How Are Payday And Personal Loans Different?

 Applying for a Loan is a convenient manner to finance expenditure. Apart from your savings, you also benefit from planning for future expenses without worrying about the exhaustion of accumulated funds. Today, there are many options to help you avail of funds for emergencies. The kind of Loan highly matters.

Factors like interest rate and Personal Loan terms are necessary to help you assess your repayment capacity and differentiate between schemes. Knowing how it differs from Payday Loans help you make an informed decision.

Definition

Banks and institutions offer attractive schemes to customers. They differ between occupations. A Personal Loan for salaried is unsecured. You receive the amount according to the lender’s terms for legitimate purposes. You need to repay them according to the conditions laid down.

Payday Loans are for the short-term. Also known as advance cash, they get sanctioned quickly and require the borrower to repay them within a short tenure. The charges are also higher compared to a Personal Loan for the self-employed.

Eligibility

Follow the Personal Loan eligibility set by the lender. They allow you to borrow finance up to Rs. 25 lakh based on your eligibility, amounting to a larger sum compared to Payday Loans. The upper cap of your Payday Loans is the salary amount.

Tenure

Borrowers can opt for a Bank Personal Loan tenure of 12 to 60 months. On the other hand, Payday Loans require to be honoured between two to four weeks duration on the receipt of the paycheck. If you cannot honour the borrowed funds, you need to renew the Loan and other associated costs into a fresh set of fees.

Documents

To verify their eligibility, potential borrowers need to submit their KYC documents, bank statements, and income proof. You can also assess the repayment amount using the Personal Loan calculator. The only eligibility criteria for Payday Loans is a steady income equivalent to the borrowed sum.

Borrowing cost

The interest rates for Personal Loans are reasonable, starting from 11.9% per annum. Lenders also levy processing fees, insurance, and service charges. Payday Loans get instant approval. However, they attract a higher interest rate. Sometimes, you calculate the interest rate on a daily or weekly basis. You can apply for them from the banking app as well.

Age and CIBIL score

Applicants between the age of 21 and 60 years, self-employed or salaried, are eligible to apply for the Loan to finance their requirements. Candidates in cities should earn at least Rs. 25,000 and Rs. 20,000 monthly in other towns across India to be eligible for borrowing funds. Self-employed persons should make a basic net profit from the business they run. A CIBIL score above 750 is a necessity for approval.

What Does Digital Banking Mean?

 At its most basic level, Online Banking uses technology to deliver Digital Banking services. Some wrongly believe that it simply means using an online platform, but it involves more. Using the most updated technologies at all levels and across all service delivery platforms is what it means to be digital.

It acts the same in the branches,  head office, online service delivery platform, banking app, ATMs, and point-of-sale machines. The difficulty with viewing banking online overlooks the bank's other digital initiatives. The internet or mobile platform serves as the front end of the banking service delivery.

There are many middle and back-end functions, including risk management, treasury, product development, marketing, relationship-based sales teams, etc. These functions should get digitised for the bank to be considered a Digital Bank.

What does Digital Banking involve?

Is it worthwhile for banks to go digital if it means more than the Android or iOS apps? According to a survey, nearly half of them believe that digital adoption is crucial for developing client relationships and that it is also the most persuasive argument. Here are a few instances of how banks benefit from the same:

Efficacy

Despite holding many interactions with retail clients, banking has been unusually hesitant to take advantage of any technological potential. Many banking systems have got digitised, but unlike other customer-facing businesses, the entire system is still not operating as a single digital entity.

Airlines and logistics companies, for example, rely heavily on technology to run smoothly, yet most banks are yet to achieve that level of efficiency. Banks consider digital as a valuable tool than the foundation upon which their systems are built. It enables banks to encourage people to use Internet Banking to access their Savings Account.

Cost savings

Functions are automated. So, redundancies are lowered, and this results in cost savings. There are, however, additional benefits, such as synergies resulting from access to more qualitative data and shorter market response times. When customers open a Bank Account online, banks save a lot of money.

Increased competitiveness

Digital Banking in India lets banks reach a larger customer base and build closer relationships with younger, tech-savvy generations. Banks deliver services of equal quality to compete with new-age tech behemoths and innovative Fintech start-ups.

Agility

Digital banks are more adaptable than traditional banks. Their automated features are built to work differently and respond to market shifts. For example, during the financial crisis of 2008, there was a heightened emphasis on risk management. Banks require years to train and attract enough risk professionals to manage their assets properly.

Understanding The Difference Between Checking And Savings Accounts

We all need Bank Accounts to keep our money safe and optimise it rightly. You can select from different accounts, including Checking, Savings, and Salary Accounts. The decision to open a Checking and Saving Account depends on the purpose and the level of accessibility required.

To grasp the distinction between a Checking and Saving Bank Account, understand the meaning of both.

What is Checking Account?

This gets used for paying your daily costs. They are simple and do not have any restrictions on withdrawals. You can use it to pay bills, make online purchases, and carry out other routine operations. When you open this account, the bank offers a Debit Card, chequebook, and a passbook. Use the Online and Mobile Banking features to access your money from anywhere. Meanwhile, a Checking Account does not provide much interest.

What is Savings Account?

This lets you save money and build your capital by depositing funds regularly. It is a place where you can place funds that you do not require. Savings Accounts, unlike Checking Accounts, have a few limitations on how they can get used. For example, you can only withdraw money from banks and ATMs many times.

Your Savings Account comes with a Debit Card, passbook, chequebook, and Internet Banking, much like a Checking Account. However, unlike the Checking Account, the Savings Account pays out interest semi-annually or annually on deposited cash.

Difference Between Checking and Savings Account

Account Fees

Most transactions carried out through Checking Account are subject to a fee: ATM, overdraft protection, online access fees, etc. A Savings Account, meanwhile, is free of cost online. A bank only charges you if you exceed your money withdrawal limit or fail to meet the bank's minimum balance criteria.

Transaction frequency

Do at least one transaction monthly if you have a Checking Account. Your bank charges you a monthly maintenance fee if you do not comply. If you have a Savings Account, make a transaction once every six months to keep it active. The bank classifies your account, and the Debit Card associated with it becomes dormant if there is no activity. You can use a banking app to make sure the account is active.

Interest pay-out

The most notable distinction between Checking and Savings Account provides interest rates. Checking Accounts normally earn little to no interest from banks. You get interest on your deposits in a Savings Account. The Savings Account interest rates vary between banks and get decided mainly by the type of account you open and the amount you deposit.

How to select a Bank?

The most financial decision is selecting a bank to manage your funds. Different banks offer various services, fees, and Savings Account interest rates.

Types of Banks

The banks ideal for you is the essential factor to consider. Every bank has its set of pros and cons.

Traditional banks

When people think of a bank, they think of the traditional ones, who primarily provide facilities to their customers through a network of physical locations and supply ATMs to their and other banks' customers. Most are considering Online Banking services for bill payments and deposits. Even though traditional banks have been around the longest, fewer reasons to pick them over competitors. Both charge lower fees than typical banks.

However, choose to conduct your financial transactions personally. If you have a query or a problem, speak to someone about it in your local branch. This indicates that a traditional bank is the best option for you. However, it is best to check the alternative options accessible to you.

Online banks

These were uncommon 20 years ago, but their popularity has grown with time, and they now compete directly with traditional ones. Because internet banks have fewer or no physical branches, they have lower overhead costs than standard ones, which means their fees are often lower. These banks offer to have a banking app that lets you make banking transactions.

The difference between online and traditional banks has increasingly blurred in recent years, as the latter's digital services and technologies have evolved. This implies that you can get the benefits of a traditional branch while also taking advantage of the convenience of Internet Banking.

Fees and interest rates

The fees and rates charged are other aspects to examine when deciding where to bank. Most hold two types of accounts: a Checking and a Saving Account. The features vary depending on the type of account you open, and it is common to have various accounts with multiple banks.

Interest rates

Look for a unique set of features in your Savings Account. As you do not use the Saving Bank Account often, you can handle them online. Most of them do not charge excessive fees if you do not make frequent withdrawals. Instead, the fundamental distinction between these accounts is the interests they pay. The best rates are found through credit unions or internet banks. Shop around for the best interest rates.

Benefits Of Using Mobile Banking Apps To Send Money

People are becoming increasingly reliant on mobile devices for different services. When Apple initially released the iPhone in 2007, no one had heard of the app. Over these years, the App Store has grown to nearly four million applications. Use them for anything from getting a taxi to buying groceries to learning a new language.

A smartphone without apps is difficult to imagine. They also provide hours of entertainment, with games accounting for about a quarter of all downloads. One of the ways that mobile devices encourage financial services is by making it easier for them to transfer and receive money. Since the entire procedure is safe and quick, banking apps typically make it smooth for ex-pats to money transfer from the US to India

Save time

The primary benefits of these apps are that it enables customers to send money whenever they need it, no matter where they are. Thanks to them, you can execute a transaction on your device from the comfort of your home. Once you download them, you need a decent connection to send money from the USA to India.

Suppose their native country offers the desired payment infrastructure. In that case, the recipient stores the funds in a mobile wallet, a digital replica that is easily accessible anywhere and sends them right away from their smartphone. If they do not, they show up at a bank to withdraw money.

The money transfer to India from the US via the app frees up time for the important things like spending time with closed ones or engaging in a hobby.

Simple and secure

Using a mobile money transfer app to send money to India. The apps are meant to be user-friendly, so use them even if you are not tech-savvy. Complete all your transactions within the app than on a third-party website. They are safe as well. Besides the PIN, think about other ways to secure your mobile device for peace of mind. If your phone gets stolen, they have difficulty getting access to it.

Keep a record

The banking apps assist in calculating and keeping track of funds you transfer. You see a history of your transactions within the app. This unique feature helps in managing your and the receiver’s funds. Track the amount you transfer money to India and increase or reduce it based on how much you can afford or how urgently you need the funds.

What are the features of an NRE Account?

 Once you become a Non-Residential Indian, managing funds in India becomes difficult. Sending or receiving money becomes a hectic task. You need to complete numerous transactional formalities. This could be time-consuming. To avoid this hassle, consider NRI Accounts. One such service is the Non-Resident External Account. It is a rupee-denominated account. This means your funds are maintained in Indian rupees.

An NRE Account specifically caters to NRI requirements. It satisfies your unique banking needs. But before you seek one, go through its features. Here are some:

Fund repatriation

NRE Accounts facilitate fund repatriation. They let you move funds freely. Through them, you get to transfer money to any other country. This ensures a smooth flow of funds.

Rupee denominated

An NRE Bank Account is rupee denominated. All your funds get sustained in INR. For example, you can deposit money in US Dollars and withdraw it in INR. This account is a Savings Account, Current Account, or Term Deposit Account. You can choose what type you want your funds in.

Remitted funds

NRE Accounts collect funds remitted from another country. They also obtain funds from another NRE or Foreign Currency Non-Resident Account. The funds may be in foreign currency drafts, cheques, remittances, etc. The accounts, however, are maintained in India. Once you ensure this, you receive funds freely.

Transactions

Sometimes, you may want to send funds to a Non-Resident Ordinary Account. You could also be expecting payment from the same. To help with this, NRE Accounts facilitate your transactions. They enable you to send and receive funds from NRO Accounts.

Tax exemption

The interest you earn on deposits is usually taxable. It eventually decreases your interest earnings. However, under NRE Accounts, interest earnings are exempted from taxes. As a result, your taxable income gets reduced.

Terms

To open an NRE Account, you need to obey some terms and conditions. For starters, you must be an NRI. Also, the Power of Attorney cannot open NRE Accounts on your behalf. This is impossible according to the account terms. However, they can make rupee transactions locally on the NRI’s behalf.

Account conversion

Say you are an NRI holding an NRE Savings Account. You have returned to India. You have also become an Indian resident. In this case, your account gets converted into a regular resident account.

Debits

NRE Accounts facilitate debit transactions. These include local disbursements, payments made outside India, etc. They allow transfers to other NRE/FCNR Accounts as well.

What are the different Debit Cards?

 A Debit Card is a plastic money that allows users to get cash from an ATM or pay for goods and services online or offline. However, did you realise that the Debit Card you use for purchases or ATM withdrawals is different from the Debit Card used by someone else?

A user chooses from a variety of Debit Cards depending on their intended purpose and transaction value. Now, before you apply for a Debit Card, understand the differences between the types of Debit Cards so that you can choose the one that best suits your needs:

Visa Debit cards

These are accepted worldwide, giving users financial flexibility for transactions inside and outside the country. Visa Debit Cards get issued by banks partnered with the International Visa Payment System Network. Offline, internationally, online, and over the phone, these cards provide quick, secure, and convenient access to a user's money. You apply for Debit Card online for this type.

RuPay Debit Cards

The National Payments Corporation of India introduced RuPay, an Indian transnational payment service. These are issued as part of the domestic Debit Card scheme and used for domestic purposes. They get used to withdrawing cash from ATMs or making online payments within the domestic boundary. Besides that, compared to Visa and MasterCard, these cards have a lower processing cost and time. Banking apps also let you apply for them.

MasterCard Debit

These are accessible anywhere in the world. They come in handy at ATMs and for online transactions. They allow you to keep a complete record of all transactions done each month. You can go for an online Debit Card to help you with online transactions.

Contactless Debit Cards

Such cards are famous because you need not input your PIN. Payments made with contactless Debit Cards are made simply by waving or tapping at the POS terminal. These cards work on the Radio Frequency Identification or Near Field Communication concept, equipped with contactless payment technology.

Maestro Debit Cards

They are comparable to MasterCard Debit Cards that are accepted worldwide. Users who have a Maestro Debit Card conduct online transactions inside and outside the country. Besides, they can use it as Debit Card worldwide.

Since there are so many Debit Cards, it is good to perform a thorough analysis of each before applying. The comparison parameters should be benefits, incentive programmes, security, processing fees, and other extra features.