How to manage credit cards and loans


1. Please mention some of the best practices to manage credit cards and loans ?

The ideal thing would be to use a credit card only for emergency expenses and also expenses that are huge in amount which would not be easy through cash in cases like a medical emergency etc. It would also be more favorable to use credit card to make sure that you do not fall prey to the idea of paying only the minimum amount due on the same.

2. I would like to make some investments, please provide me with some ideas?

Please note that investments should be dependent on time horizon, risk appetite of individual, objectives of investing.

3. I wanted to know about good insurance plans - life cover along with good sum assured at end of term. I am not really interested in ULIP but can check good endowment policies (if any)?

Ideally for a good sum assured you should look at a pure term plan which provides only for a life cover. For investment purpose you should look at other vehicles. For e.g.: You can look at a cheap term policy plans from companies such as Kotak.

4. Which Gold ETF is the best one to invest in terms of cost and other factors?

Goldman sachs Gold bees is the best to invest.

5. I do not have a credit card and scared to take one as many of my known friends took personal loans to pay their credit card bills. Is credit card very essential?

A Credit card is helpful in cases of emergencies like medical etc. You can take one card but be careful how you use it

6. I need to know the difference between SIP and PPF and which one holds more benefit?

SIP and PPF are two separate investment options. PPF is a pure debt investment in a government backed investment with guaranteed returns for a definite period while SIP is a way of investing in mutual funds similar to EMI payment

7. Is the reality market set for slowdown? Is this the right time to not to invest?

Equity/markets are extremely volatile. If you want to invest, do only through SIPs. Usually, it is done in equity based mutual funds.

8. Please suggest that will it not be good to invest in 2 or 3 funds, one in large cap, one in multi cap & one in banking sector, if yes please suggest which funds are good?

You can invest in HDFC top 200 fund, IDFC Premier Equity Fund (mid cap fund) etc.

9. If I take medical insurance for my parents what are the exclusions for it?

If the person covered under the policy is a senior citizen then the tax exemption under sec 80D on the premium paid for medical insurance goes up to Rs 20,000.

10. Please advice that, is investing in PPF is a good idea ?

Investing in PPF is a good idea from a retirement perspective and if you have children educational goals in the next 10+years.

11. Please let me know about infrastructure bonds?

There are options of infrastructure bonds which are done for tax saving purpose up to 20k. The interest on these could be between 8.25%-9% depending on the company

12. What is this superannuation plan managed by LIC that appears in our FBP?

It is a contribution you make towards your retirement which is then paid out as annuity, 30% can be pulled out of it as tax free at time of retirement.

13. Is the interest earned on infra bonds taxable?

Yes, it is taxable

14. Where can I apply for a infrastructure bonds?

Any of the investment institution/banks/advisors can help you with the same.

15. Do one needs to pay any exit charge when taking back my PPF invested amount?

PPF withdrawals can happen only after 15 yrs, before that you can make partial withdrawals and no exit charge.

16. How to convince my bank to increase the limit of my credit card?

The bank usually does not increase your credit card limit until they check your credit history and the balance you maintain in your account.

17. How to plan the home loan management? For e.g.: Will it be better to finish the existing home loan first and think for second home or save monthly directly for second home?

It entirely depends on the kind of savings being done by yous.

18. Please tell us about Credit rating and its importance in relation to credit cards/loans?

It depends on various factors such as credit utilization. Presently, CIBIL gives you a score that lies between 300 and 900 which sums up your credit record. It is inversely related with the risk of your defaulting on repayment for more than 91 days. Hence a score of 750 or 800 is good.

19. The interest paid on the outstanding bill seems to be high but my financial status sometimes does not allow me to pay on time. Can I use credit cards to overcome this situation (need help in managing finance)?

In such a situation you should not use your credit card to repay the amount as the penalty on the expense is way higher than the use of the same.

20. Please guide me on good child insurance plans?

Several companies provide child plans. You should look at your objective in terms of value and presently how much you can invest.

21. I have kid of 5 yrs, is it good to take child plans or go for any SIP in mutual funds?

Since your child is young, you can look at ULIPS as they provide investment + security.

22. I have ULIP policies in ICICI & LIC. What are the other policies that I can take to avail tax exemption?

Please look at insurance from a need based perspective and not to save taxes.

23. How to check my credit score?

Your bank will help you with the same to rate your credit score.

24. Which is better investing or home loan repayment?

It entirely depends on what kind of loan and savings you have.

25. I want to invest for my two sons (in terms of insurance). For one, I have obtained ICICI's Smart Kid policy. Can you help me with a new policy which is best suited in the market for kids?

Investing in child plan depends on the age of the child. You can look at HDFC Child plans.

26. Which is the best housing loan available?

There is no one best housing loan available. You should look at one based on the loan amount you need to borrow and its tenure. Take a look at public sector banks.

27. Please advice as i have taken personal loan of 3lakh with @ 16% of rate of interest for 5 years. Now, i am planning to reduce the tenure to 3 years, is it a good idea? Does it save me some interest money?

Always try to pay off your loan as soon as you can and avoid taking such loans as the interest rates are high. You can look at doing a combination of equity based and debt based SIP's and also tax free bonds.

28. Which of the insurance is best term life insurance or whole life insurance?

Term insurance is a best option from the perspective of high life cover.

29. Please suggest some good Infra bonds to invest?

Presently, IDFC infra is open for investment.

30. Will taking a personal loan helps me in tax deduction.

No, personal loan will not help in tax deduction.

31. Please suggest me whether pre-closure of loans are recommended or it will have a negative impact on my credit score?

No, pre closure of loans will not affect your score. You should decide on the basis of the interest rate of the loan and what interest deduction you are currently having.

32. How is HDFC youngstar plan for children. I have invested in that for my daughter?

HDFC Youngstar is a good investment vehicle for the education of children.

33. Which of the health cover is good apart from the corporate health cover?

You can look at Max Bupa and Apollo Munich Health Insurance options. Ideally, with a cover of 3-5Lacs.

34. How about LIC child Education Plan?

Generally, LIC premiums are much higher versus other companies, you could look at a good child plan from a private company.

35. I have availed home loan to the maximum amount that I can avail still I need some amount for financing home. From where can I get additional amount ?

You may not get the benefit of additional loan from any bank as you have already surrendered your property papers to one bank and that is the maximum you can get.

36. Are there any recommended investment ratios in Equity, Mutual funds, Gold, FD etc?

It entirely depends on what are your goals and how aggressive or conservative your approach is.

37. In what kind of investment i can save higher tax?

The maximum you can save is to the limit of RS 1.2Lacs in a combo of tax saver funds/insurance/ PPF/ infra bonds or a 5 yr FD.

38. How do I investment in Gold online?

You can look at Gold ETF's via Demat account.

39. Looking at the long term retiral benefits, how much of my salary I should plan to invest regularly to meet my retiral needs?

You will have to define your retirement needs and consider factors such as inflation etc. and work backwards to arrive at a monthly investment value.

40. Planning to invest in child's plan, for my son who is 2 years old now, could you suggest name of any good private company?

You can look at children plans from HDFC, Kotak Life, Max New york life insurance etc.

41. How can i increase the SIP amount, say for 1 yr i have been investing 1000 rs on a given MF, how can i increase it to 1200 Rs going forward. Can i use the same folio or the SIP is fixed for the tenure ( which is 2 yrs )?

You can stop the present SIP and restart in the same folio for an increased value.

42. With the current stock markets in volatile state, do you think switching the SIP to Gold ETF is as a better idea?

Gold is only a hedge against other investments. You should continue SIP's in equity and look at investment in Gold as 5-7% in total portfolio allocation.

43. Out of monthly or quarterly or half yearly or annual investment, which one is better ?

You should look for monthly investments as it makes for a systematic method of investing.

44. How good is NSC compared to Mutual Funds? Any Do's and Don'ts while paying auto loans?

Auto loans payments should be made systematically and no default on the same. Also, just because you are getting a loan don't go for a car beyond your reach. NSC provides a fixed return on investment versus Mutual Funds which could be variable. You can look at a combination of investments with fixed returns and risk attached investments.

45. Between Gold coins and online gold, which one is the best?

Online Gold is the best.


end faq


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