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Things To Know Before Buying A Credit Card

Applying for your first credit card is a huge milestone in your financial journey and can often prove to be a daunting task. Understandably, since there are over a hundred different cards available in the market and very little guidance on how to go about it. 

brown wallet

We believe credit cards are powerful financial tools, if used rationally, that can benefit you in multiple different ways and help build a strong credit history as well. If this is your first time applying for a credit card, let us be your voice of reason and take you through some of the things that you must know before applying for one.

  • Different types of credit cards 

There is a whole list of credit cards that one needs to be aware of before purchase. From beginner level credit cards to travel credit cards, here are some of the credit cards available in India: Basic Credit Cards (given to entry level customers) Secure Credit Cards (for those who have a poor credit history)No Annual Fee Credit Cards (does not levy an annual fee for the usage of the credit card) Low-Interest Credit Cards (those that offer a lower interest rate as compared to the other cards from a similar category) Balance Transfer Credit Cards (low-interest rate for a specified period of time) Rewards Credit Cards (offers some kind of rewards for every rupee you spend with the card) Cashback Credit Cards ( offer a certain percentage of the purchase amount) Travel Credit Cards (offers benefits such as travel insurance, global acceptance, favourable currency conversion rates) Entertainment Credit Cards (provide discounts and offers on entertainment-related spends)Premium Credit Cards (for high income individuals) and much more. 

  • Rate of Interest 

Interest rate is of the main reasons that banks issue credit cards. The interest rate on a credit card is usually higher than that on loans. Credit cards follow the daily compounding interest rate which is based on the Annual Percentage Rate (APR). Based on the type of card you choose you’ll find yourself paying either a fixed or a variable interest rate. 

  • Interest-free period 

An interest-free period is a duration from the date of the transaction to the payment due date, something that is offered by most credit cards. If the full payment is made within this period then there is nothing extra that you have to pay to the bank. However, payment post this interest-free period comes with an applicable interest fee which is usually on the higher side. It’s advisable to make the entire payment within this period to avoid any extra fees. 

  • Fees and charges 

This is probably considered one of the most important elements of a credit card agreement. Fees and charges help you determine how much you will be paying for the card, withdrawing cash from the ATM, or upon failing to make the payments. Some of the important fees to know about : annual fee, late payment fee, over-the-limit fee, cash advance fee, balance transfer fee and foreign transaction fee. These fees again differ based on the card issuer so it is important to have a clear understanding of these before proceeding with the application. 

  • Minimum payment 

As part of the credit card agreement with your bank and the transactions against your card, you will be required to either make the full payment or the minimum payment that has been agreed upon. The minimum payment is calculated against the interest amount with one percent principle or on a certain percentage of your current balance. This calculation differs based on the card issuer and hence it is important to understand how your card issuer is going to calculate it. 

  • Credit limit 

The maximum amount that you are eligible to borrow is known as the credit limit. This credit limit is set by your issuer based on your qualifications and eligibility criteria. Be mindful about not reaching or getting close to the credit limit since it will then affect your credit utilization ratio which in turn can damage your credit score. Credit card issuers generally review your account on a quarterly, half-yearly or annual basis and either increase or decrease your credit limit. 

  • Perks 

A credit card generally brings with it certain rewards like points, cashback offers and other discounts and deals. Most of these perks come as an introductory offer to attract buyers but over time you will end up accumulating points that you can redeem in various forms. Check for the offers that different cards have to offer and analyze which ones are going to be beneficial for you. 

The important things to know do not end with this list but this is the bare minimum that you must know. While selecting a card, you might feel overwhelmed with the different options available but let your spending habits and your real need for a credit card guide you towards choosing the right one for you.  Always remember, everyone’s financial journey is different and what works for someone else might not work for you. 

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15 Frugal Tips To Save A Lot Of Money

A frugal lifestyle is often confused with a life that sacrifices on quality. This is because the term frugal is, more often than not, misconstrued as a negative one. If done the right way, choosing to be frugal can actually add more value to your life. Do you agree? 

The art of frugal living

A lifestyle where you are very intentional with your spending is a frugal lifestyle. It is about prioritizing your money on things that truly matter, and cutting out all the frills that don’t. If you choose to only look at the sacrifices you make, it is bound to get difficult to stay on this path. However, if you look on the bright side, these sacrifices add to larger benefits down the road. 

Why is frugal living a great idea?

The benefits that come with choosing a frugal lifestyle are multifold. 

  • It puts you on the path to financial freedom by accelerating how quickly you achieve your personal financial goals.
  • It allows for a cause-and-effect reality to take hold in terms of finances.
  • You get to decide where you spend your hard-earned money. 

How does one live a frugal lifestyle?

If you’ve tried to lead a frugal lifestyle over the years but have fallen off the wagon, it’s okay. If you are new to this life, then it may seem difficult at first. That is also okay. We’ve been there. We are all for that frugal lifestyle, and over the years we have found tips and tricks that really lower expenses and help us save a lot of money. 

We’ve put together some of our favorite tips for you to save money while living your best life. When we say this, we understand that a frugal lifestyle means different things to different people. We just want to help you live a life that aligns with your goals. 

  1. Start budgeting your finances 

Your first tool towards a frugal lifestyle and your financial success is creating and sticking to a budget. It helps you prioritize things that are important and cut out the ones that are not. There are many tools available to help you plan your budget. You can start by maintaining either a weekly or monthly budget, whatever works for you. 

  1. Take stock of your pantry 

If you ever walk into your pantry and take stock of the food available, you’ll be surprised. In today’s digital world, ordering food at the click of a button has spoiled us rotten. Instead, get into the habit of making meals at home with what is available. The fact that it is healthier than take-out food is an added bonus. Of course, you can indulge in food from your restaurant; you just don’t need to do it four times a week. 

  1. Sell the things you don’t need 

If you look around, there’ll be five things in your direct line of vision that you can do without. Set a day aside, look around the house and put aside things that you have outgrown. With a little bit of effort, this clutter can be cashed through different platforms such as Facebook and eBay, to name a few. 

  1. Start thrifting 

Local thrift stores and online marketplaces can really surprise you with the things on sale and the prices they are available at! Apart from saving up tons of money, you’ll also be saving the planet. A win-win situation, we say. 

  1. Upcycle your wardrobe 

Have you ever considered shopping in your closet? Yes, it’s true. If you look into the deep corners of your closet, you’ll unearth clothes and shoes that are begging for your attention. Sew some patchwork on that jacket or cut your denim and turn them into shorts. You can be fashionable, even on a budget!

  1. Walk or bike whenever you can 

We’re all guilty of taking the car to the nearby grocery shop that is within walking distance. Next time, ditch the car and walk instead. Not only will you save on a lot of petrol money, you’ll also end up burning some calories in the process. 

  1. Workout at home 

A membership at a good gym can really burn a hole in your pocket. Instead, join an online workout class that is relatively cheaper and also lets you work out at ease. Or you can ditch a membership altogether and pull out a video from YouTube instead.

  1. Automate your savings and investments 

It is easy to fall into the habit of overspending when your savings and investments are not automated. Get a financial advisor on board and figure out places where you can invest in and automate them. Also, go through your expenses and set up automatic payments wherever possible. 

  1. Evaluate your subscriptions 

Do you really need subscriptions to six OTT platforms? You’ll be surprised at the amount you pay on an annual basis just to watch one movie from that one platform. Keep the ones that are worth keeping and cancel the rest. 

  1. Get a side gig 

The gig economy is booming in the country and all over the world. Pick up a part-time job near your house or even one that requires you to work from home. There are tons of exciting options available.

  1. Shop in bulk 

You’ll be surprised at the amount you save when you buy certain things like toilet paper, soap, paper napkins, among others, in bulk. The price per unit is low when you purchase large quantities. Make a list of items that you use daily, and next time you go grocery shopping, buy them in bulk and keep them. 

  1. Plan your travels better 

Travelling does not have to be an expensive affair if you plan it well. Try to plan your travels during the ‘off-season’ as everything is relatively cheaper. Ditch the expensive hotels and opt for a beautiful Airbnb instead. Also, avoid the tourist traps and eat where the locals eat, instead. Not only will you save up on cash, but you’ll also get to eat some of the best food!

  1. Make gifts instead of buying 

There is a certain emotion associated with gifts that are handmade instead of store-bought. Gifting during the holiday season can be expensive. You can check out videos on YouTube for some great gift making ideas!

  1. Grow your vegetables 

If you are blessed to have a small open patch in your house where you can grow a vegetable garden, do it! Apart from being fun and inexpensive, there is also a sense of great satisfaction associated with it. 

  1. Ditch the expensive coffee 

We’ve all been there and done that. Try ditching that expensive cup from Starbucks and instead start brewing your coffee at home. There are some top-notch home-grown brands that source the best coffee from all over the country. Your wallet and taste buds will thank you.

As you can see from the tips above, a frugal lifestyle does not ask you to give up your favorite cereal brand or stay at home instead of going on a vacation. Also, don’t cut back on too many things too fast, as it is bound to backfire. It all comes down to the strategy and approach you choose for yourself. If you get addicted to this lifestyle, we completely and happily accept all the blame!

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Money Habits of Entrepreneurs

A successful entrepreneur is aware that they need to have a clear purpose, value, and good return on investment for every rupee they spend. Ask any entrepreneur out there about the one skill that is crucial to their success, and the answer you are most likely to get is Financial Management. 

Being an entrepreneur means handling the finances of your business as well as your personal finance. 

person holding U.S. dollar banknote

All of us might not be entrepreneurs, but we can learn from successful entrepreneurs’ proven money habits to extend the value of our economic resources. We’ve put together some tried and tested strategies and some entrepreneurs’ money habits that you can adopt to realize your business and financial goals. 

  1. Have clarity about your financial goals 

Entrepreneurs are clear about their personal finance’s short- and long-term goals and accordingly work towards it. Get a diary and chart out the financial milestones you want to achieve in the next year, five years and ten years. Develop a plan that is clear and realistic to help you achieve those goals. Lastly, do not forget to continually review your plans and goals and adapt as per the situation.  

  1. Organize your personal finances 

Entrepreneurs love nothing more than to watch their money grow! Set a daily, monthly and yearly budget for yourself. Investment in different funds, pensions and have a retirement plan for yourself. 

  1. Adopt a savings mindset 

An entrepreneur knows that a healthy financial lifestyle is crucial for growth. The best way to achieve this is by adopting a savings mindset. The first step towards sticking to this habit is putting away the amount you want to save first and then planning your expenses around the remaining amount. Most of us make the mistake of doing this the other way round. 

  1. Diversify your revenue streams 

Entrepreneurs are always on the lookout for new opportunities and know better than to invest all their money in one place. Diversification means an opportunity for growth. Educate yourself about the different investment options available to you and create a diverse portfolio of financial products. This will help your money grow and will decrease dependence on one stream. 

  1. Master the use of credit 

If there is a battle that entrepreneurs fight daily, it is not to get swamped by the mountain of interest payments. They know better than to spend more on a card than they can pay off in a single billing cycle. 

Start by paying off your high-interest debts first to manage personal and business credit better. 

  1. Be frugal 

Finances and discipline go hand in hand. Entrepreneurs know they need to be stingy with their money, and they are not ashamed to wear this as a badge of honour. This does not mean that you are living uncomfortably – it just means that you choose to focus on the larger picture rather than give in to instant gratification. 

We hope this has helped you understand entrepreneurs’ money habits and how you can adopt them in your lifestyle. It’s not essential to incorporate everything at once, but it’s important to at least start!

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5 Money Mantras for 2021

2020 might possibly be the most dynamic teacher we have had in our lives. The year really pushed us to take a step back and take a long, hard look at how our lives are built, the foundation of everyday lives and the framework of how we go about doing it. While the importance of health and a clean lifestyle was brought to the fore, so was the discussion around financial health. 2020 was a year filled with challenges; while the market took a hit, we also saw one of the best equity rallies in a long time! Job security, savings, health insurance and more were the talk of the town, and with good reason. Job security, savings, health insurance and more were the talk of the town, and with good reason. 

This is precisely why we’ve come up with 5 simple yet incredibly effective Money Mantras for 2021, to ensure smooth sailing and a strong back-up plan. Read on to know more. 

BUILD A BUDGET

One of the easiest yet effective things you could do for your money right now is starting to build a budget. It’s the ultimate tool to help you control your expenses and channel your finances towards achieving any goals you might have set. Budgets, at their core, exist on a balance—if you want to spend more on something, you’ll have to forfeit or spend less on something else. This simple practice gradually teaches you how to prioritise your earnings and spend them wisely on things that actually matter. Usually a budget is a combination of your household, transport, personal and miscellaneous purchases. Nowadays, there are many budget-calculating apps that you can download to help you track your expenses—or better yet, talk to your financial advisor for a more detailed approach. 

INVEST IN A GOOD HEALTH INSURANCE

As mentioned earlier, health insurance is the topmost priority in today’s time, and should be treated as such. A good health insurance should cover the basics—this includes hospital charges, pre & post hospitalization included. It should also cover not just you, but your family as well, ensuring that should you ever require the help of your insurance, paying the bill will be the last thing going through your mind. One of the biggest blunders we as a customer make, is to simply assume that we will not require health insurance until we are much older. However, on the contrary, being well-prepared when it comes to your health from an early stage in life will only pay off in the long run.  

BUILD AN EMERGENCY FUND 

Out of all the financial years so far, if 2020 has not convinced you to build yourself an emergency fund, we doubt what else will! If you’ve been thinking about starting your emergency fund, there’s no better time to do so than now. This will help you face potential job cuts/salary cuts, household damage repair and any medical emergencies with the reassurance that you have your emergency fund to help you out. 

DIVERSIFY YOUR INVESTMENT PORTFOLIO

It’s never a good idea to put all your eggs in one basket. The same goes for your investments—diversifying your portfolio will help you stay afloat in the event of an unexpected market crash. And the best part is: it’s not that hard to implement. Diversification operates on a simple idea, that an investment portfolio consisting of different investment types will essentially lead to optimizing the risk. A well-diversified portfolio might include- cash, bonds, stocks, mutual funds, exchange-traded funds. To know more you can contact us and find just the right diversification model for you. 

CURB IMPULSE PURCHASES

Our last point ties back to where we started: setting a budget! When you know you have a budget that allows you a certain amount of expenditure, it automatically helps you steer clear of purchases that you really do not need. One of the best ways to figure out whether what you want to buy is something you really need is to give yourself a waiting period: give it 24 hours or sleep on it. If you still feel the need to purchase it, then compare prices online to pick the best one. If not, you’ll realize that what you almost spent your money on was simply a phase. 

Although these Money Mantras look simple, their impact is anything but. Stay consistent with your budgeting, investing & savings, and trust us—you’ll see your bank account flourishing in due time. For more information, get in touch with us at cagrfunds@gmail.com