2 The line of credit is typically given based on account holder balances, and as pre-sanctioned loans against assets such as bank FDs, shares and bonds offered as collateral.

3 The sanctioned overdraft limit and the interest charged will vary based on the nature of the asset offered as collateral.

4 The overdraft facility works like an approved loan. Money can be withdrawn as and when required and the interest has to be paid only on the amount borrowed and only for time it was borrowed.

5 Establishing an overdraft facility with a bank can help individuals or small businesses with short term cash flow issues, although the negative balance needs to be repaid within a month.

CASH BACK:

In the case of a cash-back card, you get back a fixed percentage of the amount you have spent every time you swipe it. The amount varies for various banks and card issuers may notify you about the changes in their offers from time to time. Besides, most banks set a minimum transaction amount on their cards to qualify for the benefits and have a cap on the cash they return to the customer. Our bank lets you adjust the cash-back amount against that due for the next month's bill

REWARD POINTS

Like cash-back cards, you can accumulate reward points on card purchases. For every `100-150 you spend on your card, you get 1-5 points.If you do not redeem your reward points in time, they might lapse.

HOW TO PICK THE RIGHT CARD

Both have their own advantages and limitations. The good part about cash back is that most banks automatically adjust it against the outstanding bill amount.

However, rewards points have to be redeemed against products. As far as indus try numbers go, only 35-40% of rewards points are being used. Most cash back cards come for specific spending categories, such as dining and entertainment. If you spend across categories, generic reward point cards work well. However, your choice of cards should depend on how much you spend on it and for what (see graph).

However, motor insurance buyers need to be cautious, particularly when the insurer agrees o the discount you are seeking. Mis-selling of the insurance product and miscommunication about it are most likely to happen when you are given huge discounts.

HAS YOUR CAR'S VALUE BEEN LOWERED?

Mis-selling happens when you buy a policy via an insurance agent. "If you negotiate hard with an agent, he may lower the value of your car, hence lower your insured declared value (IDV). Say your car is valued at `7 lakh and you are asked to pay a premium of `22,000. If you push for a bargain, the agent might value your car at `6.50 lakh, thus bringing your premium down by some `2,000.Unfortunately, you will discover this only when you make a claim, and get a low payout.

HAS VOLUNTARY DEDUCTIBLE BEEN INCREASED

When monetary loss is borne by the insured, it is called deductible. It can be compulsory or voluntary . For a policy where a car's IDV is around `6.50 lakh and an insurer offers a lower premium of `18,930, you are also offered a voluntary deductible component of around `5,000. If you increase the voluntary deductible component to, say , `7,500, the premium gets lowered to `18,480. If you increase it to `15,000 your premium could fall to `18,000.

Often agents lower the premium quote by increasing the voluntary deductible. When a loss occurs, you have to cough up a good amount-voluntary and compulsory deductible.

INCORRECT CLAIM HISTORY?

If you want to shift to another in surer, and you do not disclose you had made a claim with your previous insurer, you may get a discounted premium from your new insurer.The problem arises when you make a claim with the new in surer. If non-disclosure or misrepresentation on the part of a policyholder is found out at the time of a claim, the insurance company has the right to reject the claim.

HAVE ADD-ON COVERS BEEN REMOVED?

A typical third-party motor policy has inbuilt covers for drivers and co-passengers.These are detachable, and so often people choose not to take these covers in order to lower the premium payout. Add-on cover can be important, don't get swayed by the lower premium.

STANDARD COVER PITCHED AS SPECIAL OFFER?

Often agents sell a policy by bloating its price and then offering you a 20-30% discount on the premium and project it as a special deal for you.So, if you can do a little research of your own before you buy the policy , it will be helpful.

And the earlier one starts planning and investing, better it is for the longer run.

Mutual funds can play a very important role in planning to meet such financial goals, along with adequate insurance cover, and also some other investment products, financial planners and advisers say. For example, as one takes up a job and starts earning, one should start investing regularly even if the amount is small. At pres ent there are mutual fund houses which accept monthly investments of just Rs 500 through the systematic invest ment route, popularly called SIP. According to financial planners and advisers, one could start with a small amount and as and when the person's income rises, he should also increase the investment amount. If one starts investing as he starts earning, that money could also be used when he gets married.

Here the important thing to note is that one should not keep his savings idle in bank accounts returns from which does not even meet the rate of inflation. This is important because if one keeps money parked in a financial product returns from which do not beat the rate of inflation, actually he is earning negative real return, which should be avoided.

The next stage in one's life, after he settles down with a stable job or has a stable income, is to start a family. During this phase, it is important to take insurance covers for life so that the people dependent on him could remain safe in case of any eventuality for the person. Also given the rising medical costs, it is also absolutely necessary to adequate health cover for the whole family.

The next phase, when one has a child, is to plan for the child's education and then marriage. Here too mutual funds could be very useful.According to Arun Mandal, co-founder, Box Personal Financial Advisors, Noida, apart from all one's other life goals, mutual funds can also help build the desired corpus for one's child's higher educa tion and marriage using a combination of lumps-sum and SIP in equity, debt and gold funds. The same strategy can also enable you to build a retirement corpus so that you can celebrate your sunset years\.

To build one's retirement corpus, according to Mandal, SIP in mutual funds could be very useful. Since the amount, frequency and dates are pre-decided, it leads to the habit of `saving first and spending later'.SIPs give best results when continued for long peri ods irrespective of market cycles. The inherent benefit that accrues is safeguarding your invest ment portfolio against its biggest enemy ­ your emotions. You will continue to benefit from the time spent in the market rather than trying to time in the market. Historical longterm SIP returns in almost all the equity funds in India have been stellar

Even after retirement, one could use various mutual fund products for a tensionfree life. Once one builds an adequate corpus for retirement, as one nears retirement, the funds should be slowly moved to debt funds which witness relatively lower volatility. After retirement, financial planners and advisers usually advise their clients to move the money into accrual debt funds and set up a systematic withdrawal plan (SWP) from such funds so that every month only the returns generated from those funds are taken out while the principal amount remains as it is. This is also a very tax efficient method of earning good and steady returns after retirement.

Other than meeting the bigger and long term goals in life, mutual funds could also be used to meet short and medium term goals. For example one could use an SIP in liquid funds or short term debt funds to meet early outgo of funds like paying the annual school fees, insurance premium payments, expenses for holidays and vacations etc. However, financial planners and advisers warn that to meet the short and medium term goals, one should not use equity mutual funds, but should look at debt funds.