In 2010, the consumer debt in America was placed at $2.4 trillion while in 2011; it was 11.38 trillion showing a significant drop by 2.95 percent. Credit cards take the largest proportion of consumer debts in US and this means that consumers need to know how they can manage these debts. Credit cards are essential financial tools but when used inappropriately, or due to unavoidable circumstance, these cards can bring a stack of debts and financial pitfalls that may be challenging to cope with.
Before you declare bankruptcy, there are a number of things you need to work around to determine credit card debt solutions. The road to eliminating the debt may not be smooth but altogether there is hope. You can get out of your credit card within a few years and be financially freed of those debts. Credit card debts are known to pile up so fast and one thing is because the interest rates charged on balances increase with great magnitudes.
For example, if you miss a payment, the interest rates may increase from the average 16 percent to about 31 percent or so. It most cases, just one late payment can attract an increase of 15 percent APR on the balance. There are people servicing credit card balances with interest rates as high as 35 percent.
However, you do not have to go through these challenges as there are different ways you can refinance your debt. Refinancing is simply acquiring another loan that has low interest rates and doing away with the older high interest loan. This can be achieved through credit card debt transfer, home equity loans, home equity line of credit, personal loans and peer to peer loans.
The peer to peer loans have lower interest rates, meaning that they can be used to refinance your existing high-interest credit card debt. However, for you to obtain these loans, you should have a good credit score. If you have a credit score of more than 660 points, you can apply for a p2p loan that attracts a rate of between 6 and 10 percent APR. Considering that credit card debt may attract interest rates of more than 25 percent, it means that when you switch it to peer to peer loan, you can be able to clear your debt comfortably.
And as InCharge Debt Solutions’ director of education and creative programs Karen Carlson points out, peer to peer lending can offer a viable alternative for borrowers who have been turned away from banks and other conventional lending institutions. InCharge Debt Solutions is a nonprofit credit counseling agency.
Peer to peer loans are obtained online and they are offered by companies such as Lending Club and Prosper. These two companies are the pioneers of the peer to peer lending and today, they have recorded an enormous growth. Recently Lending Club reached a record high of $1 billion in loan originations or the loans issued and this shows that the market is growing strong.
You can contact a peer to peer lending partner and get a low interest rate loan to pay off your debt. Most of the p2p loans carry a term of between 12 to 30 months. In addition, you can get a loan of up to $35,000 which can allow you to settle the debt easily. Usually, when you are refinancing, you are just changing or switching your loan to a low interest credit. It means that you acquire a new loan under different terms and conditions that allows you to settle it more comfortably than the previous one.
Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts
Tuesday, November 19, 2013
Peer to Peer Loans vs. Bank Loans…What Is The Difference?
The changing demands in financial lending are giving birth to new lending platforms like payday loans and peer to peer lending. Peer to peer lending is pretty a new concept that eliminates the use of banking institutions to offer credit facilities to consumers. People do not need to visit a bank to acquire loans as they get them from other people. On the other hand, investors do not need to invest in stocks or bonds but rather in the community.
Although peer to peer lending also known as person to person lending or simply p2p works similar to traditional lending, it does have its benefits. Like in banks, individuals are offered loans depending on their creditworthiness. Banks interest rates are higher because these institutions factor in overhead costs like buildings, staff and other facilities.
In peer to peer lending, the borrower and investor work directly online eliminating the need for physical infrastructure like buildings. With p2p lending, you save money as an investor or borrower. Banks need to cater for high administrative costs, infrastructure and marketing costs before they make profits. It is these costs of running banking operations that partly contribute to high interest rates than p2p lending.
You can get low interest rates of about 6.5 % on personal loans with the person to person lending. This substantiates the reason why people are turning to these kinds of loans to meet their financial needs. If you have credit card balance carrying high interest rates, you can refinance that by acquiring a p2p loan at a much lower interest rate.
Because of the risks involved in lending, peer to peer lenders like Lending Club and Prosper use eligibility standards to reduce loan defaults. Although the credit score for the borrowers does not have to be perfect, the underwriting is much stricter. The credit history of borrowers is checked including current delinquencies, bankruptcies, collection accounts, open tax liens and FICO score.
You may not be approved of these loans if your credit score is below 660 but you do not have to be discouraged as there are ways in which you can improve the score and be able to get approval for the loans. Peer to peer lenders like Lending Club and Prosper have focused on providing personal loans to borrowers with high credit score at rates, which are far much less than those offered by banks and credit card issuers.
The trend in peer to peer lending is increasing with Lending Club recording a 300% growth in loan originations in the last 12 months as at the beginning of 2013. Lending Club has reached a $1 billion mark of loans issued since its inception in 2007. The concept of peer to peer lending was initiated in 2006 with the pioneer entities being Prosper and Lending Club.
With the peer to peer loans, there is high credit quality where an average borrower has 700+ FICO score and income close to $70,000. The loans attract low interest risks with an estimated lending duration of 15 to 30 months. In addition, with this p2p lending, there is low volatility, diversification, and correlation. As more institutions invest in p2p lending, the market it is going to gain more scalability and accelerated growth. There is high cash flow with principal recovery starting within the second month.
Although peer to peer lending also known as person to person lending or simply p2p works similar to traditional lending, it does have its benefits. Like in banks, individuals are offered loans depending on their creditworthiness. Banks interest rates are higher because these institutions factor in overhead costs like buildings, staff and other facilities.
In peer to peer lending, the borrower and investor work directly online eliminating the need for physical infrastructure like buildings. With p2p lending, you save money as an investor or borrower. Banks need to cater for high administrative costs, infrastructure and marketing costs before they make profits. It is these costs of running banking operations that partly contribute to high interest rates than p2p lending.
You can get low interest rates of about 6.5 % on personal loans with the person to person lending. This substantiates the reason why people are turning to these kinds of loans to meet their financial needs. If you have credit card balance carrying high interest rates, you can refinance that by acquiring a p2p loan at a much lower interest rate.
Because of the risks involved in lending, peer to peer lenders like Lending Club and Prosper use eligibility standards to reduce loan defaults. Although the credit score for the borrowers does not have to be perfect, the underwriting is much stricter. The credit history of borrowers is checked including current delinquencies, bankruptcies, collection accounts, open tax liens and FICO score.
You may not be approved of these loans if your credit score is below 660 but you do not have to be discouraged as there are ways in which you can improve the score and be able to get approval for the loans. Peer to peer lenders like Lending Club and Prosper have focused on providing personal loans to borrowers with high credit score at rates, which are far much less than those offered by banks and credit card issuers.
The trend in peer to peer lending is increasing with Lending Club recording a 300% growth in loan originations in the last 12 months as at the beginning of 2013. Lending Club has reached a $1 billion mark of loans issued since its inception in 2007. The concept of peer to peer lending was initiated in 2006 with the pioneer entities being Prosper and Lending Club.
With the peer to peer loans, there is high credit quality where an average borrower has 700+ FICO score and income close to $70,000. The loans attract low interest risks with an estimated lending duration of 15 to 30 months. In addition, with this p2p lending, there is low volatility, diversification, and correlation. As more institutions invest in p2p lending, the market it is going to gain more scalability and accelerated growth. There is high cash flow with principal recovery starting within the second month.
Lending Club…Brad Lansing Comments on Peer to Peer Lending Growth
Peer to peer lending is growing rapidly with Lending Club, one of the pioneer businesses in the market having recorded a growth of more than 300 percent in the last 12 months as at the beginning of 2013. Loan originations at Lending Club have hit a $1 billion mark and the prospects for growth are high. According to Robert Warren, a business professor at University of North Dakota, he noted that person to person lending is one of the emerging financial lending alternatives that meet the needs of people who are underserved, cannot use the traditional sources or they are not interested in these conventional banks at all.
Banks have been known to be very rigid in offering their services. You will most likely get into a bank to negotiate for a loan application and approval but all in vain after spending your valuable time. However, with the online person to person lending, you are able to get suitable loan that can meet your financial challenges. One of the main questions, which critics in the financial market ask is; what is driving the rapid and steady growth of the peer to peer lending?
Brad Lensing, the chief marketing officer with Prosper lending marketplace, which is a San Francisco based lender, believes that there are two things which are leading to growth of peer to peer lending. One is that this lending is an alternative to traditional bank-based lending. When consumers do not solve their problems in the banks, they have to look elsewhere and this is where they get the services they have not received from banks and other traditional institutions.
Conventional banks are not easy to deal with and most consumers find it very discouraging to deal with banks when it comes to borrowing. This is why when presented with a less rigid lending platform; consumers are willing to borrow from person to person lending companies. On the side of lending, there is more access of a credit asset class in the personal loans something that has previously not been there.
People are able to obtain their loans online and the process is easy though with strict measures. The borrowers understand that they are not taking funds from an institution but the resources of individuals pulled together. The average loan at Prosper is placed at $8,500 and this has produced good returns to the investors since the inception of the company in 2006.
With the growing consumer asset class, it means that this credit sector is stretching its arms and within a few years, peer to peer lending has become a billion dollar industry.
Peer to peer lending is a unique financial platform, which offers both the investor and borrower an opportunity to benefit from the business model. People who need quick money can get loans of up to thousands of dollars.
These loans are unsecured and they are granted to consumers provided that you meet credit requirement and other risk check parameters. On the other hand, the investors who are seeking for ways to diversify their investment portfolio find it quite convenient to invest in peer to peer lending by putting up money to fund one or more loans. This is a unique setting of lending and you cannot get it anywhere like in banks.
Banks have been known to be very rigid in offering their services. You will most likely get into a bank to negotiate for a loan application and approval but all in vain after spending your valuable time. However, with the online person to person lending, you are able to get suitable loan that can meet your financial challenges. One of the main questions, which critics in the financial market ask is; what is driving the rapid and steady growth of the peer to peer lending?
Brad Lensing, the chief marketing officer with Prosper lending marketplace, which is a San Francisco based lender, believes that there are two things which are leading to growth of peer to peer lending. One is that this lending is an alternative to traditional bank-based lending. When consumers do not solve their problems in the banks, they have to look elsewhere and this is where they get the services they have not received from banks and other traditional institutions.
Conventional banks are not easy to deal with and most consumers find it very discouraging to deal with banks when it comes to borrowing. This is why when presented with a less rigid lending platform; consumers are willing to borrow from person to person lending companies. On the side of lending, there is more access of a credit asset class in the personal loans something that has previously not been there.
People are able to obtain their loans online and the process is easy though with strict measures. The borrowers understand that they are not taking funds from an institution but the resources of individuals pulled together. The average loan at Prosper is placed at $8,500 and this has produced good returns to the investors since the inception of the company in 2006.
With the growing consumer asset class, it means that this credit sector is stretching its arms and within a few years, peer to peer lending has become a billion dollar industry.
Peer to peer lending is a unique financial platform, which offers both the investor and borrower an opportunity to benefit from the business model. People who need quick money can get loans of up to thousands of dollars.
These loans are unsecured and they are granted to consumers provided that you meet credit requirement and other risk check parameters. On the other hand, the investors who are seeking for ways to diversify their investment portfolio find it quite convenient to invest in peer to peer lending by putting up money to fund one or more loans. This is a unique setting of lending and you cannot get it anywhere like in banks.
Peer to Peer Lending: an Effective Alternative for Personal Loans
Peer to peer lending is done online and you will not find it in banks, and other brick and mortar lending institutions. It is a platform where the borrower borrows from the investor. Although initially the investors consisted of mainly individuals, today, institutions are now dipping their hands in the business. The lending business works by meeting the investor and the borrower in one platform. If you need money for your use such as home improvement, repair your car or refinance your credit card loan, you log on to the website like Prosper or Lending Club and fill in the application form.
If the approval succeeds, the money is deposited in your account within a few days. It will depend on the customer risk profile to determine the interest rate. Most of the rates range between 6 to 10 percent but for the high risk borrower, they may be as high as 35 percent. If you are seeking for a way you can make return on your investment, you can join the community and put in your money.
The companies are always on the lookout of investors to expand their resource base. As the popularity of these peer to peer lending increases, it is expected that more investors will join the platform. With as little as $25, you can be part of the funding team of the customers’ loans thus gaining a share of this rapidly growing lending business. According to Mitchel Harad, who is the Lending Club’s vice president of marketing and advertising, these loan facilities are not easy and don’t just go to anyone.
Since these are unsecured loans, the lending has strict regulations that help minimize the risks involved in lending. Consumers can get unsecured loans of up to $35,000 and this clientele group consists mainly of the good to excellent credit only. One thing with the p2p lending is that it may not be helpful for the bad credit consumer. However, the lending can be used to refinance credit card debts.
Close to 70 percent of Lending Club’s customers use the loans to pay off their high interest credit card debts. The interest and payments to investors at Lending Club is done on pro rata basis and the company takes one percent fee. In a period of 3 years, Lending Club has surpassed the $ billion mark in loans issued and the prospects for growth are high. There is also the possibility that the company is set for an IPO listing.
In a similar trend, as of October 2012, Prosper, another player in the p2p lending was sitting at $425 million loan originations since its inception and $15 million in loans originations in the month of October. If you need a loan to remodel your home, repair your car, refinance your high interest rate credit card balance, then the peer to peer loans may be a good option.
In the same way, if you want to invest and gain some good returns from your dollars, you can pull your resources together at Prosper and Lending Club p2p lending companies. As the consumers and investors gain confidence, the market is expected to even growth further.
If the approval succeeds, the money is deposited in your account within a few days. It will depend on the customer risk profile to determine the interest rate. Most of the rates range between 6 to 10 percent but for the high risk borrower, they may be as high as 35 percent. If you are seeking for a way you can make return on your investment, you can join the community and put in your money.
The companies are always on the lookout of investors to expand their resource base. As the popularity of these peer to peer lending increases, it is expected that more investors will join the platform. With as little as $25, you can be part of the funding team of the customers’ loans thus gaining a share of this rapidly growing lending business. According to Mitchel Harad, who is the Lending Club’s vice president of marketing and advertising, these loan facilities are not easy and don’t just go to anyone.
Since these are unsecured loans, the lending has strict regulations that help minimize the risks involved in lending. Consumers can get unsecured loans of up to $35,000 and this clientele group consists mainly of the good to excellent credit only. One thing with the p2p lending is that it may not be helpful for the bad credit consumer. However, the lending can be used to refinance credit card debts.
Close to 70 percent of Lending Club’s customers use the loans to pay off their high interest credit card debts. The interest and payments to investors at Lending Club is done on pro rata basis and the company takes one percent fee. In a period of 3 years, Lending Club has surpassed the $ billion mark in loans issued and the prospects for growth are high. There is also the possibility that the company is set for an IPO listing.
In a similar trend, as of October 2012, Prosper, another player in the p2p lending was sitting at $425 million loan originations since its inception and $15 million in loans originations in the month of October. If you need a loan to remodel your home, repair your car, refinance your high interest rate credit card balance, then the peer to peer loans may be a good option.
In the same way, if you want to invest and gain some good returns from your dollars, you can pull your resources together at Prosper and Lending Club p2p lending companies. As the consumers and investors gain confidence, the market is expected to even growth further.
Lending Club $1 Billion Dollar Mark...What Does It Mean for Peer to Peer Lending?
In 2012, Lending Club, one of the pioneers of peer to peer lending investment recorded a historical growth by reaching a $1 billion mark in loans issued. Since the start of the lending platform in 2007, there have been ups and downs but amidst these challenges, Lending Club has managed to grow strongly. Its growth had reached as high as 300 percent for the past 12 months as at the beginning of 2013. Such growth shows that there is plenty of cash available to lend and that investors are seeking for ways in which they can put in their cash for returns.
The model of investment put forward by Prosper and Lending Club seems to have succeeded and now it is only a matter of time before this lending business becomes a mainstream activity in the nation. The growth seems to suggest that this might only be the initial steps for a longer journey of the decentralization of the country’s financial sector. Similar models which began in the same way are such as PayPal and today, this online money transfer has changed the lives of many people in the world.
Peer to peer lending is expected to grow to be global financial solutions. In 2013, person to person loans by Lending Club are expected to hit a %1.7 billion. From the firm’s commendable growth of more than 90,000 loans totaling to more than $1 billion, it was a good indication that this form of lending is now a mature technical development that can be duplicated for nation’s growth.
Lending Club has managed to alleviate some of the stumbles and over excitements which were witnessed from the word go when the business was launched in 2007. Passing through an expensive and cost-consuming scrutiny process by the securities and exchange commission-SEC, the company has stood against all odds and has demonstrated that the business model can work.
According to the CEO and co-found of Lending Club, Renaud Laplanche, an influencing personality in the financial world today, the company is putting in place many proprietary factors that help judge an applicant’s creditworthiness before the loans can be granted and this is coupled with FICO score rating check. Lending Club could be signalling a paradigm shift on how the consumer perceives lending because it seems that the consumer is walking away from the financial institutions and wishing to borrow from fellow consumer who is an investor.
The Lending Club business may be signalling the same change in consumer behaviour which was witnessed when the once obscure YouTube was introduced in the internet. YouTube has changed the way in which online video is done and the same could happen to peer to peer lending with Lending Club.
The one problem facing peer to peer lending is that lenders do not have the resources and motivation to be able to draw borrowers with enticing offers like 0 percent intro rates and cashback perks as found in many credit cards. This is because the model of the business is still young and the consumer is being evaluated to determine the investment sustainability.
The business should be designed so that it does not appear as a last resort for consumers. As it aims reaching the $2 billion growth mark, Lending Club will ensure that it deals with the consumer intuitively to win his or her confidence.
The model of investment put forward by Prosper and Lending Club seems to have succeeded and now it is only a matter of time before this lending business becomes a mainstream activity in the nation. The growth seems to suggest that this might only be the initial steps for a longer journey of the decentralization of the country’s financial sector. Similar models which began in the same way are such as PayPal and today, this online money transfer has changed the lives of many people in the world.
Peer to peer lending is expected to grow to be global financial solutions. In 2013, person to person loans by Lending Club are expected to hit a %1.7 billion. From the firm’s commendable growth of more than 90,000 loans totaling to more than $1 billion, it was a good indication that this form of lending is now a mature technical development that can be duplicated for nation’s growth.
Lending Club has managed to alleviate some of the stumbles and over excitements which were witnessed from the word go when the business was launched in 2007. Passing through an expensive and cost-consuming scrutiny process by the securities and exchange commission-SEC, the company has stood against all odds and has demonstrated that the business model can work.
According to the CEO and co-found of Lending Club, Renaud Laplanche, an influencing personality in the financial world today, the company is putting in place many proprietary factors that help judge an applicant’s creditworthiness before the loans can be granted and this is coupled with FICO score rating check. Lending Club could be signalling a paradigm shift on how the consumer perceives lending because it seems that the consumer is walking away from the financial institutions and wishing to borrow from fellow consumer who is an investor.
The Lending Club business may be signalling the same change in consumer behaviour which was witnessed when the once obscure YouTube was introduced in the internet. YouTube has changed the way in which online video is done and the same could happen to peer to peer lending with Lending Club.
The one problem facing peer to peer lending is that lenders do not have the resources and motivation to be able to draw borrowers with enticing offers like 0 percent intro rates and cashback perks as found in many credit cards. This is because the model of the business is still young and the consumer is being evaluated to determine the investment sustainability.
The business should be designed so that it does not appear as a last resort for consumers. As it aims reaching the $2 billion growth mark, Lending Club will ensure that it deals with the consumer intuitively to win his or her confidence.
Personal loans: the Growth of Peer to Peer Lending
It has not been simple, but peer-to-peer lending has grown beyond all odds to be one of the fastest expanding lending investment in the financial market today. As demonstrated by two key players in the business, Lending Club and Prosper, person-to-person lending also known as p2p lending has shown a remarkable growth since 2007. Despite going through a time consuming scrutiny by the Securities and Exchange Commission- SEC back in 2008, these two companies have clearly shown that there is great potential in the peer-to-peer lending.
But what has made peer to peer lending a popular investment in today’s highly volatile lending industry? The ability to earn double digit returns from lending is one reason why low interest rates investors are seeking for alternative lending in p2p investment. With returns ranging from 6 to 10 percent or even higher, investors are making good returns in their investment.
After skepticism on the way in which person-to-person lending could thrive amidst the risk associated with the lending, institutional investors are now joining the community and they are channeling in money in both Prosper and Lending Club, the two pioneers of p2p lending.
It is estimated that there is over $100 million of investment by institutions at Lending Club and the amount is expected to increase in 2013. This gives borrowers and investors more confidence in lending practices. Another reason which may have led to fast growth of these kinds of loan facilities is that consumers want to get out of credit card debt. Credit card debt continues to be a burden for many people and with the financial institutions being reluctant to offer credit facilities to people with bad credit, peer-to-peer lending remains a viable option for borrower.
One of the most common types of borrowing in both Prosper and Lending Club is debt consolidation. After experiencing high penalties in form of interest rates on credit card balances owing to late payments, cardholders are not finding it more convenient to consolidate their loans for a cheaper low interest loan in peer-to-peer lending.
Considering that credit card debt may attract interest rates to the highs of 35 percent APR, consumers can get a refinancing option with person-to-person lending. A borrower could get a 3 years peer-to-peer loan with an interest rate of about 10 percent and be able to pay off the high interest credit card loans within a relatively short period of time.
Banks are still tight in their lending and this has locked many borrowers out of borrowing from these institutions. Individuals and small businesses are finding it difficult to obtain loans from conventional banks and this gives then an option to go for the peer-to-peer lending. The credibility of person-to-person lending has grown substantially meaning that consumers and investors are gaining confidence with this form of lending.
This is further substantiated by the rapid growth that has seen the lending business hit a record high of $1 billion in 2012. If you are struggling with a credit card debt, you may consider p2p lending as a viable way of consolidating your debt.
But what has made peer to peer lending a popular investment in today’s highly volatile lending industry? The ability to earn double digit returns from lending is one reason why low interest rates investors are seeking for alternative lending in p2p investment. With returns ranging from 6 to 10 percent or even higher, investors are making good returns in their investment.
After skepticism on the way in which person-to-person lending could thrive amidst the risk associated with the lending, institutional investors are now joining the community and they are channeling in money in both Prosper and Lending Club, the two pioneers of p2p lending.
It is estimated that there is over $100 million of investment by institutions at Lending Club and the amount is expected to increase in 2013. This gives borrowers and investors more confidence in lending practices. Another reason which may have led to fast growth of these kinds of loan facilities is that consumers want to get out of credit card debt. Credit card debt continues to be a burden for many people and with the financial institutions being reluctant to offer credit facilities to people with bad credit, peer-to-peer lending remains a viable option for borrower.
One of the most common types of borrowing in both Prosper and Lending Club is debt consolidation. After experiencing high penalties in form of interest rates on credit card balances owing to late payments, cardholders are not finding it more convenient to consolidate their loans for a cheaper low interest loan in peer-to-peer lending.
Considering that credit card debt may attract interest rates to the highs of 35 percent APR, consumers can get a refinancing option with person-to-person lending. A borrower could get a 3 years peer-to-peer loan with an interest rate of about 10 percent and be able to pay off the high interest credit card loans within a relatively short period of time.
Banks are still tight in their lending and this has locked many borrowers out of borrowing from these institutions. Individuals and small businesses are finding it difficult to obtain loans from conventional banks and this gives then an option to go for the peer-to-peer lending. The credibility of person-to-person lending has grown substantially meaning that consumers and investors are gaining confidence with this form of lending.
This is further substantiated by the rapid growth that has seen the lending business hit a record high of $1 billion in 2012. If you are struggling with a credit card debt, you may consider p2p lending as a viable way of consolidating your debt.
Why Low Credit Score will Not Prevent Consumers from getting online Personal Loans
In the past, it has been difficult for consumers with bad credit or low credit score to obtain personal loans but this trend is changing as we notice more lending for these consumers. Both formal and non formal lending institutions are discovering that they cannot do without the bad credit consumer. Today, the online personal loans have become popular. These loans are offered by banks and other non-traditional lending institutions.
Good examples are cash advance, payday loans or next pay-check loans and peer to peer loans. Before the economic crisis which hit many parts of the globe in 2007, the lending industry was thriving well. Many consumers borrowed more than they could handle to repay back. Because of the low interest rates on loan facilities, people were willing to borrow more and the lenders had the capital to dish out to consumers.
However, when the credit crunch hit the economy, things turned around and consumers were not willing to borrow because they did not have the money to repay. Banks and financial lenders held with them a lot of money and they had to device ways to entice the consumers. What happened is that they made the interest rates very low and consumers were more attracted.
There was over borrowing and multiple borrowing and this resulted to aspects like loan delinquencies, foreclosures, bankruptcies, loan defaults and other financial challenges. Many consumers found themselves on the receiving end as their credit score dropped to record low levels. Some of the credit score effects they suffered during the pre-economic crisis and post economic crunch are still reflecting in their credit reports.
In the recent years, consumers who have remained locked out of borrowing by traditional financial institutions have seen some limelight. The lenders who had abandoned the consumers with bad credit are today making a comeback. In addition, there are trends of fast short term cash advances, which are designed by payday lenders.
Consumers still struggling with the bad credit report can gain access to short term loans like payday and peer to peer loans. Banks are offering salary advance loans or cash advance loans which are basically secured by a person’s salary. One of the things which are making consumers to develop more interest in the short term loans is because of the loan approval flexibility.
These loans are easy to obtain and considering that previously, one of the impediments consumers have faced is the complexity of acquiring a loan approval. Getting a loan has been very cumbersome and frustrating and this is why consumers are even willing to go for the high interest rate payday loans offered online. There are no credit credits for you to obtain these short term online loans like payday.
The loans are approved within a few hours or less than 24 hours and the funds are released to the consumer’s account in less than a day or two. Because consumers still in bad credit are unable to save for emergencies, this means that when pressing financial needs arise, they do not have money at their disposal to meet these needs. The only place they can turn to is the fast cash online personal loan facilities.
Good examples are cash advance, payday loans or next pay-check loans and peer to peer loans. Before the economic crisis which hit many parts of the globe in 2007, the lending industry was thriving well. Many consumers borrowed more than they could handle to repay back. Because of the low interest rates on loan facilities, people were willing to borrow more and the lenders had the capital to dish out to consumers.
However, when the credit crunch hit the economy, things turned around and consumers were not willing to borrow because they did not have the money to repay. Banks and financial lenders held with them a lot of money and they had to device ways to entice the consumers. What happened is that they made the interest rates very low and consumers were more attracted.
There was over borrowing and multiple borrowing and this resulted to aspects like loan delinquencies, foreclosures, bankruptcies, loan defaults and other financial challenges. Many consumers found themselves on the receiving end as their credit score dropped to record low levels. Some of the credit score effects they suffered during the pre-economic crisis and post economic crunch are still reflecting in their credit reports.
In the recent years, consumers who have remained locked out of borrowing by traditional financial institutions have seen some limelight. The lenders who had abandoned the consumers with bad credit are today making a comeback. In addition, there are trends of fast short term cash advances, which are designed by payday lenders.
Consumers still struggling with the bad credit report can gain access to short term loans like payday and peer to peer loans. Banks are offering salary advance loans or cash advance loans which are basically secured by a person’s salary. One of the things which are making consumers to develop more interest in the short term loans is because of the loan approval flexibility.
These loans are easy to obtain and considering that previously, one of the impediments consumers have faced is the complexity of acquiring a loan approval. Getting a loan has been very cumbersome and frustrating and this is why consumers are even willing to go for the high interest rate payday loans offered online. There are no credit credits for you to obtain these short term online loans like payday.
The loans are approved within a few hours or less than 24 hours and the funds are released to the consumer’s account in less than a day or two. Because consumers still in bad credit are unable to save for emergencies, this means that when pressing financial needs arise, they do not have money at their disposal to meet these needs. The only place they can turn to is the fast cash online personal loan facilities.
Monday, November 18, 2013
How Much Should You Trade With as a Beginner in Futures Trading?
Trading in commodity futures market requires a good plan and there are a number of aspects which should be observed to trade profitably. The market is confronted with risks that leave many traders at the losing end. About 85 to 95% of traders in this market do not trade profitably and this means that the money is earned by a few traders. These are the traders who apply strict trading discipline and manage their losses effectively.
If you are a beginner, you should not risk trading with a large amount. You may begin with a few hundreds of dollars and trade carefully. It is essential that you do not go for big profits because this means trading with big risks. The larger the amount you trade with, the more you risk losing that money. Therefore, when you are wrong, you will suffer big losses. This can send you out of the market fast than you anticipated.
Commodity futures market can shift in price movements unexpectedly. Most of the successful traders make a lot of losing trades but the good thing is that they leverage what they have to lose. They trade with manageable amounts and even when they trade with big money, they apply the stop loss order strategy very effectively.
When you realize that you are faced with a margin call, it means that something is wrong in you trading. You should never accept to be confronted with margin calls because it implies that your trade is not correct. You have to check the contract size. For example, if you have$5,000 account equity, you should not trade with more than $250 in any one given trade.
You need to give yourself a risk or loss margin of about 2% and this will ensure that in the event you trade in loss, the total amount lost is not too big. Losses cannot be eliminated and therefore you have to manage them. You will incur numerous losses as you trade but you have to keep them minimal. When you get a profiting trade position, you have to optimize that chance.
This means that you have to hang on in that position until you have earned something substantial. The numerous losing trades you face are covered by the large profiting trades you occasionally get. In essence, if you are a beginner in futures commodity trading, you should not risk your money by trading with big amounts.
You need to trade with a plan and follow the trend. Trade with low amounts and scale down your losses significantly. With about $200 dollars, you can start trading in a commodity futures market. This means that you will not get a lot of profit but the good thing is you are gaining experience.
As you begin to understand how the market trades, you can increase the amount successively. You need to have a long term goal and avoid short end goals that will only plunge you into pitfalls. Many beginners who trade in this market lose their amount before they even learn the basics and tactics of trading in commodity futures markets.
If you are a beginner, you should not risk trading with a large amount. You may begin with a few hundreds of dollars and trade carefully. It is essential that you do not go for big profits because this means trading with big risks. The larger the amount you trade with, the more you risk losing that money. Therefore, when you are wrong, you will suffer big losses. This can send you out of the market fast than you anticipated.
Commodity futures market can shift in price movements unexpectedly. Most of the successful traders make a lot of losing trades but the good thing is that they leverage what they have to lose. They trade with manageable amounts and even when they trade with big money, they apply the stop loss order strategy very effectively.
When you realize that you are faced with a margin call, it means that something is wrong in you trading. You should never accept to be confronted with margin calls because it implies that your trade is not correct. You have to check the contract size. For example, if you have$5,000 account equity, you should not trade with more than $250 in any one given trade.
You need to give yourself a risk or loss margin of about 2% and this will ensure that in the event you trade in loss, the total amount lost is not too big. Losses cannot be eliminated and therefore you have to manage them. You will incur numerous losses as you trade but you have to keep them minimal. When you get a profiting trade position, you have to optimize that chance.
This means that you have to hang on in that position until you have earned something substantial. The numerous losing trades you face are covered by the large profiting trades you occasionally get. In essence, if you are a beginner in futures commodity trading, you should not risk your money by trading with big amounts.
You need to trade with a plan and follow the trend. Trade with low amounts and scale down your losses significantly. With about $200 dollars, you can start trading in a commodity futures market. This means that you will not get a lot of profit but the good thing is you are gaining experience.
As you begin to understand how the market trades, you can increase the amount successively. You need to have a long term goal and avoid short end goals that will only plunge you into pitfalls. Many beginners who trade in this market lose their amount before they even learn the basics and tactics of trading in commodity futures markets.
Leveraging Losses and Gains in Futures Trading
Trading in commodity futures market can be very profitable only if you trade keenly. One of the downfalls that are faced by many traders is the inability to control their trading. People often get enticed by the trade patterns and fail to take precautions when trading. Managing losses is a big challenge for many traders and this is because the market can be engulfed by surprise events that move prices too quickly for a trader to exit at the pre-determined point.
Since it is not possible to eliminate losses completely, it is important that you keep losses as low as possible. When you are trading, you need to ensure that you do not over leverage your trade. You have to apply a loss margin. You can leverage your lose risks to about 2% of your account equity.
When you over leverage, you are likely to be caught up in a margin call meaning that you risk losing the entire capital you have invested in the market. The difficult aspect in managing losses is that traders want to make big money in any one trade. This is a risky move and you should avoid risking too large amount of your account.
It is essential that you have a stop loss order to protect you should the market shift against your trade. This will ensure that you do not suffer hefty losses when you begin trading in a loss. On the other hand, it is of paramount importance that you maximize your gains. When you are trading in profit, you should not exit prematurely.
You can hang on in a profiting position as long you do not over stay in the trade. If you have reached the gain margin that you had set for that trade, you need to exit even if you are still trading in profit. This is because, when you wait, something may happen unexpectedly and the market shifts its trading leading to untimely losses.
The key point to note when you are trading in futures commodity is to ensure that you minimize the percentage of losses and keep them minimal and maximize your profiting positions. At times, traders exit prematurely in a profiting trade fearing that they may lose. However, when they notice that the market is still trading upward, they decide to enter again.
This can be a trap because by the time you enter, traders have already profited. If something wrong happens and the market starts to move against your position, then you incur losses. If you have exited prematurely, you should just wait until another time where you can make a new order position. It is crucial that you trade with the trend and avoid speculating the market price movements.
In addition, traders try to pursue bigger profits not knowing that the bigger the profits you pursue, the large the amount of losses you risk in the trade positions. With a good trading plan, you are able to leverage losses and gains and therefore trade profitably in the long run.
Since it is not possible to eliminate losses completely, it is important that you keep losses as low as possible. When you are trading, you need to ensure that you do not over leverage your trade. You have to apply a loss margin. You can leverage your lose risks to about 2% of your account equity.
When you over leverage, you are likely to be caught up in a margin call meaning that you risk losing the entire capital you have invested in the market. The difficult aspect in managing losses is that traders want to make big money in any one trade. This is a risky move and you should avoid risking too large amount of your account.
It is essential that you have a stop loss order to protect you should the market shift against your trade. This will ensure that you do not suffer hefty losses when you begin trading in a loss. On the other hand, it is of paramount importance that you maximize your gains. When you are trading in profit, you should not exit prematurely.
You can hang on in a profiting position as long you do not over stay in the trade. If you have reached the gain margin that you had set for that trade, you need to exit even if you are still trading in profit. This is because, when you wait, something may happen unexpectedly and the market shifts its trading leading to untimely losses.
The key point to note when you are trading in futures commodity is to ensure that you minimize the percentage of losses and keep them minimal and maximize your profiting positions. At times, traders exit prematurely in a profiting trade fearing that they may lose. However, when they notice that the market is still trading upward, they decide to enter again.
This can be a trap because by the time you enter, traders have already profited. If something wrong happens and the market starts to move against your position, then you incur losses. If you have exited prematurely, you should just wait until another time where you can make a new order position. It is crucial that you trade with the trend and avoid speculating the market price movements.
In addition, traders try to pursue bigger profits not knowing that the bigger the profits you pursue, the large the amount of losses you risk in the trade positions. With a good trading plan, you are able to leverage losses and gains and therefore trade profitably in the long run.
Online Payday Loan Peddlers: The Dimming Future of Payday Loan Practices
The Federal is put at task to counter the abusive role of payday lending operators who are running payday lending shops purported to be owned or operated by native American tribes. Stepping into the lending environment where state regulators have failed may not be easy and the federal needs to do more to protect the consumer. Through the consumer Financial Protection Bureau- CFPB, the federal has been lobbying for investigations into the operations of payday lending in tribal lands of America.
Both the CFPB and the Federal Trade Commission believe that some of the increasing payday lending operations are controlled and or owned by non-native American lenders who are abusing their business operations rights to trade under the auspice of native American tribes’ rights of sovereignty. This is a move aimed at shielding themselves from the consumer protection legislation.
The payday loans that carry interest rates as high as 750 percent are available online to native Americans who live on reservations and anyone else in the U.S. Payday loans have been described as predatory lending practices that exploit the already financially crippled consumer. According to State and Federal investors, some of these lending operations swindle customers of their money.
Most of these consumers are already struggling with their bad credit reports and they have been underserved by traditional lending institutions like banks. The payday lenders deceive customers about the costs of the credit facilities and engage in scrupulous and unlawful collection activities.
These lenders have however remained largely out of reach and the federal is pounding on how it could apply the law to trap them. The problem is exacerbated by the fact that tracing these peddlers online is such as daunting tasks. The native American tribal leaders have come up to defend the operations of these lenders saying that the tribes benefit from the positive economic gains realized from the revenues collected through these lending practices.
Some of the economic benefits cited are such as education, medical care, and other basic necessities. The severity immunity of the native American tribes puts legal challenges to the application of consumer laws. The legal concept of severity immunity of native American tribes is complex but when it comes to commercial activities like casino gambling, cigarette sales and payday lending operations, that immunity hinders the legal applications of consumer protection regulation bodies.
Many of the cases put forward against tribal payday loan practices are thrown out of the court on grounds of severity immunity. The issue of payday loan practices in native American lands is quite sensitive. According to the prevailing legal conditions and application of law within the native American tribal lands or reservations, there is a likelihood of protracted litigation over the role and authority of CFPB.
It is unlikely that CFPB will assert any authority in the near future. Until then, it is expected that these lending practices will continue to thrive amidst an ailing consumer group that does not have the privileges to access loans from traditional or other lenders due to their bad credit reports. These are consumers who are in desperate need of cash and they cannot get it from other lenders and the only option they have is to rush for the easily available but highly-charged payday or next paycheck loans. Surprising, the consumer is willing to pay the high interest rates charged on these loans.
Both the CFPB and the Federal Trade Commission believe that some of the increasing payday lending operations are controlled and or owned by non-native American lenders who are abusing their business operations rights to trade under the auspice of native American tribes’ rights of sovereignty. This is a move aimed at shielding themselves from the consumer protection legislation.
The payday loans that carry interest rates as high as 750 percent are available online to native Americans who live on reservations and anyone else in the U.S. Payday loans have been described as predatory lending practices that exploit the already financially crippled consumer. According to State and Federal investors, some of these lending operations swindle customers of their money.
Most of these consumers are already struggling with their bad credit reports and they have been underserved by traditional lending institutions like banks. The payday lenders deceive customers about the costs of the credit facilities and engage in scrupulous and unlawful collection activities.
These lenders have however remained largely out of reach and the federal is pounding on how it could apply the law to trap them. The problem is exacerbated by the fact that tracing these peddlers online is such as daunting tasks. The native American tribal leaders have come up to defend the operations of these lenders saying that the tribes benefit from the positive economic gains realized from the revenues collected through these lending practices.
Some of the economic benefits cited are such as education, medical care, and other basic necessities. The severity immunity of the native American tribes puts legal challenges to the application of consumer laws. The legal concept of severity immunity of native American tribes is complex but when it comes to commercial activities like casino gambling, cigarette sales and payday lending operations, that immunity hinders the legal applications of consumer protection regulation bodies.
Many of the cases put forward against tribal payday loan practices are thrown out of the court on grounds of severity immunity. The issue of payday loan practices in native American lands is quite sensitive. According to the prevailing legal conditions and application of law within the native American tribal lands or reservations, there is a likelihood of protracted litigation over the role and authority of CFPB.
It is unlikely that CFPB will assert any authority in the near future. Until then, it is expected that these lending practices will continue to thrive amidst an ailing consumer group that does not have the privileges to access loans from traditional or other lenders due to their bad credit reports. These are consumers who are in desperate need of cash and they cannot get it from other lenders and the only option they have is to rush for the easily available but highly-charged payday or next paycheck loans. Surprising, the consumer is willing to pay the high interest rates charged on these loans.
The Complex Nature of Payday Loans and Why Credit Unions Cannot Bridge the Gap
Despite the booming payday lending business, the complexities of this market seem to make it impenetrable by lending institutions like banks and credit unions. Payday loans also referred to as predatory loans are designed for a very particular group of consumers. These are consumers ailing with demise of failing to meet their financial obligations. The consumers have categorically been underserved by traditional financial institutions because of bad credit history.
Banks and traditional lending institutions feel that they risk their business by dealing with this group of consumers. However, there are payday lenders who are willing to take the risks and offer financial help to the consumers with bad credit reports and who cannot access loans from credit unions and banking institutions.
In recent years, banks and credit unions seem to be offering some type of short term loans similar to payday loans. A presentation by the National Credit Union Foundation entitled “Real Solutions to Members’ Payday Loan Needs” shows that consumers are saving millions of dollars in fees through credit unions. This breakthrough is achieved by offering payday loans at break even prices.
This is certainly a positive move by the credit unions to offer such a high stake loaning facilities. The big question is; what kind of consumers are benefiting from these loans? Traditional payday lenders deal with a very peculiar consumer who has tainted score and cannot access loans from other institutions. Although credit unions can offer payday loans at cheaper rates, it is most unlikely that they will serve the market.
The number of people with bad credit and who cannot access loans from banks has increased following the aftermath of recession. This means that there is high demand for fast cash that does not require credit check. Credit unions may not be willing to risks their operations by immensity venturing into the payday business.
Operating at breakeven point is purposely meant to help the consumer but unfortunately the demand is too high. Those consumers with very deep financial crisis and need fast cash will end up seeking for payday loans. There is also an argument that encouraging credit unions to provide payday loans means that they are engaging in a manner that is likely to spar disagreements among the financial regulators and consumer protection bodies.
The credit unions are competing directly with traditional payday lending operators by selling short term loan at high prices than they are actually allowed to charge on any other credit products. However, the consumers being served by the credit unions may not necessarily have poor credit score and they may be able to negotiate for other low priced loans.
Credit unions may further limit their payday loan offers to consumer who have verified income, have no delinquent loans, and are not in the course of filing for bankruptcy. This means that there is still a marginalized population that may not be able to access the credit unions payday loans. In essence, the complex nature of the payday loans consumers may not allow credit unions and other institutions to venture extensively in this business. The risks involved are just too high to bear and the regulations cannot allow the credit unions to raise the interest rates beyond certain margins. This means that payday lenders will have less competition and thus the rates may not subside any soon.
Banks and traditional lending institutions feel that they risk their business by dealing with this group of consumers. However, there are payday lenders who are willing to take the risks and offer financial help to the consumers with bad credit reports and who cannot access loans from credit unions and banking institutions.
In recent years, banks and credit unions seem to be offering some type of short term loans similar to payday loans. A presentation by the National Credit Union Foundation entitled “Real Solutions to Members’ Payday Loan Needs” shows that consumers are saving millions of dollars in fees through credit unions. This breakthrough is achieved by offering payday loans at break even prices.
This is certainly a positive move by the credit unions to offer such a high stake loaning facilities. The big question is; what kind of consumers are benefiting from these loans? Traditional payday lenders deal with a very peculiar consumer who has tainted score and cannot access loans from other institutions. Although credit unions can offer payday loans at cheaper rates, it is most unlikely that they will serve the market.
The number of people with bad credit and who cannot access loans from banks has increased following the aftermath of recession. This means that there is high demand for fast cash that does not require credit check. Credit unions may not be willing to risks their operations by immensity venturing into the payday business.
Operating at breakeven point is purposely meant to help the consumer but unfortunately the demand is too high. Those consumers with very deep financial crisis and need fast cash will end up seeking for payday loans. There is also an argument that encouraging credit unions to provide payday loans means that they are engaging in a manner that is likely to spar disagreements among the financial regulators and consumer protection bodies.
The credit unions are competing directly with traditional payday lending operators by selling short term loan at high prices than they are actually allowed to charge on any other credit products. However, the consumers being served by the credit unions may not necessarily have poor credit score and they may be able to negotiate for other low priced loans.
Credit unions may further limit their payday loan offers to consumer who have verified income, have no delinquent loans, and are not in the course of filing for bankruptcy. This means that there is still a marginalized population that may not be able to access the credit unions payday loans. In essence, the complex nature of the payday loans consumers may not allow credit unions and other institutions to venture extensively in this business. The risks involved are just too high to bear and the regulations cannot allow the credit unions to raise the interest rates beyond certain margins. This means that payday lenders will have less competition and thus the rates may not subside any soon.
Bad Credit Payday Loans Technically Long-term Credit Facilities!
Interesting research findings on bad credit payday loans are being witnessed as more studies are being done and one conclusion is that these loans are technically long term credit facilities. The payday loan market has previously lacked any credential research but today we are seeing more studies about this lucrative financial market. The truth is that you may not believe the reality on these payday loans. Critical information points out that these loans are technically long term and therefore, they are not serving the purpose they are intended to serve. Therefore, the big question is; are payday lenders sitting in their cocoons hoping that the market takes its own course? Well! Here is the reality about payday loans;
Payday loans are presented as short term loans were you get the cash now and pay in your next paycheck. But this is not the reality on the ground as what is happening is that many consumers are either rolling over the loans or repaying the current loan and taking a new one. According to a report released by the Consumer Financial Protection bureau- CFPB, it was found that as many as a-third of the borrowers were taking more than 11 loans and not more than 19 loans in one year.
This means that in a period of 12 months, consumers were borrowing between 11 and 19 payday loans. In the same report, it was also revealed that about 14 percent of borrowers were taking about 20 or more payday credit facilities within 12 months. This clearly demonstrates that these loans are not short term but they have been transformed to long-term credit facilities.
Since the lenders are on business mission, they encourage their clients to roll over or take new loans after repaying their present ones. This makes the whole structure of payday loans like wonga loans ideally unrealistic. Another surprising finding is that the average borrower is a consumer who is already struggling with finances. For one, the consumers who seek for payday loans are those who are turned back by banks because of their bad credit.
Therefore, the bad credit payday loans are helping the cash-strapped consumers and therefore, the borrowers are willing to pay the price. According to the CFPB report on payday lending, it was established that only about 4 percent of borrowers had an income of more than $60,000 in one year. A vast majority of the borrowers were surviving with annual incomes of less than $30,000.
If such a consumer who is financially tied is subjected to high interest rates and rollover of payday loans, the repercussions are daunting. Consumers are actually suffering in silence and something needs to be done. Apparently these consumers do not realize that there are other options they can take to prevent relying on these loans.
First, they can use bad credit credit cards, which could allow them take small loans against the cards to solve their emergency cash needs. There are also other options like peer to peer lending and bank cash advances. The problem with peer to peer lending and bank cash advances is that they may not be available to consumers with bad credit. There has been a debate on whether banks and credit unions can bridge the gap within the payday lending practice.
The payday lending market is just too risky for these depository institutions or entities and the regulations governing them do not allow them to impose very high interest rates. In the same CFPB report, it was established that the largest group of borrowers were making less than $ 20,000 in a year. This is a financially crippled borrower who is been subjected to risky loans in the name of bad credit payday loans, which attract very high interest rates, loan rollovers, and a vicious circle of borrowing.
- Close to one-third of borrowers are taking loans totaling between 11 and 19 in just one year.
- The loans are serving the underprivileged consumer.
- Many of the consumers are already struggling with debt or bad credit.
- The lenders are grooming consumers to become repeat customers.
- Only about 13 percent take one or two payday loans per year; the rest take more than that.
- About 14 percent of payday loan borrowers are taking more than 20 payday loans in 12 months.
- People are using payday loans to meet their regular expenses.
- Many of the consumers have been trapped in a vicious circle.
Payday loans are presented as short term loans were you get the cash now and pay in your next paycheck. But this is not the reality on the ground as what is happening is that many consumers are either rolling over the loans or repaying the current loan and taking a new one. According to a report released by the Consumer Financial Protection bureau- CFPB, it was found that as many as a-third of the borrowers were taking more than 11 loans and not more than 19 loans in one year.
This means that in a period of 12 months, consumers were borrowing between 11 and 19 payday loans. In the same report, it was also revealed that about 14 percent of borrowers were taking about 20 or more payday credit facilities within 12 months. This clearly demonstrates that these loans are not short term but they have been transformed to long-term credit facilities.
Since the lenders are on business mission, they encourage their clients to roll over or take new loans after repaying their present ones. This makes the whole structure of payday loans like wonga loans ideally unrealistic. Another surprising finding is that the average borrower is a consumer who is already struggling with finances. For one, the consumers who seek for payday loans are those who are turned back by banks because of their bad credit.
Therefore, the bad credit payday loans are helping the cash-strapped consumers and therefore, the borrowers are willing to pay the price. According to the CFPB report on payday lending, it was established that only about 4 percent of borrowers had an income of more than $60,000 in one year. A vast majority of the borrowers were surviving with annual incomes of less than $30,000.
If such a consumer who is financially tied is subjected to high interest rates and rollover of payday loans, the repercussions are daunting. Consumers are actually suffering in silence and something needs to be done. Apparently these consumers do not realize that there are other options they can take to prevent relying on these loans.
First, they can use bad credit credit cards, which could allow them take small loans against the cards to solve their emergency cash needs. There are also other options like peer to peer lending and bank cash advances. The problem with peer to peer lending and bank cash advances is that they may not be available to consumers with bad credit. There has been a debate on whether banks and credit unions can bridge the gap within the payday lending practice.
The payday lending market is just too risky for these depository institutions or entities and the regulations governing them do not allow them to impose very high interest rates. In the same CFPB report, it was established that the largest group of borrowers were making less than $ 20,000 in a year. This is a financially crippled borrower who is been subjected to risky loans in the name of bad credit payday loans, which attract very high interest rates, loan rollovers, and a vicious circle of borrowing.
Wonga Payday Loans Rescuing People in Bad Credit… But Are These Loans Solving the Problems
Wonga payday loans can smoothly cross you over a financial bottleneck you are experiencing especially if you are bad credit consumer and cannot get financial assistance from the depository institutions or banks. From reality, it seems that consumers are getting the helping hand they need when they are faced with a troubling emergency for money. These bad credit payday loans have become the crossing bridge for many borrowers who are turned away by banks whenever they desperately need money.
This is certainly one reason why borrowers keep on using these credit facilities despite the fact that they attract very high interest rates. And as wonga sets it straight, “We will always tell you what the full cost of repayment will be upfront” and as though this payday loans lender is not afraid, goes ahead and point out that “Our service has a Representative APR of 4214%” The big question is; how can this such high interest rates be justified?
Consumers need to prepare themselves and learn how to maneuver the hard times. Although wonga tries to defend itself and justify that this is an annual measure of APRs and that their payday loans are not intended for a 12 month period but only one month, the rates are surely high. In addition, wonga claims that this percentage they have given out assumes a theoretical compounding, which means that a borrower rolls over the balance and therefore the interest rate is charged on the accumulated balance and not the principal amount that was initially loaned.
A wonga loan is structured to be due between one day and a month; period. However, like other next paycheck credit facilities, they are no longer serving the intended purpose. A payday loan that is only meant for two weeks could be rolled over for up to one year. And the repercussions are huge. Even those who pay their loans within the two-week period, they head back to the same lender to take some more.
According to a research done by the Consumer Financial Protection bureau, it showed that about 13 percent of borrowers were taking out a maximum of two payday loans in a year. Similarly, about one-third of borrowers were taking an estimated 11-19 different payday credit facilities in just 12 months. This clearly demonstrates that payday loans are no more short term or one-time borrowing credit facilities.
There is the danger of being trapped in a vicious circle where you have to keep on borrowing in order to make ends meet. The problem is that the high interest rates eat up the little income you earn every month and you are left with a deficit and you cannot meet your regular bills and expenses like food stuffs, rent, gas, electricity, telephone, and other monthly bills.
Therefore, the chances of going back to obtain wonga payday loans is very high. It seems that payday lenders are grooming their customers for a repeat business not knowing how they are destroying their lives. There are many options that consumers need to take in order to steer clear of these cash advance loans because they are not sustainable.
First, you need to set up an emergency cash account and make it a strict saving behavior. In addition, today there are bad credit cards, which can allow you get some credit against the cards. Although missing credit card payment can attract high interest rates penalties that may hike your APR to as high as 35 percent, this is annualized APR and therefore, if you break it down to two weeks or one month period, you find that it is something negligible.
Wonga loans can only serve their purpose if you take only one or two of these loans in one year but this is practically not happening to most of the consumers. They are trapped in a vicious circle of borrowing again and again with many taking as many as 20 or more loans per year.
This is certainly one reason why borrowers keep on using these credit facilities despite the fact that they attract very high interest rates. And as wonga sets it straight, “We will always tell you what the full cost of repayment will be upfront” and as though this payday loans lender is not afraid, goes ahead and point out that “Our service has a Representative APR of 4214%” The big question is; how can this such high interest rates be justified?
Consumers need to prepare themselves and learn how to maneuver the hard times. Although wonga tries to defend itself and justify that this is an annual measure of APRs and that their payday loans are not intended for a 12 month period but only one month, the rates are surely high. In addition, wonga claims that this percentage they have given out assumes a theoretical compounding, which means that a borrower rolls over the balance and therefore the interest rate is charged on the accumulated balance and not the principal amount that was initially loaned.
A wonga loan is structured to be due between one day and a month; period. However, like other next paycheck credit facilities, they are no longer serving the intended purpose. A payday loan that is only meant for two weeks could be rolled over for up to one year. And the repercussions are huge. Even those who pay their loans within the two-week period, they head back to the same lender to take some more.
According to a research done by the Consumer Financial Protection bureau, it showed that about 13 percent of borrowers were taking out a maximum of two payday loans in a year. Similarly, about one-third of borrowers were taking an estimated 11-19 different payday credit facilities in just 12 months. This clearly demonstrates that payday loans are no more short term or one-time borrowing credit facilities.
There is the danger of being trapped in a vicious circle where you have to keep on borrowing in order to make ends meet. The problem is that the high interest rates eat up the little income you earn every month and you are left with a deficit and you cannot meet your regular bills and expenses like food stuffs, rent, gas, electricity, telephone, and other monthly bills.
Therefore, the chances of going back to obtain wonga payday loans is very high. It seems that payday lenders are grooming their customers for a repeat business not knowing how they are destroying their lives. There are many options that consumers need to take in order to steer clear of these cash advance loans because they are not sustainable.
First, you need to set up an emergency cash account and make it a strict saving behavior. In addition, today there are bad credit cards, which can allow you get some credit against the cards. Although missing credit card payment can attract high interest rates penalties that may hike your APR to as high as 35 percent, this is annualized APR and therefore, if you break it down to two weeks or one month period, you find that it is something negligible.
Wonga loans can only serve their purpose if you take only one or two of these loans in one year but this is practically not happening to most of the consumers. They are trapped in a vicious circle of borrowing again and again with many taking as many as 20 or more loans per year.
Payday Loans a Double-Edged Sword… they Help and Concurrently Hurt the Consumer
As the popularity of payday loans online lenders increases, the effects are being felt among the consumers as these non depository credit facilities are both helping and at the same time hurting the very consumer. Like a power saw, payday loans are a very excellent credit facilities for cutting through a financial emergency but again like a power saw, they will hurt serious if you do not use them correctly. These next paycheck credit facilities are aimed at serving specifically very short term pressing financial needs.
There is need to emphasize that they are only intended for very pressing and urgent need for cash and where a borrowers cannot obtain the money from other sources. While the payday loans online credit can be very attractive for the consumer in a financial crisis, it can be a trap to a vicious circle of borrowing. Although the loan is designed to be repaid within two weeks or one month, this is not the case because studies show that payday loan borrowers are taking numerous loans in a year.
From a study conducted by the Consumer Financial Protection bureau (CFPB) it has been established that more than one-third of people who borrow payday loans take about 11 to 19 different next paycheck loans in a period of 12 months. And that does this means?
These credit facilities are designed for one time or occasional borrowing in order to take you through a financial crisis you are facing. The loans typically range from $300 to $500 and can help solve a very urgent small ticket expense that you MUST resolve. In the CFPB report, it was also revealed that about 14 percent of borrowers were taking out 20 or more payday loans in the same period of 12 months.
These loans are very beneficial to the right consumer because they are obtained quickly and easily. The payday loan process has typically the shortest application process that you can find in the market today. If you need money to pay a bill today so that you do not damage your credit report, these loans are there just for that one time urgent need. Similarly if you are faced with an urgent need such loss of a loved family member and you need bus fare to go home and you are cash-strapped and do not have any cash in your account or pocket, then again these loans can rescue.
You may need these loans if you want to buy a life-saving drug or medication or pay your house rent. So, you can see the kind of emergencies these loans can handle. This means that they are not good for every other financial need because they carry a big risk. In a few hours or less than 24 hours, you can have money in your account and resolve your emergency.
In addition, the loans are easy to qualify because they are no credit check loans. All you need in order to obtain this loan is an active checking account, a monthly income from a job or business and the proof of your resident. These payday loans online credit facilities eliminate the cumbersome and frustrating bank application process, which entails filling out lengthy forms and worst of it all, checking your credit report.
Just the mere requesting for a credit report check by a bank lowers your score even if you have not been granted a loan. In addition, these loans are useful when you have been turned back by banks and other depository institutions.
However, the trap is that most of these loans will take a better part or large chunk of your next paycheck. This means that you will not have enough money for your regular expenses and therefore, the likelihood of going back to the same payday loan shark lender is high. This way, you may end up borrowing a 2nd, 3rd, 4th ... and even the 10th payday loan before the end of the year. This is how these loans are transformed from the intended short-lived debt solution to a long term borrowing.
There is need to emphasize that they are only intended for very pressing and urgent need for cash and where a borrowers cannot obtain the money from other sources. While the payday loans online credit can be very attractive for the consumer in a financial crisis, it can be a trap to a vicious circle of borrowing. Although the loan is designed to be repaid within two weeks or one month, this is not the case because studies show that payday loan borrowers are taking numerous loans in a year.
From a study conducted by the Consumer Financial Protection bureau (CFPB) it has been established that more than one-third of people who borrow payday loans take about 11 to 19 different next paycheck loans in a period of 12 months. And that does this means?
These credit facilities are designed for one time or occasional borrowing in order to take you through a financial crisis you are facing. The loans typically range from $300 to $500 and can help solve a very urgent small ticket expense that you MUST resolve. In the CFPB report, it was also revealed that about 14 percent of borrowers were taking out 20 or more payday loans in the same period of 12 months.
These loans are very beneficial to the right consumer because they are obtained quickly and easily. The payday loan process has typically the shortest application process that you can find in the market today. If you need money to pay a bill today so that you do not damage your credit report, these loans are there just for that one time urgent need. Similarly if you are faced with an urgent need such loss of a loved family member and you need bus fare to go home and you are cash-strapped and do not have any cash in your account or pocket, then again these loans can rescue.
You may need these loans if you want to buy a life-saving drug or medication or pay your house rent. So, you can see the kind of emergencies these loans can handle. This means that they are not good for every other financial need because they carry a big risk. In a few hours or less than 24 hours, you can have money in your account and resolve your emergency.
In addition, the loans are easy to qualify because they are no credit check loans. All you need in order to obtain this loan is an active checking account, a monthly income from a job or business and the proof of your resident. These payday loans online credit facilities eliminate the cumbersome and frustrating bank application process, which entails filling out lengthy forms and worst of it all, checking your credit report.
Just the mere requesting for a credit report check by a bank lowers your score even if you have not been granted a loan. In addition, these loans are useful when you have been turned back by banks and other depository institutions.
However, the trap is that most of these loans will take a better part or large chunk of your next paycheck. This means that you will not have enough money for your regular expenses and therefore, the likelihood of going back to the same payday loan shark lender is high. This way, you may end up borrowing a 2nd, 3rd, 4th ... and even the 10th payday loan before the end of the year. This is how these loans are transformed from the intended short-lived debt solution to a long term borrowing.
Top Reward Cashback Credit Cards Lock out Low Income Earners
Reward credit cards are designed to help consumers save money through a number of perks offered by the card issuers. However, for you to enjoy the top reward cashback credit card perks, you have to qualify for the card issuance. Although you may still qualify for a cashrebate reward credit card with low income, you may not benefit from the top rewards as they are offered to high spenders.
If you earn less than $60,000 annually, you will not qualify for those top reward cashbacks cards. In 2010, the Federal put in place a voluntary ethical code of conduct that was meant to protect small business entities from the rising processing fees charged on credit card. This is the reason why modest income earners cannot enjoy best reward credit cards and therefore, they are virtually locked out.
Initially, before this code of conduct was issued, small entities complained that they were compelled by credit card issuers to pay more in processing premium card. Therefore, Ottawa concluded that premium cards should not be marketed to consumers if they do not meet certain income level. In recent times, there has been proliferation of reward credit cards which are aimed at saving consumers money whenever they spend in purchasing goods and services with their cards.
High spenders can benefit from premium cards like Visa’s Infinite brands as well as MasterCard’s World brands. For you to benefit optimally from these premium cards, you need to spend more than $2000 per month, and this for the low income earner, is pretty large amount to spend. Considering that credit card debt still hurts many consumers, it would not be easy for them to spend such amount and these cards will remain to benefit the wealthy class and high spenders.
In order to qualify for reward cards like Capital One and Scotia, the card users need to have at least a personal annual income of $60,000 and a household income of at least $100,000. However, despite low income earners being locked out of the premium reward cards, they can still enjoy reward card perks that are designed for the modest income.
One of these cards is the RBC Cash Back MasterCard. You are only required to have an annual income of $15,000 for you to be issued with the RBC Cash Back MasterCard. Another low income reward card is MBNA’s Smart Cash card, which requires you to have at least an annual income of $35,000. The MBNA’s Smart Cash card offers a cashrebate of up to 5 percent on gas and groceries in the first 6 months of use. After that grace period, you are offered a 2 percent cashrebate in purchases.
Other cards that have been designed for the low income earners are Scotia Momentum No-Fee Visa, which requires a low amount of $12,000 annual income to qualify. Capital One Aspire Cash Platinum requires an annual income of $30,000 while CIBC Dividend Card is designed for consumers with an annual income of at least $15,000.
However, the perks are far much less compared to the premium cards. In addition, since the more you spend, the higher the perks you enjoy, for low income earners, definitely, they will benefit from less perks compared to the wealthy class.
Nonetheless, using these no-fee reward credit cards can help the users save about $10 to 20 dollars in every month and this can go towards meeting the card fees. The MBNA’s Smart Cash card gives card users the most cashrebate considering that you can get 5 percent on gas and groceries in the first six months spending.
If you earn less than $60,000 annually, you will not qualify for those top reward cashbacks cards. In 2010, the Federal put in place a voluntary ethical code of conduct that was meant to protect small business entities from the rising processing fees charged on credit card. This is the reason why modest income earners cannot enjoy best reward credit cards and therefore, they are virtually locked out.
Initially, before this code of conduct was issued, small entities complained that they were compelled by credit card issuers to pay more in processing premium card. Therefore, Ottawa concluded that premium cards should not be marketed to consumers if they do not meet certain income level. In recent times, there has been proliferation of reward credit cards which are aimed at saving consumers money whenever they spend in purchasing goods and services with their cards.
High spenders can benefit from premium cards like Visa’s Infinite brands as well as MasterCard’s World brands. For you to benefit optimally from these premium cards, you need to spend more than $2000 per month, and this for the low income earner, is pretty large amount to spend. Considering that credit card debt still hurts many consumers, it would not be easy for them to spend such amount and these cards will remain to benefit the wealthy class and high spenders.
In order to qualify for reward cards like Capital One and Scotia, the card users need to have at least a personal annual income of $60,000 and a household income of at least $100,000. However, despite low income earners being locked out of the premium reward cards, they can still enjoy reward card perks that are designed for the modest income.
One of these cards is the RBC Cash Back MasterCard. You are only required to have an annual income of $15,000 for you to be issued with the RBC Cash Back MasterCard. Another low income reward card is MBNA’s Smart Cash card, which requires you to have at least an annual income of $35,000. The MBNA’s Smart Cash card offers a cashrebate of up to 5 percent on gas and groceries in the first 6 months of use. After that grace period, you are offered a 2 percent cashrebate in purchases.
Other cards that have been designed for the low income earners are Scotia Momentum No-Fee Visa, which requires a low amount of $12,000 annual income to qualify. Capital One Aspire Cash Platinum requires an annual income of $30,000 while CIBC Dividend Card is designed for consumers with an annual income of at least $15,000.
However, the perks are far much less compared to the premium cards. In addition, since the more you spend, the higher the perks you enjoy, for low income earners, definitely, they will benefit from less perks compared to the wealthy class.
Nonetheless, using these no-fee reward credit cards can help the users save about $10 to 20 dollars in every month and this can go towards meeting the card fees. The MBNA’s Smart Cash card gives card users the most cashrebate considering that you can get 5 percent on gas and groceries in the first six months spending.
A Steady Credit Card Use Expected Despite Looming Consumer Spending Cutbacks
Consumer spending is expected to dip in 2013 owing to increased payroll taxes however, analysts say that consumers will continue to show increase credit cards use despite these spending cutbacks challenges. Middle class Americans will not escape higher taxes in spite of the Congress’s effort in passing legislation that helps keep the broader middle class income taxes from going up. The reality is that workers will still part with more than 2 percent through payroll taxes.
The reason behind this is that the government had put a temporary hold in paying payroll taxes of 6.2 percent but this has already expired. In 2011, the government temporarily lowered payroll tax rate to a low of 4.2 percent from the designated rate of 6.2 percent and this hold expired in 2013. What this means is that the workers will have to pay more in payroll taxes and this has an implication on consumer spending.
In yet another blow to consumers, in January 2013, credit card users would be subjected to direct surcharges when they shop in stores. Store owners in most of the states were allowed to impose direct surcharges on shoppers to the tune of 4 percent of the bills they paid through their credit cards. This would further implicate negatively on their spending patterns.
What this means is that consumers need to prepare for tough times ahead whenever they use their credit cards. Bearing in mind that credit card debt is the number one debt burden in the country, it means that consumers need to be careful in the way they spend their income. As though not enough, consumers are likely to be dealt a blow by the seemingly increasing credit card interest rates.
In 2012, MBNA hiked its credit card interest rates up by 4 percent and in a similar move, the Bank of Ireland also extended interest hikes to its card users by the same margin at the end of the year in 2012. The latest move to see increased interest rate on credit card balances has been witnessed within Danske Bank, which has hiked the rates by about 2 percent.
Experts say that other banks are likely to follow suit and increase their rates too. Consumers have been enjoying low interest rates on credit card since the highs of 14 percent imposed in 2010 following the credit crisis. When all these factors are put together, it is expected that consumer spending may be hit hard and banks may have to cope with hard time too.
However, notwithstanding fear of weak consumer spending, credit card use is still strong and it is expected to grow throughout the year. When consumers do not have sufficient income, they tend to use their credit cards. Owing to the pressures put on the consumer by payroll tax, then these consumers are likely to increase the level of use of credit cards in order to make up for the reduced income, FBR Capital Markets’ analyst Scott Valentin said.
It is also projected that banks that depend on revenues generated through credit card interest rates are likely to experienced reduced earnings because consumers are now holding less credit. There has been a notable decrease in credit card loans and this is something that has seen revenues generated from credit card interest rates shrink significantly.
Companies that count on interest rates levied on revolving loans are likely to feel the pinch. Nonetheless, for American Express, the largest US credit card issuer, it may be less affected by the reduced card borrowing, and this is because this company generates much of the revenue through merchants who are charged when consumers make purchases using their cards. American Express doesn’t rely on revenue generated from revolving credit card loans interest rates.
The reason behind this is that the government had put a temporary hold in paying payroll taxes of 6.2 percent but this has already expired. In 2011, the government temporarily lowered payroll tax rate to a low of 4.2 percent from the designated rate of 6.2 percent and this hold expired in 2013. What this means is that the workers will have to pay more in payroll taxes and this has an implication on consumer spending.
In yet another blow to consumers, in January 2013, credit card users would be subjected to direct surcharges when they shop in stores. Store owners in most of the states were allowed to impose direct surcharges on shoppers to the tune of 4 percent of the bills they paid through their credit cards. This would further implicate negatively on their spending patterns.
What this means is that consumers need to prepare for tough times ahead whenever they use their credit cards. Bearing in mind that credit card debt is the number one debt burden in the country, it means that consumers need to be careful in the way they spend their income. As though not enough, consumers are likely to be dealt a blow by the seemingly increasing credit card interest rates.
In 2012, MBNA hiked its credit card interest rates up by 4 percent and in a similar move, the Bank of Ireland also extended interest hikes to its card users by the same margin at the end of the year in 2012. The latest move to see increased interest rate on credit card balances has been witnessed within Danske Bank, which has hiked the rates by about 2 percent.
Experts say that other banks are likely to follow suit and increase their rates too. Consumers have been enjoying low interest rates on credit card since the highs of 14 percent imposed in 2010 following the credit crisis. When all these factors are put together, it is expected that consumer spending may be hit hard and banks may have to cope with hard time too.
However, notwithstanding fear of weak consumer spending, credit card use is still strong and it is expected to grow throughout the year. When consumers do not have sufficient income, they tend to use their credit cards. Owing to the pressures put on the consumer by payroll tax, then these consumers are likely to increase the level of use of credit cards in order to make up for the reduced income, FBR Capital Markets’ analyst Scott Valentin said.
It is also projected that banks that depend on revenues generated through credit card interest rates are likely to experienced reduced earnings because consumers are now holding less credit. There has been a notable decrease in credit card loans and this is something that has seen revenues generated from credit card interest rates shrink significantly.
Companies that count on interest rates levied on revolving loans are likely to feel the pinch. Nonetheless, for American Express, the largest US credit card issuer, it may be less affected by the reduced card borrowing, and this is because this company generates much of the revenue through merchants who are charged when consumers make purchases using their cards. American Express doesn’t rely on revenue generated from revolving credit card loans interest rates.
Free Credit Reporting... Do You Have to Pay For Your Credit Report?
Credit reporting is important because it helps you monitor your credit report in order to ensure that that it is accurate and any disputes and errors are rectified and reflected on the report. Every action you take on your report either contributes positively or negatively to the credit score. If there are errors in a report, they need to be fixed very fast and waiting from the free credit report released yearly may not be advisable. Because of the increased need to monitor credit reports, there are reporting companies that have cropped up to offer these services.
There are only three major credit reporting agencies, which are legally authorized to provide one copy of free credit report per year. According to Fair Credit Reporting Act, every consumer can get a free copy of their credit report from the three major reporting agencies which are; Experian, Equifax and TransUnion.
This means that you can get one copy of your credit report in every 12 months for free. However, if you want to monitor your report, you have to pay for the other copies. There are many credit reporting companies that are offering monitoring services for your credit history. These companies claim that they offer free credit reporting but in the real sense, you sign up for a trail period and then after that you are subjected to a paid service.
Consumers pay about $19 to $29 per month for credit reporting, a service that is provided for free. There is no need to pay for your credit reporting even if you want to monitor it. In fact, you can spread out your free credit history reporting from the three agencies and use them to monitor your credit history.
If you were to use the paid services, it means that you would pay at least $228 dollars in a year. This is a large amount you are paying for a service that is actually offered free. What you need to do is spread the three credit reports from the three major reporting companies. You can spread them in four-month intervals.
There are no restrictions as to when you can get your report from these companies. You can start with Equifax, and get your report on January. After four months i.e. the month of May, you can get your report from TransUnion, and after another four months, October, you can get the third report from Experian. This means that in one year, you have three reports.
You can use the reports to monitor the accuracy of the information. If there are errors, you are able to fix them in advance. This way, you save money and you do not have to pay for the free credit reporting services. One thing you need to know is that you cannot order your free reports from the three credit reporting agencies on their website.
These free reports are provided through annualcreditreport.com that has been provided the mandate to provide the free copies of the credit reports. However, if you want a paid credit report, you can order directly from these agencies. It is important that you watch out for websites that claims to be offering free credit reporting. You need to avoid them because they will eventually subject you to a paid service or even sell your personal information to marketing companies and spammers.
There are only three major credit reporting agencies, which are legally authorized to provide one copy of free credit report per year. According to Fair Credit Reporting Act, every consumer can get a free copy of their credit report from the three major reporting agencies which are; Experian, Equifax and TransUnion.
This means that you can get one copy of your credit report in every 12 months for free. However, if you want to monitor your report, you have to pay for the other copies. There are many credit reporting companies that are offering monitoring services for your credit history. These companies claim that they offer free credit reporting but in the real sense, you sign up for a trail period and then after that you are subjected to a paid service.
Consumers pay about $19 to $29 per month for credit reporting, a service that is provided for free. There is no need to pay for your credit reporting even if you want to monitor it. In fact, you can spread out your free credit history reporting from the three agencies and use them to monitor your credit history.
If you were to use the paid services, it means that you would pay at least $228 dollars in a year. This is a large amount you are paying for a service that is actually offered free. What you need to do is spread the three credit reports from the three major reporting companies. You can spread them in four-month intervals.
There are no restrictions as to when you can get your report from these companies. You can start with Equifax, and get your report on January. After four months i.e. the month of May, you can get your report from TransUnion, and after another four months, October, you can get the third report from Experian. This means that in one year, you have three reports.
You can use the reports to monitor the accuracy of the information. If there are errors, you are able to fix them in advance. This way, you save money and you do not have to pay for the free credit reporting services. One thing you need to know is that you cannot order your free reports from the three credit reporting agencies on their website.
These free reports are provided through annualcreditreport.com that has been provided the mandate to provide the free copies of the credit reports. However, if you want a paid credit report, you can order directly from these agencies. It is important that you watch out for websites that claims to be offering free credit reporting. You need to avoid them because they will eventually subject you to a paid service or even sell your personal information to marketing companies and spammers.
Seniors in More Credit Card Debt Burden than Young People... What is The Matter!
Older Americans are carrying more credit card debt that young people, a research findings has revealed. In a study paper entitled “In the Red: Older Americans and Credit Card Debt,” presented by the AARP Policy Institute and Demos, it showed that older Americans are struggling with more credit card debt that young people. Old age comes with many challenges as it is the time when many retire to enjoy their after-retirement life.
This means that seniors loss their jobs through retirement and focus on living an old age life. In addition, this is the time when old persons start experiencing chronic diseases like diabetes, heart problems, and other conditions caused by low immune functions. In order to spend their last days well, seniors need to have a good financial security.
However, this is not case as many Americans are dying at old age with less than $10,000 in their accounts while others are dipping into their retirement benefits and exploiting them long before they die. According to the AARP Policy Institute and Demos report, those over 50 years were carrying a combined card debt of close to $8,278 in all their credit cards while those under 50 where carrying a combined debt of about $6,258.
Some of the contributing factors to the increased indebtedness of seniors are because after losing their jobs, they still have to meet expenses like home repair, medical bills, car repairs, insurance, utility bills, rent, mortgages, and food. However, one peculiar thing has been observed among seniors.
It has been revealed that seniors are helping their family members settle debts. What this means is that a good number of them are using their credit cards to support their adult children. This way, they are carrying a credit card debt that is not theirs. These old people are using their credit cards to obtain loans to pay for their adult children’s tuition fees.
About 25% of seniors are actually helping their family member to settle their debts. In this study, it was discovered that about 5 percent of student loans borrowed, they were taken by persons over the age of sixty. Only a handful of seniors at this age are surely in college if there are any. This means that these student loans were taken to meet college fees for their children.
However, students should bear the burden of their debts. They should take the loans and repay them when they are employed. Seniors seem to be willing to support their adult children not knowing the situation they are subjecting themselves into. When the burden of paying tuition fees is coupled with other expenses like home repairs and utility bills, this is far stretching the finances of the seniors.
What is happening is that these seniors are now dipping into their retirement savings and using their money to settle credit card debts. This is such a big mistake as the retirement benefits are the only financial security these seniors may have. Draining their retirement kits earlier could actually be creating serious financial insecurity at a time when there may be many problems that need financial support such as visits to the doctor and meeting utility bills.
This implies that seniors need to be educated on the reality of life after retirement and understand the challenges they have to go through including credit card debts and how they can avoid them. They need to refrain from taking responsibilities that they cannot afford. Supporting adult children to pay for college fees may be a sign for love and expression of emotional attachment, but does this has to be presented with material things like finances?
This means that seniors loss their jobs through retirement and focus on living an old age life. In addition, this is the time when old persons start experiencing chronic diseases like diabetes, heart problems, and other conditions caused by low immune functions. In order to spend their last days well, seniors need to have a good financial security.
However, this is not case as many Americans are dying at old age with less than $10,000 in their accounts while others are dipping into their retirement benefits and exploiting them long before they die. According to the AARP Policy Institute and Demos report, those over 50 years were carrying a combined card debt of close to $8,278 in all their credit cards while those under 50 where carrying a combined debt of about $6,258.
Some of the contributing factors to the increased indebtedness of seniors are because after losing their jobs, they still have to meet expenses like home repair, medical bills, car repairs, insurance, utility bills, rent, mortgages, and food. However, one peculiar thing has been observed among seniors.
It has been revealed that seniors are helping their family members settle debts. What this means is that a good number of them are using their credit cards to support their adult children. This way, they are carrying a credit card debt that is not theirs. These old people are using their credit cards to obtain loans to pay for their adult children’s tuition fees.
About 25% of seniors are actually helping their family member to settle their debts. In this study, it was discovered that about 5 percent of student loans borrowed, they were taken by persons over the age of sixty. Only a handful of seniors at this age are surely in college if there are any. This means that these student loans were taken to meet college fees for their children.
However, students should bear the burden of their debts. They should take the loans and repay them when they are employed. Seniors seem to be willing to support their adult children not knowing the situation they are subjecting themselves into. When the burden of paying tuition fees is coupled with other expenses like home repairs and utility bills, this is far stretching the finances of the seniors.
What is happening is that these seniors are now dipping into their retirement savings and using their money to settle credit card debts. This is such a big mistake as the retirement benefits are the only financial security these seniors may have. Draining their retirement kits earlier could actually be creating serious financial insecurity at a time when there may be many problems that need financial support such as visits to the doctor and meeting utility bills.
This implies that seniors need to be educated on the reality of life after retirement and understand the challenges they have to go through including credit card debts and how they can avoid them. They need to refrain from taking responsibilities that they cannot afford. Supporting adult children to pay for college fees may be a sign for love and expression of emotional attachment, but does this has to be presented with material things like finances?
Banks More Likely to Hike Credit Card Interest Rates...What are The Repercussions?
Credit card users have been enjoying relatively lower interest rates charged on balances but this scenario seems to changing. In February 2010, credit card interest rates averaged 13 percent reaching a record high of averagely 14.26 on February the same year. These high rates at that time where attributed to effects posed by the credit crisis. However, since then, banks have been cutting back their credit card interest rates on consumers.
In 2012, the average consumer credit card interest rate was recorded at about 12 percent and in 2012; it hit a low of about 11 percent. When consumers have low interest rates, it means they pay less on any balances they roll over. However, considering that card users have been paying their balance off and they are not carrying a lot of credit, it means that the amount paid as interest rates from credit card balances has reduced.
Credit card debt is still the leading indebtedness in the US and this shows that card use is high. However, there have been a few moves by banks to increase interest rates on credit card balances with the latest being the Danske Bank rate hikes. Danske Bank pushed up its interest rate on cards and this is an indication that consumers will have to tighten their belts to meet the extra cost.
The bank increased the rates by 2 percent and this means that the card users will have to prepare for tough times ahead. The use of credit cards in increasing and this is demonstrated by the proliferation of reward credit cards. There are virtually many different reward cards that cater for every consumer.
Although the top perks in rewards cards are enjoyed by high spenders, there have been low income reward cards, which also meet the needs of the low spender. As consumers seek for ways to cut down on expenses, perhaps the aspect of hiking interest rates on cards may not be received with good news. Danske Bank has not had any credit card rate adjustment for about four years and before the recent hike, this bank had two of the best value credit card ranking on the list of the top first three cards.
The bank’s name was recently changed from National Irish Bank to Danske Bank. At the end of 2012, another bank hiked its credit card interest rates by a margin of 4 percent. Bank of Ireland extended higher rates to its consumers at a time when consumers do a lot of shopping in holiday season.
In a similarly move, MBNA increased its credit card rates last summer in 2012 by the same margin of 4 percent. What this means is that soon other banks may fall suit and also increase their rates. Consumers are still ailing from the effects of recession and perhaps an increase in rates could create more pressure on their spending patterns.
For those carrying balances on their cards, such an increase could lead to more troubles. If any delinquencies occur, the credit card interest rates could hit very high levels that users cannot cope with. Despite these projected increase in card rates, the use of credit cards in expected to grow in 2013.
In 2012, the average consumer credit card interest rate was recorded at about 12 percent and in 2012; it hit a low of about 11 percent. When consumers have low interest rates, it means they pay less on any balances they roll over. However, considering that card users have been paying their balance off and they are not carrying a lot of credit, it means that the amount paid as interest rates from credit card balances has reduced.
Credit card debt is still the leading indebtedness in the US and this shows that card use is high. However, there have been a few moves by banks to increase interest rates on credit card balances with the latest being the Danske Bank rate hikes. Danske Bank pushed up its interest rate on cards and this is an indication that consumers will have to tighten their belts to meet the extra cost.
The bank increased the rates by 2 percent and this means that the card users will have to prepare for tough times ahead. The use of credit cards in increasing and this is demonstrated by the proliferation of reward credit cards. There are virtually many different reward cards that cater for every consumer.
Although the top perks in rewards cards are enjoyed by high spenders, there have been low income reward cards, which also meet the needs of the low spender. As consumers seek for ways to cut down on expenses, perhaps the aspect of hiking interest rates on cards may not be received with good news. Danske Bank has not had any credit card rate adjustment for about four years and before the recent hike, this bank had two of the best value credit card ranking on the list of the top first three cards.
The bank’s name was recently changed from National Irish Bank to Danske Bank. At the end of 2012, another bank hiked its credit card interest rates by a margin of 4 percent. Bank of Ireland extended higher rates to its consumers at a time when consumers do a lot of shopping in holiday season.
In a similarly move, MBNA increased its credit card rates last summer in 2012 by the same margin of 4 percent. What this means is that soon other banks may fall suit and also increase their rates. Consumers are still ailing from the effects of recession and perhaps an increase in rates could create more pressure on their spending patterns.
For those carrying balances on their cards, such an increase could lead to more troubles. If any delinquencies occur, the credit card interest rates could hit very high levels that users cannot cope with. Despite these projected increase in card rates, the use of credit cards in expected to grow in 2013.
What Are Credit Card Skimmers and How do They Work?
Credit card skimmers are devices used to extract credit card information for intended purpose of theft. The victims of credit card skimming are blindfolded by the theft and many come to realize that their accounts have been swindled money thereafter following the theft of information. Of late, these devices have been used in ATMs, gasoline stations and also in public areas like restaurants and consumer goods stores or supermarkets.
The skimming devices are placed in ATM machines or they are held by hand by the person stealing the information. When the card is run through the devices, information is extracted and stored in the device. The thieves then use the information to device counterfeit card or carry out online withdrawals or payments from your account.
The skimming devices are placed in ATM machines or they are held by hand by the person stealing the information. When the card is run through the devices, information is extracted and stored in the device. The thieves then use the information to device counterfeit card or carry out online withdrawals or payments from your account.
Why it is difficult to detect card skimming devices
What makes this kind of thieving difficult to detect is that the devices resemble the “card insert” or the “keypad” part of an ATM and are attached or plugged just next to or over the exiting parts of an ATM’s “card insert” or keypad components. If you are not keen, you will enter your card in that device and the moment you key in your password, all the information is derived from the card and stored to the device.
Victims of card skimming are not aware of the theft and begin to notice that there is a problem when they get billing statement or even notices of overdrafts through their emails. Another thing which makes credit cards skimming difficulty to detect is that you never lose your card so you are not suspicious at that time until later after your bank account is intruded.
What makes this kind of thieving difficult to detect is that the devices resemble the “card insert” or the “keypad” part of an ATM and are attached or plugged just next to or over the exiting parts of an ATM’s “card insert” or keypad components. If you are not keen, you will enter your card in that device and the moment you key in your password, all the information is derived from the card and stored to the device.
Victims of card skimming are not aware of the theft and begin to notice that there is a problem when they get billing statement or even notices of overdrafts through their emails. Another thing which makes credit cards skimming difficulty to detect is that you never lose your card so you are not suspicious at that time until later after your bank account is intruded.
How can you protect yourself from credit card skimmers?
One way you can prevent this theft is by keeping watch of your accounts. You need to monitor your checking account activities on daily basis and report any transaction that seems suspicious. In addition, you also need to be very careful where you shop. Skimmers are used in bars, gas stations, restaurants and other places when people visit to buy goods and services.
Always, you should not let any gas station attendant or bartender leave with your card. All the transaction should be done in your vicinity because if you cannot see you card; it could be probably be getting skimmed at that moment. Never trust anyone you give your card in these public areas.
If you want to withdraw money from an ATM machine, you need to check around and ensure that there is no device attached to the machine. Sometimes, the skimmers place a camera in a strategic point where it can view the ATM keypad in order to steal your PIN. They may also place a fake keypad fittingly on top of the ATM’s keypad in order to extra the information you enter when using your card.
Because the camera can be so tiny and placed in a hidden location where you cannot notice unless you are very keen, the best thing to do is to always try to cover your hand when you are keying in your PIN numbers on the keypad. If you notice that the keys are hard to push, you would rather stop using the machine immediately and eject your card and look for another ATM machine.
If you become suspicious of your account activity or notice a device that looks like a card skimmer you need to report to the bank as well as your credit card issuer so that actions can be taken to prevent any loss of money. If already there has occurred theft, you should report to your bank and also place a fraud alert in your credit report.
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