Things to Consider When Choosing the Right Credit Card for You
November 7th, 2008 Subscribe To Our Feed
Are you fed up with having to travel all around town, dealing with high-pressure salespeople or sifting through junk mail trying to work out which credit card offer is the best for you? If this is the case, you are with many others and now it is possible to avoid all that trouble because you can go online and obtain quotes on credit cards that are guaranteed. It is incredible how misleading many of the letters are and indeed so is the degree to which the salespeople twist the truth. Even some of the advertisements online are misleading regarding their claims that they are able to offer “guaranteed approval” for credit cards.
Not all applicants are successful in obtaining a credit card. Most people with bad credit have difficulty in getting a credit card and they are discouraged as a result of the rejections. Going online can be of assistance as there are more providers willing to help those who have concerns with their credit.
There are very few providers who are willing to take the risk and offer low interest rates to people who they deem to be a credit risk, but there are some that will charge excessive fees and high interest rates to anyone with a bad line of credit. If you fit into this category, often this is the best solution so long as you commit to paying off the debt within the time period.
Credit cards have some things in common with loans - the cardholder is presented with a line of credit with interest to pay. These lenders are also similar to banks: you are required to complete an application and must agree to the terms and conditions placed on you if your application is approved. There is a difference between banks and credit cards, however: you must sign an application and await approval. The concept of “guaranteed approval” therefore is a trick or lure. Your credit rating must be verified before approval as must the information you have provided.
Some of these credit providers will take longer to process your application. To be sure of who you are dealing with, then, it is advisable to check each card and its features individually, comparing interest rates, fees and the reputation of the provider. This can all be achieved online.
It is vital that you compare the terms & conditions, fees, benefits, and interest rates very carefully before you make that final decision. The annual percentage rates (APR) must be carefully considered as well before applying for a credit card. It is extremely frustrating to obtain approval only to be disappointed by unanticipated costs.
Another consideration when applying for a card is the “grace period”. These allow the consumer the choice of either paying or avoiding extra charges as long as the balance is paid in full before the due date. If there is no information regarding grace periods, then it may be the case that the lenders will request additional fees whenever it suits them.
The annual fees (sometimes called participating fees) mostly vary in cost from $25 to $100. Cards with more “status” ie Gold or Platinum cards charge $75 often and there are still others that expect fees of hundreds to be paid. A few will permit the cardholder to pay the annual fee or the visa card balance with the first statement, which can be a help as long as you are able to pay the debt when it comes.
There may be even further fees included with approval such as transaction and supplementary fees. Be wary of those that offer cash advances as some will have fees attached to the advance. Choose carefully and review Chase policies to avoid these pitfalls.
Credit cards, when used properly can be extremely useful, but when placed into the hands of people struggling to make ends meet, they can be like a plague.
Technorati Tags: No Tags
Related Tags: No Tags
Loans Continue To Be Take Out by Hispanics
November 7th, 2008 Subscribe To Our Feed
Hispanics today more than ever are making purchases using loans.
The reasoning behind this is simple, many do not have the money to pay full prices for merchandise so Hispanics turn to making payments.
But not all Hispanics take out loans because some would rather pay with cash than take out loans.
For the most part though Hispanics are making big purchases by taking out loans to pay.
The weekend is the time with Hispanics go out and make purchases. Some weekends Hispanics buy furniture on credit or else their vehicles.
When Hispanics make big purchases they tend to take the family with them to the store because it is like a family event.
Because of this families with Hispanic background will stay together. One of the problems about this is that they all follow the same principles, buying on credit. So their credit can pass, they co-sign for each other.
Hispanics continue to go deeper in debt and its because nobody is helping them manage their finances. For some, their greatest asset is their vehicles and it goes down in value.
Until people educate Hispanics about not taking out loans they will continue to do so.
Technorati Tags: No Tags
Related Tags: No Tags
Debt to Income Ratio: How To Calculate This Important Number
November 6th, 2008 Subscribe To Our Feed
There are many factors that lenders consider when deciding whether or not to extend credit to someone applying for a loan. Credit score, down payment, and the purpose of the loan are all factors. There is one factor that is looked at probably more closely than any other though, and that is the debt to income ratio. This is the way that a lender determines how likely a consumer is to be able to make timely payments for the life of the loan. Understanding how the debt to income ratio is determined is the key to making sure that you’re in a position to obtain credit in the future.
When you sit down in front of a creditor, you will most likely be asked a series of questions. The lender is looking for the elements in your financial life that comprise your debt to income ratio.
What is your monthly income, if you add up all the sources of money that comes into your hands each month? This answer is the income portion of the formula.
What payments are you liable for each month on money you’ve borrowed in the past, including mortgages, auto loans, credit card debt, student loans, and all other monthly obligations? This is the debt portion of the equation.
The debt to income ratio, then, looks like this:
Debt to Income Ratio = Total Liabilities/Total Income
A lender has a target number in mind for individual’s looking for a loan. People with a high debt to income ratio are unlikely to find a creditor willing to make a loan to them, since as debt payments already take a large amount of your monthly income to pay, you’re unlikely to be able to continue making all of your payments long term. If a lender is willing to lend up to a point where your debt to income ratio is 38%, but no higher, then the credit you qualify for may be considerably less than what you’re seeking if your debt to income ratio is already 35%.
There are only two ways to reduce your debt to income ratio. Your first choice is to increase your income. A second job or a career change maybe in order to qualify for a higher amount. Your second choice is to reduce your debt obligations. Paying down balances doesn’t matter here unless you can completely pay off a debt, since the ratio is based on your monthly payments, which stay constant on most types of debt. For example, paying off half of your mortgage balance will not change your monthly payment or your debt to income ratio. However, refinancing and reducing your monthly payment will reduce your debt to income ratio (even though it could increase your overall loan balance).
Understanding the debt to income ratio will help consumers stay positioned to obtain financing when they need it and to keep their debt levels manageable. There are several free websites that will help you calculate your debt to income ratio.
Technorati Tags: No Tags
Related Tags: No Tags
Payday Loan Online: A Real Life-Saver?
November 6th, 2008 Subscribe To Our Feed
Every now and then we experience inevitable times of financial crisis. We need to pay for our basic needs, electricity bills, rent, and other immediate and emergency expenses. At times when our salaries cannot arrive on time for these expenses, applying for a payday cash loan may just be a good idea. Just remember that before applying for any of payday loan online, you must have a good orientation about it since there could be risks involved, especially if you don’t make payments in time. It could be easy to get more than what you bargained for if you’re not careful.
The fact is, a payday cash loan can easily provide you and your family the immediate cash you need for very important expenses as you wait to receive your salary in a few days. Unlike borrowing from a bank or other financial institution, getting approved for a payday loan online is very easy since it does not need any credit checks and you don’t need to wait weeks or months for your loan approval and money transfer.
It also does not require you to fill-up any paperwork, no faxing, no interviews and no hassles. The only thing that is primarily needed is any proof that you are capable of paying the loan through giving relevant information and papers like your salary or paycheck details and other personal or financial data.
After which you just fill-up some pertinent information on the website you chose to apply for a loan with, and then just wait for your application to get approved, which usually is just within 24 hours. As compared with banks and other financial institutions, that’s really fast right?
What’s very interesting with payday cash loans is their unusually high rates of interest and other relevant charges. As compared to banks, this type of loan can come with an interest rate that is about 2 to 4 times higher. The reason for this is that since lenders are willing to lend money with high risks, convenience and almost no questions asked, they get to make up for it with the high interest rate. Interest can vary from one lender to another, same with the terms and conditions so it is important to take time reviewing them before applying for a loan.
One of the best things about a payday cash loan is that there is not much you need to do to get your application approved. Even people having a bad credit standing with banks can easily apply for the loan so long as they have the capability to pay through their salary or other income streams. A lender can typically allow you to borrow as much as $1,000 to $1,500, depending on your salary range or other submitted data.
Another great advantage of this type of loan is that you don’t need to wait for a long time just to get approved. There is also no need for filling-up a lot of forms, albeit just a few important details that a lender may require to evaluate your ability to pay. With all that in mind, one can have an easier time getting the needed money to cover current expenses.
Well quite obviously, the worst thing about a payday cash loan is their shockingly high interest rates. Despite all the great advantages, it is normal that one may think twice before applying because of this disadvantage. Typically the lender may charge you around $20 to $30 for every $100 you borrow from them. Of course terms and conditions will apply and you must read them carefully.
The real problem comes the moment you are unable to make payments for the payday cash loan when the due date arrives. When this happens, interest can accumulate and can even go beyond the principal if delayed longer. This is the reason why one is advised to review if they can really make payments before applying for a payday loan online.
Technorati Tags: No Tags
Related Tags: No Tags
Tutorial on Unsecured Personal Loans
November 5th, 2008 Subscribe To Our Feed
At present, the interest on an unsecured personal loan is currently over 15% per year, says BankRate.com, assuming you can get this type of loan at all in today’s credit-starved environment. And that’s about your best such rate. Attempt to borrow against a credit card, for example, and it could be a good deal more. It’s obvious that personal loans can get very expensive nowadays.
In emergency situations, though, a personal loan is just about unavoidable for many of us. What if the car won’t start and you need an expensive engine repair to get it up and running again? Or your daughter needs braces? Or the washing machine breaks down?
Scenarios like these force many Americans to resort to personal loans, including high-cost payday loans. These loans now make up over 22% of the total non-mortgage installment loans at U.S. banks, up from only 12% in 1998.
But before you sign up for your next personal loan, consider the following options you might not have thought of —
- What about borrowing against your cash value life insurance policy.? This is a low-interest alternative if you have this type of policy, and it’s the most common type.
- Selling stocks, Treasury bonds, etc., can be a fast way to drum up some hard cash - just be sure you understand you’ll have to pay taxes on any gains or interest.
- What about borrowing against the cash value of your life insurance policy.? This is a low-interest alternative if you have this type of policy, and it’s the most common type.
- Try borrowing against your retirement account. Ask your employer’s benefits department if this option is available. If so, it’s another low-interest alternative.
- Family or friends. Maybe your dad can fork over some cash. Just make sure you pay him back.
- Ask your creditors - particularly local merchants who may be more flexible - if they might be willing to extend your payments a month. If they are, make sure you’re not getting charged extra for the privilege of paying your bill late - or if you do get charged, find out how much.
- How about asking your employer for a pay advance - assuming of course you have an understanding employer.
Good vs Bad Debt
At the outset you need to recognize a simple fact about personal finance: Never borrow money just to spend it, i.e., for consumption. That’s bad debt. Only borrow for investments that will increase in value (and increase by more than the cost of the loan). Borrowing money just in order to spend it is a terrible idea, a royal road to bankruptcy or other financial land mines. As Eric Tyson says in his book, PERSONAL FINANCE FOR DUMMIES:
If you spend, say $2,000 [which you’ve borrowed] on a Caribbean vacation, the money is gone. Poof! You may have fond memories and even some Kodak moments, but you’ll have no financial value to show for it… I’m not saying don’t take a vacation. Definitely, take one, two, three, or as many as you can afford yearly. But that’s the point - what you can afford. If you need to borrow money… [then you can’t afford the vacation]…
And exactly the same advice applies to almost any consumer (noninvestment) purchase: expensive meals, home computers, clothes, yes, even a new car - anything that decreases in value and eventually becomes worth nothing financially. If you have to borrow to buy it, you probably can’t afford it. According to Tyson “The financially correct amount of bad debt [you should have] is zero.”
But this does not apply to things that “retain and hopefully increase in value over the long term, such as an real estate, education or your own business.” For these uses, debt is acceptable, up to a limit - the limit being the point at which making payments causes you to be no longer able to save sufficiently to accomplish your financial goals.
All that is good advice, but let’s face it: At times, you simply may not be able to avoid adding to your debt load - an emergency or other urgent situation forces you to seek a personal loan. In those kinds of situations, what are your best options?
Essentials of Personal Loan Essentials
Here are some few basics to keep in mind whenever shopping for an unsecured personal loan:
First, never borrow more money than you absolutely have to. Given the high interest rates in today’s credit environment, you’ll want to keep the amount to an absolute minimum.
Second, always compare terms from several lenders. Never look at just the monthly payments - consider the total cost of the loan, including any hidden charges like credit insurance or other fees. Don’t skip the small print on the loan agreement. Don’t take it for granted that what you’re being told by a loan officer is binding. It’s what’s in writing in the contract that counts.
Third, begin by trying your credit union before a bank. Credit unions usually have more favorable terms than banks and are often willing to make small unsecured personal loans to their members.
Fourth, don’t pledge your valuable personal assets when you take out a small loan - it’s not worth the risk, say the experts. And avoid using credit cards or payday loans if at all possible - the interest rates, especially on the latter, can be prohibitive.
Fifth, be aware that the interest you pay on unsecured personal loans is not tax deductible.
Subprime Loans
If you are caught in the subprime lending category, things get even more complicated. As you no doubt know, subprime lending has tightened up tremendously over the past year (and is now almost nonexistent in the mortgage market). However, if you’ve got a job, you can probably still find cash in an emergency - you just have to be prepared to pay a steep interest rate for it.
But exactly what does the term “subprime” mean? The definition varies by lender, but in general terms subprime means a FICO score of 650 or below. Among the other criteria commonly used are: a bankruptcy within the past five years, a foreclosure within the past 24 months, or a debt-to-income ratio of 50% or higher. Some highly conservative lenders will even brand you as subprime if you’ve been late on one or one or two credit card payments over the past 12 months.
There are some important factors to bear in mind if you’re considered subprime and yet need to take out an emergency personal loan. One is to recognize that you won’t be viewed the same by all lenders - so you don’t have to jump at the first offer you receive. Shop around. As said, be sure to try your credit union first - and also one or more banks that have departments providing subprime lending. Try using one of the online services that allow you to apply at several lenders simultaneously, like Lending Tree
Here are a few more important points for subprime borrowers to bear in mind:
Avoid personal loans which involve “fancy” terms such as balloon payments. Avoid adjustable rate loans (these have proven disastrous for thousands of subprime mortgage borrowers and can be almost as disastrous for personal loan borrowers).
Avoid “fancy” loan terms such as balloon payments. Avoid adjustable rate loans (these have proven disastrous for thousands of subprime mortgage borrowers and can be almost as disastrous for personal loan borrowers).
Don’t allow several lenders to access your credit report at the same time. Several inquiries on your credit report within a short period can further lower your credit score.
Always read the fine print. Be certain you understand the terms of the loan clearly. You will be held to what is in the contract, no matter how much eye-strain it takes to read it.
If possible avoid payday loans, also called cash-advance loans, altogether except as an absolute last resort, and even then only use them on rare occasions - never more than once a year. They entail phenomenal interest rates. Payday loans have burgeoned into a billion-dollar industry in the U.S. but they can be disastrous to your financial health.
Technorati Tags: No Tags
Related Tags: No Tags
Payday Cash Loan: When You Need Immediate Money
November 4th, 2008 Subscribe To Our Feed
Getting yourself a payday cash loan can sometimes be our only option when a need for immediate cash inflow arises. It is not unusual for families to experience from time to time the difficulty in payment of basic needs, electricity or phone bills and other immediate expenses, especially if they come simultaneously. Usually, our paychecks don’t arrive on time to get these immediate expenses covered, and this where the headache starts. At times like these, it could be a good idea to apply for a payday loan online. But before getting into any kind of loan contracts, one must have a solid background on what it is all about so that we may not risk ending up in bigger trouble than we already are.
Fact of the matter is, a payday cash loan is a life-saving tool and when used properly can ease some of the financial difficulties that the family is experiencing. As compared with borrowing money from banks and credit institutions, it is quite easy to have your application approved here since there are no credit checks involved and no waiting for a long time to get the money you need.
It also does not require you to fill-up any paperwork, no faxing, no interviews and no hassles. The only thing that is primarily needed is any proof that you are capable of paying the loan through giving relevant information and papers like your salary or paycheck details and other personal or financial data.
After filling-up the required information in the online form of the loan website you are applying for, just wait for a day, usually within 24 hours, for your loan to be approved. Now that’s one quick way to get your much needed money right? No bank or other credit institution can approve a loan that quick.
What’s very interesting with payday cash loans is their unusually high rates of interest and other relevant charges. As compared to banks, this type of loan can come with an interest rate that is about 2 to 4 times higher. The reason for this is that since lenders are willing to lend money with high risks, convenience and almost no questions asked, they get to make up for it with the high interest rate. Interest can vary from one lender to another, same with the terms and conditions so it is important to take time reviewing them before applying for a loan.
One of the great advantages of a payday cash loan is the fast approval times of your loan application. These loans are in fact designed for people with poor credit standings, in which they can still apply as long as they have the means to pay for the loan like their salary or other sources of income. Lenders can generally give you up to $1,000 or $1,500 credit limit depending on your financial data or their terms and conditions.
Fast loan approval is also one of the key features of payday cash loans, which is really fast as compared to banks. With this type of loan, you don’t need to go through a lot of paperwork other than the basic information that the lender will require to be able to study your loan paying capability.
As mentioned earlier, the biggest drawback of a payday cash loan is its very high interest rates, which can really make you have second thoughts before applying once you realize how high they can be. The lender normally charges around $20 to $30 on every $100 that you borrow, which may also vary depending on their terms and conditions.
The problems comes when you are not able to pay the payday cash loan in due time, in which the interest start to come in. The more time you spend before paying the loan, the higher your interest gets, and it’s easy to find yourself paying interest that is more than the principal amount you have borrowed. And because of this, you must review your capability to pay very well before applying for a payday loan online.
Technorati Tags: No Tags
Related Tags: No Tags
