Debt relief options to achieve a debt free life:

Increasing numbers of debtors are having serious monetary issues. Your debts will only minimize once you start paying them off but financial relief can be achieved overnight. With the state of today's economy, consumer debt is increasing in number. There are many who are looking for debt relief.

What is debt relief?

Debt relief is kind of assistance provided to an individual who is in debt. It provides liberation from debts. Any one of us can fall into a debt trap. Simply consolidating a handful of debts will not relieve you from this burden. The initial step of getting out of debt is to work out on your pending bills. If you have no idea about the extent of your debt, you will not be able to do anything about it. So, it is advisable to go for debt relief programs which have proved to be beneficial for many who have financial issues.

Options for debt relief:

The most common options of debt relief are debt consolidation, debt management, and debt settlement.

Debt consolidation: Through debt consolidation you can consolidate your debts into one single payment. This is helps you to pay your multiple debts through a single payment. The debt consolidations programs are widely adopted by individuals to end their debt problems. Here a debt consolidation firm will contact your creditors and negotiate with them on your behalf. They will reduce the interest rates for you and club all your outstanding payments into one affordable amount.

Debt management: Debt management is seeking help from experts in finding a proper debt solution. Basically there are two types of debt management programs. One is secured debt management programs and the other one is unsecured debt management programs.

Debt settlement: It is one of the popular solutions when you are under the burden of heavy debt. The other option is to just file for bankruptcy. Among these two, debt settlement is preferred as it has a relatively less impact on your credit report.

You can start to plan your debt relief right from today, but do not expect things to change overnight. You can try to build a rapport with your creditors and keep them informed so that they will be able to help you with lower interest rates or monthly payments. They may even help you to structure a payment plan which may lessen the chance of adverse credit ratings. The option can be to take help from a credit counseling company. They may be charge you a small fee or no fee at all. They can help you to organize your budget and minimize your spending for some debt relief. They may also contact your creditors and work out repayment plan for you. Also never forget your bank as they can help you to give you an equity loan in your home’s value. This you can use to pay your debts.

All these options may vary from person to person. Try to find a debt relief plan which will suit you. All you need to do is lessen your credit limits and try to improve your credit scores. The debt relief solutions only guide you to manage your finances.

Banks started pulling off high-return FD schemes

Interest rates have started suspending therefore banks have also started taking off the special deposit schemes under which they were offering higher interest rates. For instance Union Bank of India (UBI) recently has taken a decision to withdraw its 900-day deposit scheme with 10.5% interest rate from next week. Other banks to follow suit soon.

UCO Bank sources said that banks deposit scheme under which it is offering 10.5% on exact one-year deposits will be only for the festive season. UBI on the other hand has withdrawn its one-year deposit from November 1 even though it has raised deposit rates.

Banks have introduced ‘special’ schemes under which they were giving high interest rates than the rates attached on regular deposits on either side of the special term.

From all the concerned quarters the indications are coming that the interest rates on deposits in general will slip down from their current high levels. Therefore if you are still looking for a safe option for investing your liquid cash then this is probably the best time to invest your funds with bank fixed deposits.

Hence you might not get interest rates which are as good as 10.5% per annum on long deposits. “We will reduce deposit rates with effect from November 9. We have decided to withdraw the 900-day scheme on which we offer 10.5% rate per annum.

There will be no change in deposit rates for other time buckets,” UBI chairman and managing director MV Nair said. According to him, UBI has collected Rs 4,000 crore through this single-deposit instrument during the past one month.

For the moment, State Bank of India is yet to take a decision on deposit rates. Other top banks, in principle, have agreed to reduce their rates. They have gone back to their drawing boards to finalize the extent of the reduction and the timings for the same.

Some of the banks like Allahabad Bank, Bank of India, UBI, and UCO Bank recently raised their deposit rates. But they, too, have started considering realigning their plans with the market.

UCO Bank CMD SK Goel said: “We will take a decision on rates on November 10. By then, the real impact of Reserve Bank of India’s liquidity infusion doses will be clear.”

UBI executive director TM Bhasin said: “After RBI’s signal to lower interest rates in general, our deposit rates have to be corrected now.” It has reduced its lending rates to all advances linked with prime lending rate. The bank added: “More reductions in lending rates will be considered commensuration with decrease in deposit rate in the next week.”

Bank directed to pay interest on prematurely withdrawn FD

The District Consumer Forum in its judgment said that it is incumbent on the bank to pay interest on a deposit that has been prematurely withdrawn with an interest rate less than one per cent of the fixed rate The forum directed Canara Bank to pay interest on a fixed deposit of Rs 5 lakh.

Bank refused to pay interest on the amount withdrawn within six months while the fixed deposit was made for a period of one year.

In its order forum asserted that it is a clear a case of insufficiency on the part of the bank to refuse payment of interest. Bank has been asked to pay an interest of nine per cent on the 9 per cent (10 per cent -1per cent = 9 per cent) on the pre-mature deposit for the period it remained with them.

The bank has also been asked to pay Rs 5,500 as costs of litigation.

The complaint was filed by Ashwini Luthra, a resident of Sector 15, said after his retirement he received various benefits and deposited the amount in his bank account at the Canara Bank branch in Bhopal.

As he was to settle in Chandigarh after retirement, therefore he requested the bank to transfer these funds to his account at the Sector 17, Chandigarh branch of Canara bank.

For this, Bank asked Ashwini to keep the aforesaid money in the fixed deposit as this would give him credit.

But the complainant then did not transfer the funds. In April 2007, when bank increased the rate of interest for senior citizens from 8 per cent to 9.5 per cent, he requested the branch in Bhopal to encash the FDs and transfers the funds to the Chandigarh branch, so that he could avail a higher rate of interest.

He told that once again he was asked not to transfer the funds as his old FDs will be cancelled and converted to high rate of interest. Though this was done in April 2007, but in the third week of October 2007, the complainant needed the funds and requested the bank branch to encash one of the FDs worth Rs 5,00,000.

Then bank advised him that the FDR had to be signed by both the account holders as this was a case of “premature withdrawal”.

Hence he completed all the formalities and, the amount was credited to his account, at this he found that the interest due for this period of six months was not credited in the account.

When he inquired from the bank, he was told that since the FDR was in a scheme, which had a lock period of one year, the premature withdrawal did not entitle him to any interest.

The complainant alleged that bank had never informed this aspect either at the time of conversion of FDs at the higher rate of interest in April 2007 or when the complainant asked for premature withdrawal. Thereafter, when in spite of prolonged correspondence with the bank, nothing positive could come out, so he moved the consumer forum.

On the other hand Canara Bank, in its reply, stated that immediately after retirement the complainant did not fall within the senior citizen category to claim additional interest.

It was stated that as soon as the complainant requested the Bhopal branch immediately transferred the fixed deposits to Chandigarh.

They informed that as per the scheme, the complainant was informed that premature closure is not permissible under the terms of the deposit, therefore, the deposit be continued till its maturity.

The bank also said that they had informed the complainant in case of premature closure of the deposit, no interest would be payable for the period.

The forum on investigation found that the bank had floated the scheme for a limited period only, but at the same time bank could not put forward enough proof that for any premature withdrawal no interest is paid.

“The complainant did not receive any information from the bank that he will not be entitled to interest if he made a premature withdrawal of his FD amount. In fact, the complainant was led into a bonafide belief that he will be paid interest similarly in this deposit scheme also as used to be made in other FDR deposit schemes. However, when the complainant lodged his protest with the higher authorities, he was told that the interest was payable to him for the full amount only on the maturity date. For premature withdrawal no interest was payable,” the forum said.