involved, read these carefully and then take your decision accordingly.

Visit www.cibilconsultants.com
Source- Secondary

Financial health implications

No matter how reputed and reliable your brokerage house, bank and financial planner are, remember that it’s your money. Get involved. They will keep coming to you with numerous tips that they say are ideal for you; they may hard sell the products that they have to offer; they make call after call and send you mail after mail extolling the benefits of strategies. While considering everything that they say, do your homework and finally settle for what you think fits your portfolio requirement.

Here are a few simple snippets which will help you bring financial disciple in your life.
             

Never buy a product which you don’t understand

No matter what the company’s sales representative promises you or convinces you to believe, never put your money on something which you find too complex to fully comprehend and whose benefits you are not convinced about. So, first clear any doubts that you may have with the sales person and only then agree to buy it.

Shop for the best deal

If you are investing in a financial product, whether it is a loan or any other funds, involves your hard earned money. So it is important that you take time off to look at various options available in the market, compare them and then take a well-informed decision while choosing the right product. Each financial entity has its own terms and fees, and it is in your best interest to compare all the choices available and then pick out the best deal for you. A reduction of few basis points in the interest rate of your home loan or personal loan can end up in saving thousands of rupees for you over the long term.

Perform online research

As you get prepared for availing a loan, do not forget to carry out an online research on the best rates and schemes offered by different banks. There are different loan products available in the market as per different requirements. In addition to speeding up the buying process and making it less cumbersome, you also stand a great chance of getting your desired products at discounted rates.

Reveal the hidden costs

When you buy a financial product, you may forget to factor in the hidden costs involved which can influence the total cost of the product. Hidden costs involved vary from one financial entity in the market to another and some institutions may wave these completely, if you negotiate. So, ask the financial institution to give you details on the fees and charges involved.

Negotiate to gain a best deal

Every financial institution has its own interest rates and fees structure for customers which provide some scope to us to bargain for a better deal. However, before sitting on the negotiation table, you need to do your homework and get information on rates and charges prevalent in the market so as to assess the level to which you can bring down the price.

Visit www.cibilconsultants.com

Source-secondary

Own your dream home!

Buying a house or making an investment, more so in a city, is a challenging task. It involves a huge sum of money. When you have painstakingly found a house that broadly suits your budget and most of your other criteria, put down the token. Getting over-optimistic about external factors changing could rob you of the chance to purchase your dream home. Here are some precautions which you need to follow as you navigate the purchase of any real estate property.

Before you Shop for the deal

Examine record of your finances. Before switching lender or contacting a real estate agent or window shopping for a new home, figure out what you can spend. Know your credit card limits and review your usage to prevent a potential approval pitfall.

First proceed with financing. Attaining pre-approval for a loan will make the loan approval process and process of negotiation smoother from the start.

Switch lender for better benefits. Try to get a professional who is both familiar with the area you’re considering and its home values – and who is well versed in the laws, timelines and deadlines. It allows you to lower the risk of ruining the dream of purchasing your own house.

Over the process of negotiation

Reading the fine print. If there is one piece of expert advice we hear often for consumers, it’s that it is always good to read the fine print before taking the ultimate buying decision. Fine print often lays down the terms and conditions for what generally the large print promises. Get the clarity on the matter to avoid any troubles in the future.

Keep everything in written. If you negotiate any extras make sure that they’re documented in writing and that all parties sign off on the extras.

Disclose the hidden expenses. Due to these expenses the total cost of your product gets hiked by a considerable amount; definitely more than you have calculated earlier. It’s better to know about hidden costs as these vary from one financial entity in the market to another. So, read these carefully and then take your decision accordingly.

Bargain to gain a better deal. Every financial institution has its own interest rates and fees structure for customers which provide some scope for you to negotiate for a better deal. You can also leverage your past record to good use while negotiating as banks normally don’t want to lose out on old customers.

Conclusion

Don’t take your self-decision. While seeking advice on purchasing a house, it is best to consult an experienced financial advisor. It’s always better to counter-check the suggestions of your advisors with others. It can safeguard you from making expensive mistakes.
Visit: www.cibilconsultants.com
Source: Secondary

Whether to purchase a home with cash versus obtaining finance through mortgage.

To be a homeowner of your dream house is not merely a financial decision. It is an emotional decision too. That’s why in a number of cases, despite fixing a budget, most people tend to stretch themselves to own a house that is beyond their budget.  It’s probable to think that buying a home with cash – or sinking as much cash as possible into your home to avoid the enormous debt linked with a mortgage, is the wise choice for your good financial mileage.

But it involves a lot of consideration whether to purchase a home with cash versus obtaining finance through mortgage.

Purchasing a house with cash is a very legitimate productive investment as it eliminates the need to pay interest on the loan and closing costs. In a current market scenario, paying all can also make your purchase offer more attractive to sellers as they don’t have to concern about a buyer falling out due to financing being denied. A cash home purchase also has the flexibility of closing faster than one requiring financing, which could be attractive to a seller. Those benefits to the seller shouldn’t come without a price.  Also, a cash buyer’s home is not leveraged, which allows a homeowner to sell the house as per his convenience.

Shouldering responsibilities with mortgage

At some point you would like to own a house. Then why not do it now? Yes, buying a house on a home loan, if you can afford the EMIs, makes more sense than paying massive cash. How? There are obvious benefits. Firstly, by buying a house in which you live, you are creating an asset with the easy to pay EMIs that you pay; on the other hand, paying complete cash is painstakingly as it involves your entire life money and liquidating huge investments. Moreover, you can enjoy tax benefits on repayments of a home loan. But remember that no matter how tempting it may be, don’t liquidate all your investments to purchase that dream home. Once you moved in, you will still need to go on living; in fact, if you move into a better home, you may seek a better standard of living and therefore, need more regular spending money. Further, you still need to service your insurance policies and subscribe to tax saving investments. You may be needing money for unforeseen emergencies that are not covered by insurance.

The Conclusion

The best advice when considering which option makes the most sense is to opt for the choice that gives you the satisfaction for your entire life. Also, ask yourself which will provide the greater return on your investment.

If you decide to purchase a house with a loan, make sure you can easily afford the principal, interest, property taxes, homeowners insurance, homeowner association and other fees each month. And no matter how you pay for a house, make sure to have an emergency savings account of expenses in case your personal economy declines and you need a financial safeguard.
Visit- www.cibilconsultants.com
Source:  Secondary

Learn how Annual Percentage Rate (APR) works

Loans or credit agreements can vary in terms of interest-rate structure, transaction fees, late penalties and other factors. A standardized computation such as the APR provides borrowers with a bottom-line number they can easily compare to rates charged by other potential lenders. The annual percentage rate, or APR, is the cost per year of borrowing. By law, all financial institutions must show customers the APR of a loan or credit card, which clearly indicates the real cost of the loan.

Annual percentage rate versus Interest rate

APR is not the same as the interest rate on a loan. Loans charge an interest rate, but usually also charge other fees, such as closing costs, origination fees or insurance costs, which are typically wrapped into the loan. Credit card companies are allowed to advertise interest rates on a monthly basis, but are also required to clearly state the APR to customers before any agreement is signed.

If two loans have the same interest rate, but one has much higher fees than the other, simply shopping by interest rates won’t give an accurate comparison of the loans’ true costs. That’s why there is the APR. By factoring in other fees, APR gives a more accurate estimate of the cost per year of a loan. For this reason, the APR is generally higher than the interest rate.

Conclusion

Unfavourably, not all financial institutions include the same fees in their APR calculation, so APRs are not always a perfect comparison tool. When comparing loan or credit card APRs, ask which fees are included, so your comparison is accurate.

Visit- www.cibilconsultants.com
Source: Secondary

Balance transfer on credit cards. Here's the guide!

Are you being offered with a new credit card carrying zero percent interest balance transfer? Eventually before you proceed to transfer a balance from one credit card to a new card, have a glance on our guidelines to safely transfer the balance on credit cards.

Selecting on balances to transfer

See where you stand by and then list all of your credit cards, their balances and their interest rates. Now, pick one or more cards with high rates whose balances you would like to transfer to save money on interest.

Estimate the transfer fees

Know about the balance transfer fee and calculate your balance transfer fee that you will be entitled to pay on the amount you want to transfer. Use a free, online balance transfer calculator to do the math.

Know about the incurred penalties

When you wish to do the balance transfer at zero percent, you still have to make the monthly payment on your balance to keep the zero rates. Note the interest rate you’ll pay if you lose the zero percent rates because you miss a minimum payment.

Avoid doing balance transfer with the same bank

Make sure you fulfill the basic requirements for the balance transfer. Remember, before you proceed with the process if your new account is with the same company then you cannot transfer a balance.  Also, your transfer request may be declined if you have due payments with the creditor to which you want to transfer the balance.

Keep your eye on accounts

Watch your old accounts to know whose balance you’re paying off to see when the balance transfer clears. In the meanwhile, don’t miss any payment deadlines on those accounts so you don’t incur any late fees. Each creditor has its own time frame for completing a balance transfer. Keep monitoring your new account to see when the balance has transferred over.
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Source: Secondary

Paying Debts Early : Good or Bad

If you have extra money, it’s always a question for people whether to use this money in paying off your debts or rather investing somewhere. Would paying off the debt early affect our credit score? Would it help us go ahead with our finances? Check these points before deciding on where to use your extra money.

Dangerous debts: 
Some debts are very dangerous for your financial health as they can result in jail time or monetary penalties. Such debts should be prioritized and paid off first. Examples of such debts are delinquent taxes, debts given to collection agencies etc.

Check the terms of the debt:
Check and see if there are penalties for paying off a loan early. Some creditors put a fee for the early repayment of the debt. Go back to your paperwork and check your fine print for prepayment fees.

Enough Cash:
After you strike through the dangerous debts checkpoint, next is the cash on hand. You want to have enough savings to cope during a financial crisis. Having cash militia helps you to go through a rough financial patch without having to rely on more debt.

Invest:
Do the maths! If you are earning more from the after cutting taxes rate of the investment than what is piling up due to the debt interest rate, then it is better to go for the investment. Paying off a debt early may not give you a benefit- that is why you are better off using your extra money for investing. In fact, use the money earned on the investment to pay off your debt in future. 

Act smart! Visit: www.cibilconsultants.com

Source: Secondary

Don’t let history repeat itself

I have often come across friends boasting, “My credit score is higher than yours,” and those on the “lower” end of the comparison want to have higher scores. Then there are past defaulters who wish to be considered for a loan and complain that banks turn down their application even after they have settled all outstanding in full and even improved their scores. In many cases they are indignant that they have now settled all the over dues, hence should get access to loans.

Past defaulters

Let us take up the case of the past defaulter first. Let us suppose you are in the money lending business and a potential borrower has approached you for a loan. Would you lend to this individual knowing fully well that he has delayed payment in the past to another money lender and only settled a part of the amount of overdue interest to the lender? Even if he had settled his outstanding in full along with overdue interest, would you still lend to him?

Like any sensible businessman you will wait for a while till he shows better record with someone else before you lend him money. This is exactly how one who is placed in this category of borrower should do: First, settle all outstanding payments. Even you settle, do not expect an overnight increase in your ability to borrow more. You will need to slowly rebuild your history. The best way is to get loans that are available despite your adverse credit history.

You can take a secured credit card from some public sector banks where you place a fixed deposit with the concerned bank and they give you a credit card with some percentage limit of the fixed deposit amount. This ensures that the bank is completely protected from the risk of any default as they can set off the credit card outstanding against the fixed deposit amount in case of the eventuality.

The reason it helps the consumer is that when he spends and pays back on the credit card, he is building a good repayment history. The other option could be to take a loan against gold from leading banks or NBFCs. Again the lender is fully protected and hence is able to give a loan despite the adverse credit history.

Prompt repayment on such loans again creates better credit history. Over time the credit institution starts giving less weightage to your old default and more weightage to your current prompt payment and hence the overall credit score starts improving.

Keeping up with the Joneses

The second category of people compare their score with their friends discover that their credit score is lower than their friends/relatives and want to understand the reasons. Do not get obsessed about your credit score as long as it is above 750. Unlike the US where a movement of 5-10 points in your credit score could cost/save you thousands of dollars in interest and fees, in India lenders just use your credit score to eliminate people whom they will not consider for lending. So if you have a credit score of 825 and your friend has 775, you will still get the same rate and experience from the lender since both of you will make the grade to be considered for the loan. Here are a few things that you could do to make sure that your score becomes higher while waiting for the benefits to accrue:

Get a copy of your own credit report at least once a year and make sure you follow up to get any errors corrected to ensure it does not hurt your credit score.

Pay your bills on time

Keep unsecured loans to a minimum. Don’t close your old credit cards as repayment history on older credits has a higher weightage than on a newer facility. If you have used the credit limit on your card almost fully then apply to get your credit limits enhanced to show lower utilization of your credit limits.

Book an appointment to get credit report and rectify the errors at www.cibilconsultants.com

Source: Secondary

Use Your Balance Transfer Card Wisely

Balance transfer cards are cards that offer very low or zero interest rates. If you have high-interest debts to pay like loans, credit cards then you can go for a balance transfer card to preserve money on the high interest rates. You can transfer your due balance to a balance transfer card with a low or zero interest rate and pay off the balance without worrying about the interests piling up. But to get approved for a balance transfer card, you need to have a good score. A good CIBIL score also helps to get the balance transfer deals. But you should also know that balance transfer cards have an expiry period ranging from 3 months to a year.

So how should one use a balance transfer card wisely? 

Your main aim should be paying off that balance before the low interest rates for the balance transfer card expires and interests start piling up again. Don’t transfer a balance if you are not sure of paying off the debt before your low interest rate expires. Transferring a balance when you are not sure about paying it does more hurt than help because in the end you’ll be stuck with a bigger interest rate than the one in last account, once your low interest rate expires.  You would lose money than, what you were thinking of saving, while transferring the card. Make sure you understand all the terms and cinditions of the card before you make a transfer. Try to get the lowest fees & lowest interest rates and the longest period of time.

Balance transfer card don’t make the balances go away- they optimize your debt by making it less expensive for a limited period to help you pay it off. 
So, follow these steps and use your balance transfer card wisely!

For any assistance regarding credit score visit www.cibilconsultants.com

source-secondary

7 Ways When Credit Card Rewards Prove To Be Expensive !

Get bonus points, cash back, miles and more.How we love to redeem credit card rewards. Rewards are a good way to save some money while spending. However, the same rewards can prove expensive if we start spending to save. Spending to save? Yes, that indeed happens.Rewards can be very tempting and can lure card holders to spend money which they otherwise wouldn't have. What happens then? You end up spending more money than what the reward is worth! Such spending decisions taken under the influence of a reward temptation can be a bad idea for your wallet. Here are 7 situations when credit card rewards can backfire.

1)    Here redeem your rewards, but first open your wallet!

Rewards points accumulated can be redeemed as per the card company's policies. This typically includes spending at specified outlets, brands, miles or cash back. Once you know that you have accumulated the reward points there is an urge to redeem and benefit from it. This urge pushes us to think of ways to redeem which includes going in for purchases which are not required! Whether it's shopping for clothes, accessories, travel plans or dining out, decide to spend on these activities only if they were a part of your plan anyway. Planning to spend for redeeming rewards is not a good idea. 

2)    Chasing rewards?! They are watching you.

Often friends and family talk about the "amazing" credit card they have signed up for. Their stories of saving money, claiming air miles and access to exclusive lounges lure us into going and checking out what the deal was about. Not denying that it may be a good deal, but stop before you decide to sign up. Having a bunch of "amazing" credit cards, signed up primarily because they have good rewards scheme can prove detrimental for your CIBIL score. Banks can view you as a credit risk if you aren't organized while picking credit. Credit utilization and repaying on time is a task which requires a good tracking system. If your tracking system is not in place it is possible that you miss out on repaying or end up spending more than you intended to. Your wallet and CIBIL report, both will be affected as a result of the reward chase.

3)    Mind your score!

Reward credit cards have a higher rate of interest. If that is the choice you have made then redeeming the reward points will definitely be on the list. However, while availing rewards you may end up spending more money. The repayment of which, if missed can lead to paying a heavy interest rate. Moreover, these delayed payments can negatively impact the CIBIL score. Now the last thing you need after ending up spending more money is a drop in your CIBIL score!

4)    I don't need it but let me buy my reward!

Credit card offers can be generous deals. The best offers are generally up to 5% of the value spent as reward in some form or the other. Now if you are making a purchase with an eye on this offer, then you are in trouble. Spending 95% of the money on an unnecessary purchase is far from being wise about spending.  Availing the reward should be a bonus on the purchase and not a reason for the purchase.

5)    Did you see the fee?

Reward cards charge a considerable annual fee. While we sign up for the cards, enticed by the rewards, the annual fee is often ignored. It is important to evaluate the total worth of the rewards as against the annual fee applicable. Are the rewards another reason for you to spend more? Does redeeming the rewards means planning for unwanted purchases? Answer these questions for yourself to know if the credit card rewards are actually helping you save. If not, look out for options with lower or no annual fees and do away with unwanted temptation to spend more for redeeming reward points. 

6)    Watch out if you are shopping for more debt!

If you already have a credit card with a credit limit which is utilized regularly and timely repayments are being done then you are in the right zone. This approach will help you max out the benefits of using a credit card while positively keeping up your CIBIL score. Don't let greed take over and make you hunt for reward cards. While the immediate benefits like signing up bonuses and short term benefits like using a certain amount within a limited period of time in return for reward points may appear lucrative, it is a bad idea in the long run. You are actually taking on more debt even though you don't need it! We definitely don't need to find newer avenues to part ways with our hard earned money.

7)    Focus on your goals more than the rewards!

To stay out of trouble and sail smoothly it's important to stick to your personal financial goals. A part of this plan is sticking to budgets every month. Major expenses are planned and money is set aside for such expenses beforehand. Credit card rewards can prove distracting while you are trying to stay focused on planned spending. To avail rewards, we convince ourselves to get off the budget plan. Bad idea! The thrill of availing the reward not only takes us off the road leading to our financial goals but also drills a hole in our pocket. So remember, goals over rewards any day.

Credit cards when planned and used can indeed help us save and give us access to money when required. However, using cards to accumulate reward points and then planning ways to redeem them is not a great idea. Focus on your financial goals, plan your expenses and aim to save. Keep off those credit card reward carrots!

Keep an eye on your credit score along with using credit card because credit card can affect your score positively and negatively both.
visit www.cibilconsultants.com

source-secondary

Home loans- avoid these mistakes !

Buying a home is a very tedious process for individuals since there are many decisions involved. We often tend to forget the things to be avoided since we focus more on the things to do. Here are some points which should be looked at and some mistakes which should be avoided:

Checking credit score:
Before you apply for a loan, be well aware of details such as CIBIL score/credit score. It would be better to get your credit scores on a regular basis to avoid identity thefts. Credit score is a very important condition which is checked when you apply for a home loan so it is advisable to have a good credit score.

Not researching options well:
Home loans are very popular products available with many banks but with different conditions. Usually many people don’t take the effort to research the varied loans offered and thus have chances of missing out on a good deal. So, it is advisable to window shop a little and evaluate the interest rates, other fees and charges, services, the time the bank would take to pay out the loan, etc. Your original house documents would be with the bank from where you will borrow so it is important that you choose the right bank, which would be safe as well as economical. It is also important to start researching on the loans offered, six months before you start the property search. Don’t try opting for credit cards and personal loans because it is possible that your loan application might be rejected by your lender if he finds confusion in your CIBIL report.

Pre-approved loans not considered:
Most banks would offer you pre-approved loans on the basis of the relationship you share with them. This helps in saving a lot of time during loan processing. When you have a good relationship with the bank, they will know about your history more and the processing would become easier for them.

Over leveraged Loan:
Do not just opt for a loan because the bank is going to offer you a higher value loan. First check If the loan is affordable for you and if you have the ability to pay back the monthly EMIs. The tip is to look out for avenues whereby you can increase the EMIs and to save money on interest by reducing the loan period.

Read the clauses well:
Get a legal consultant to verify your loan documents. Read and be aware of each and every clause in the application form before you sign the loan papers. If, you don’t understand any terms get in touch with the bank.
Thus, have a secure experience when you are buying a home by avoiding these mistakes and make decisions while keeping these points in mind when are you opting for a home loan.

Maintain your credit score with service packages at www.cibilconsultants.com

Source: Secondary

Credit Card vs Debit Card

Credit and Debit Card both are very similar in their usage; the main difference being that in debit card, the money is used from your account where you deposit your money, while in credit card the money is used from your line of credit which you have to repay at the end of each month. So which card gives better benefits than the other? Check the reasons below to find out:

Building Credit Score: 
It is common knowledge how a credit card is very useful in improving and maintaining your score. The only criteria is that you should keep your credit utilization ratio low.While a debit card is obviously not a credit account, therefore it can hurt or help your credit score.

Protection from Fraud:
The liability for fraudulent charges is fixed in a credit card. If your card or card number gets stolen, fraudster cannot steal money beyond a certain limit while in a debit card, the liability is unlimited, depending on how fast the fraud is reported. Your whole account balance is at a probable risk.

Protection during purchases:
During purchases, if you are unsatisfied with the services or products of the seller, the credit card allows you to reverse the purchase charges that have been charged on your card. So that is why in large purchases, even if you can use cash go for a credit card. You can use the cash later to pay off the credit card bill. In debit card, there is no such protection. Money once charged from your account cannot be taken back. Your debit card cannot save you from a poor customer experience.

Perks & Rewards:
Credit Cards offer various perks and rewards for using the card like air miles, purchase points, travel points, gift cards etc. So, even if the credit card does charge you an annual, the rewards would overpower the fees any day. While in debit cards, there are very few cards which can offer such rewards and even if they can offer rewards the rewards aren't of much par with the debit cards.

Source: Secondary