Check-up on Your Credit Score in 6 Simple Steps

When one thinks of financial check-ups, the most popular choice that comes to mind is the Credit Information Bureau of India Limited which is also known as CIBIL. CIBIL is the country’s standard format for credit scores and any bank, non-bank financial institution or any other financial institution will check the applicant’s CIBIL score before approving any applications for loans and hence it is imperative that one knows their CIBIL score.

With the New Year, many people set themselves goals of losing weight, being healthy, being fit and giving up vices such as smoking and as important as it is to be healthy and take up healthy habits and keep a check on one’s health, it serves one well if they checked up on their financial health as well. An annual check-up of one’s health is beneficial in many ways and can help diagnose and detect illnesses or anomalies earlier on, similarly financial health check-ups every year will keep your credit score in good stead.

Any person can be up to date on their CIBIL score by following these six simple steps

1)      Acquire and Fill up the CIBIL score request form online: The first step in acquiring the CIBIL score is to log onto the website of CIBIL and go to the section for applying for the credit score. The direct link to this section for accessing the request form can be reached by clicking on the following link. CIBIL.com/online/credit-score-check.do

2)      Filling in the details: Once the request form has been acquired, the applicant needs to fill in the necessary fields of information. The applicant will have to provide all details requested and the more details provided, the better. The details that are normally required to be filled in include PAN card, Passport details and other identity proof details such as a Driver’s license or Voters ID

3)      Submission of the form and Payment: After the applicant has filled in the form and verified it by entering the anti-spam codes, they are required to click on proceed to payment option which will direct them to the next page. This page will require them to authenticate a payment. The payment for credit score request is Rs 500. This payment can be made through Debit or Credit Cards or through Net banking facilities.

4)      Authentication: This step follows the payment. The system on the authentication page generates a set of questions, usually around 5 that are based on the details submitted and may range from details of the current loans or the details of the applicant’s bank account. A minimum of 3 successful answers should be given for authentication success

5)      Confirmation: The final step is confirmation. Once the confirmation message has been generated by the system, the applicant will receive the CIBIL scores within four business days. Applicants will also receive a payment receipt confirming the payment made towards the request

6)      The authentication fail step is needed only if the 4th step is unsuccessful. In case authentication is unsuccessful, a copy of the payment slip along with self-attested documents need to be sent over to the registered corporate office of CIBIL in Mumbai. Applicants can also reach out on the helpline number for any guidance which is +91-22-61404300.

The payment towards acquiring the CIBIL Score is a meagre amount and the process is relatively hassle free. The online process is convenient and allows applicants to view their credit scores and make sure they are on top of scores that are straying or falling below the desired levels.

Importance of Credit Score

Credit score is an important component of your financial background. Even if you haven’t actively monitored or worked towards building a credit score, you already have one thanks to the dealings with various financial institutions who feed your financial data to CIBIL. CIBIL is responsible for providing credit score or CIBIL score to people.

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CIBIL score and CIBIL report are arguably the single-most important component that defines whether you will be receiving any form of credit from a financial institution, be it a credit card or a loan. As such, it is imperative that you actively try to maintain a good credit score by having a good credit history.

Let’s say you have acquired a personal loan, a home loan and a credit card from three different institutions. All the three institutions will be fed to CIBIL, which will then analyse this data and come up with a credit score. Therefore, all your financial data is eventually consolidated by CIBIL so as to provide an outline on your financial background.

What is a credit score?

Your credit score will be a 3 digit number lying between 300 and 900. A high score implies good credit history while a score towards the bottom implies financial mismanagement and unpaid dues in the past and present.

When you are applying for any form of credit, the bank or the lender will approach CIBIL with a request for your CIBIL report and score. CIBIL will then forward a copy of your report to respective authorities.

How do I access my credit report?

You can access your credit report from the bank or lender with whom you have applied for credit. Alternatively, you may directly approach CIBIL and get your report in a few simple steps. You need to fill up and submit the application form, which can be downloaded online. Next, you need to pay the amount for the report through online means. On completing the online authentication process which establishes your identity, you will instantly be given access to your credit report. There’s also the option to complete the authentication process offline once you have emailed all the relevant documents.

Who are allowed access to my credit report?

All credit institutions, financial sector entities and the whole banking industry are allowed by law to access and work with CIBIL to contribute towards and access a person’s credit report. Telecom industries also have access to your CIBIL report and this is mostly used when postpaid connections are applied.

Insurance companies are also allowed access to CIBIL reports of individuals. Brokers or other credit rating agencies can also become CIBIL members and access credit information pertaining to clients. As such, it is no more only about getting loans or credit cards – your CIBIL score will likely imbue itself with all your financial dealings. Therefore, it is advisable to actively work towards building a good credit score so that you are allowed to access the full spectrum of financial services on offer.

 

Kerala’s unique gold jewellery

The crafting of gold into intricate and exquisite jewellery is an art form that takes many years of dedicated effort and patience to master. Goldsmiths in Kerala have not only honed their skills and attained mastery of this craft, but have also customized it to suit the needs of people in the region by giving it a very specific kind of aesthetic appeal. Not by any small coincidence, gold necklaces (particularly the bridal ones) in Kerala have their own unique style and are sought after the world over.

Goldsmiths purchase gold at the current gold rate in Kerala, and get to work making these masterpieces. Gold jewellery and necklaces in Kerala are very popular, and people buy gold not only to establish their level of success and standing in society, but also as a very effective investment.

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  • Jasmine bud (Mulla Mottu) necklaces have small ‘petals’ of gold all along the length of the necklace, masterfully crafted to very specific standards of size, uniformity of the petals, and quality.
  • Lakshmi Mala necklaces have many gold coins imprinted with the image of the goddess Lakshmi, and are connected with smaller pieces of gold to the main spine of the necklace. It’s a lot of gold, and the central gold coin is generally larger than the others, which are all of a uniform size and weight.
  • Palakka Mala necklaces are a perfect example of gold and precious stones used together to create a stunning work of jewellery, which has both gold and stones used in such a proportion that they complement each other, and enhance the overall beauty of the piece.
  • Kaasu Mala necklaces are among the most lavish necklaces that use a large number of gold coins set very close to each other, hanging individually off the spine of the necklace. Gold coins of a standard size and weight are flatly overlapped very close to each other to give the impression that it is a single thick necklace of gold, but each is allowed to shine individually as they are not directly connected to each other.
  • Pathkam necklaces are basically pendants with gold chains, but the mastery of the goldsmiths has brought these to the forefront in terms of popularity. The pendants are usually huge single chunks of gold moulded to be aesthetically appealing, and hang perfectly in the centre of a fine gold chain.

 

All the styles of gold necklaces can be found in popular locations to buy gold in Kerala.

Global gold prices and Fed rate hikes

Learned wisdom

According to conventional wisdom in the financial markets, gold rates are inversely proportional to Fed interest rates in that during times of ultra-loose financial policy measures, gold prices increase.

Also, since monetary stimulus such as quantitative easing can pave way for inflation, the demand for the precious yellow metal may increase given that it is considered a good hedge against inflation. As is the case with other commodities, gold prices are determined by the supply and demand trajectory on a global scale. However, it is important to note that changes in the supply side of gold occur very slowly and therefore, any wide fluctuations at the margin originate from the demand side and more so the investment side. While the jury is still out on whether the gold prices fall as a direct result of Fed rate hikes, there is a view that around four-fifths of the yellow metal’s bullish run during 1970-80 can be attributed and even mathematically proved to be a result of rising interest rates at the time.

Gold prices and rate hikes

Intriguingly, the bullish gold market of the 1970s was witnessed during times of high interest rates. According to a school of thought which goes against this grain of the aforementioned conventional wisdom, traders, across the globe seek status qua and more often than not, base their decision on fear about any change in market conditions and therefore, chose to believe that stock markets will rally without any corrections. However, there is considerable evidence which reveals how gold price in 1973 and 1974 increased owing to Fed rate hikes. Likewise, gold price fell in 1975-76 on the back of plummeting interest rates. Again, there was a hike in the price of gold in 1978 and 1979 as interest rates rose.

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There is a view that rising interest rates prove to be bullish for gold since the former is bearish for stocks. When conventional asset are taking a beating, several investors flock towards the yellow metal. Rising rates, in many ways, result in overvaluation of stock markets, as it were. It has been observed that during times of higher interest rates, corporate profits are hit, which result in reduced earnings. According to experts, stock markets, decline during interest rate hikes. As a result, investors seek solace in alternative investments such as gold. For instance, when gold prices rose by 186% in 1973-74, the S&P 500 fell by 42% during the same period. Likewise, when the S&P 500 index rose by 57% in 1975-76, the price of gold plummeted by 28% in the same period. During the last big rate-hike cycle between June 2004 and 2006 when Fed raised interest rates to 5.25%, the price of gold rose by 49.5%. One of the other woes faced by the precious yellow metal is the US monthly jobs report. Traders in gold futures tend to panic on the prospect of a rosy US jobs report, anticipating a Fed rate hike.

Reason Why the Price of Gold Fluctuates

Among the countries around the world, India is the largest consumer of gold. Being on the top of the list, India’s gold jewelry demand is around 36%, which is the largest share in the world. The country also consumes around 22% of the world’s total coin and bar investments. In 2010 alone approximately 958 tonnes of gold was imported by India. The demand of gold jewelry increases during festivals, which are considered auspicious periods for buying gold. The sale of gold and the gold rate also goes up during the wedding season.

One of the key factors that influence the price of gold is because of the production cost, determined by gold producers in order to maintain profitability. The volatility in the gold price occurs due to the following reasons:

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Gold Import Restraints

Gold, in India, is preferred as an investment option. However, with the government and RBI taking stringent measures to restrain the import of gold has  slowed down the demand of investing in this precious metal.

Higher domestic gold inventories

According to 2014 reports, India was voted the top consumer of gold in 2014. Also in the first quarter of 2015, it became the second biggest consumer of gold, after China. Higher domestic inventories have also impacted the pricing of gold, leading to fluctuations.

Monsoon Concerns

Monsoon also impacted the price of the bullion. With India being an agricultural country, farmers play a key role in  the demand for gold. With no formal banking system to access two-thirds of the country’s population, which hails from rural areas relies on gold as their investment option and wealth store. With monsoons being sluggish this year and crops growing less, the demand has come down.

Massive dumping in China

With China selling a large amount of gold in the market, the prices slipped further. The Shanghai spot market sold approximately 33 tonnes of the precious metal. The gold reserves in China were lesser than the expected level, which added pressure on selling the precious metal, as investors sought other avenues.

Stronger US dollar

With the dollar rates hitting a high and other currencies dropping  made commodities denominated by the dollar more expensive. Gold priced with dollar became expensive in the market lowering the demand of the metal. Indian gold prices witnessed a downsizing in recent times, because of the high rates of the US dollar.

Hike in US Fed Rates

With the dollar gaining the higher rate in the market, the US economy is expected to expand. The rise in interest rates for higher returns will attract investors, driving up the value of gold.

With the dizzying rise and fall of the gold prices, the conflict whether to invest in gold continues. Whether, the current prices will plummet further or rise, only time will tell.

Gold Saving Schemes – how do they work?

Gold, being the number 1 priority savings instrument for the Indian masses, now has schemes that are centred on enabling people to own it more easily. Jewellers have designed “gold saving schemes” which are supposed to help people save up a sizeable chunk of funds, which they can then spend on gold jewellery.

How it works is that you regularly invest a set amount of money every month, for a predetermined period of 1 or 2 years, and the jeweller covers one bonus instalment towards the end. At the end of your deposit tenure, you can use all these saved up funds to purchase gold jewellery.

Let’s break it down.

  • Non-transferable investment.

You invest a fixed amount each month for a fixed period of time and towards a fixed goal – you can do this with other instruments like recurring deposits, etc. for a better return on investment and more flexibility. Money invested towards a gold saving scheme can only be used for purchasing a very limited range of gold jewellery from a specific seller. If you were to invest the same way, at the same rate in a recurring deposit, you would have the same (or more) amount of money to spend at the jeweller of your choice, on the design of your choice – or if you’ve changed your mind by then you can go buy a motorbike or something.

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  • It’s a regular money saving scheme.

The scheme’s marketing makes it seem like you’re buying gold every month, when in reality, you’re just setting aside a certain sum every month in order to buy gold at a later date. It’s a simple matter of keeping money aside every month. You can do this with a piggy bank in your house, or invest in a recurring deposit scheme or a savings bank account and earn some interest. The only difference is that the bonus instalment your jeweller gives you at the end of the scheme gives you a 8-10% return on your total investment.

  • Specific purpose directed investment.

The monthly instalments you make are directed towards purchasing gold jewellery. If you change your mind halfway through and wish to purchase gold bars, coins or bullion, you’re in for a disappointing conversation with the jeweller. You can only select jewellery from a specific range, as decided by the jeweller. You can’t buy any jewellery you want, and your personal choice and taste does not matter at the end of the day. The jeweller decides what gold jewellery you buy. If you want to use the saved up funds to purchase a set or piece of jewellery apart from the pre-decided plan-specific range, you will have to pay additional making charges which effectively means that your 8-10% return on investment is useless.

  • Jewellers use these schemes to guarantee future sales.

By making you invest your hard earned money every month towards their own jewellery store, gold jewellers effectively ensure that customer come back and buy from them at a future date. Not only that, once you take a gold savings scheme from a particular jeweller, you have no choice but to purchase jewellery from that jeweller only. You can’t transfer your savings or withdraw them for their cash value.

  • Gold rate fluctuations

The gold rate from when you start investing and when you’re able to use your investment will not be the same. And the rate at which you will have to purchase the gold is the rate at the end of the investment tenure, not the rate as on the date you started investing. Bear in mind that the gold rate will, on an average, be higher than it was the previous year and you will have to spend at that rate, regardless of whether you want to wait for a few days for a small dip in gold prices.

What does the jeweller do with your monthly investment?

Well, the jeweller offering you the scheme can do literally whatever he wants with your money, including taking it and investing in a recurring deposit scheme and earning a decent profit. There is no real gold getting credited to your account, no real monetary gain you’re making. The jeweller is simply ensuring that you come back and buy from his store at the end of the tenure, and sweetens the deal by giving you one month’s investment (or some other benefit, which is easy for him to do now that he has made a decent profit off your investments).

When do gold saving schemes work?

Gold savings schemes make sense for those few select people who have planned a wedding a couple of years down the line and have not heard of any other investment or savings instrument apart from a gold saving scheme.

Investing regularly in any investment vehicle that offers you decent returns will have the same result as a gold savings scheme in terms of how much money you’ll have at the end of the tenure to buy gold – with the added advantage of flexibility in where you spend that money.

One good time to invest in such a plan, however, is if you know the jeweller well, and trust his designs, and have a wedding planned for a year or two from now. It becomes easier to save through these schemes if you know that you’re getting exactly what you want at the end of the scheme.

Here’s a list of popular gold saving schemes in the market right now:

  • “Jewels for less” by PC Jewellers.
  • “Shagun” by Gitanjali Jewellers.
  • “Gold Tree” by GRT Jewellers.
  • “Gold Harvest” by Tanishq.
  • “Jos Alukkas Gold Saving Scheme” by Jos Alukkas.
  • “Gold Schemes” by Bhima Gold.
  • “Kalpvruksha” by Tribhuvandas Bhimji Zaveri.

Homemakers, pay attention to your CIBIL scores

If you’re a homemaker and spend a lot of time on domestic improvement and maintenance, chances are you haven’t paid too close attention to your CIBIL credit rating. It’s true that you wouldn’t really have had to, given that the breadwinner of the family handles most financial matters. But what if one day the breadwinner is rendered incapable of providing for you and your family, or if the worst comes to pass and she/he is no longer of this world?

7312842_origGranted, your first concerns won’t be purely financial, but there will come a time when you may feel the pinch of financial insecurity and instability. To combat this, it’s strongly recommended that even homemakers keep an eye on their credit rating from credit information bureaus like CIBIL/Equifax/Experian.

Why is a credit score important?

Well, a good credit score is what all lenders look for in applicants whom they consider lending to. A sub-standard or non-existent score will mean that you can’t get a home loan to renovate your home, and you can’t get an education loan to educate your children. You won’t even be eligible for a credit card to manage household expenses. Although you will definitely need a job or some source of income to pay off EMIs and bills, you may even need a good credit rating to land yourself that job – as employers are looking at credit scores to determine stability and reliability.

How can you, as a homemaker, take steps to improve your credit score?

The simplest way to get started in the process of establishing a decent credit score is to get a credit card, and use it judiciously. Even if you have the cash for a small purchase, use your card and pay it off as soon as you can, before the due date. Never, ever, ever overshoot the due date on a credit card payment, as this will damage your credit rating in a terrible way.

Regular, stable and responsible use of a credit card is a huge indicator of stability and capable financial management, resulting in a constantly growing credit score.

  1. Maintaining a savings account in your name, and having an amount of money deposited in it every so often is a good way to survive the financial crunch. When the breadwinner is no longer in the picture, all those deposits will work as a financial cushion to break your fall. Savings accounts earn good amounts of interest and are instantly liquefiable. Also, as an added bonus, a savings bank account in a particular bank will increase the chances of you getting a credit card from that bank, as they know all your details and have details about your financial status. The same credit card can then be used to improve your credit score.
  2. Stand as co-applicant or guarantor on the breadwinner’s loans and make sure he/she pays off EMIs as and when they become due, and make sure your better half doesn’t default on the loan in any way. Standing as a guarantor makes you just as responsible for honouring the loan, and a successful repayment of the loan will improve your CIBIL score by a sizeable amount.
  3. Co-applying for a loan with your spouse is a good way to make sure both credit scores go up, if you pay your loan back diligently and don’t default in any way. It is also a good way to secure a far greater loan amount than you would have received with a regular single-applicant loan, and on better terms, as the lender will be far more confident in recovering the debt with two responsible adults working towards paying it off.

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Don’t underestimate the value of a good CIBIL score as it’s a direct indication of your creditworthiness and ability to manage finances and debt. Taking a loan to secure your future in the future may depend entirely on this, and no matter what, make sure that the EMIs on any loan you take (with or without a primary family earner) can be paid off on the income you currently generate.

A regular income will enable you to manage a household as you once had, but when huge expenditures like college tuition for your children or emergency medical expenses befall you, a loan may be your only option for large sums of money, quick. Ensure your CIBIL score is up to the mark to ensure that you’ll always be eligible for credit – and always have something to fall back on.

CIBIL to incorporate utility bill payment in your credit history

cibil_logoCIBIL is the apex credit bureau of the country. CIBIL stands for Credit Information Bureau India Limited. CIBIL does the task of collating customer’s’ credit history and then evaluating customer’s’ credit score based on their credit history. Apart from the credit score, CIBIL also furnishes credit report for individuals and companies. These reports are the first point of reference for banks and lending institutions for checking the creditworthiness of any customer who seeks to apply for any kind of loan.

Credit report of any individual or company plays a huge role in determining loan eligibility and credit sanction process. However, in case there is a discrepancy in your credit report, then chances of obtaining credit can be ruined to a great extent. While maintaining a good credit history is in itself a challenge owing to small oversights in bill payment creating deep dents in credit reports, CIBIL is now further mulling to include utility bill payment history too.

How will CIBIL include payment history in credit report?

Before sanctioning loan to customers, banks check their credit report and history. Currently, this history includes only credit related repayments like loan and credit card payments. However, efforts are on to include not just loan and credit card bill payments but also phone bill payments, insurance premium payments and utility bills to calculate the creditworthiness of an individual. In order to expand the scope of credit history, Credit Information Companies are in talks with telecom operators as well as the election commission of India to obtain access to their database.

credit-score-factorsIf everything goes on smoothly then in the near future CIBIL will have not just credit information but also postpaid bill payment history included in the credit reports. Most telecom companies in India are members of CIBIL and are using data, however, customer data is not being shared by these companies with CIBIL.

Current functioning of CICs in India

Currently, when information about an individual is sought by any user, it gets only information provided to the CIC by its member. This does not include non-member related credit history which the client would have had with the non-member. The move to include more customer data on payment history stems from recommendation by a committee set up by RBI. The committee led by HDFC Bank managing director noted that India ranks 28th in the list of “getting credit” by the World Bank.

royalty-free-bill-clipart-illustration-440906Report by this committee pointed out that India has very low coverage by credit bureaus that cover just 19.8 per cent of adult population as against 100 per cent in various other countries. The report also noted that there is low penetration of financial services in the country and that credit information business in the country can still be improved to a great extent.

Quite recently. CIBIL was also roped in by the government to help track death insurance claims made by customers. With a huge database of customer information, CIBIL has become the apex organization to furnish data which can be used to study and track customer behavior, and to furnish insights that can be leveraged to ensure better credit information business.

How is credit history and credit score important?

The first thing that banks check upon before accepting your loan application is your credit history. CIBIL rates credit scores of individuals between the range of 300-900. Any score that is greater than 750 is considered ideal for obtaining credit. In short, your credit score and history are pointers to your repayment pattern. Since, non-performing loans are a huge liability for any lending organization, credit reports come across as convenient tools that lend insight into payment behavior of customers and thus, help banks reduce cases of loan default.

Measures to increase credit score

While credit scores above 750 are good and healthy, anything below this calls for trouble. Customers can check their credit scores before applying for credit with any bank. For customers who have poor credit scores, following are some of the steps that can help improve it.

  • Timely payment of credit card and utility bills
  • Minimize the number of credit channels availed. If required, get a loan to consolidate all your debt into one single channel
  • Use credit cards wisely so as to avoid overspending which may result in delayed payments and an affected credit history
  • Have a mix of secured and unsecured debt in your financial portfolio
  • Get your credit report and check if all the information being displayed on it is correct and current
  • Do not apply for credit with too many banks

CIBIL is just a collator of your credit information. It does not make changes to your credit history and as such the onus to improve your credit score lies in your own hands.

Buying Gold – Are Online Transactions Bankable?

If one were to trace the history of humankind there would probably be two eras, one before the internet came into existence and the other post the internet entered our lives. There is no doubt that the internet has changed our lives, and while the quality of change might be debatable the quantum of change is for all to see. The internet has entered every sphere of our lives, taking over our daily chores, simplifying matters and increasing our pace of life.

The internet has managed to impact everyone, the young and the old alike. Gold has been around for centuries, survived wars and climate changes, natural disasters and financial crisis, and still managed to keep its sheen intact. Purchasing gold is an smart investment, owing to its testament over time. Gold is an extremely precious commodity and gold rate reflect its value. Gold prices in India have been changing according to global trends, with the present rates offering an excellent investment opportunity to Indians.

goldThere are multiple avenues to buy gold, it can be physically purchased through banks or jewellers or through the internet. The craze for internet shopping has picked up in recent times, with global players entering the Indian retail chain, albeit via the internet. Most Indians generally prefer to make tangible purchases, wishing to see and feel the product before they buy it, which holds true for gold as well. While the internet offers a host of benefits over physical transactions, there are always bound to be lingering doubts over it, because buying gold is an expensive proposition.

Purchasing gold coins – Online purchase Vs Traditional Purchase

  • Timely delivery – Traditional gold purchases, either through banks or jewellers enable buyers to get delivery of their gold immediately after payment. This is not the case with online purchases as a buyer might need to wait a few days before getting the gold, a wait not many would be comfortable with.
  • Quality assurance – Gold coins sold by banks are checked for quality before they are sold. This might not be the case with all online purchases and it is possible to get gold of lower quality, which would need to be verified independently by the buyer.
  • Physical presence – Indians love to see and feel the product they are purchasing before actually buying it. This plays a huge role in online purchases as there are chances of a product differing from what is actually shown in an image. Images might just be for representational purposes and might sway the buyer without being truly reflective of the product.
  • unnamedCosts – Banks and jewellers have additional overhead costs like manpower and utility bills, which make any gold purchased from them a bit more expensive. Traditionally, gold rates in India reflect international prices but they aren’t the exact same as international gold prices due to taxes and duties. Buying gold online could be cheaper, as overheads are reduced in an online environment, though the difference might be negligible in most cases.
  • Buy-back– Banks in India cannot buy back the gold sold by them. Gold purchased through jewellers can be sold back to them, whereas gold purchased online cannot be sold back to the seller.
  • Authenticity – Gold coins sold by banks and big jewellers are authentic, with certification. Gold coins purchased online might not be as authentic as traditional purchases, making them a risky affair at times.
  • Refunds – Banks might not offer any refunds once they sell gold coins. Jewellers might consider refunds in case the customer is not satisfied, though they might not necessarily give one. Most online portals which sell gold offer a refund period, subject to the customer meeting certain criteria.
  • Delivery charges – When a customer buys gold at a bank there are no delivery charges levied on such purchases. This is not the case with online purchases as a seller might ask the buyer to pay delivery charges on the gold.

The internet has changed the way our world does things, making a huge impact in multiple fields. While online transactions dealing with household commodities have increased over the last few years, online purchase of gold is yet to find a footing in India. Banks and jewellers continue to be the preferred choice when it comes to buying gold as a vast population is still not open to the idea of buying gold from an unknown, virtual entity.

Best reasons to use credit card | Credit Score

Financial experts keep telling that the credit card could land you in trouble and it will hurt your Credit Score. It is true that reckless use of credit card can lead to debt trap and bring down your CIBIL score immensely, but there are benefits of using credit cards as well. The benefits being:

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  • Accepted universally:

It is easier to use a credit card when you are travelling as it is universally accepted when compared to debit card or cash. If you are in a foreign country and want to book a hotel room or rent a car, credit card will come to your aid. Debit card might be safe for you to use in your domestic country for domestic use, but to use it in a foreign country it is definitely not so safe.

  • Enjoy grace periods to make payments:

The benefit of making a purchase using credit card is that you do not have to pay instant cash. The practice that you must follow is to make the payments well within the time frame given to you so that you can hold on to the cash in your savings account and also access credit at your convenience for no extra cost. Apart from the billing cycle, you are also given a grace period to pay the outstanding balance without having to pay any extra fee. The time frame is usually 15- 20 days depending on the credit card issuer. If you judiciously use the billing cycle and the grace period, your CIBIL score will not be harmed.

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  • Save on air travel:

Debit cards do not offer as many benefits as they are an extension of your savings account. However, credit cards on the other hand does offer you benefits if you have a CIBIL score of  750 or above. If you are a frequent flyer, then you can opt for a co-branded credit card with a particular airlines that you regularly fly with. This will give you a sign up bonus of a good number of travel miles and will save you a lot of money on air travel. If you have chosen the right cards, you might get one or two free flights in a month depending on the sign up bonus and other points that you have accumulated in your travels. Some cards offer you points that can be redeemed for gift cards or freebies.

  • Cash back schemes:

Most of the e-commerce websites have major tie-ups with the major banks and offer anywhere between 1-5 percent cash back on most of the purchases. This will help you save quite a lot when you are shopping online.

  • Earn reward points:

Reward points are the best way to make the best way to avail more benefits from your credit card. If there is no use of those reward points, then stock them up and you can use them to avail hefty discounts on flight tickets or hotel bookings when you wish to go on a vacation.

  • You won’t have shortage of personal funds:

Online frauds are not uncommon and when you use your debit card to make payments online, there is a potential for fraud. Credit cards are safer than compared to your debit cards. By the time you realise that your debit card is being used fraudulently, you would’ve lost a lot of money by that time and you will fall short of personal fund. Credit card transactions will send you a notification at all times and you can immediately inform your issuer to stop the transaction.

Though there are benefits of using credit cards, reckless usage will land you in a lot of trouble and you will have a poor CIBIL score that may not give you access to credit in the future. So, use your credit card wisely and enjoy all the benefits that it has to offer.