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19 Feb

Call us Excited …Just launched India’s 1st ‘Scan and Pay later’ credit wallet

Customers can now shop on credit using the exclusive “Kissht QR Code” which will be accepted in select offline stores and modern retail chains across the country.

We are delighted to announce the exclusive launch of super exclusive product developed at intersection of strong demand ( from industry ) & cutting edge technology – India’s 1st “Scan & Pay Later” credit wallet, a first of its kind in the Indian Fintech ecosystem. Customers can now shop on credit using the exclusive “Kissht QR Code” which will be usable in select offline stores and modern retail chains across the country. This launch has widened the markets for OEMs (original equipment manufacturers) and modern retail chains.

With a loan closure that can be achieved in under 60 seconds, customers can select, scan and walk out with the desired product with just one OTP authentication from their Kissht credit wallet. Scan & Pay Later credit wallet will be available in 32 cities across India, at 3000 partnered merchant stores. The product is being launched with all existing merchant partners and brands such as Dell, Prestige, Intex, Caratlane and others. The product was in its pilot phase for a duration of three months during which there was a visible increase of 30-35% in footfalls in tier I and tier II cities.

OEM’s and retailers can include Kissht QR code along with their advertisements in newspapers. Customers who desire to buy the products can scan these codes to instantly check their line of credit, and upload the required documents through the app for credit approval. Once approved, the customers can walk in to a nearby merchant store with the pre-approved loaded wallet and buy the product of their choice instantly, and re-pay the money to Kissht in easy instalments later.

From the merchant’s point of view, the final approval of the loan can be brought down to 1 minute. This will enable higher acceptance in the market over the other players in fin-tech space where quick approval is thumb rule.

During pilot phase, We have witnessed 30% increase in footfalls in offline stores and retail chains where customers’ intention to buy has always been there but instant, convenient and affordable credit options were missing.

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07 Feb

2018 Will Be The Year For Consumer Credit

Digitization of currency: To begin with – while demonetization happened last year, the second order impact on the consumer economy manifested itself in 2017. Use of digital currency became more widespread and consumer lending business, use of cash saw widespread decrease. In our own company, where we never used cash collection, even the request for cash payment reduced from over 30% to less than 5%. With user friendly UPI payments becoming more mainstream with apps such as Bhim and Tez, the flight to digital economy for small ticket transactions has well and truly arrived.

Jio and explosion of 4G and digital footprint and smartphone revolution: As a company that relies on mobility solutions, high bandwidth and digital footprint as a core part of business model, the proliferation of high quality budget smartphones by Chinese manufacturers such as Xiaomi and the enabling network infrastructure by Jio (and Jio induced for others) have created a quantum leap in addressable market for companies such as hours. Suddenly – our ability to serve tier-4 and tier-5 centers is not only possible but also profitable.

Convergence of payments and lending: Multiple partnerships between payments and lending companies have exemplified what can be collaborative model going forward where payment companies rich in transaction data can monetize the same for lending and improve their business economics. For many lending institutions, such a partnership helps lower acquisition costs and improve risk scoring algorithms. The trend will further strengthen in 2018 where companies with transaction data will work closely with lending startups to enable loans through alternate lending models (e-commerce companies, payment companies, travel companies etc). On its part, lending startups are incorporating payment features into their model with products such as pay later products.

“New to credit” lending becoming more mainstream: Thanks to the proliferation of consumer lending fintech startups, the new to credit segment is becoming more mainstream. What was once a niche segment is now becoming a more profitable segment thanks to use of alternate lending techniques that leverages data from digital footprint to social footprint to web footprint to make decisioning. The growth in terms of volumes and in terms of credit quality is forcing larger lenders to cater to this segment through partnerships. Such partnerships on the back of risk-reward sharing is reducing cost of capital for startups while giving mainstream lenders to target the excluded segment in a big way.

Initiation of credit-led financial inclusion to rural segment with government support: Multiple governments in India are working towards credit inclusion in India by building on alternate lending methodology leveraging data sets they possess. Andhra government have taken the initiative in the state whereby government is making / has already made a serious push towards data digitization (farm produce, land holding, past production data, weather etc) and using the same to enable loans to rural / farming community across two districts in the state (to be launched soon).

Further strengthening of policy and regulatory support: Government and policy holder continue to develop policies aiding in financial inclusion including revised eKYC policy, cKYC registry, eNACH implementation across banks, seeding of aadhaar and mainstreaming of India-stack, rationalization of pricing for digital payments – all of which have aided in reducing cost of service to benefit one and all.

A lot of things such as India Stack, 4G reach and adoption, quality budget smart phones and Digital India came together in 2017. 2018 will be the year when Consumer Credit will see a healthy explosion with alternate lending becoming more mature and mainstream.

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06 Aug

Here’s how you can beat inflation

 

Inflation is the result of more money chasing fewer goods, leading to a disparity in the demand and supply. It hits you, where it hurts the most – your pocket. This inflation eats away your purchasing power and reduces your propensity to save. For instance, if you invest money in a fixed deposit (FD), which gives a return of 9% and the rate of inflation is 9%, you are not earning anything on your investment. Here’s how you can defeat this hydra headed monster called inflation:
Plan your expenditure:

With our new-age salaries, knowingly-unknowingly we are spending exorbitantly, leading to a rise in prices resulting in a rise in inflation. Inflation is not under your control, but your expenditure sure is. Do not go over the top with your purchases. Inflation first knocks out items of regular consumption. To begin with, you can cut down on inessentials when buying groceries and items of daily chores, and look for lower priced alternatives to items that you regularly purchase.

Invest in equities:

It has been historically proven that equity investments gets the better of inflation in the long run. You can invest directly in equity stocks. First time investors, sceptical of the stock market risks can invest through equity mutual funds. Both have their upsides and downsides. The key is to invest and be invested. You can invest in blue-chips & good quality mid-cap stocks or mutual funds with good track records over a longer term.

Choose debt instruments wisely:

Debt instruments are essentially money given on a loan to an entity, e.g. the government, government backed organisations or a company. Hence the nomenclature – debt. If equity markets scare you, you can park your money in debt instruments. This asset class includes bonds, National Savings Certificate, Public Provident Fund (PPF), Corporate Deposits, Employee Provident Funds (EPF) and even Fixed Deposits (FD) amongst others. For risk averse investors, debt is a plausible alternative to the volatile equity.

Invest in real estate – Property appreciates:

Having an additional property and earning rent from it is a boon when inflation sets in. Though there is no ‘property index’ to support this, inflationary periods in India have usually been accompanied by rising prices of real estate. By investing in real estate you can enjoy a twin benefit – capital growth due to appreciation and rental income earnings.

Invest in gold:

During times of inflation, you can take refuge in gold. Gold is certainly a hedge against the high and sticky inflation over a long term. This is because the factors that affect gold are different from those that affect the prices of other assets. For instance, during the financial crisis, world gold prices shot up drastically. You can buy gold bars, gold mutual funds, ornaments, Gold Exchange Traded Funds (ETFs), etc

As an investor you have to keep a tab on all your investments. Inflation can sometimes even at into the returns offered by assured return schemes like fixed deposits and small savings schemes, thereby, leaving you with dismal real returns. Hence, it would be negligent to put all your eggs in one basket.

 

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06 Aug

Saying I do! The best ways to fund it

 

The questions been popped, the big day is looming forebodingly close and the excitement is growing. Thinking of robbing a bank to make your nuptials as perfect as you want them to be? Don’t let money hold you back. Here are more practical (and legal!) ways to fund your big day:

Create a budget

Before even setting a date plan your budget. Start keeping a separate sum of money every month for your wedding. Divide your total budget by the number of months you have to save till the ‘Big Day’. For e.g. if you are planning to wed in a year with a budget of Rs 600,000, divide Rs 600,000 by 12 (which equals about Rs 60,000 per month). Where should this money go? Accordingly you and your fiance can open a wedding account. Now you can direct a portion of your monthly income towards this account. Open your account in a bank which offers high interest to saving account holders. If this amount seems achievable, defer your wedding or try cutting corners at least till the big day.

Get someone else to pay

Honestly, getting someone else to pay for your wedding is always the best option. If your parents/grandparents/aunts/uncles, anyone and everyone is offering to fund your wedding don’t try and be a saint – accept gratefully. If not for the full amount, you can split the costs with your family. This will help lighten the load.

Consider credit as an option

Like most young couples, if you don’t have a ton of cash in hand (and borrowing the money from your folks is inconceivable), you will have to pare down your ceremony and reception. In this case you can turn to credit. Using a credit card will help you spread and defer the payments. You won’t have to make all payments at one time. But be careful because running up your charge card excessively could cost you ungodly amounts in interest.

Hire a wedding planner

Thinking of saying “I do” to a wedding planner? Wedding planners will help you wrangle details you might otherwise overlook. Since they are in constant contact with vendors they will help you make the most of your budget and allocate it properly. They will cost more money, but they will know about discounts and deals that you don’t.

Throw your wedding during off-peak season.

The date of your marriage has a huge impact on the costs. Avoid months which come with higher price tags. Plan your wedding during the off-season and avail the same quality of services at greatly reduced rates. Getting married during off season means better deals. It is cheaper too. It is far cheaper to throw a wedding on a weekday instead of a weekend.

Opt for a personal loan

You definitely don’t want to commence your married life with a debt. Consider opting for a personal loan as a last resort, only if all other alternatives are wiped out. Wedding loans fall under the category of personal loans.

Though rates for personal loans are fairly low, they turn out to be more costly than what you will pay for a mortgage. This because a personal loan is unsecured – there is no collateral. Remember the very best deals are reserved for those with an excellent credit score. Hence, it is important that you obtain a high credit score.

Now you can make your fairytale wedding come true!

 

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06 Aug

Common traps that snare first time home buyers

 

All geared up for your new home? You’re white-picket fence dream has come true. You’re anxious to move into your new home and are surmounted by a whirlwind of emotions, primarily happiness. But you must be cautious and smart. One mistake is all it will take for your new home buying experience to become a financial nightmare.

Recent college graduates may consider owning a home a quintessential symbol of achievement and may not look into the details. Newlyweds may overlook the nitty gritties of home buying. After taking a deep dive into marriage, these lovebirds are likely to think that other major decisions like purchasing a home will be a cakewalk. Even 30-something professionals, who may have excellent financial knowhow still make novice mistakes.

Arm yourself with these tips to avoid making 10 of the most costly mistakes that could put a hold on the ‘SOLD’ sign outside your new home.

Spending more than you can afford

Set a realistic limit on your home buying adventures. Create a budget and determine how much of your new home can you really afford. It’s simple. Make a list of all your monthly expenses – rent, loan payments, groceries, insurance payments, etc. Subtract this from you’re your monthly take home pay. The result is the amount you can spend on your new home every month. Don’t look at homes outside your price range. Stretching beyond your financial means will put you in a dangerous spot. The rule of thumb permits you to devote only a third of your income towards housing expenses, which include rent, interest and other outgoings. It is very important that you set your borrowing limit before taking the plunge.

Failing to qualify for mortgage or loan

You book a flat and decide to pay the initial deposit with your savings and you rely on the bank for the rest. To your dismay, the bank turns down your loan request. Hence, it is always better to explore all your home loan options before signing on the dotted line. These days you don’t have to rely on maintaining a huge savings deposit in order to avail a loan from your bank. Banks and other financial institutions are making loans readily available for borrowers. Get a pre-approved home loan. A pre-approved home loan will ensure that you don’t face last minute hiccups at the time of actual approval. When pre-approving a loan, the bank looks at your repaying capacity and accordingly fixes the loan amount. This way you can know your upper limit and can look for a house within this amount.

Look out for added costs

Buying a home is not only about replacing your rentals with loan EMIs. You will also have to incur stamp duty, property taxes, maintenance expenses, repairs, commission to brokers and utilities. Check with the seller, your broker and to be neighbours what are their monthly expenses like. Factor in all costs and try and estimate what your total expenses would be. This will help you decide if you can afford the type or size of home that you desire, if you need to work on increasing your income or if you need to further curb your monthly expenses.

Get everything in writing

As a buyer you will expect light, shower and bath fixtures, ceiling fans, washers, dyers and other appliances only to discover an appliance free house and that the seller has even taken the drapes down. Go through your contract with a fine tuned comb. Consult your lawyer and broker before signing on the agreement. Ensure that everything from painting to even the door bell is in writing.

Take inspection seriously

You are excited and emotional about your new purchase but you will have to keep your emotions in check until you have a clear picture of the home’s physical condition. You will have to check what kind of shape the house is in before you close the sale. Although the house might appear to be alluring, it would be foolish not to get it professionally inspected. For all you know you might end up spending profusely on hidden defects. Look for signs of water leakage, cracks, etc. If there are conditions that will need repair, you may be able to negotiate with the seller to drop the price and the inspection will be worth every penny.

Choose the right agent

Choosing the right agent will not only affect the price but also the entire experience of purchasing a property. The right agent can make buying your dream home a soothing experience but a wrong agent can leave you with an egg on your face and all your aspirations will be washed away. If you’re not confident of your agent get a second opinion. Get recommendations from friends and relatives. Ask questions and interview two to three agents to decide the best fit for you.

Buying a home may be the largest purchase you might ever make. But it need not be the most difficult.

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06 Aug

Defaulting on your home loan EMIs? Here is what you can do

 

Defaulting on your home loan EMIs? Here is what you can do

Everything was going fine for Ankit – back to his hometown, owner of a dream villa, VP at his new firm. He was glad to be back to his roots after living in UAE for fifteen long years. Ankit had easily availed a loan from the bank to purchase his home. He would pay the EMIs regularly until one day the worst happened to him. Due to a medical emergency in his family, Ankit was not able to pay his EMIs on time.

Consider Ankit’s plight. Imagine yourself in a situation wherein you were not able to pay your EMIs due to a personal emergency. Usually, banks do not consider you as a loan defaulter if you skip one EMI. However, if you do it for three consecutive times, you will be constantly sent reminders of the same. If you continue not to respond, the bank will send you a legal notice and you will be labelled as a loan defaulter. So what now?

Banks usually pursue to recover their dues from the borrower for five to six months. If in vain, the bank can seize your property and arrange for it to be auctioned. In addition to this, your credit score will fall drastically. But you need not bury your head in the sand. Here are some of the necessary steps you can take if you miss your EMIs:

Contact your bank:

Defaulting on your loan is not the end of the world. As soon as you know that you are going to be facing problems in meeting your loan repayment schedule, contact your bank. If you ignore the issue, the situation will only worsen. But if you are keen to pay your EMIs, then let your bank know of your good intentions. If you have a good repayment track record or if you have a genuine problem it is likely for the bank to offer you some leeway.

Ask for options:

It is important to convince the bank of your ‘Genuine Intent’ to repay. You can ask the bank to consider deferring your payment and ask for a grace period. If the bank is satisfied that you will start paying the EMIs soon, it might consider your request. You can ask for restructuring or refinancing your home loan by taking into account your future income. You can also offer your savings as a collateral. By increasing the tenure of your loan, your repayments will be of smaller amounts and easy to manage.

Seek counselling:

You can visit a counselling centre and seek financial advice. Counselling centres will advise you how to talk to your bank about various repayment options. They will also help you to draw a budget to meet your repayments on time. Some banks have in house counselling centres for the same.

Budget your finances:

Draw out a budget that you will be able to adhere to. Calculate your monetary inflows and outflows. Identify areas where you need to curb expenditures. For e.g. stay away from luxuries till your finances are back on track again. Keep aside six month expenses in a liquid fund. This will help you tide over crisis situations.

Attaching a property for loan default is a cumbersome procedure and banks usually keep this option at arm’s length. The last thing a bank wants, is to increase the number of Non-Performing Assets (NPAs) in its books. If you default, the bank’s Non-Performing Asset (NPA) ratio increases, which will reflect poorly of the bank’s performance. Hence, banks prefer to recover back their loan than repossess you property. The best option for you would be to communicate with the bank of your troubles and convince them of your ‘Genuine Intent’ to repay.

 

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06 Aug

Demystifying your credit score

 

Wondering what this score is all about? How can one number generate so much power? If credit is part of your modern life, then so is your credit score. If you think that you can just ignore your credit score, you might want to think again! You will be surprised to know how this number can affect several facets of your life.

CIBIL is India’s first Credit Information Company (CIC) and is the central recorder of the credit information of all borrowers.

CIBIL credit score or credit rating is, in short, a three digit figure ranging from 300 to 900 points which denotes a person’s credit worthiness. This score determines everything from whether you qualify for a loan, credit card and if you are admissible for rent to how much interest you will pay on your loan.

Lenders look at your credit score to assess their risk in lending you MONEY.

Lenders make their decision based on:

  • Your application form
  • Your credit report
  • Their lending policy
  • Your past transactions with them

Understanding what lenders are looking for and managing your credit score accordingly is the key to getting the credit you can afford. Let’s demystify the numbers that determine your credit worthiness.

What is in that credit score of yours?

Some common factors that make up a archetypal credit score include your bill paying history, your recent credit activity, the number of accounts you have, how long have your accounts been active, how much of the available credit are you using, whether you’ve had a foreclosure, a debt referred for collection or a bankruptcy in the past, credit balances, depth of credit, available credit, types of credit use and the length of credit history.

What’s not in your credit score?

Your credit score does not factor in such information as income, employment, age, sex, national origin, marital status and race.

If your score is not what you want it to be, you can take these precautionary measures to improve it:

  • Every time pay on time

If your payments continue to remain outstanding on an active credit account, lenders can close your account and collect all the outstanding balance. Under these circumstances your account will be marked as defaulted. If you make several late payments your credit account, lenders will consider the account to be ‘delinquent’. Do not miss payments to lenders even if you just have to pay the minimum balance. Missed payments negatively impact your credit score.

  • Reduce your credit balance

Lenders are cautious to extend credit to people with high credit balances. If you’re struggling to juggle payments, lenders will notice this. But if you’re using less than 50% of your available balance and are making your payments on time, it shows that you can well manage your credit. Banks and financial institutions will also look at your non-revolving balance trend (total balance in the last 3 months in comparison to 12 months ago) to see how you manage your finances over time and if your balance is increasing or decreasing. Keep your credit card balances well under the maximum available limit.

  • Don’t exhaust your available credit

Your ‘available credit’ is the difference between your outstanding balance and your credit limit. For example, let’s assume visit the nearest bank and apply for a credit card. If your card had a credit limit of Rs 50,000 and you had a balance of Rs 10,000 on it, you would owe Rs 10,000 and have available credit of Rs 40,000. This implies that you can make another Rs 40,000 in purchases.

Banks generally grant a larger credit limit to those who have a larger income and a good credit score. Alternatively, if your credit limit increases, it will enable you to obtain a higher credit score.

  • Settle outstanding accounts

If a credit account is closed or a loan has been repaid in full, the account is recorded as settled. Settled accounts have a positive effect on your credit score. It reflects how responsible you are in managing your accounts. If you have outstanding balances on a large number of credit accounts, it will indicate that you are excessively reliant on credit, thereby decreasing your score.

  • Age of accounts

Since credit score takes into consideration an individual’s credit history, hang on to those old accounts. They have positive effect on your credit score. However, new credit accounts decrease your credit score.

  • Credit Applications

When you apply for credit, a ‘credit search’ is recorded on your report. Numerous credit applications suggest that you are over-reliant on credit and this will have a negative impact on the way a lender views you. Do not apply for credit too frequently.

Credit scores need not be confusing – you just have to know how they work. Purchase your credit information reports regularly and check your credit history from time to time. This way you can study your report to ensure it is building up as required. Any variances can be corrected at the earliest and you can consciously engage in practices to raise your score.

 

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06 Aug

Common money management pitfalls we find ourselves in

 

Let’s face it: money is a necessity. We need money in order to live. Human lives are centred around it. Financial folly can come at any age. With each financial breakthrough and responsibility comes a wave of a confusing labyrinth of temptations, options, dead ends and traps. But you can be assured that you’re not alone. You are surrounded by peers who have a history of monetary mishaps and poor financial choices.

It is up to you how you survive. To begin with, at least be cognizant about such snags. This can give you the confidence to handle your finances more effectively. If you want to abstain from taking a step backward for every step forward, you need to get on top of your finances. You need to sidestep common money mistakes that can drain your wealth, or misapply it. The best way you can circumvent these mistakes is to learn what they are.

Avoid these seven mistakes and be ahead of the financial race early on.

  1. Being financially illiterate

Just because you were not taught money management by your parents or school doesn’t mean that you should be debilitated by your finances. It is never too early or too late to begin developing financial literacy and taking control of your finances. Learn about saving, investing, budgeting, wealth management, repayment and retirement from financial advisors, books, websites and maybe even free classes in your area.

  1. Spending more than you earn

If you are spending more than you make, you’re in the red. You definitely need a budget to tighten the belt and buckle down. To calculate how much money you need to set aside each month as savings is simple: deduct the total annual expenditure you incur from your yearly inflow and divide it by the number of months. Make your budget your right hand man; your buddy. This way you will be able to control your spending and keep your expenses within the limits of your income.

  1. Impulsive buying

There you are, innocently window-shopping, when you spot a pair of fabulous shoes – 20 percent off! You just have to have it, don’t you? Shopping as per your whims and fancies can cost you more than you can imagine. While the occasional splurge may not ruin your plans for good money management, habitual impulsive buying will. You have to take charge of your wallet and resist the urge to splurge.

  1. Not investing money earned in financial instruments

Investing can be intimidating for those who don’t have a lot to invest. But let that not deter you from investing. Investing prevents your money from lying idle in the bank and grows it at a higher rate than a savings account would. It is not mandatory to have loads of money or a fancy financial advisor to help you invest. Instead, check with your bank and your relationship manager.  You will find a whole range of investing and wealth management services from fixed and recurring deposits to mutual funds and insurance plans.

  1. Being scared of financial jargon

Most people are turned off by the extensive jargon in finance. It sure can confuse you. A term like CAGR is being used with increased frequency amongst finance professionals. If you look it up, it’s actually a simple word. It stands for compound annual growth rate, or the pace at which an amount (e.g. revenues) has increased annually over a given period of time. You do not need a very extensive academic background in finance just to be able to start investing. You just need to drive yourself in the right direction. All those who are considered financial experts by society started out not knowing anything about finance in the first place. You can learn too.

  1. Keeping up with the joneses

Take pride in your net worth instead of competing with your neighbours and peers. If your friend or neighbour has bought a new car or a fancy gadget, there is a chance he/she is signing up for another debt. Those who have showy items are not necessarily financially better off.

  1. Worrying about retirement

How about sailing smoothly into retirement? If you want to live comfortably when you are 65, start investing at least 3% of your annual pay towards a retirement fund. Invest into the PPF and NPS schemes which have the added benefit of being tax free investments. If retirement is a long time away for you have something very valuable on your side – time. Develop a systemic approach towards retirement planning based on the stage of your life. Invest a greater part into equities in your youth and scale up the investment into fixed income instruments as you near retirement. If you wanted to start saving for retirement years ago, but just never got around to it, you can sure catch up. Invest the maximum you can in your retirement fund each year. Finish off your major expenses by retirement (e.g. buying a house, car, etc.). Maintain health insurance to meet upcoming medical costs. You may not have a huge retirement fund, but at least you will have a healthy one.

Good money management has a wide scope – from knowing where you are spending your money today and living within your means to saving for short and long-term goals, having a realistic plan to pay off your debts and having a well thought out plan in place for where you want it to go in the future. Become financially savvy with your money and achieve financial success.

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06 Aug

Tips to protect yourself against credit card fraud

 

You shopped with your credit card at your favourite mall. Bad news: Your credit card is one of the million that may have been subject to a data breach. Living in the digital age has its upsides and downsides. The ability to send and receive emails, make payments, process transactions, etc. at the drop of a hat is something we could never envision 20 years ago. But with the spurt in ecommerce and increasing proliferation of online payment options, credit card frauds are intensifying significantly.

How does credit card fraud happen?

Credit card fraud can happen in a variety of ways. A retail or bank website can get hacked and your card number can be stolen from there. A dishonest waiter may take a photo of your credit card and use it to make purchases or create another account. You may be offered prize money and asked to reveal your account details to claim your prize. The next thing you know, your card is charged for items you never purchased. A thief may even go to the extent of going through trash to find discarded billing statements and misuse it.

You can mitigate these risks by incorporating a few practices into your daily routine.

  • Don’t lend your card to anyone and don’t leave it anywhere. Ensure that there is a secured place for your card in your wallet and even at home and office.
  • Don’t keep expired cards. If you no longer need them, discard them appropriately.
  • Don’t give your account number to anyone on the phone unless you are sure that it is a reputable company.
  • Carry only the card you need for that outing. Avoid taking all your cards with you in your wallet every time you step out. This can minimize your losses in case of theft.
  • Keep your eye on your card and make sure you take it back after it has been swiped.
  • Ensure that you shop online only from reputed websites.
  • We have a habit of taking out our credit cards beforehand when standing in a line to make payment. This must be avoided under all circumstances as it gives credit card thieves the opportunity to copy down your credit card number or take a picture of it with their cell phone.
  • Check your bill statement thoroughly and reconcile it with the purchases you have made. If you notice any discrepancies report it to your card company at the earliest.
  • Writing down your Personal Identification Number (PIN) defeats the purpose of having one. Don’t write it down, memorize it.
  • Never sign a blank receipt. Draw a line across any blank spaces above the total.
  • Shred all bills and receipts that have your credit card number on them before discarding them in the garbage.
  • If you can’t find your wallet and you suspect it has been stolen or it has been lost, immediately call your card issuer’s 24-hour customer service and have them cancel the card.
  • Before you give your personal credit card information online check if the website has a locked lock in the lower right corner of your internet browser.

It is important for the cardholder – you to stay vigilant about protecting your personal information. The payments industry has been long working on creating innovations to combat fraudsters and create a safe and secure environment for all financial transactions. But the first line of defence lies with the cardholder. Being informed of what you can do to protect yourself against credit card fraud is a crucial preventive measure for every credit card holder.

 

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06 Aug

Things you should know before agreeing to be a guarantor for a loan

 

A guarantor is someone who pledges to repay the loan on behalf of the person who has taken the loan. If a lender is concerned about the borrower’s ability to repay he will insist for a guarantor. As a guarantor you are liable for repayment of the borrower’s debt in case of default or whatever other reason may be. You must realize that by agreeing to be a guarantor for someone you are reducing your own loan eligibility to the extent of the amount of loan you are liable for as a guarantor.

If a family or friend requests you to become a loan guarantor, it is difficult to refuse. But, before consenting to become a guarantor, it is necessary for you to consider what all it entails.

What if the borrower defaults?

If the borrower is not able to meet the repayment on time, the lender will turn to you to recover his loan. You will be the one with the bad credit record if you and the borrower can’t repay the loan. This will reflect badly on your credit report when you want to apply for a loan in the future.

Unlimited guarantee

Guarantees have no limitation. For e.g. you are signing up to be a guarantor for a home loan of Rs 2,500,000. As a guarantor you think that you are only a guarantor for the loan amount i.e. Rs 2,500,000. But, that is not the case. You are signing up to the home loan and subsequent borrowings or liabilities that the borrower enters into such as overdraft, personal loans, overdraft facilities, etc.

Who can be a guarantor?

Generally parents, siblings and other family members serve as guarantors for the loan. Banks and other lenders also allow extended family members and ex-spouses to act as guarantors. In case of home loans guarantors are usually limited to immediate family members.

Of what help is the guarantor?

With the help of a guarantor, borrowers, especially first time borrowers will be able to meet the bank’s criteria when applying for a loan. Guarantor loans enable people with a poor credit history to obtain loans.

Downsides

Guarantor loans can have huge repercussions on your relationship with the borrower, in case the borrower defaults. By consenting to be a guarantor you’re risking your own finances for the borrower’s sake. You will not be able to flounce out of the loan at your own will. You are obligated to repay the entire loan amount to the lender including any additional charges, costs, etc. incurred with connection to the loan.

How does it work?

A guarantor generally allows his property to be used as collateral on the borrower’s loan. The mortgage will not support the loan but will be used to support the guarantee from the guarantor.

You must realise that you will not be able to forsake the commitment during the duration of the loan at your will. As a guarantor, you will not be subject to any recourse once the default takes place.

Ask yourself!

Will you be able to repay the loan in case the borrower defaults?

Are you willing to risk having your property repossessed in case the borrower defaults?

Did you seek legal advice when applying?

If you find that your borrower will fulfil all repayment commitments and you are confident of your current and projected finances you can consent to becoming a loan guarantor.

 

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