How to Manage Cash Flow for Effective Financial Management

In business, cash flow and cash flow statements can be helpful in understanding the liquidity of funds. That way, you can improve your cash management to carry out day-to-day expenses. 

Management of cash flow means control of cash outflow with analysis of possible sources of inflows. This ensures your business’s financial stability to perform the usual operations during a challenging period. 

Here is a guide to help you understand cash flow and cash flow statements and their importance with complete information.

Understanding How Cash Flow Works

This involves knowing the total income over a specific period and taking note of spending. This also helps you make cutbacks on unnecessary expenses. To calculate the current cash flow over a period of time, you need to reduce the cash outlays from your cash inflows. 

For cash flow analysis, you need a cash flow statement. This financial document outlines all the necessary information and detailed analysis of a business’s cash flow in a specific period of time. It shows all the data on cash received and cash used in different areas.

Upon completing an accurate calculation, you may get a positive or negative balance. A positive balance represents that you have enough liquidity to carry out regular expenses. A negative balance means you have inadequate liquidity. Thus, it helps you determine your current liquidity.

Also Read: What Is Channel Financing? 

Types of Cash Flow

After learning what is cash flow, knowing the type can help you to understand where your business stands better. There are various kinds of cash flows depending on expenditure, such as:

Operation-related cash flow

When money is generated due to sales, either due to goods or services, it is included in the entity’s core business cash flow. Expenditures include cost of goods sold, rent payments and others. This is included in the outflow of cash in operations.

Financing-related cash flow

The cashflow changes if there is an increase or decrease in long-term financing activities such as:

  • Changes in dividend issued 
  • Stock repurchases
  • Debts or liability incurred

This type of statement reflects such changes. 

Investment-related cash flow

This cash flow statement includes the fluctuation in long-term assets in the business, such as:

  • Loan extended by the entity
  • Buying fixed assets
  • Profit due to investment funds

Apply for Instant Cash Loan

Why to Understand Cash Flow Management

It has both long-term and short-term effects on the business as it determines the smooth operation of the business and its financial position. These are the reasons why knowing understanding cash flow and cash flow statements is critical:

Increases Profit

You can optimise your expenses by managing the cash flow and lead the way towards overall growth. That will result in:

  • Minimising the debt
  • Increasing the value fir the shareholder

Decreases Risk

Cash flow analysis and management ensure that day-to-day expenses are met by maintaining the required liquidity to run the business. That way, you reduce the risk of cash shortage.

Also Read: 5 Warning Signs for a Cash Crunch

Enhances Decision Making

Correct forecasting of cash flow can improve the decision-making capability in various areas of business:

  • Resource allocation
  • Budgeting of various expenditure
  • Strategic investment

This creates growth opportunities for businesses while minimising risk.

Attracts Investors

Practising proper cashflow management can gain confidence from investors, lenders, stakeholders and others by fostering trust. This can build confidence to invest in the business, attracting more financial opportunities. 

Also Read: What Is Invoice Discounting?

Steps to Implement 

You can take certain steps for better cash flow analysis:

  • Investing the surplus funds smartly and maintaining a reserve fund for unforeseen needs
  • Keeping a proper record of all the cash transactions, including time-in entry
  • Analysis of the area of overspending and cutting down on these to increase cash flow
  • Monitoring the payment dates and terms with suppliers and negotiating for favourable terms
  • Preparing a cash flow statement to analyse the inflows and outflows
  • Forecasting future cash trends depending on past projections and data

By taking the necessary steps, such as creating an in-depth cash flow statement, tracking your expenses and others, you can have a good strategy to maintain your cash flow and cash flow statements. 

If you need to fuel up your working capital or meet other business needs, qualifying for financing can sometimes not be easy. In this case, a Fibe Instant Personal Loan can be a smart option as it offers you up to ₹5 lakhs loan . You can use these funds without any restrictions and apply without any collateral. Pre-cloure facility at no additional cost gives you an added advantage. 

What’s more, you can apply in just a few minutes online and get the funds instantly to manage your expenses. With a completely online process and minimum documentation, you can save time after meeting simple eligibility criteria. Register on our website or download our Fibe Loan App to get a quick loan online. 

FAQs on Cash Flow

What tools or software can help me track cash flow?

Here are a few tools that can help you to track your cash flow:

  • Cash controller
  • Cash flow frog
  • ThinkOut
  • Strands BFM
  • PlanGuru

What’s the difference between cash flow and profit?

While the meaning of cash flow indicates a business’s inflow and outflow of cash, profit is the balance left after meeting all the expenses.

A Complete Guide to a Credit Card Cycle and its Importance

The credit card lifecycle has different phases. One of the important components to take into consideration as a user is the billing cycle. Every credit card comes with a billing cycle – some for 30 days, others for 28 days – depending on the issuer offering the credit card. 

Understanding this is crucial, as failing to pay bills on time can adversely affect your credit score. However, this is different from a credit cycle, which is a concept of economics. As such, understanding the credit cycle and how the credit card billing cycle works can give you a clear picture.

A Brief Understanding of the Credit Cycle

It is referred to as the cyclical fluctuation in:

  • Interest rates
  • Availability of loans 

This cycle has two phases that are intertwined with each other:

  • When the economy is contracting, lenders are less willing to give loans and, if so, offer loans at a high interest rate
  • When it’s expanding, lender tends to give loans at a low interest rate 

Hence, during recessions, credit availability is low and at a high interest rate. However, when the economy is on an upswing, you can avail of personal loans easily at lower interest rates of interest. 

Credit Card’s Lifecycle

This principle above is very different from a credit card lifecycle, which basically involves everything from getting a card to closing your account. On the whole, it involved the following:

  • Getting a new card from a credit card company on approval on your application 
  • Activating your card via online and offline modes within 30 days of receiving it 
  • Renewing your card once it expires by getting a new card and activating it 
  • Replacing your card if it is lost or stolen
  • Closing the credit card account 

How the Billing Cycle Works 

Within a card’s lifecycle, the only way that you can maintain good financial health is by paying your credit card bills on time. For this, understanding your issuer’s bill payment cycle is crucial. It can help you plan your credit utilisation during the interest-free period and avoid late payment penalties. 

Understand how the billing cycle works for credit card  with an example: 

  • Say your bill generation date is 10 March
  • Thus, your new billing cycle starts on 11 February and ends on 10 March
  • At the end of your billing cycle, the bill is generated, showcasing all your transactions
  • Now, if your due date is the 28th of March, you must pay the amount before the due date to avoid any extra fees and charges

You may assume that the repayment date is the bill generation date, which is not true. In fact, the issuer provides an interest-free period of up to 25 days to pay the bill. This is known as the grace period on the bill. You can pay the credit card bills during the grace period to avoid high interest rates later. In fact, as per the RBI, you get 3 days more to pay your bill after the payment due date. It is only after 3 days that you will be charged a late payment fee. 

Also Read: How to Read Credit Card Statements

Important Factors to Consider

Knowing these terms will help you to clearly understand your credit card cycle and plan repayment. 

  • Statement Date

This is the date on which you receive your statement after the completion of the billing cycle. After this date, the new billing cycle begins. 

  • Credit Card Due Date

This is the day when you have to pay your complete credit card bill to avoid any charges. The issuer decides this date based on your credit card cycle, which remains fixed throughout the billing cycle.

  • Minimum Amount Due

In case of financial shortages, you can only pay a minimum amount. This is generally 5% of the total billing amount. The rest of the outstanding amount will be carried forward to your next billing cycle. This way you avoid late fees, but you still need to pay interest on the outstanding dues. 

Repayment behaviour is an important part of how you manage your credit card. Understanding when to pay your bills can help you make the best use of your credit card. This way, you can also enjoy the maximum interest-free period. 

For instance, you can get an interest-free period of up to 50 days with the Fibe Axis Bank Credit Card. Not only does it come with zero annual or joining fee, but it also offers you perks like up to 3% cashback.

You can also enjoy hassle-free UPI payment and other benefits like a waiver of fuel surcharge and free access to domestic airport lounges. So, what are you waiting for? Download the Fibe App or register on our website to get it now!

FAQs on Credit Cycle

How does the credit cycle impact interest rates?

Depending on the economy, the credit cycle differs. When it peaks, loans are easily available and interest rates are more affordable. 

What is a credit card life cycle?

It includes the following stages:

  • Application
  • Issuance
  • Activation
  • Expiry and Renewal
  • Replacement
  • Closure

Can I change my billing cycle to align with my pay dates?

Yes, you can change your card’s billing cycle by contacting the issuer to align with the time you get your salary. This way, you can pay bills on time and maintain your creditworthiness. 

How to best time my purchase as per the credit card cycle?

It is best to make a big-ticket purchase at the beginning of the billing cycle. This gives you the maximum amount to repay.

List of Documents Accepted as Address Proof and ID Proof

The importance of documentation, like submitting ID or address proof when joining a new job, is something everyone must learn. Whenever you are trying to complete any legal or official work in India, documentation is one common step you will come across.

The list of proof of identity documents involves all government issued IDs that include your name and some other details. To know all about these must-have documents and their significance, read on.

Proof of Identity in India

Every Indian citizen should have the following ID proof documents list to save time during the application process. Here are documents commonly accepted as identification proof. 

  • Aadhaar Card
  • Passport
  • Driving License
  • PAN Card
  • Post Office ID Card
  • Bank Account Passbook
  • Any Photo ID card issued by the Ministry of Home Affairs of Centre/State Governments

A photo identity proof means that these documents will have a photo of your face, which makes it easier for others to recognise you.

Proof of Address in India

As your documents for proof of address, you can use the following legal papers and IDs for official work in India.

  • Aadhaar Card
  • Utility Bills
    • Electricity Bill
    • Telephone Bill (Landline or Postpaid)
    • Water Bill
    • Gas connection
  • Voter ID Card/ Election Commission Photo ID card
  • Passport
  • Bank Statements signed by the bank
  • Ration Card 
  • Driving License 
  • Rent Agreement
  • Income Tax Assessment Order
  • Vehicle Registration Certificate
  • MGNREGA card issued by Govt.
  • Pensioner’s Card with address
  • Certificate of address issued by Village Panchayat head or its equivalent authority (for rural areas)
  • Passbook of an active bank account with photo (issued by Scheduled Public Sector Banks, Scheduled Private Sector Indian Banks and Regional Rural Banks only)
  • Caste and Domicile Certificate with address and photo issued by the State Government 
  • Certificate from employer of reputed companies on letterhead
  • Certificate of address having a photo issued by MP/MLA/Group-A Gazetted Officer on a letterhead

Also Read: 6 Important Documents Required for ITR Filing

Identity and Address Proofs for Minors

Most of these certificates can only be availed after you are 18 years old. However, until the legal age, you can use the following documents as identification proof:

  • Aadhaar Card: All Indian citizens, regardless of their age, must have this card, which makes this an excellent proof of identity document
  • Ration Card: Minors can use their parents’ ration card as address proof as they are added as a dependent member
  • Birth Certificate: This document is valid as age proof until you get your driving licence or a voter ID 
  • Passport: As it includes your photo ID, address, age and other personal details, you can use this as a valid identity document 

You may also be able to use a certificate of address with your photo from an educational institution recognised by the government. Once you are over 18, you will need to apply for other mandatory documents, such as a PAN card and voter ID. When it comes to your Aadhaar, you must update it at least once in 10 years as per the UIDAI. 

Check Documents Required for Personal Loan

Why Is Documentation Essential?

Documents for identity proof have become an integral part of most initiation processes in India.  This is because:

  • It also eliminates duplicity in accessing services or benefits, particularly those offered by the government 
  • It prevents fraud, increases security and restricts unlawful activities
  • It establishes your identity and residency for the purpose of the service you are applying for 
  • It streamlines the onboarding processes
  • It helps meet regulatory compliances and ensures equal rights for all

Documents for proof of address and identity are two of the most crucial documents you need to furnish when applying for a personal loan. However, with Fibe, this process becomes hassle-free as you don’t have to submit any physical paperwork.

You can apply for a Fibe Instant Cash Loan and get up to ₹5 lakhs instantly by attaching valid ID proof and address proof online. Repayment is easy too as you get a flexible period of 3 to 36 months to repay along with competitive interest rates.

The eligibility for this loan is also easy to meet. There are no foreclosure charges, which allow you to close your loan at any point you prefer. Download our Personal Loan App or register on our website to get the loan you need. 

FAQs on ID Proof Documents

Can I renew my expired passport and use it as ID proof?

Yes, after renewing your passport, you can use it as one of your ID proof documents. However, until you have renewed it, you can use other documents for identity proof like:

  • Aadhaar Card
  • PAN Card
  • Driver’s License

What should I do if my Aadhaar details don’t match my other ID proofs?

If your Aadhaar card details don’t match your other identification proof, you need to fix it immediately. You can use the online Aadhaar self-service portal to get this sorted or visit your nearest Aadhaar enrolment centre.

Online Aadhaar Self-service Portal Process:

  • Visit the official Aadhaar Self-service Portal
  • Choose ‘Update Your Aadhaar’
  • Enter the correct details
  • Upload supporting documents
  • Review and submit

Track the update status within a few days to check if your valid ID proof is ready. You can also go to your nearest Aadhaar Centre to update or change your details. 

Offline Aadhaar Enrolment Centre:

  • Visit your nearby Aadhaar enrolment centre
  • Ask for the Aadhaar card correction form
  • Attach self-attested photocopies of the supporting documents
  • Submit the form along with the fees needed for the process

Can children below 5 years of age get Aadhaar as ID proof?

The government of India has announced that children below the age of 5 will also need to get their Aadhaar card. It can be used as one of their proof of identity documents. The procedure has been introduced as ‘Baal Aadhaar’ by the Unique Identification Authority of India (UIDAI).

Beginner’s Guide to Open a Salary Account: Why is It Important?

Once you start a career as a professional, you will need a salary account to get your earnings credited each month. This is your first step toward financial independence, and understanding the various salary account benefits will help you plan your finances better.

Opening this account takes just a few minutes and requires some documents. Most companies offer to open your account at the time of joining, which is an easier and faster option. Knowing all the perks it offers allows you to decide where your money is best credited and held. 

Read on to know what is a salary account, how to open one, its features and more.

What is a Salary Account?

These accounts work similarly to savings accounts, through which employees get their monthly remuneration from employers. Most business organisations and companies tie up with various banks to create salary accounts for their employees.

With such an account, you can automatically enjoy benefits when you join the workplace. A salary account is meant to give you easy access to your earnings. This type of bank account gives you more than just the payroll benefits, as you can also earn lucrative interest too. 

Also Read: Salary Account VS. Savings Account

Perks of a Salary Account

The salary account benefits and features will vary from bank to bank, but here are some common perks you can enjoy.  

  • Zero Balance

In most cases, you don’t need to maintain a minimum account balance, unlike a savings account, where you may have to pay a penalty when your balance is low. 

  • Banking Services 

With this account, you can enjoy convenient banking services. For example, fund transfers or bill payments are easier and faster with such an account.

  • Debit Card and Chequebook 

You get a complimentary debit card, which you can use to withdraw funds from your nearest ATM or pay online and in person. You can also transfer funds using a chequebook and keep track of your transaction history in your passbook.

  • Loan Facilities 

Since lenders can easily review your income details, availing a loan with a salary account is easier. 

  • High Interest Rates

With this feature, you can grow your income by earning interest on the money in your account at the rate decided by the bank. This is a great way to earn additional income while enjoying liquidity. 

Also Read: What Is Salary Overdraft?

Step-by-step Guide to Open a Salary Account

Regardless of which bank your employer has tied up with, the initial onboarding process remains the same. Thus, you can follow these steps to open a salary account. 

  • Step 1: Go to the online application system
  • Step 2: Fill out the application form
  • Step 3: Choose the preferred branch (if there’s an option for it)
  • Step 4: Complete verification and KYC
  • Step 5: Receive your welcome kit

Required Documents

While applying for your first salary account, you will need to submit some documents. The bank can ask you to provide the list of the following documents along with an application form:

  • Aadhaar Card 
  • PAN Card 
  • Driving Licence 
  • Voter ID Card
  • Latest photo passport-sized

For salaried employees, this account offers a way to manage finances without hassles. However, if you are short on funds, opting for a hassle-free loan is just as important. One such option you can choose from is Fibe Instant Personal Loan. 

Get up to ₹5 lakhs Loan with a flexible repayment tenure of 3 to 36 months and a streamlined application process. Along with competitive interest rates, Fibe allows you to repay the loan with any foreclosure charges. Download our Personal Loan App or register on our website to easily access the required funds.

FAQs on Salary Account

What is salary account meaning? 

A salary account means a bank account where you receive the compensation from your employer as per the terms of your employment. 

Do I need to maintain a minimum balance in a salary account?

In most banks, there are generally no minimum balances for salary accounts. However, some banks may have a policy for minimum balances. You can check with your salary account bank in this regard.

Is a salary account automatically converted into a savings account when I switch jobs?

Every salary account is a type of savings account. If there have not been any salary credits in it for three months, it’s converted to a regular savings account. So, when you leave the job, you can still use it and access it as your savings account. 

Can I open a salary account in any bank or only the one recommended by my employer?

Your employer initiates the process of opening your salary account at the bank where they have a tie-up. However, you can talk to your company’s HR to check if you can open an account in a bank of your choice. 

Are there any transaction limits on salary accounts?

It entirely depends on which bank you have your salary account with. Some banks offer you unlimited free transactions while others offer a fixed number, after which they charge a transaction fee.

What kind of loans can I avail through my salary account?

You can apply for a variety of loans, including:

  • Personal loan
  • Car loan
  • Home loan

However, an employee, you must have a certain minimum income with a stable employment history to get a loan.

Tax Deductions on FDs: What You Need To Know Before Investing?

Understanding the TDS on the interest of fixed deposits is an important aspect of calculating your total earned interest. It also directly impacts your total earnings, which is important when you are investing. 

Here is everything you should know about TDS on fixed deposit interest and how much fixed deposit interest is tax-free to plan your investments smartly. 

How TDS is Calculated on FD Interest?

The interest from FD returns is completely taxable as it is calculated as a part of your net annual income. Therefore, the issuer will deduct 10% from your total interest earned before directing it to your bank account along with the capital deposit. 

This rate only applies if you have provided a PAN card at the time of application. In the absence of a PAN card, the TDS deducted on FD is 20%.

Also Read: Tax Benefits on an Education Loan

Exemption for Tax Deduction 

While the taxation on fixed deposits is applicable to all investors, it applies only after a threshold amount. Here is the exception list and the criteria.

Threshold LimitCriteria 
₹40,000Citizens under 60 years of age 
₹50,000Citizens over 60 years of age 

If your total interest from all FDs exceeds this limit, you must pay TDS. Otherwise, you can enjoy tax-free interest. 

Also Read: Guide on Calculation Of Tax

Example of Tax Deduction at Source 

To better understand how much TDS is deducted on FD interest, consider an example. Assume you have four deposits, all accumulating different amounts of interest. 

  • FD 1: ₹45,000
  • FD 2: ₹25,000
  • FD 3: ₹1,000
  • FD 4: ₹7,000

In this case, only the first FD surpasses the threshold limit. Thus, you only have to pay tax on the additional ₹5,000 on the first FD. However, you will not pay any tax if you are a senior citizen, as the threshold limit is ₹50,000 for depositors over 60 years. 

Also Read: Tax Benefits While Availing a Personal Loan

How to Save on Paying Tax on FD Earnings?

Now that you know how much fixed deposit interest is tax-free, you can calculate your investment amount to keep it under the threshold limit. This is one way to avoid paying TDS on your FD returns. 

Another way is to invest in tax-saving FD, which allows you to claim a deduction of up to ₹1.5 lakh on your investment. This way, you can earn maximum interest without worrying about taxation. However, know that this comes with a lock-in period of 5 years. 

If you have an annual income under ₹3 lakhs, you can also submit Form 15G to avoid paying tax on FD interest. Similarly, Form 15H is applicable for senior citizens. If you don’t fall under any of the criteria, you are liable for a TDS deduction on FD. 

In conclusion, you must pay tax on all your income. Whether it is active, like a job or business, or passive, like FD investments. However, you don’t need to pay any taxes when you get funds via loan. This makes it an ideal solution when you know your exact financial needs. 

Thus, if you need a fixed amount for any personal requirement, consider applying for the Fibe Instant Personal Loan. We offer ₹5 lakhs with minimum documentation and swift approval. Apply now on our Personal Loan App or website to enjoy loans at affordable interest rates with zero foreclosure charges. 

FAQs on TDS on FD Interest

Is the interest earned on fixed deposits taxable in India?

Yes, banks and financial institutions deduct TDS on interest of fixed deposit before disbursing the funds to your account. This is done after the tenure is complete.  

How much interest from fixed deposits is tax-free?

If your interest is under ₹40,000 in a year, the issuer will not deduct TDS as per section 194A of the Income Tax Act. 

What is the TDS limit for senior citizens on fixed deposits?

This limit for tax-free interest for senior citizens is ₹50,000 in a year.

Can I claim a tax deduction on the principal amount invested in fixed deposits?

Yes, it is allowed under Section 80C of the Income Tax Act. As per this section, you can claim up to ₹1.5 lakh each financial year as a deduction. 

Will TDS be deducted if I hold multiple FDs across different banks?

The TDS deduction on FD is calculated for net income from all the accounts individually. In case you hold multiple FDs, you need to submit Form 15G or Form 15H for all issuers to avoid deductions. 

What is the penalty for not paying taxes on FD interest?

If your bank or financial institution does not deduct TDS on fixed deposits, you are still liable to pay tax on the total interest you earn. If you do not do so, you will need to pay up to 300% of the tax evaded as per Section 271(C) of the IT Act. 

What are the latest changes in tax rules for fixed deposits in India?

As per the latest 2024 budget, there have not been any changes in the rules for TDS on interest of fixed deposit.

Best Low-Investment Small Business Ideas in India to Consider Right Now

Do you aspire to start a business? In most cases, financing is one of the major hurdles in achieving entrepreneurial dreams. But you don’t need to factor in a hefty investment. If you want to start a business with a low budget, you can find many options, from affiliate marketing to investing in a boutique. While considering low-investment business ideas, remember that you need to have to:

  • Invest time in market research
  • Have a business plan
  • Know how much funding is required 
  • Have a patience

Whether to tide over a financial crisis or grow a successful business that you can shift into, having a second source of income will help you immensely. Keeping that in mind, invest in something simple that can potentially build substantial returns.

Some questions to ask yourself when planning your business are:

  • Does it have a low entry barrier?
  • Is it scalable?
  • Is there a demand for it in the market right now?
  • Can I get clients for it right away?
  • Is it easy to set up?
  • Is it sustainable? 

If the answer to all of the above is yes, you can start an investment on the basis of your interest. Take a look at some business ideas with less investment below:

Also Read: 3 Best Investment Options to Boost your Income

Top 10 Small Business Ideas in India

You can easily earn money online with the growing fintech industry and internet-based jobs right from home. However, some ideas will require a bit more room and, in some cases, a team.

  • Affiliate Marketer

This is a booming business where you market products to bring in new customers. This can be a great source of passive income where you need to do is sign up online. Having adequate digital marketing experience can help immensely with the potential to grow a sizable income.

  • Online Courses

You can teach any subject that you have an interest in or hold expertise in. If you have a special skill, you can monetise it as well. This is one of the best low-investment business ideas you can go for with people signing up all across the world!

  • Content Creation

From booming YouTube channels to Instagram creators, content is the latest career option you can choose. You can earn revenue from ad sponsorships by sharing content that attracts an audience. It could be anything from travel to finance – make sure whatever you do resonates with viewers. 

  • Graphic Designer

If you have a creative mind and knowledge of graphic design, this can be a great option for your second source of income. With a small investment amount, you can get a laptop and software to start working. Today, you can even learn to use free software to create great output for MSMEs and single-person brands. 

  • Wedding Planner

Wedding planning in this country has a very large market if you know how to approach clients and get things done. Contacts with photographers, DJs, dance tutors, food and flower vendors, hotels, and designers can help you put it all together. With how much people spend on weddings, this is one of the most lucrative investment ideas in India for a new business. 

Apply for Wedding Loan 

  • Cooking Coach

Cooking skills are something that everyone requires. To maintain a healthy lifestyle and ensure an exciting new taste for the palate, online cooking videos and classes are booming across the globe. If you have the skill, you can make it as a business!

  • Fitness Coach

The world is middle of an obesity pandemic and people are adopting fitness as a part of their lives. Fitness coaches are the need of the hour to guide people in the right direction. All you need to do is have proper knowledge of this field and some experience. A course in health and nutrition can help you get started. 

  • Photographer

If you click good photos and have time to spare, become a part-time photographer. Starting from weddings to important corporate events, you can freelance for a number of projects. You only need an Instagram page to start sharing your creative point of view and get bookings. 

  • Café / Boutique

While these are long-term money investment ideas, they can be hugely profitable. Create a place where people can sit, work or study as well as order coffee and get sandwiches or other eats. The other option is to sell furniture and/or clothing by sourcing it from artisans across India. Both ideas may require time to gain customers, but can offer great satisfaction and revenue. 

  • Salon and Spa

Among other popular investment ideas in India is opening a beauty salon/spa. This requires you to hire a team of professionals and market your services online. You can do this in an area where such services are required, as this will require some funds to get off the ground. A little patience can go a long way in building your brand. 

Also Read: Top Traditional Ways to Invest and Grow Money

Establishing a business requires hard work and dedication but offers a lot of rewards, too. If you want to start a business, now is the time to go for it. Starting a business requires funds, and if you do not qualify for business financing, get a Fibe Instant Personal Loan.

With it, you can get up to ₹5 lakhs loan quickly with minimal paperwork. Its flexible repayment tenure of 3 to 36 months will help you repay the loan comfortably. What’s more, there are no pre-closure charges to worry about, so you can repay the loan early. To get started, register on our website or download our Personal Loan App.

Easy Guide to Compound Interest: Definition, Examples and Applications

You will come across the term compound interest in various financial facets and investments. Starting from savings accounts to loans and fixed deposits, it is a common term. With it, your money can grow much faster and you can build wealth quickly. 

Similarly, when your loan interest compounds, your outstanding debt can quickly become larger. It is essential to understand what is compound interest to explore investment options and make informed decisions.

Guide to Compounding Interest

Compound interest is a type of interest with which you can earn an escalated return compared to simple interests. With compounding interest methods, you can earn interest on the original sum of money and the interest accumulates over the previously earned amount.

How Does Compound Interest Work?

Compound interest works on the capital amount as well as the interest earned over the previous period. To break it down, you need to know what these are:

  • Principal Balance: The amount you invest initially
  • Interest: The interest rate applied to your principal amount
  • Compounding Frequency: This shows how often your interest will be compounded (monthly, quarterly, annually or daily)
  • Duration: The duration over which your funds attract interest

With the power of compounding, your principal grows every month/year as it earns interest. This new sum earns more interest unless you withdraw from your invested sum. 

How to Calculate It?

Since you know what is compound interest, now you must learn how to calculate it. The growth with compound interest is significant, which can lead to lucrative returns. 

Formula: A = P (1 + r/n)nt

  • A = the final amount of money you will get at the end of the period
  • P = the amount you invested, your principal amount
  • r = interest rates
  • n = the number of times your interest compounds each year
  • t = tenure or the number of years the amount can grow

Also Read: What Is Accrued Interest?

Examples of Compound Interest

This example will give you a better understanding of how to calculate compound interest when it comes to investing. 

Say you invest ₹1,000 in a fixed deposit for 3 years at 10% p.a. Find how much you get with simple interest and compound interest with these terms:

  • The principal amount is ₹1,000
  • The interest rate is 10% per year
  • Compounding frequency is once a year 
Simple Interest Compound Interest 
Interest after year 1: ₹1,000 x 10% = ₹100
Interest after year 2: ₹1,000 x 10% = ₹100
Interest after year 2: ₹1,000 x 10% = ₹100
Total: ₹1,000 + ₹300 = ₹1,300		Interest after year 1: ₹1,000 x 10% = ₹100
New total for year 2: ₹1,100
Interest after year 2: ₹1,100 x 10% = ₹110
New total for year 3: ₹1,210
Interest after year 3: ₹1,210 x 10% = ₹121
Total: ₹1,210 + ₹121 = ₹1,331

In this case, you received ₹31 more thanks to the power of compounding. Imagine what your gains will be when you apply this principle to larger amounts! 

Also Read: Interest Rates On Personal Loans In India

Pros and Cons of Compound Interest

Compounding interest also has its pros and cons. Here are some of the most common aspects of compound interest.

  • Builds long-term wealth
  • Minimise wealth erosion risks
  • Compounding can lead to high interest during loan repayments
  • The returns are taxable when it comes to interest earnings in most investments 

Who Gets the Benefit of Compound Interest?

Compound interest helps the investor who receives the interest or gains. Apart from investors, banks and lenders can also earn compounding interest through bonds, loans and investments.

The bottom line is that the long-term outcome of compound interest is very potent for your finances. When it comes to investments like fixed deposits, it can increase your wealth. You can rely on it to achieve long-term goals.

If you want to fulfil your goals today, explore the Fibe Instant Personal Loan. Its easy-to-meet eligibility criteria will help you qualify quickly. You can get up to ₹5 lakh and a flexible repayment tenure from 3 to 36 months. Prepay your loan at any time without foreclosure charges and become debt-free easily. To get started, register on our website or download our Personal Loan App.

FAQs on Compound Interest

How is compound interest applied to loans and mortgages?

Based on your compounding frequency, your principal loan amount will increase. The interest rate will be applied to the new accumulated principal. You can easily learn how much it will be if you know how to calculate compound interest or by using a compound interest calculator online. 

Can compound interest help me retire earlier if I start saving now?

It is always wise to start your retirement plan earlier in your life and investing with compounding interest increases your long-term wealth. However, consider taxes to compute your actual returns before you proceed. 

Is the formula for cumulative interest the same as compound interest?

No, the formula for cumulative interest is different from the compound interest formula. 

Cumulative Interest: Principal X Tenure X Rate

Compound Interest: A = P (1 + r/n)nt

Where:

  • A = the final amount of money you will get at the end of the period
  • P = the amount you invested, your principal amount
  • r = interest rates
  • n = the number of times your interest compounds each year
  • t = tenure or the number of years the amount can grow

Is compound interest always beneficial to the borrower?

Compound interest is never an excellent option for borrowers as they have to pay more and the principal amount will keep increasing.

How can I avoid missing out on compound interest opportunities?

Discipline is the only answer in this case. If you are investing, try to avoid the temptation to withdraw prematurely to enjoy the power of compounding interest. 

Can compound interest be used for short-term financial goals?

Compound interests can be a great way to achieve your short-term financial goals and build long-term wealth. Using the compound interest calculator formula, you can see how this principle creates a snowball effect on your finances, resulting in overall growth. For short-term goals, you can invest a higher amount. 

Fixed Deposits Explained: A Simple Guide for Beginners

A fixed deposit (FD) is one of the most popular options in Indian households as it is secure and has the lowest risk. If you have extra funds available or wish to grow your savings without any risk, this is an ideal choice. 

Funds readily available are easily used. Unless you have placed them in an account out of quick access, you may end up spending them. That’s where FDs come into play. Thus, you can better explain fixed deposits as a savings instrument rather than an investment.

Read on to know the definition of a fixed deposit account, its types, its working and more. 

What are Fixed Deposits?

An FD is a financial instrument that banks and financial institutions offer. It is an effective way to grow your money without subjecting it to market risks. It ensures you earn a predictable profit by the end of the tenure. 

How Does a Fixed Deposit Work?

To better understand what is a fixed deposit, you must know how it works.

  • Investment

You deposit a lump sum amount for a fixed tenure, ranging from a few months to several years.

  • Interest Rate

The bank or NBFC offers a predetermined interest rate for the entire tenure, typically higher than regular savings accounts.

  • Tenure Options

You can choose the tenure based on your financial goals ranging from 7 days to 10 years.

  • Interest Payout

You may receive the interest payments at regular intervals (monthly, quarterly or annually) or ask the bank to compound it and get it when the FD matures. 

  • Maturity

At the end of the tenure, you will receive your initial investment plus the interest earned.

  • Premature Withdrawal

You have the option to withdraw your funds before maturity, but it may incur a penalty and affect the interest rate.

  • Tax Implications

Interest generated on FDs is taxable as per your income tax slab and TDS (Tax Deducted at Source) may apply if it exceeds a certain limit.  

Also Read: Difference Between Callable And Non-callable FD

Types of FDs

Issuers offer various options to meet different financial needs. Whether you seek security, tax benefits, or convenience, there is an FD for you. Here are the key features that better explain fixed deposit types:

Tax-Saver FDs

  • These FDs come with a mandatory lock-in period
  • They provide tax deductions, but early withdrawal can reverse the benefits

Regular FDs

  • Normal FD schemes offer higher interest than savings accounts
  • They offer short- to long-term, flexible tenures and allow loans against deposits

Reinvestment FDs

  • The bank or NBFC reinvests the interest into the principal amount
  • You earn interest on the principal and accumulated interest, paid at maturity

Auto FDs

  • This type combines the benefits of savings accounts and FDs
  • You set a threshold for your savings and excess funds automatically go into the FD for higher interest

Senior Citizen FDs

  • These FDs serve older investors
  • They offer a higher interest rate, prioritising capital safety over high returns

Digital FDs

  • You can invest in such FDs entirely online
  • The process requires no physical documentation and includes quick verification

Also Read: Term Deposit Vs Fixed Deposit

Benefits of Fixed Deposits

FDs help you grow your savings with minimal risk. Now that you know what is a fixed deposit and how it works, know some key benefits you can enjoy with it:

  • Flexible Tenure: You can choose the tenure based on your preference 
  • Loans Against FD: You can borrow up to 95% of your FD value during emergencies
  • Assured Rate of Return: FDs offer a guaranteed rate of return throughout the tenure, so you can plan your returns and finances more efficiently 
  • Easy Liquidation: It can be easily liquidated online or at the financial company’s branch
  • Tax Threshold for Interest: No tax is deducted on interest until it crosses the income tax cap of ₹40,000 for regular investors and ₹50,000 for seniors

In conclusion, knowing what is a fixed deposit can boost your earnings. However, you do not have to break your FD if you need immediate funds. Instead, you can opt for Fibe’s Instant Personal Loan, offering fast access to funds without collateral. 

Get up to ₹5 lakh at competitive interest rates through our digital platform. Download the Fibe Personal Loan App for iOS and Android or apply on our website to secure funds.

FAQs on Fixed Deposit

Can I open an FD in a minor’s name?

Yes, you can open a fixed deposit for a minor. However, you need to be a parent or guardian to operate the account on behalf of minors until they turn 18 years old.

Can I transfer my FD to another bank?

No, you cannot directly transfer an FD to another bank. However, you can close the FD with your current bank and open a new one with a different bank.

How do I track my FD account?

Most banks provide multiple avenues through which you can track your FD account. Some of these are:

  • Online platform
  • Mobile app
  • Customer care service
  • SMS banking
  • Missed call service

Can I add a joint holder to my FD account?

Yes, you can add a joint holder to your FD account. Most banks allow joint FD accounts with two or more holders.

What is the fixed deposit definition?

It refers to a savings scheme where you invest a certain lump sum for a fixed interest for a fixed tenure. It offers interest on your invested amount across the duration you choose. It is considered a nearly risk-free investment.

How to Fill Cheque Correctly: Step-by-Step Guide

Knowing how to fill the cheque correctly ensures your payments go through without issues and keeps your transactions secure. Following the proper steps in your cheque-facilitated transactions prevents errors that could lead to delays or rejections.  

To understand what correctly filling out a cheque entails, read on.  

What is a Cheque? 

A cheque is a written order that tells a bank to pay a specific amount to a designated person or entity. In India, the Negotiable Instruments Act of 1881 governs all cheques. People often use them for personal and business transactions.  

If you fill out a cheque incorrectly, the bank may reject or dishonour cheque, causing processing problems.  

Also Read: What is Cheque Leaf?  

Different Types of Cheques 

Each type of cheque serves different purposes and offers varying levels of security and flexibility. Here are a few types of cheques you need to know about: 

  • Bearer Cheque 

A bearer cheque is cashable by anyone who presents it at the bank. It may not specify a payee’s name. That makes it easily transferable but it’s less secure.  

  • Order Cheque 

An order cheque is payable only to the named person. The payee must endorse it on the back to deposit it. That adds a layer of security to the transaction.  

  • Crossed Cheque 

A crossed cheque has two parallel lines at the top left. It is used to deposit funds directly into a bank account and not cashed directly. That prevents unauthorised cash withdrawals. 

  • Post-dated Cheque 

Post-dated cheque is issued for a future date. You cannot cash it until that date arrives. People often use it for scheduled payments and budgeting.  

Detailed Guide to the Parts of a Cheque 

Before you fill out a cheque, you need to understand the various sections that a cheque has. These include: 

Bank Information: The cheque includes the bank’s name and address.  

IFSC: IFSC Code is a unique 11-digit code, combining both numerals and letters.  

Payee Information: This section clearly mentions the name of the recipient of the funds. Date Box: Here, you need to mention the date on which the cheque is issued.  

Rupees: You need to write the amount in words here.  

Account Number: Include the account number to process the payment.  

Signature: The drawer must sign the cheque in the designated space, typically printed with their name above the signature line. 

Amount to Be Transferred: The maximum amount that you can draw.  

Cheque Number: Each cheque has a unique cheque number and MICR code. 

Amount: Write the transferable amount in numbers in this box.  

Also Read: 5 Important Facts of Account Payee Cheque  

Cheque Writing Sample. Here is a sample example of writing a cheque for your reference. Figure 1. 

Cheque Writing Sample and Format 

Filling out a cheque consists of two main parts: writing the cheque and recording the payment. Follow these steps and use the correct cheque fill format to ensure accuracy and prevent dishonour by the bank. 

  • Write the Date 

It is mentioned in the top right corner in the format “DD/MM/YYYY.” You can also create a post-dated cheque if needed.  

  • Record the Payee’s Name 

Write the payee’s name, who can be an individual or a business. Ensure you spell the name correctly.  

  • Write the Amount in Words 

In the designated space for ‘Rupees,’ write the amount in words starting from the left side. Include the word ‘only’ after the amount to prevent tampering. For example, write “four thousand and four ‘only’ if you wish to write a cheque for ₹4,004.  

  • Write the Amount in Numbers 

In the box on the right side, write the same amount in numerals, formatted as ‘4004/-’.  

  • Sign the Cheque 

Mismatched or incorrect signatures can result in the cheque being cancelled or deemed invalid. Sign the cheque using the same signature you use for other banking transactions.  

 For Example: 

Date: 28/04/2025 

Pay: John Doe 

Amount: ₹5,000.00 

Amount in Words: Rupees Five Thousand Only 

Signature: [Your Signature] 

Filling out a cheque accurately helps you to build trust with lenders when applying for loans. It allows you to avoid charges if your cheque bounces due to an error. This makes it a secure and simplified option for fund transfer.  

If you are looking for a financing option with similar features, check out Fibe’s Instant Personal Loan. With us, you can borrow up to ₹5 lakh instantly. Experience competitive interest rates and repay over a comfortable tenure. Download the Fibe Personal Loan App today or apply on our website for a quick loan solution.  

FAQs on Filling a Cheque 

Can I write the date in any format on a cheque?  

No, there is a specific format for updating the date on a cheque. You need to write the date in the format ‘DD/MM/YYYY’ only.  

What happens if I make a mistake while writing the amount in words?  

In such cases, it is often best to write a new cheque to avoid any issues.  

Is it necessary to include a ‘/–’ sign after the amount in numbers?  

Although it is not necessary, it is best practice to use this sign after the amount in numbers. The ‘/-’ sign indicates an endpoint to your written amount. It helps prevent tampering and clarifies the amount.  

Can someone misuse a cheque with my signature, but no other details filled in?  

Yes, blank signed cheques are likely to be misused. Avoid leaving cheques blank and store them securely to prevent fraud.  

Can I write a cheque for a future date?  

A post-dated cheque has a future date and is not cashable until then. People commonly use it for scheduled payments and budgeting, such as paying rent as tenants.  

How long is a cheque valid after the date mentioned on it?  

In India, a cheque is valid for three months from the date mentioned. After this period, it is considered stale and may not be acceptable for payment by the bank.  

What happens if my signature is mismatched or unclear?  

If you sign a cheque and your signature does not match the specimen signature held by the bank, your cheque will be void.

Cheque book Essentials: Your Complete Guide

Wondering how to define a chequebook? A chequebook is a collection of cheque leaf lets that is used to make fund transfers. It is a reliable tool for your payment needs and helps you track and manage your finances. 

Despite the growth of digital payments, cheques offer physical proof of transactions, providing you with control and security. To get more information about chequebooks and how you can get one, read on.

Chequebook – Meaning and Key Facts

A chequebook is a small booklet filled with blank cheques. You can use these cheques to make payments instead of cash. Using a chequebook to issue cheques is helpful for larger payments and allows you to avoid carrying cash.

Here are some key facts about bank chequebooks:

  1. Cheques are available to you when you have savings or current accounts
  2. You need to write the correct amount on a cheque to enhance transaction security
  3. Once a payee is specified, it becomes unalterable, ensuring clarity in payment
  4. A cheque serves as a binding, unconditional order rather than a casual bank request
  5. After six months, cheques are classified as stale but retain their legal validity
  6. Cheques older than six months from the date of issuance may still be honoured by some banks 
  7. Cheques that bear a signature but lack a written amount are susceptible to misuse
  8. For a cheque to be valid, you must sign it and write the correct date

Also Read: What Are Cheque Bounce Charges

Chequebook Elements

Before writing a cheque, you need to understand the key components to ensure a smooth transaction. Here’s an overview of the information in chequebooks:

  • Date

The date on a cheque shows when you issued it, serving as a timestamp that indicates its validity period. 

  • Amount

In the amount field, you clearly spell out the sum of money you want to transfer. Additionally, you need to write in numeric also. Doing so ensures clarity and prevents any confusion about the payment.

  • Payee

The payee is the recipient of the payment. This detail ensures that the money goes to the correct individual or entity.

  • Signature

Your signature acts as a personal authentication mark. It verifies the legitimacy of your cheque and confirms that you authorised the transaction. This aspect adds an important layer of security.

Also Read: 5 Importnat Facts About Account Payee Cheque 

Types of Cheques

When dealing with cheques, you need to understand the different types. Here’s a quick overview:

  • Bearer Cheque

A bearer cheque allows anyone holding it to cash it. This makes it useful for simple transactions but can be risky as it is easy to misuse.

  • Order Cheque

An order cheque is payable only to a specified person or their order. This adds security by ensuring only the intended recipient can access the funds.

  • Crossed Cheque

A crossed cheque requires funds to be deposited into a bank account. This offers extra security by preventing over-the-counter encashment.

  • Open Cheque

An open cheque allows the bearer to withdraw cash directly from the bank. This offers flexibility but less control than other types. 

  • Post-Dated Cheque

A post-dated cheque specifies a future date for encashment, allowing for planned deferred payments.

  • Stale Cheque

This is one issued more than six months ago and may still be honoured by the bank but often undergo additional scrutiny.

  • Traveller’s Cheque

This cheque is a secure alternative to cash for international transactions, reducing the risk of theft or loss.

  • Self-Cheque

You can write a self-cheque to yourself to withdraw personal funds or transfer money between personal accounts.

  • Banker’s Cheque

This cheque is issued by the bank, guaranteeing payment and providing a secure option for large transactions.

Also Read: Top 5 Cheque Leaf Facts

Application Process for a Bank Chequebook

The chequebook application processes of banks vary. However, here are the general avenues that you can use to submit it:

  • Mobile App: Log in to your bank’s mobile app and request a new chequebook easily through the available options
  • Visit Your Nearest Branch: You can visit your nearest bank branch to request a new chequebook in person
  • Through the Bank’s Website: Access your bank’s internet banking portal to request a chequebook; the bank will mail it to your registered address
  • Customer Support: Call the bank’s customer support team to request a new chequebook through customer service
  • Write a Request Letter: You can write a formal chequebook application or request letter to your bank asking them to issue one to you
  • ATM: Visit the bank’s ATM and request a new chequebook through the available options; the bank will send it to your registered address

Chequebooks are important when applying for personal loans. They prove your banking relationship and financial stability. They also show lenders that you manage your finances well. Fibe’s Instant Personal Loan offers a fast, convenient loan option with minimal documentation. 

Instead of waiting for a cheque to clear, you can access funds instantly through Fibe’s digital platform. You can get up to ₹5 lakhs loan on competitive interest rates and minimal fees. Get the Fibe Personal Loan App for iOS and Android to secure a loan today!

FAQs on Chequebook

Can I request a chequebook online?

Yes, you can request a bank chequebook online. You can do so via your bank’s website or mobile app.

How many cheques are there in a standard chequebook?

A standard bank chequebook contains up to 50 cheques.

Can I use a chequebook to pay for online purchases?

You typically cannot use a chequebook for online purchases. Most merchants prefer credit/debit card payments and do not accept physical cheques.

Can I get a chequebook with my business name on it?

Yes, you can get a chequebook with your business name if you have a business account. You can request a chequebook that displays your business name and other relevant details.

How do I update the details on my chequebook?

To update your chequebook details, you can contact your bank through a branch visit, customer service or online banking. The bank will issue a new chequebook with the updated information.