Hond Financial

Posts Tagged ‘interest rates’

Consumers and laziness

Many consumers today are looking for debt relief. Without knowing it, however, they have the solutions to many of their problems right in front of them. Due to the recession, now is not the time to be lazy about change or being proactive. Here are some things that need to be addressed because if they aren’t, the will cost dearly in the long run.

Optimizing savings rates

Many people are not proactive with where they put their money. It’s convenient to put all your funds in one bank and leave it, though there are higher interest accounts available. Justin Prichard, bank expert at About.com, stated, “The best annual percentage rate consumers will get at traditional banks is about 0.75 percent APY. Internet banks can easily offer up to 2.25 percent.”

Though it seems like a small difference, over time it adds up. For example, on a $ 100,000 account, compounded monthly for five years, the 2.25 percent interest earns about $ 8,000 more than 0.75 percent rate. Prichard added: “People are creatures of habit. If their money is somewhere, and they’re busy doing other things, they don’t necessarily try to do better. But if people have a decent chunk of change, it’s worth it.”

Having an IRA set up

Despite their perks, many people are putting off starting their IRAs. If a 40-year-old opens an IRA and saves $ 5,000 annually at 6 percent, that person will have about $ 291,000 by the age of 65. Whereas, if a person had started an account at age 25, with the same deposit and interest rates, the account would have $ 821,000.

The benefits of an IRA make it hard to believe that every consumer isn’t proactively using the tool as a way to save money. It’s tax-free money and matched by many employers. People should start taking advantage of these as early as they possibly can. Time is the key to compound interest.

Take advantage of department stores’ rebates

A great way to find extra money is to take advantage of department stores’ rebates. A lot of customers are lax when it comes to cutting off the barcode, filling out the application and sending it in. Rebates, however, can save customers up to 10 percent of their big-ticket purchase. When the items in question are things like dishwashers, refrigerators or computers, the savings are substantial. The method to finding debt relief is small ways of cutting back over time. Rebates are a great way to find extra money.

0 percent financing deadlines

Consumers also don’t normally pay attention to when their great 0 percent financing deal ends. A lot of stores are offering 0 percent for a defined time period. Consumers want to take advantage, but they need to bear in mind that they need to pay it off before interest charges start.

For instance, P.C.Richard and Sons sell TVs for $ 3,200, at 0 percent interest for 18 months. After the 18-month period, the interest rate is 22 percent. Say a consumer pays $ 3,100 prior to the 18-month period and has a remaining balance of $ 100. If a person waits even a DAY after the offer expires, that person now owes $ 800. The first $ 100 was the outstanding balance, but they owe interest of $ 700 for the entire $ 3,200.

Savings are available

In the end, savings are available but consumers have to be actively involved in their management. It may seem like a lot to remember deadlines and rules, but if one action brings savings to apply toward debt relief, then it’s worth it.

Low interest rates mean low rates of return

The financial collapse that began in 2008 stimulated Americans to begin saving more, with national saving rates going up significantly over the last year. That said, the increase in savings was concurrent with a drastic drop in interest rates, meaning that interest bearing savings instruments now earn minimal returns. Low rates of interest return from traditional savings have led people to wonder what they should do with savings to get a better return and strategies for savings they should undertake.

Forget about the rate

Basically all of the primary savings instruments – bank savings accounts, certificates of deposit, money market funds, and so on – are offering minimum interest rates for the time being, making any choice about as good as the other. Instead of focusing on current interest rates, consider the safety of your savings first and foremost. Specifically, deposit your savings into an FDIC insured account, regardless of current interest rates. Therefore, you won’t lose anything beyond devaluation from inflation.

Interest rates are likely to increase

Despite the effect it may have on efforts to mitigate the recession, the fact of the matter is that the Federal Reserve is going to have to increase interest rates at some point to offset the decline of the dollar and to encourage increased foreign investment. With much of the rest of the world already going into active recovery, new investment opportunities are wooing away foreign investors from the United States. In order to keep competitive and balance out effects of declining dollar values, the Federal Reserve will have little choice in the matter.

What an interest rate hike will mean

For people in debt, an increase in the interest rate will have a detrimental effect as the interest levied on the debt will also go up; however, for savers the current low rates of return should also rise. As interest rates increase, it would be prudent to look around for the best deals available. For the time being, you should avoid putting your savings in any sort of account that limits your immediate access to it. If the interest rate goes up over the next few months, then there will be much better opportunities than anything available now.

The continuing credit crunch

Although the worst effects of the credit crunch seem to be over, the banks are still wary of lending to anyone without a good credit score and sound financial situation. This mean not only that are many banks are being cautious about lending to private customers, but that they are also being careful about lending to each other. Eventually a lot of banks, including local banks with a lot of commercial real estate holdings, will be hard pressed to attract cash investors. Looking to put savings into these banks might be worth the effort.

Basic advice for right now

Right now you are not likely to find any secure savings options that are paying decent interest, but this is bound to change in the foreseeable future. Therefore, the best idea is to keep your savings liquid and do not lock them into anything. Once interest rates go up, many more opportunities will present themselves and at that point it would be worth the effort to shop around for the best rates you can find. Further, since rates are bound to go up, if you have much variable debt, perhaps you should consider using your savings to pay it off before interest rates go up.

The main stock markets from around the world have had quite a good start to the year. I am finding it hard to see why the markets are performing so well as I believe that the Western world is still in a major financial mess. I have been asked on many occasions over the last couple of weeks whether these stock markets will continue the good run for the rest of the year.

I am actually loving the fact that these stock markets are doing so well. I am a keen investor, or gambler as many of friends see it.

I should mention however at this stage that I am not a financial adviser and that I am merely a novice investor who is hoping that the “gamble” will pay off. You should therefore not take what you read in this article as financial advice. I actually work on various projects including offering a DVD duplication service, offering stuttering therapy and also assisting a cost reduction specialist.

Investors are hoping to see some green sheets of recovery and are eager to enter the market at the right time; or at “the bottom” as they call it. I have to say that I have not seen any green shoots thus far!

Over the last few months we have seen some dramatic gains on more of a hope that the recovery has started. So just how will the markets react when it sees some “real evidence” that the credit crunch is starting to ease? Well they should, in my humble opinion, have a major rally. With interest rates at historical lows people are seeking an investment which offers a much greater return than the measly three percent offered on the high street.

I personally believe that there are going to be some rocky roads ahead but that the bottom of the market may have been reached.

What is an unsecured loan?

Borrowing money without providing the lender a security (such as a property or vehicle).

What is a secured loan?

The lender secures the loan against an asset such as a property or vehicle. If you fall behind with the loan payments, the lender can take possession of that asset.

TRUE OR FALSE: Secured loans are safer than an unsecured loan.

FALSE: Borrowers assume that secured loans are safer than unsecured loans. However, secured means safer for the lender, not the borrower. Therefore your asset such as your home or vehicle is at risk if you fail to make the regular repayments of the loan.

TRUE OR FALSE: Unsecured loans have no risks.

FALSE: If you own your home, but fail to make regular payments on the unsecured loan, your lender may be able to secure a charge order against the property. This means when your property is sold, the debt will have to be paid from the proceeds of the property sale.
If a charging order is successful, the lender may also apply for an Order for Sale. If this is granted as well, then the process is almost the same as if you had obtained a secured loan against your property, which means the forced house sale can result to settle the outstanding debt.

TRUE OR FALSE: You pay more interest for longer term loans.

TRUE: Spreading payments over 10 years versus 5 years, the regular payments will be smaller, but you will end up paying more in the long run due to the additional years involved.

Things you should find out before taking out a loan:

Paying off a loan quicker will save money in the long run, make sure the loan can be paid off early without incurring any early redemption charges.

Understanding the interest rates tiered banding rates could save you money since tiered rates are more competitive as the amount you borrow crosses over different bands .e.g. 9999.99 versus 10000.01.

Taking short holiday’s from your repayments is normally a false economy as you tend to still be incurring interest on the debt, therefore, you either have to pay more or over a longer period of time.

Alan Parker provides Financial advice to help people with their debt and wealth management solutions.

To learn more about loan and debt management, Loan options post credit crunch, visit my web site now. Read about what options are available to you if you need to borrow money to pay for a home renovation project, wedding, education, purchase a new car, and so on.

For many folks who are trapped in an adjustable rate mortgage or have fallen behind on their mortgage, finding the right mortgage modification program may help with getting caught up on delinquent payments, or in extreme cases halt a foreclosure.  The process of getting a home loan modification is starting to become more and more well-liked as there’s more publicity surrounding them.  They have got a great result on many lives ; as families that are not able to make their home loan payments are afforded the chance to stay in their home.  This has made a major difference as many families are staying in their houses. 

In the hardest hit states,eg California, loan alteration provides the property owner with the opportunity to improve their cash flow in a number of different ways.  One of the primary strategies a California loan modification can help is by bringing down home loan payments.  This kind of loan modification is accomplished thru a fall in the rate of interest being charged, or a lowering of the principle amount to reflect the present valuation of the property, or by extending the term of the loan.  These systems are often utilized in combination, so that by lowering the IR and spreading the loan out over a further 10 years, the monthly out-of-pocket cost for the borrower decreases noticeably. 

For real estate owners at risk of losing their property to foreclosure, an AHMSI loan modification can often work to save the home.  This servicing company is very responsive to loan modifications.  AHMSI doesn’t originate loans, but they package it with other loans and act as the service company on the loan.  Under this arrangement, the goal is to reduce rates using what is known as a step modification.  An AHMSI loan modification will often establish a new interest rate for the initial year, then a slightly higher rate for the second year and by the 4th or 5th year, will cap it for the life of the loan.  This works out to be a much better deal than what the borrower previously had. 

For property owners, the supply of a loan modification might be the help they need to weather the hurricane.  The time has never been better, IRs have never been lower, and lenders haven’t ever been in a more accommodating mind-set than they’re now.

—————–

You might have success locating related resources in EzineArticles or in Cuil.

Credit card issuers have large amounts of control over us, and it seriously is ludicrous. They have the power to drastically jack up our interest rates, lower our credit limits, and even share personal information about us.

Credit card agreements are extremely lop sided and only benefit one side, the credit card organization. A lot of Americans are under the false awareness that these are legal documents they are signing, but that’s not the case at all. They are agreements, which means that a lot of things can change whenever they want and a lot of times due to outside factors other than your payment performance with any one particular account. I’ll go over that point more in detail later on.  

The truth that these cards will never stop revolving because of the “generous” offer of merely paying back minimum payments, consumers end up paying back so much cash in interest that it in reality isn’t worth it. Minimum payment pyramids are devised to keep a consumer paying off their credit card bills for what they would prefer to be the rest of the debtors life.  

When it comes to what is expected of us versus what’s expected of them, it is not equal whatsoever when looking at the terms written in a lot of agreements. If we misstep or mess up in the slightest bit from the “agreement,” the situation can quickly take a turn down the wrong road. It’s greatly known that if you are past due or even miss a single payment, penalty fees will apply and your APR will most certainly rise. But by how much and for how long? Various credit card companies have various fees so it is important to know the exact changes that will occur if you default at all. More than that, by signing these documents many of our everyday consumer-rights are thrown out the window.

When it comes to a dispute, all credit card agreements have fine print regarding what they will do to us versus what we can do to them. They own the legal right to seek judgment against any person owing them money in a court of law, yet the consumer doesn’t have that same law on their side. Any quarrel a consumer might have with a credit card company will be taken care of outside of the courtroom in adjudication, something that is by now understood by the consumer when they signed the fine print and something that again is a disadvantage to the debtor. Comprehending this material in detail will more than likely discourage any weary consumer from agreeing to most credit card agreements out there. It’s about knowing and grasping the ramifications of the “small print.”

Being in the debt relief market myself, I have been dealing with a lot of situations in which a consumer wasn’t conscious of the malevolence of agreements they put their name on. To begin with, most debtors aren’t made alert of what their interest rate could rise to. Most credit card solicitations have an introductory interest rate that will go up farther down the road, normally specified by time. This comes as a surprise to many debtors when it occurs. On top of that, the default rates are usually ridiculous to begin with, and even that is subject to change as long as the credit card issuer bumps it across the board for all their cardholders. That’s something that is not always specified as to how much of a change will occur, just the truth that they reserve the legality to do so. That’s just not ethical; a consumer can’t contact the credit card organization and tell them they would like to pay back the money at a reduced interest rate as an already accepted term.

One thing you need to understand is, there is a little known clause mentioned in many credit card agreements that is referred to as “universal default.” This clause grants the credit card company the right to bump up your interest rate or cut your credit limit down due to outside influences. This is what I was referring to earlier in the article.

Universal default clauses most of the time grant the credit card companies the right to manipulate the terms of one account based on the payment history of another account. You may go late on a payment on a utility, car, or another credit card bill. That can change one or all of your credit card account agreements. Another factor is the amount of credit available versus the size of the balance. If you own one card that has a large balance or has even had the credit line reduced for whatever reason, other companies can figure this out and do the same. They have even been known to bump up your interest rates, if they find you to be a high-risk based on the standing of other bills you maintain.

The simple truth that many credit card providers swap this info with each other is the most intrusive aspect. They can extent many numbers about the status of your credit card accounts. That info normally dosen’t benefit any of us consumers, it’s typically used against us. Yet, it’s supposedly okay because it’s written out in “their” credit card agreements.

Not having the awareness of this information is a major issue for the catastrophic predicament that many Americans locate themselves in. Credit card debt settlement is not an simple task to get done once the debts spiral out of control. Being up to date as to what the terms of any credit card agreement are can vastly improve your odds of you to get out of debt and preventing a financial mess.

The Bank of England influences interest rates through issuing bank notes at a particular rate of return; the current rate set by the Bank is 5% and is reviewable each month. When this rate is increased, investors withdraw their money from the financial system as a result of wishing to take advantage of the opportunity of increased returns this offers. However, when the rate is lowered, money can be seen to be retained within the system since individuals look to borrow money at lower rates or to invest their money in other investments that will heighten their return.

The Bank of England would arguably be one of the safest institutions to store wealth and , should this be the case, the risk to ones investment would be insignificant. From this, individuals are able to project and establish a reasonable rate of return for other sorts of investment.

At the present, a UK bank may offer a rate of between 6-7.5% for deposit with a term of between one and three years. This reflects the slightly increased risk of an ordinary bank as opposed to the bastion of security that is the Bank of England.

On the other hand, an individual may opt into stock market investment. The ferocious surge of the bull market which existed until the end of 2007 saw the stock market allow investors gigantic returns depending on their investment timing, but generally provided about 14% p.a. return over the long term.

Naturally, this sort of investment can bear witness to disastrous consequences, of which the past twelve months can bear testimony to. The most recent occurrences affecting the stock market serve as a useful reminder of the risk/reward principle of investment. Even though the return on stock investment may, on occasion, be seen to be markedly high, the risk involved is far higher than that of the ownership of a bank note having been issued by the Bank of England.

Another option open to investors is the investing in business and commerce. This typically represents a far riskier enterprise than investing in the stock market, and as such demands a return to mirror this risk. Additionally, investments within SIPPs are becoming increasingly popular as an option wide open to investors. Depending on numerous factors, often out of an operators control, the return on investment in business as a rule of thumb ought to be commensurate with the subject matter involved, but generally is not worth the risk of investing in small business unless a return of at least 30% is reflected in either market research or the financial statements of an existing business.

For larger macro commercial ventures, risk capital still demands a similar rate of return. However, the topic matter of the exercise is important to consider since the investment in, for example, a larger transport company with a contractual guaranteed income represents better investment security than that of a small outlet in an existing saturated market.

The ownership of land, as an investment, has historically proven to be valuable to investors, particularly since the further concentration of residential areas and the population of the UK continues to increase. The demand for housing within urban areas remains consistent and can be seen to be steadily increasing. Commonly, returns within investments made in property suggest a long-term return of approximately 10%, though it is worth noting that, much like the stock market, the housing market regularly experiences peaks and troughs.

Whilst in certain periods these numerous investment markets may display specific sympathy for one another in their interaction, they may also be seen to be in conflict with each other in the instance of money being transferred from one market to another. This flight to quality (or lack thereof) is typical of a global market place whose destiny lies in the collective hands of millions and millions of people. SIPP advice or more information about self invested personal pensions can be found at sipps.org.uk.

Home equity loan is the loan taken against your property, and can be fixed rate home equity loan, or HELOC, but in both the cases, the term of home equity loan is usually fixed at 10 or 20 years. Home equity is the difference between price that you could sell at your home at, and the mortgage value of your home.

When to Take Fixed Rate Home Equity Loan

There are several circumstances under which home owners take the fixed rate home equity loan. Homeowner could take the fixed rate home equity loan to consolidate the debt, usually the ones with higher rate such as high interest credit cards. Homeowners also take the fixed rate home equity loan and invest them in property. Another reason for taking the fixed rate home equity loan is to use a second mortgage in addition to first on home refinance or purchase.

Advantage of taking a fixed rate home equity loan is that the interest is usually lower than that of the other loan being paid off, and interest on the debt you pay off is tax deductible. Another benefit of taking the fixed rate home equity loan is that sometimes, it is an interest only loan, so that you make lower payment each month as you are only paying off the interest. The amount you can borrow depends on the equity value you have in your home and policies of the lender.

Before taking the fixed rate home equity loan, read the fine print, and always understand all the terms and conditions. Understand about the prepayment penalties, and be aware of the maximum interest rate you can pay. Lenders providing such loans often get the fee at closing or when the loan is paid off early.

There are few sites that can help you understand the truth about loans, ethical practices and borrower’s bill of rights. These sites make your search straightforward, and there are many tools that can help you make the informed choice when looking for the fixed rate home equity loan. Characteristics of fixed rate home equity loan vary depending upon the fees, interest rates, loan amount, repayment conditions and points. Compare different lenders to find out the loan that suits you best. You can also take help of home equity loan comparison chart to make the comparison.

There are certain risks associated with fixed rate home equity loans. If you are not able to refinance or repay your loan, then you might lose your home. If you miss the payment or make the late payment, it can trigger the foreclosure within three months.

The main stock markets from around the world have had quite a good start to the year. I have to say that this, in my opinion, is quite a surprise as the overall economy is still in dire straits – it was only a couple of months ago that General Motors went into administration for example. I am asked on a regular basis whether I think that the stock markets will continue to rise in the second half of 2009.

I am actually loving the fact that these stock markets are doing so well. I love to invest on the markets, or gamble as my family like to call it.

I should mention however at this stage that I am not a financial adviser and that I am merely a novice investor who is hoping that the “gamble” will pay off. You should therefore not take what you read in this article as financial advice. I actually work on various projects including offering a DVD duplication service, offering stuttering therapy and also assisting a business cost reduction specialist.

Investors are hoping to see some green sheets of recovery and are eager to enter the market at the right time; or at “the bottom” as they call it. I am not sure about you but I certainly have not seen any green shoots so far!

Over the last few months we have seen some dramatic gains on more of a hope that the recovery has started. So just how will the markets react when it sees some “real evidence” that the credit crunch is starting to ease? Well they should, in my humble opinion, have a major rally. With interest rates at historical lows people are seeking an investment which offers a much greater return than the measly three percent offered on the high street.

I personally believe that there are going to be some rocky roads ahead but that the bottom of the market may have been reached.

The average American household has nearly $10,000 in credit card debt, and many people are only able to make the minimum payment of 2% of the balance. Even 2% is $200, and by paying the minimum payment, you could be paying on the balance for decades before you finally pay it off. Since new legislation will make it more difficult to file for bankruptcy, it may occur to savvy debtors to try to negotiate a good proposal with their credit card company in order to make it easier to pay off the balance. Is it possible?

It might be possible depending on your current balance,credit history and interest rate. Your best bet, especially if you have a history of paying on time, is to simply call your credit card company and ask if they will lower your interest rate. Your company might lower your interest rate if you tell them that you got a better proposal from another bank. If you pay your debt late, then probably your company will not be willing to lower your interest rate. That’s unfortunate, since paying late has probably prompted the credit card company to raise your interest rate in the first place. Still, it’s worth a phone call; you may get lucky.

You can get rid of your credit card debt by asking the credit card company for a lower interest rate. The credit card companies are not going to be too concerned to your financial woes if they’re receiving payment on time. On the other hand, if you’re late on your payments, especially if you’re more than three months behind, you may have some negotiating leverage. That leverage comes with a few strings attached, however. You may be able to bargain a lump-sum settlement for your outstanding balance, where the credit card company accepts a portion of your debt and writes off the rest. Credit card companies are often willing to lower your interest rate as it is much cheaper just to settle instead of turning your debt over to a collection agency. The settlement amount will vary, depending on your interest rate, your balance and your payment history. This type of agreement comes with a couple of problems of its own, though. What if you can not pay the settlement amount at once? If you can’t pay your bills on time, then how will you pay the lumpsum settlement cash at once. Additionally, the amount of your debt that gets written off will show up on your credit report as bad debt, and that will stay there for seven years.

Your credit card company may or may not be ready to work out a settlement plan, but it costs you nothing to ask them, and negotiating a settlement with them may be cheaper for you than if you consult with a debt consolidation firm. If your credit card debt is big and you just can not make the payments, it is worth a try.