BankAmericard Secured Credit Card for Immigrants from BoA

Most of us have heard or used traditional credit cards and debit cards. But not many people (especially US immigrants) know of the existence of credit cards with security deposits or also known as “secured” cards.

Debit and Credit Card

As you know, the debit card is a card that uses the money we have deposited in the bank, that is, when you make purchases with that card you are actually using money available in your account.

Credit cards, unlike debit cards, use money from the bank that lends to us for certain number of days and if you pay the total amount purchased in the period, no interest is charged. Interest is only charged when the total amount utilized in the previous billing cycle is not paid fully.

What is a Card with Security Deposit?

This card is most recommended especially for immigrants in the U.S. wanting to build a credit history in USA, as it gives the advantage of being able to purchase services that only people with a history can get.

You basically deposit the amount you want to have as a credit limit, say $500, into an account at the issuing bank. The bank puts this money into a special account that you do not have access to, as long as the card is valid and the bank does not decide that it “already trusts” you and returns the money, changing the card from “secured” to a “regular” credit card.

Why not ask for a regular credit or debit card?

Using a debit card in the U.S. does not help in building credit history. It can only be built by utilizing a credit product, whether it’s a regular, secured, personal, auto, or home loan card.

In the absence of credit history, it is difficult to get a regular credit card (but not impossible), so a good alternative is a secured credit card especially for immigrants.

BankAmericard Secured Deposit Card

One of the best secured cards in the USA is the BankAmericard Secured Credit Card offered by Bank of America and highly recommended for migrants.

This card comes with many advantages:

Credit limit from $300 to $10,000* dollars

The limit is $300 to $4,900, but you can talk to the bank and increase the maximum limit to $10,000*.

Cash Back Rewards Program

This card has the advantage that when you buy gas with it, 3% of what you spend accumulates as cash. Shopping in supermarkets returns 2% of what you buy and everything else 1%. But it is worth mentioning that 3% and 2% requires a quarterly spend of $1,500. If you increase your spend then it drops to 1%.

Extra bonus when cashing out rewards to a Bank of America account

If you have a Bank of America account, either checking or savings, and you request that the accumulated rewards be deposited into that account, you get an extra 10%. So considering the above the rewards, you would actually get 3.3%, 2.2% and 1.1%.

Extra reward program with participating companies

There is an extra bonus program called BankAmeriDeals, these rewards are targeted to specific merchants, usually with some validity and are only for a single use. For example, 5% cash back at Autozone or 10% cash back when paying with the card at Chili’s.

The card can be converted to a regular card after 12 months

Other secured credit cards never change their status and no money is recovered until the card is cancelled. With Bank of America, this card can change to regular after 12 months of good use of the card. This “conversion” is automatic. But people who change their credit card after 10 months and others who ask that their change be considered before 12 months, their applications are marked in their credit report. This lets other credit bureaus know that they made the request. This is known as a ‘hard pull’ in the history which affects the score.

Some of the disadvantages of this card are:

You have to pay an annual charge

The annuity on this card is $39. Not much, if we consider all that it offers and with the rewards you can pay that annuity and most importantly it helps (especially US immigrants) in building credit history. However, there are many cards in the U.S. that do not carry annual fee. On the other hand, even when the card becomes regular, negotiating for waiving-off the annuity in some cases is not possible.

Increasing the limit puts a mark in the credit history

This doesn’t seem right. If you deposit more money to increase the credit limit of the card, you put a hard pull on your credit history in credit report bureaus that registers individual’s credit information (TransUnion, Equifax and Experian). So it is recommended to set the limit at the time of application to avoid any sort of negative points in the history. This helps later when ordering other unsecured cards from BoA or other card companies.

The money deposited is not available for 12 months

This is a point that puts many people at a disadvantage. In the event of an emergency and a need for money, the card must be cancelled (if less than 6 months old) to receive the deposit back. Remember also that, if the card is not used properly, the bank may not want to change the card to a regular one since you are a risky customer.

They usually issue a card with no rewards.

Even though you receive a regular card with no rewards, you can log into your account online and request a secure chat to have it exchanged for a rewards card. If all goes fine (and you are lucky) they will send you a new card.

How do I get my card as a foreigner?

Bank of America allows foreigners to obtain checking accounts, savings and even credit cards with security deposits.

The requirements are:

  1. Physically visiting Bank of America branch
  2. Valid passport
  3. Valid visa
  4. U.S. Address (indicates that the permanent address is in the country of origin and that you are not a U.S. citizen)
  5. Mention if you want a savings account too (recommended to get an extra 10% reward and to be able to pay your credit card online)
  6. Money to maintain the average account balance ($300* in the savings account)
  7. Money for the desired limit (minimum $300*)
  8. You do not need to have a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN).

FAQs on BankAmericard Secured Credit Card

Is it true that building a credit history is not possible, if you do not have Social Security Number (SSN)?

Bank of America reports to all 3 major agencies and it reports – the person’s name, date of birth, U.S. address, type of product (credit card and identifies it as a “secured credit card”), card usage, limit, maximum usage and payments (also any delays in payment, which greatly affects history).

Does BoA report information to my origin country?

If there is an agreement of financial communication between country of origin and BoA and the requirements for such exchange are met, then the account, amounts, interest, etc. that generates the money deposited in the U.S. will be reported. Please see your country’s requirements. Sometimes it’s because you have X amount of money deposited and sometimes it’s because you generate Y interest in the account. U.S. savings accounts give very little interest on the money kept in the bank account, so if it’s only for interest, it’s hard to report.

What to mention when there is no income in the United States?

In the United States, people are trusted, and just as there is trust, people who lie in their applications can face many problems. So recommendation is to always speak truth with the bank executive, indicating that there is no income in the U.S. and that the income is equivalent to monthly or annual dollars as requested.

Why proof of income is not asked?

Normally if you report income within the normal range and the use of the card does not show anything different, they do not require proof. If anything changes, this may generate alerts to the bank and may require proof of income or the bank may cancel the credit product.

All About Credit History in USA: Report, Score, Importance, Agencies

Checking your credit history is the best way for lenders such as banks, credit officers, homeowners, and others to measure the risk of doing business with you. Your credit history determines whether or not you will qualify for a loan and the price you will have to repay for that loan, whether you will be able to rent an apartment or whether you will get good auto insurance.

Credit History (Credit Report)

A credit report is a report that documents everything related to how an individual has managed his or her credit. It includes information about credit card loans and payments, bank loans, mortgages, car loans and any other debt owed to a creditor. Credit history includes not only open accounts, but also all credit card and loan accounts that have already been closed. It details late payments, loan defaults and bankruptcies, if any.

What information does credit report contain?

Your personal information: Name, current and previous addresses, social security number, date of birth, employment and income history, and ownership of the home.

Credit information: About each account you have or have had, such as opening date, credit or loan limit, monthly payment and recent payment history. This information is collected from a wide range of sources; including banks, credit unions, credit card issuers, mortgage and loan companies, homeowners, insurance companies, professional services organizations, and others.

Public record information: This includes information from government agencies, including the Federal Bankruptcy Registry, county or state court records, debts or liens, money judgments, family pension commitments or child support (in some states). All this information remains on file for a period of 7 years, but in the case of bankruptcy the time is 10 years.

Inquiries about your report: The names of any person or institution that has requested a copy of your Credit Report in the last year (or the last two years for employment-related inquiries).

Credit Reporting Agencies (Credit Bureau)

The companies that collect and sell credit history information in the United States are called Credit Bureaus.

The three major credit bureaus are Experian, Equifax and TransUnion. Here are the addresses and telephone numbers:

  • Equifax, P.O. Box 74024241, Atlanta, GA from 30,374 to 0241 (888) 766-0008
  • Experian, P.O. 2002 Box, Allen, TX 75013 (888) 397 3742
  • Trans Union, P.O. Box 2000, Chester, PA 19022 (800) 916-8800

Why Credit History Matters

Having a good credit history will be a critical part of having personal and financial success in the U.S. Your credit history can help open or close doors for you. Telephone companies, landlords, lenders, insurers, even potential employers often make decisions about your future based on your credit history.

It’s recommended that you review your credit history at least once a year, and immediately before making a significant loan. Checking your credit report is not always free, but it is cheap. Credit bureaus may charge no more than $8 for your report. However, there are 2 ways to get your credit history for free:

  1. If a company takes adverse action against you based on information in your credit report, such as denying your application for credit, insurance, or employment, and you are a victim of a crime, you have the right to request your Credit Report within 60 days of receiving the denial notice. This notice will tell you the name, address and telephone number of the credit bureau so that you can contact them.
  2. You are also entitled to one free report per year, which you can order at https://www.annualcreditreport.com/. Here you can request a report from the 3 agencies listed above.

How to Build Credit History in the United States

If you do not yet have Credit History in the United States, follow the steps below to obtain it:

  1. Open a bank account and use it responsibly. This is the first step in establishing a financial history. This will not appear on your credit report, but are often required on credit applications.
  2. Put utilities in your name and pay for electricity, gas, telephone and cable TV bills on time.
  3. Apply for a credit card. If you are having trouble qualifying for a credit card, a secured credit card is a good option. These cards have credit limits based on a required deposit made by you into a savings account. You use the card as you would any other credit card. You can also consider department store cards.
  4. If you can get a cosigner for a joint card withdrawal is another option you should consider.
  5. Make sure you “pay on time” for a few months. Then the credit history will be established.

Credit Score

Another important feature of a Credit History is that it generates a Credit Score. This information is sent to creditors. A Credit Score is a quantitative assessment of a person’s creditworthiness based on an analysis of his or her credit history.

The calculation of this is based on a complex weighting of many factors, including payment history, outstanding debts, credit history, application for new credit, and the types of credit in use.

Although there are different credit scoring systems in place, the most common is Fair Isaac Corporation (FICO). Credit scores range from 375 to 900, with 650 being the average. A higher score indicates better credit quality. As your credit history changes, your credit score will change and so will the interest rate that you pay.

Immigrant/Non-Resident in USA? Here’s How to Get Credit/Debit Card

There are several reasons why a non-resident, not necessarily undocumented, may want to have a U.S. debit or credit card. If you are a non-resident of the U.S., obtaining a credit card will be difficult and while it can be done, there are some requirements you should meet.

1. American Credit Card for Non-Residents

Few American banks dare to issue credit cards to the non-residents of the United States because of the high risk of leaving the country with unpaid debt. If the person uses the limit of the card and disappears in another country without paying the bill, the bank will not be able to recover the money.

On the other hand, some banks that have promoted credit cards for non-residents (undocumented immigrants) have suffered great public criticism.

If you are a non-resident and need a credit card to start building credit history, we recommend that you start with a secured credit card. Or, if you do not already have one, start by obtaining a bank account with an associated debit card, as follows:

2. Bank Account and American Debit Card for Non-Residents

If you want to open a bank account there are 4 general, but not absolute, requirements to consider:

  1. American Residence
  2. Social Security Number
  3. Physical Presence in the USA
  4. Balance Sheet and Movements

American Residence

American residency is not an absolute requirement to open a savings card in the United States. You only need to show at least two forms of photo identification. Often a passport, driver’s license, visa or other document is acceptable.

Call the bank to find out what is required. You may need to bring proof of your current address, as well as an invoice in your name. Requirements vary for each bank. Some known banks where non-residents can open a savings account are Bank of America, Chase, Wells Fargo, US Bank.

Social Security Number

You can open a bank account and have a debit card without a social security number. But remember that credit companies don’t usually issue credit cards unless you have a valid social security number.

Physical Presence in USA

Since the event of September 11, if you are not a U.S. resident, the only way to open a savings account with an American bank is by physically visiting the bank. That is to say, if you are not a U.S. resident then it won’t be possible to open an online bank account.

This rule applies to company as well. If a foreign company wants to open a U.S. bank account, the company’s legal representative or general manager must appear in person at a U.S. bank branch to open the account.

Active Balance Sheet

Normally, for these types of bank accounts, the bank usually requires a minimum average account balance and/or a minimum number of transactions per month. Additionally, when opening the bank account you must deposit a minimum amount of funds. You should call the bank to find out about these requirements.

Keep in mind that if you open an account in the United States and use it in another country, there will be additional fees and surcharges for international use of the account or card. This charge is average 2.5%.

Build Credit History in United States: 4 Recommended Ways

It can be difficult to establish credit. And if you don’t have a credit history, it’s hard to get a loan, a credit card or even an apartment. But how can you develop a credit history that shows you’re paying back what you borrow, if no one gives you credit in the first place?

In the United States, for example, to have a credit score you must have at least one account that has been open for several months, as well as a creditor who has reported his or her activity to a credit bureau.

Some measures that can help you establish a credit history include:

  1. Secured credit cards
  2. Secured credit builder loan
  3. Loan with a co-signer
  4. Authorized user on someone else’s credit card

Whichever option you choose from the above four, make sure you use it in a way that will eventually get you a good credit score.

1. Apply for a Secured Credit Card

If you want to start building your credit score from the beginning, you’ll probably need to start with a secured credit card. An insured card is backed by money that is deposited at the beginning; the amount of the deposit is usually the same as your credit limit.

This card works just like any other: you can make purchases, make payments on or before the due date, and earn interest if the balance is not paid in full. The cash deposit is used as collateral if payments are not made.

When you close the account on this card, your deposit will be returned to you.

The purpose of a secured card is to build enough credit and qualify the user for an unsecured card without a deposit and with better benefits. You should choose a secured card with low annual fees. Also, make sure that the company that issued it, sends reports to the three credit bureaus – Equifax, Experian and TransUnion.

Secured credit cards are not used indefinitely. After being used to establish your credit, you can then apply for a regular credit card.

2. Apply for a Secured Loan

This loan, which is also called a credit builder, is exactly as its name suggests. Its sole purpose is to help people establish credit.

With a regular loan, you can be approved for a certain amount, and then you get the money up front and start paying it off. With a loan to establish your credit, the amount you borrowed is held by the lender in an account and you do not receive the loan money until after you have made all your payments. This is some kind of forced savings program.

If the loan is repaid as scheduled and fully, the financial institution promises to send a good report to the credit bureaus. Ideally, you will improve an average 35 points with six months of timely payments for loans as small as $100.

These loans are often offered by credit associations or community banks.

3. Get a Co-Signer

It is also possible to apply for a loan or secured credit card using a co-signer as guarantor. But you must be sure that you and the co-signer understand that the co-signer is responsible for the total amount you owe, if you fail to pay.

4. Become authorized user on another person’s credit card

A family member or partner may allow you to add yourself as an authorized user to their credit card. As an authorized user, you will be able to access a credit card and build a credit history, but at the same time you will not be required to pay for the charges.

Ask the cardholder to find out if the bank that issued the card reports the activity of an authorized user to the credit bureaus. That activity is usually reported, but you must be sure, otherwise you will spoil your efforts to build your credit.

You must agree on how to use the card before you are added as an authorized user. If the cardholder expects you to pay your share, be sure to do this even if you are not legally required to do so.

Get Your Credit Reports

In the United States, you are entitled to one free credit report every 12 months from each of the three national credit bureaus. A credit report is a snapshot of how you use your credit.

12 Guidelines for New Credit Card Users in USA

The first credit card can be exciting, tempting and intimidating. If you’re going to have your first credit card (or your child is going to have it), here are some ideas to keep in mind.

  1. A credit card is a serious matter. The issuing company lends you money and responsibility is on you to repay all the money.
  2. One card is probably enough. Have just one and avoid temptation.
  3. Keep your credit limit low. Depending on how you are going to use it, $500 or $1,000 will be enough for most first-time credit card users.
  4. Pay the balance you owe in full each month. Avoid service charges and establish a good credit history.
  5. Make your payments on time. This will help you establish a good credit record and avoid late fees.
  6. Use the card for emergencies. Start using this new comfort slowly. Continue to use cash, debit card and checks for most purchases, especially until you feel comfortable with the card.
  7. Never allow others to use your card. You are responsible for all charges on your card. Don’t let others borrow it and don’t reveal your social security number/PIN or any other personal information related to your credit card.
  8. Keep track of your card usage and compare your records to the information on your monthly statement.
  9. Keep the card active. Even if you only use it for emergencies, try to use it for small purchases every three to four months to keep it active. In that case, pay the outstanding balance before interest is earned.
  10. Avoid using the card for cash advances. The interest rate charged on cash advances is often higher than the purchase rate and you are charged interest immediately.
  11. Create a spending plan and budget. Don’t let your credit card payments exceed 20% of your monthly income.
  12. If having a credit card is a problem, cancel it or stop using it for a while.

Here are some other points to keep in mind regarding your credit card:

Credit card companies make money by charging interest on long outstanding balances. Often, the rates they charge are quite high. In addition to the interest, they also make money from annual/joining fee, cash withdrawal and others.

Choose a card that meets your requirement. First-time users should look for one that has low (or no) annual fees and low interest rates. If you are not going to use it much, benefits such as rewards (airline tickets or cash refunds) will not offset the charges that are usually applied with this type of card.

Having a good credit history is important. People with good record often find it easier to get credit in the future and often get lower rates on their loans.

Carefully analyze the details of the card. Make sure you understand all charges and how interest charges are calculated.

Why is it better to use a credit card than cash?

Why is it better to use a credit card than cash? Do you know the reasons?

At first glance we may think that using cash for payments and purchases will always be the best option, but it’s not entirely the case and here we show you why it might be better to use your credit card instead of cash.

Why is it better to use a credit card than cash?

Security

This is the main reason for using credit cards instead of cash. With this payment method you have the peace of mind of having anti-fraud protection in case of loss, theft or fraudulent use.

If you lose your credit card by calling the bank, you will be able to regain control of your money and information, whereas this is not possible with cash.

In addition, having a card is completely safer than having all the money in your wallet, but it is always advisable to keep it in a different place than the card.

Discounts

There are a variety of discounts and benefits available when paying by credit card. Some credit cards, for example, refund the difference of the purchases, you can also win prizes or points redeemable for the proper use of these.

The discounts earned can be used in stores, to accrue miles for travel or to have some kind of assistance.

Convenience

Having a credit card is more convenient than having to think about how much money to bring for a specific situation, or for example having to use exchange houses if you are traveling in another country. Someone with a credit card will never have these problems, as they will be able to access their money at any time and at any exchange rate.

However, it is logical that it is always recommended to carry some cash with you, for small payments or for purchases at street stalls, which usually do not receive cards.

It is also very convenient for the customer to make purchases and pay for them in instalments and over a long period of time, as best suits their finances.

Controlling Expenses

All purchases and expenses are recorded when paying with credit card, and can be reviewed by the customer in your transactional portal or through your mobile phone, showing detailed information, even by purchase categories.

Other Reasons

Making payments with credit or debit cards is the best way to avoid unnecessary fees and commissions, especially when you are out of your country, as you can save on currency exchange fees and cash withdrawals at ATMs.

They allow for easier tracking of expenses, a task that is quite complex when shopping with cash, as many purchase invoices and receipts accumulate, and sometimes it is almost impossible to track them.

Credit cards are not as dirty as bills and coins, which generally pass through a large number of people, bringing with them hundreds of bacteria.

It is also very important to mention that when using credit cards for payment the following month the user is financing at a 0% rate.

21 Personal Loan Schemes ESPECIALLY for Housewives/Women

Everyone has a dream or wishes to fulfill. It could be starting a business, expanding existing business, renovating house, buying appliances, etc. Although an individual can use his/her saving to fulfill the need, it is not possible for everyone to achieve their dream mainly because of lack of finance. Although there are lenders offering personal loan but getting financial assistance is difficult especially for housewives with no income since they carry high credit risk to the lender.

However in order to give confidence to women by helping in building a business, various schemes are available in the market offering personal loan for housewives. These credit schemes are especially designed for women and many of these sponsored by the government only.

Name of Scheme / LoanWho Offers?Purpose of Loan
Mudra Yojana (3 Schemes - Shishu, Kishor, Tarun)Private and public sector banks, Regional rural banks, Scheduled union co-operative banks, Scheduled state co-operative banks, Micro finance institutions (MFIs), NBFCs, societies and trusts.Refinancing to micro business
Star Mahila Gold Loan SchemeBank of IndiaPurchase of gold jewelery or coins
Can MahilaCanara BankGeneral purpose
V SwashaktiVijaya BankSetting up small business
Sakhi ShaktiIDFC BankMeet financial needs
AB Vanitha Vahan SchemeAndhra BankPurchase of 2 or 4 wheeler
Secured Gold LoanShri Mahila Sewa Sahakari Bank LimitedFor general purpose
ShringaarBhartiya Mahila BankSetting up beauty parlor
AnnapurnaBhartiya Mahila BankSetting up food catering business
ParvarishBhartiya Mahila BankSetting up day care center
Kitchen ModernizationBhartiya Mahila BankMainly but not limited to renovating kitchen
Mahila Udyam Nidhi SchemePunjab National BankSetting up small scale industry
Mahila Samridhi YojanaPunjab National BankPurchasing and setting up of internet cafe and other small businesses
Kalyani Card SchemePunjab National BankAgricultural and non-farming activities
Stree Shakthi PackageState Bank of IndiaSetting up entrepreneurial business
Dena Shakti SchemeDena BankStarting business in select industries
Udyogini SchemePunjab and Sind Bank and Karnataka State Women’s Development Corporation (KSWDC)Starting business in select industries
Annapurna SchemeState Bank of MysoreSetting food catering business
Cent KalyaniCentral Bank of IndiaStarting a new business/expanding or modifying an existing business
Stand-Up India SchemeICICI BankSetting up a greenfield enterprise in select sectors
Mahila Vikas YojanaOriental Bank of CommerceStarting small business

But each come with their own eligibility criteria especially the purpose. Meaning, you cannot avail a loan meant for purchasing a vehicle for starting a business.

Good read: Ways to earn money from home especially for housewife

Other options for homemaker women to get personal loan

In addition to the above mentioned loan schemes for housewife, there are following four options to get personal loan:

Against Fixed Deposit:

Personal loan against FD account is another cost saving option to get a loan. If homemaker has some amount then she can open fixed deposit account and get loan against it. The interest rate charged is very low compared to traditionally bought loan. Almost every bank offers financing against FD. In this case, the FD becomes security.

Against Gold:

If homemaker women has gold jewelry then she can take loan against it. She will have to keep the gold as a security with the bank which will remain in their custody until the loan is fully repaid.

Against Securities:

Similar to gold and term deposit, housewife can keep securities such as life insurance, shares, mutual fund and avail personal loan against the same.

Private Money Lenders:

Although this option is never recommended due to the risks involved but there are trusted money lenders as well offering loans at higher interest and returning the security kept with them.

Personal Loan: 7 Most Important FINANCIAL Documents Required

Credit is basically a financial agreement between the borrower and lender (banks in most of the cases) in which lender offers money to the borrower to meet his/her objective which could be buying home/car/house renovation/bike/personal. In return, creditors charge interest and certain other fees from the borrower. Loaner may also ask to keep some form of security from the loanee i.e. the borrower in their control until the loan is fully paid-off.

Since crediting is the most profitable earning source for any lender, the market is flooded with numerous financiers ready to offer you money for almost any purpose. Check your E-mail inbox or SMS to verify this. You’ll definitely see a lot of marketing messages offering your credit card, loan (personal, car, home, etc.) within a day.

However many of these messages are actually marketing gimmicks. Because any type of credit application goes through a rigorous verification process till the money is received by the applicant (salaried or self-employed).

Few of the procedures involved are:

  • Application form submission
  • Documents submission to the lender
  • Documents verification by the lender
  • Credit bureau check by the lender
  • And others on a case to case basis

In this article, we’ll discuss about the 6 most important financial documents asked by the loaner for personal loan without which getting any type of finance is almost impossible for salaried and self-employed individuals.

Financial Documents Required by Salaried Individuals

Pay Slip: No other person than a salaried can know importance of the salary slip. Whether he/she is applying for a job, any type of loan or credit card, non-availability of this proof will give sleepless nights. And especially getting finance will become next to impossible. Although there are ways to get loan without income proof document.
Based on the income mentioned in the pay slip, application is processed further and loan amount is decided.

Typically lenders will ask for last 3 months pay slip. However submitting salary slip is just the first step, lenders will then cross verify the authenticity of the document submitted:

  • Employee details verified: Salary amount, PAN, designation, provident fund number, official employee-id, issuance date of salary slip, bank name in which salary was credited and the respective account number.
  • Employer details verified: Name, logo, signing authority, address, phone number, etc.

Although there are many other factors taken into consideration by the banks such as CIBIL score, age, city, company worked for and so on.

Many people make a mistake of creating fake income proof. However beware that this can land the applicant in a big trouble and even a criminal action can be taken against the person by the company on whose name fake salary slip was created. And most importantly, career will be at risk.

Must Read: Impact of submitting fake documents for personal loan

Form 16: Many people think that Form-16 is required only during filing of income tax returns. But this document is also required while applying for personal loan (in fact any type of loan). Typically total income is checked by the creditor which is obtained by subtracting the deductions from the gross income.

If the applicant does not fall under the tax bracket, then he/she is not required to submit Form-16. Not falling under tax bracket also means, income of the applicant is also low. But poor income does not necessarily mean, personal loan application will be rejected, since your income is the most critical component that decides whether loan will be approved or not. And if approved what amount will be granted.

Check out personal loan for poor salaried.

Income Tax Return: This is not always asked by the salaried individuals and is typically requested when the loan amount is high. This document contains income from all the sources. For a salaried person, income is what is paid by his/her employer. And based on the total income earned, decision on loan approval is made.

Bank Statement: This helps salaried individuals especially who do not receive pay slip and are issued monthly salary in cash or cheque. By verifying the statement, lenders can check monthly amount deposited.

Financial Documents Required from Self Employed

Typically loan application from self employed businessman is high, so lenders ask for different set of documents before granting loan. Self employed also includes doctors, chartered accountant, company secretary, architects, and others.

The documents required are:

Income Tax Return: Similar to salaried individuals, self employed individuals are also required to provide ITR of last 3 years when applying for a personal loan. For this category of individuals, income is profit and gain from the business. And based on the total income reported, lenders decide on loan approval or rejection and the amount.

Balance Sheet: This is the document which specifies the financial health of any company (sole proprietorship/private limited/public limited, others). Through this document, lender can evaluate credit worthiness by checking the cash position, assets and any debts and then decide on personal loan approval and the amount.

Profit and Loss statement: Though many of the information present in balance sheet is also available in a profit and loss statement, but the net profit metric is what is typically checked by the lender in order to evaluate whether it is worth lending money to the self-employed applicant. This metric can be either positive or negative. And obviously a negative number indicates poor financial health. This is the reason last 3 years P&L statement is requested by the loaner, so that they can know what has been the financial health in recent years for better judgement.

Personal Loan against Salary Slip: Details Checked by Lender, Importance of Pay Slip

Whether applying for a job or any type of credit, for a working professional, salary slip is one of the most important document. No other person would know its importance than what a salaried employee does.

But why is salary slip is important for getting personal loan or any type of credit (car loan, home loan, credit card, etc.)?

The answer is – credit worthiness of the personal loan applicant is judged on the basis of income stated in the pay slip. Irrespective of what salary you say to the lender, they will rely only after verifying the pay slip. Although income is not the only eligibility criteria on the basis of which loan application is approved or rejected. But it is certainly the most important criteria considered by major lenders in India. Also the loan amount is also decided on the basis of the income of the salaried person.

Although there is a minimum income requirement but there are lenders offering personal loan to low income earners. And higher the income, higher would be the chances of credit approval since repayment capacity of the individual is assumed to be good since the income is good.

Check out getting loan from co-operative banks when your income is poor.

What details financial institutions check in a salary slip?

Apart from your gross or net income mentioned in the payslip, banks or any lender check for:

  • Authenticity of the document: This is cross checked by the company logo, signature and/or stamp of the person issuing the slip. Typically this person is from the human resource department of the employer. In many cases, if the pay slip is computer generated with no official signature, then lenders check for the company name, logo, address, phone number, etc.
  • Details of the recipient: That is, on whose name the slip is generated, designation, employee code (if available), location of work, provident fund number, PAN number.
  • Other details: Date issued, duration of the pay i.e. days worked, name of the bank in which salary was credited and the bank account number, joining date. If the applicant is experienced and has recently a new company, then income slip of the previous company is also asked.

Typically lenders ask for last 3 months slip. In some cases, bank statement for the last 3 months are also requested.

Non-availability of the document may result in rejection. However there are ways to get personal with no salary slip or income proof as follows:

  1. Against Fixed Deposit
  2. Against Securities
  3. Private Money Lenders

If you do not have pay slip and don’t want to go with above listed three options, then you can ask request bank by providing:

  1. Photocopy of the salary cheque: In India, there are many companies who give monthly cheque to their employees. If this is the case, make sure you take photocopy of the cheque received each month. This will act as a proof to validate that you are receiving salary each month, though in the form of a cheque.
  2. If income slip is not issued and employer directly deposits the monthly salary in the bank account then provide bank statement showing salary credited with the employer’s name.
  3. Offer letter showing salary details
  4. If you were employed earlier and recently joined a new job then show pay slip from the previous employer. This combined with the above 3 option should make your work done.

Lastly remember that approval or rejection is at the sole discretion of the lending company. And most importantly, never provide fake salary slip or income documents, as it may land you in a legal trouble and create problem in your career in the future.

8 Free Things You Get With Credit Card: Money, Miles, Insurance, Vouchers & more

Everyone wants credit card as it offers many exciting features which are not available in any other payment option such as cash, cheque, debit card, etc. and thus helping in saving money.

But do you know that there are free things that come along with credit card? If not, then continue reading.

Free Money

Let’s start with objective of credit card i.e. FREE MONEY. The most important benefit or we can say the objective of the credit card is to offer FREE MONEY to the user every month for spending on almost anything. Free money is a magnet which attracts users. How much money is offered by the card companies varies with each card and depends on the income, risk profile, CIBIL score, and other important factors.

FREE Credit Card

There are some cards which carry ZERO annual and joining fee. So basically what you get is a card for free. Although there are conditions associated to avoid these two fees, such as minimum spend either annually or in the first few days of card issuance, but there are cards with no such requirement.

Free Grace Period

In addition to free money, user also gets a free grace period to make the repayment. This is the duration typically 21 days in which user has to pay the money used in a month. So for e.g. if your monthly billing cycle ends on 20th of each month, then your grace period to make bill payment would be around 10th of the next month. This is quite enough time to repay the money, as there is no interest charged during this period. But in order to get a good CIBIL score, you should not wait for grace period and instead pay the bills fully and before the due date.

Free Insurance Cover

Card companies partner with insurance companies and offer users FREE INSURANCE COVER. Typically types of insurance offered are health, travel, personal accident, life, lost baggage, etc. So any unfortunate event happening, cost would be borne by the insurance companies. But remember that insurance offers on credit card comes with various terms and conditions and user has to follow regular claim process in order to receive the claim amount. So basically twin benefits are offered – free coverage with no premium to be paid.

Free Airport Lounge Access

This especially is mainly offered to premium card customers. Lounge access gives travelers a peaceful place on the airport to sleep and relax, away from the crowded places at the airport. In fact, some cards also allow users to bring guest users in the lounge. Although this feature may not interest regular card users but for a frequent traveler, this is highly valuable as they are offered luxury lounge access.

Check out travel cards for Indians going on an international trip.

Free Air Miles

Credit cards also offer free travel points (or air miles) to the frequent flyers and spends made on the card. These accumulated points can later be used for buying flight tickets for free.

No Fee on Certain Services or Free Vouchers

There are cards available in the market which carry ZERO base fare charge on flight booking. Or offer free shopping or food vouchers. These vouchers are offered by SBI SimplyCLICK card, Axis Bank Neo, FBB SBI STYLEUP and others.

Free Movie Tickets

This is especially for the movie lovers. Cards such as KOTAK PVR Gold offers 2 free movie tickets every month at PVR movie theatres.

But always remember, the word FREE is GIMMICKY tactic to entice users either in credit card/shopping etc. Because ultimately credit card is one of the biggest money making income source for the card companies.

Unless someone has no monetary benefits, why would anyone offer money for FREE in today’s world, right?
And this money is recovered in the form of charges associated with each card such as:

  • Interest on late payment or non-payment of full balance
  • ATM cash withdrawal
  • Joining and annual fee
  • Over limit penalty
  • Balance inquiry
  • Mobile alerts
  • Cheque bounce and many others

Important point to note before selecting the right credit card is to read the terms and conditions associated with all the free features mentioned above.