Thursday 29 August 2013

Best use of banking options

This post is about providing financial information which will help you in managing money especially for those who are starting their career.I have also discussed about various money transfer options available with all the details.
This information  will be very helpful to you because without this you might make some mistakes which will cost you a lot of money which i want to avoid.
So now after entering your job you will have to choose your bank in which you will be opening a salary account.
The following options will be available to you after you open a salary bank account:
-debit card
-credit card
-net banking
Apart from this i will discuss about health insurance policy,the decision which you make regarding this has a great effect on your salary every year.
So lets start with debit card.
Debit card:
As you all are aware it is used to withdraw money from bank and perform online transactions.Apart from this,your bank may provide you with points for using it which can be redeemed.So eventhough you have net banking,credit card if you use this you may earn some points which on reaching certain limit can be redeemed for money or some banks will give some coupons which can be redeemed on purchase of a product.

Now coming to credit card.

Credit card:

-You will be provided with certain credit limit on your credit card.The limit may differ for each individual even though salary is same.This decision is made by the bank.
Facilities provided:EMI,Cash withdrawal,Special features


While purchasing any item using emi you need to check the following things:
-Whether any interest is being charged.
-Whether any processing fee is being charged.This is the one which many shops exploit particularly where you find item is cheaper because of this hidden cost.While buying the dealer says that there is no processing fee but after making the purchase you can find that you are charged for opting emi.This happened to many times,so do not fall in this trap.But not all shops do like this.

Cash Withdrawal:

You will be provided a PIN which can be used to withdraw money from ATM using you credit card.But it is better not to use this anytime as they charge high interest rate on it.

Special Features:

You may also have some special offers such as cash on call by hdfc or Personal Loan On credit card by kotak depending on your bank.You can use these options in case of emergency.

Monthly billing procedure:

Every month you have a certain date on which your bill will be generated.The transactions performed until this day will be billed.You will be given another date on which you have to pay this bill.Do not ever delay paying the bill because you will be charged very high interest rate and it will effect your credit score which i will discuss later.
Here many of us will be confused.So lets say my billing date is 18th and my payment date is 5th.So on Aug 18th i will receive my bill which contains all the transactions i have made using credit card until 18th.As my bill payment date is 7th i have to pay this bill amount by Sept 7th.After 18th if i buy anything that transaction will be billed in Sept 18th bill.So i have to pay that by Oct 7th.This is how it works.So first of all know your bill generation date and payment date as it will give an idea when you will have to pay the bill.
Net banking:
Mainly it can be used for money transfer.There are three ways for this:

NEFT:National Electronic Fund Transfer.

There is no limit either minimum or maximum on the amount of funds that could be transferred using NEFT.
The charge depends on the amount being transferred and the maximum charge per transaction is 25 INR.
NEFT cannot be done on Sundays & National bank holidays

RTGS:Real Time Gross Settlement.

The minimum amount of money which needs to be transferred to use RTGS is 2 lakhs and maximum is 5 lakhs.
The charge for transfer depends on bank,amount being sent.
RTGS cannot be done on Sundays & National bank holidays

IMPS:Interbank Mobile Payments Service.

You dont have to give account number for this transfer. Instead you need to give the other party MMID and your mobile phone number.
The maximum amount which can be transferred is 50K through IMPS.
By using IMPS an inter-bank transfer can be done any time of the day and anytime of the year. So be it Sunday or public holiday you can still transfer funds across banks.
Net banking can also be used for the following:
Online transactions.
Account balance details.
Transaction details.
Blocking debit card in case you lost it.
Checking debit card and credit card points.
Recurring Deposit and Fixed Deposit information.

Now coming to health insurance policy:
After you join any company you may have to take a health insurance policy.It may be mandatory for you but optional for your parents.
First find out whether your parents are having any policy or not.If they do not have any then it is better to take one as it is very helpful in case of emergency situations.
If they do have one then have a look at it to compare it with the policy which you are provided with and decide whether to take it or not.
Most of the time,freshers dont know whether their parents have a policy or not and later regret after realizing that they have one and still they are paying a premium for another.So dont make this mistake.
Hope this information helps you in avoiding some mistakes.All the best in your career :)