Personal Finance Latest news and expert tips on how to make money and save money.

The world today runs on the cogs of money, the centralized resource to obtaining, using and disposing of all the primary and secondary resources. As such, financial management demands the highest attention whether personal or corporate finance, holding the reigns of function at all levels. Financial management today is diversified with respect to the normal Indian- in the form of loans, insurance, credit card facilities, auto finances, property loans, fixed deposits and tax savings to mention a few.

With the changing regulations and increased awareness, the options available to a person to garner savings and create a financial back-up are growing too. From the limited openings like Life Insurance Corporation for insurance, National Savings Certificates and National Savings Scheme, Unit Trust of India mutual funds, Public Provident Funds etc. The opportunities to invest and save in India have burgeoned into innumerable options with the finance avenues broadening the playing field. This article gives you an insight into the other developments in some of these financial avenues like loans, tax savings and credit card facilities that have occurred, sharpening the financial tools required for efficient management of your finances.

The concept of insurance is essential to have a good start on personal savings as well as back-up for emergencies; and with life insurance policies like Unit Linked Plan offering tax benefits along with flexibility in the premium tenor, one can make use of the opportunity to invest and secure amount.

Auto loans are another viable option, and with 60% of cars in India financed, the credibility is sealed! The car or vehicle being a depreciating asset, investment in auto loans must be carefully scrutinised with respect to Equated Monthly Instalment (EMI) rates and foreclosure charges, not to mention turnaround time and mode of repayment.

The third aspect of finances includes the tax benefits and savings which the Indian can accrue, on account of home loans and Public Provident Funds, the latter being a long-term savings option. There are many rebates on taxes offered by the Government on certain investments, and tax exemptions are offered for several saving instruments mentioned above and this list includes home loans as well.

An important aspect controlling most of the financial transactions today is the credit card and debit card option, which allows us to perform financial transactions conveniently. Although statistics show the debit card transactions ranking higher than their credit card counterparts, the concepts of credit card usage and the recent developments through Consumer Information Bureau India Limited are invaluable in financial management today.

Credit card owners who have outstanding amounts piling up can look to salvage their position by turning those amounts into personal loans, which come at a rate of 12-18% p.a. as opposed to the high rates (36-44% p.a.) levied on the credit cards.

The concept of credit information reports are new in India, though common practice abroad, which gives the credit worthiness of every individual owning credit cards and going for loans. The information pertaining to the repayment behaviours and financial history obtained from banks, financial institutions, credit card companies and housing finances is used by the bank or lending agency to gauge the creditworthiness, set up the rates and decide on how fast to issue loans.

Understanding the current financial trends in India and investing appropriately, maintaining a decent credit status is essential for today’s investment-savvy Indian to extract maximum returns.

It’s true that there are many people today who shun the credit card in their lives. Some who are still facing problems also strive to slowly lessen the use of the plastic. Financial experts point out the card is useful as long as you know how to use it and you know what you’re getting. In short, you have read and understood the fine print.

There are also some misconceptions regarding the use of the credit card and how one can gain a good credit score from it. Don’t believe what they say that you can get a good score from paying your bills on time. Yes, paying on time is the most responsible thing to do but it does not guarantee you a favorable score. This is so particularly if you often reach your credit card limit.

Take note that there are other factors being considered by credit card companies and agencies. The balance on your last statement is just one of them. So keep in mind that when you incurred a high balance even just one time, it can have a negative impact on your score.

The solution here then is to pay a few days before your regular credit card statement date. When you are able to do this, the agencies that determine your credit score will receive a report of a low balance from your end. So remember that on time does not always mean more points for you.

Another thing to learn is that maintaining a balance won’t give you a good score. Some people believe that it’s okay to have a remaining balance each month but this is wrong. The credit bureaus are actually particular about a consumer’s payment history as well as the balance that’s being carried on their monthly bill. So if you have the extra money, do pay more than the minimum amount due to lower your balance moving forward.

Do away as well with the mindset that you will get a better score if you earn more. Having a high income, according to the experts, does not have any bearing on one’s credit card score. The benefit of a high income, though, is you can be approved of a loan faster than those who don’t earn much.

You might also think that closing one or two of your credit card accounts can help you with regards to your score. Unfortunately, this is not so true because it can adversely affect your credit score. Eliminating some cards would mean lowering your so-called credit utilization ratio. What you should do then is to just maintain the card and use it once in a while for small purchases. This will keep your payment history in a much better condition.

Finally, know that paying off your debt will not immediately give you a good score contrary to what many of you think. Remember that any negative information you’ve incurred in the past will be seen and stay in the credit report for seven years while any bankruptcy information will remain for 10 years.