Both the credit forms, i.e. loans and credit cards play a significant role in our financial life. They help us manage financial emergencies, accomplish important financial goals, maintain our liquidity, and get funding whenever required.
However, if you misuse or are careless towards these available credit facilities, it could hurt your finances and credit profile. Their impact can be found out by seeing if your credit score has increased or decreased, through the check free credit scorefacility.
So consider the following questions to be answered about your various credit-related habits that could be harming your credit score:
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Do I frequently charge more than I can afford to pay back on my credit card?
Consumers do have a tendency to take the easy way out and pay only the minimum amount due, which is typically 5% of the total amount owed, when they spend more than they can afford to repay promptly and in full by the bill due date. Even though this practise of paying the bare minimum amount due by the due date can spare you from paying late fees, the unpaid balances would still be subject to high finance charges. Any missed payments, no matter how small, could result in late fees and harm one’s credit rating. To see if there have been any changes that reflect how you handle credit repayment, you can even frequently check free credit score.
What steps should I take if I’m having issues making prompt, complete credit card payments?
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If you are having trouble making full and on-time credit card payments, think about converting all or a portion of your debt into EMIs. These conversions have up to a five-year repayment period and interest rates that are significantly lower than the high finance charges. When you convert your outstanding credit card bill into EMIs, either in full or in part, you can continue to benefit from the interest-free period on new card transactions as well as make repayments at significantly lower interest rates and in smaller tranches. To see the results of your efforts to raise your credit score, keep in mind that you can check credit score on the bureau’s website or on any of the numerous financial portals that offer this service.
What risks might I run in terms of money if I use my credit card erratically?
There can be a lot of negative financial repercussions if you don’t make credit card balance payments on time. One of the biggest traps is the imposition of high finance charges and late payment penalties, as well as the elimination of the interest-free grace period and the withdrawal of pre-approved offers by card issuers. Other traps include the discovery of a negative impact on credit score when you check credit score. Users of credit cards need to be aware that inconsistent payment schedules and balance payments could, at worst, trap them in a debt cycle.
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Have I ever withdrawn money using my credit card? Is that a wise plan?
A cash advance fee of up to 3.5% of the amount withdrawn as well as finance charges from the day of the withdrawal until the date of repayment are both applicable on cash withdrawals made through a credit card. As a result, these withdrawals should only be used as a last resort. If you must use your credit card to make a cash withdrawal, make sure to pay the entire balance back as soon as you can. To ensure that no errors slipped through the cracks and negatively impacted your credit score, check credit score each month to monitor your credit repayment history.
How can I improve my credit score?
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People with low credit scores can improve their scores by practising sound money management, such as making on-time payments on credit card bills and EMIs, keeping their credit utilisation ratio under 30%, monitoring co-signed/guaranteed loan accounts, and maintaining a healthy credit mix. When they check free credit score occasionally, perhaps once a month, if they adhere to these suggestions, it might eventually start to rise.
While those who have just received credit, or those who do not yet have a credit history, can improve their credit score by using credit cards sensibly and paying their bills on time. People who are unable to obtain regular credit cards due to a variety of factors, such as poor or no credit, risky job profiles, insufficient income, unserviceable locations, etc., have the option of applying for secured credit cards.
Do I need to regularly check your credit report? What if I don’t? What possible consequences might result from not doing it?
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The information that lenders and credit card companies include in your credit report is used by credit bureaus to calculate your credit score. Inaccurate information on your credit report may lower your credit score. When you check free credit score through your credit report, these errors are particularly likely to be the reason for a sudden or unexpected drop in your score. You won’t be able to spot such errors, whether they are due to clerical errors made by the bureau, lender, or card issuer, or a potential fraudulent credit transaction, unless you routinely review your credit report. Each of India’s four credit bureaus offers consumers a free credit report once a year.
It is advisable for borrowers to compare interest rates provided by various lenders before submitting loan applications. What factors should borrowers consider when selecting a lender?
Depending on how each lender assesses the credit risk, there can be significant variations in the likelihood that a loan or credit card will be approved. Some lenders may have more lenient loan eligibility requirements than others when evaluating loan applications. Similar to this, the cost of borrowing money influences how much lenders charge in terms of interest rates and other fees and charges. As a result, before submitting their final loan applications, borrowers must carefully assess the loan offers they receive from as many lenders as they can. They should start their search by inquiring about any potential loan offers with the banks and NBFCs they already do business with. Compare the rates and deals provided by other potential lenders using that as a benchmark. Never forget to check free credit score before applying for a loan to ensure that, at the very least, it won’t be a factor in the lender rejecting your application or making it more difficult to get a loan approval.
Heana Sharma: A rising talent, Heana boasts 2 years of versatile content writing experience across multiple niches. Her adaptable skills result in engaging and informative content that resonates with a wide spectrum of readers.
According to a 2023 report by the Employee Benefit Research Institute (EBRI), only 52% of U.S. adults reported having life insurance. While we may not like to think about it, preparing for the future is crucial. Life insurance offers peace of mind, knowing your loved ones (or your business) will be financially secure in your absence.
This post will guide you through everything you need to know about life insurance planning, from understanding different types of policies to using them for both personal and business needs.
Read along so that you can plan a brighter tomorrow.
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Understanding Life Insurance
Life insurance is a contract between an individual (the insured) and an insurance company (the insurer). The insured pays regular premiums to the insurer, typically on a monthly or annual basis.
In return, the insurer promises to provide a lump-sum payment, known as the death benefit, to the designated beneficiaries (whether an individual or a business owner) named in the policy upon the insured’s death.
How does it work?
Understanding how life insurance works is crucial for both individuals and businesses. Below, we’ll outline the key steps involved in a life insurance policy, from purchasing to the payout process, ensuring financial protection for you and your loved ones, or continuity for your business.
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Policy Purchase: You buy a policy from an insurance company, stating how much coverage you want and who will receive the benefit when you pass away.
Premium Payments: You pay premiums regularly to the insurance company to keep the policy active. This can be done monthly, yearly, or as a lump sum.
Coverage Period: As long as you keep paying premiums, the policy stays active. It can cover a set period of time (term life insurance) or your entire life (permanent life insurance).
Death Benefit Payout: When you pass away, your beneficiaries file a claim with the insurer, providing proof of death.
Claims Processing: The insurer reviews the claim and, if approved, pays out the death benefit to your beneficiaries.
Beneficiary Use: Your beneficiaries can use the money to cover expenses like funeral costs, debts, or daily living expenses, providing them with financial stability during a tough time.
Types of Life Insurance Policies
Here’s a simple overview of various life insurance options, suitable for both individuals and businesses.
Individual Life Insurance
Term Life Insurance: Covers you for a certain time, like 10 or 20 years. Good for things like paying off a mortgage or supporting your family if something happens to you.
Whole Life Insurance: It covers you for your whole life. It has a savings part that grows over time, but it costs more than term life insurance.
Universal Life Insurance: Similar to whole life insurance but more flexible. You can change how much you pay and how much goes into savings.
Variable Universal Life Insurance: This lets you invest part of your premiums in the stock market, so it can grow more, but it’s riskier.
Guaranteed Universal Life Insurance: Gives you fixed growth on your savings, so you know what you’ll get back.
Final Expense Insurance: Covers things like funeral costs so your family doesn’t have to pay.
Business Life Insurance
Buy-Sell Agreements: Help businesses if an owner dies. It pays for the owner’s share so the business can keep running.
Group Term Life Insurance: Businesses can offer life insurance to their employees as part of their benefits package.
Executive Bonus Programs: Businesses can use this to give their top employees extra money and life insurance.
Estate Planning: Businesses can use life insurance to plan for passing the business on to someone else when the owner dies.
Benefits of Life Insurance
More than 100 million Americans are uninsured or underinsured when it comes to life insurance, If they understand the benefits as given below, they can understand how important it is to have life insurance, whether in businesses or for individuals.
For Individuals
Life insurance is vital for individuals to secure their finances and provide for their families in case of unexpected events. Let’s look at how individuals benefit from life insurance.
Financial Protection: Life insurance provides a financial safety net for loved ones in the event of the policyholder’s death, ensuring they are financially secure.
Debt Coverage: It helps pay off outstanding debts such as mortgages, loans, and credit cards, relieving the burden on family members.
Income Replacement: Life insurance replaces lost income, helping beneficiaries maintain their standard of living and meet ongoing financial obligations.
Estate Planning: It facilitates the transfer of wealth to heirs, ensuring smooth estate settlement and minimizing estate taxes.
For Businesses
Businesses need life insurance to stay financially stable and keep operations running smoothly during unforeseen circumstances. Let’s see how life insurance helps businesses.
Key Person Coverage: Life insurance protects businesses against financial losses resulting from the death of key employees or partners, covering expenses like recruitment and training.
Business Continuity: It provides funds to cover operating expenses, debts, and salaries, ensuring business continuity during the transition period after the death of an owner or key employee.
Buy-Sell Agreements: Life insurance funds buy-sell agreements, allowing surviving partners to buy out the deceased partner’s share of the business, ensuring smooth ownership transitions.
Loan Protection: Life insurance can be used to secure business loans, providing lenders with assurance that debts will be repaid in the event of the policyholder’s death.
Employee Benefits: Offering life insurance as an employee benefit helps attract and retain top talent, enhancing employee satisfaction and loyalty.
Using Life Insurance
Life insurance is a valuable tool for both businesses and individuals, helping to meet financial needs and offer peace of mind. Let’s see how it works in different situations.
Life Insurance in Business
Businesses use life insurance to keep running smoothly, protect against financial challenges, and attract talented employees. Here’s how it helps businesses.
Business Continuity Planning: Life insurance can ensure that if something happens to a business owner, like their passing away, the business can keep running smoothly. It provides money to cover expenses and debts so the business can continue operating.
Funding Buy-Sell Agreements: When business partners have an agreement that says what happens if one of them dies, life insurance can provide the money needed to buy out the deceased partner’s share of the business. This ensures that the business can carry on without financial strain.
Estate Tax Planning: Life insurance can be used to help pay for taxes that may be owed when someone passes away and leaves behind a business or other assets. It ensures that the business doesn’t have to be sold off to cover these taxes, preserving it for the next generation.
Corporate Tax Planning Services: Life insurance can offer tax benefits for businesses. Money invested in certain types of life insurance policies can grow without being taxed, and the benefits paid out to beneficiaries are often tax-free. Corporate tax planning services help businesses take full advantage of these benefits.
Attracting and Retaining Talent: Offering life insurance as part of employee benefits can make a business more attractive to employees. It shows that the company cares about their well-being and wants to help protect their families financially. This can help the business attract and keep talented employees.
Life Insurance in Individual Planning
Individuals use life insurance to protect their families, prepare for retirement, and leave a meaningful legacy. Here’s how it helps individuals.
Financial Protection: Life insurance provides financial security for loved ones by covering living expenses and debts in the event of the policyholder’s death.
Income Replacement: Life insurance replaces lost income for primary breadwinners, ensuring that their family’s standard of living is maintained.
Legacy Planning: Life insurance allows individuals to leave behind a meaningful legacy for their beneficiaries, whether it’s providing an inheritance or supporting charitable causes.
Supplemental Retirement Income: Certain life insurance policies offer cash value accumulation, providing additional income during retirement to enhance financial security.
Health Benefits: Some policies offer benefits for terminal illnesses, providing financial support for medical expenses and treatments during challenging times.
Estate Planning: Life insurance helps cover estate taxes and other expenses, ensuring a smooth transfer of wealth to beneficiaries and preserving assets for future generations.
Tax Efficiency: Life insurance offers tax benefits, with the death benefit generally being income tax-free for beneficiaries, providing tax-efficient wealth transfer.
Conclusion
Life insurance planning is essential, but it can be complex. Knowing what you need can give you and your family comfort. Whether you’re just starting to look into life insurance or thinking about changing your current plan, it’s smart to stay updated and ask for advice.
Remember, a staggering 30% of Americans realize the importance of life insurance but haven’t yet taken action. Don’t be part of that statistic; explore your options today for a secure tomorrow with us.
The Forex trading market is a dynamic environment where efficiency and effectiveness are key to success. AlfaXM emerges as a prominent platform, offering a combination of easy-to-use interfaces with advanced technological capabilities, designed to enhance trading experiences for investors of all levels.
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Nowadays, the proliferation of fake videos on stock market operations is increasing and getting viral. In the wake of this, the NSE and the National Stock Exchange have issued certain guidelines on these, reported Livemint.
NSE has extended a stern caution to those investors who make fake videos purportedly recommending stocks by showcasing Shri Ashishkumar Chauhan.
Notably, Shri Ashishkumar Chauhan is the Managing Director and Chief Executive Officer of NSE. NSE said, “NSE in a few investment and advisory audio and video clips falsely created using technology.
The National Stock Exchange (@NSEIndia) cautioned investors on #fake audio and #videos of their MD- CEO @ashishchauhan recommending stocks — which are circulating on social media.
Such videos seem to have been created using sophisticated technologies to imitate the voice and facial expressions of Shri Ashishkumar Chauhan, MD & CEO of NSE.”
As per TimesNow, the national stock exchange has also requested investors to verify information, exercise vigilance and only trust what appears on official NSE channels.
Information can also be verified from www.nseindia.com, the official website. Other official social media handles include, “Twitter: @NSEIndia, Facebook: @NSE India, Instagram: @nseindia, LinkedIn: @NSE India, and YouTube: NSE India.”
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Ashishkumar Chauhan, the MD and CEO wrote on X, “Caution – clarification on fake audio/ videos of NSE MD and CEO recommending specific stocks – circulating on social media for last few days.”
This statement is the follow-up of the surfacing of the manipulated video and audio clips regarding stock recommendations.
These fake videos make use of advanced and sophisticated technology which mimic the MD’s voice and facial expressions. Thus, this creates an alarming and misleading situation for unsuspecting investors.
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NSE Employees Cannot Recommend Stocks
Thus, investors are advised not to fall for such fraudulent content and take investment decisions. NSE also clarified that its employees are “not authorized” to recommend or endorse any specific stocks.
NSE has also asked online platforms to take back potential deceptive videos. Meanwhile, the public and investors are requested to verify the authenticity of information and exercise caution before taking any wrong step which may cause financial loss and personal harm.
