Business and Finance

Archive for June, 2010

During these unpredictable times, more investors have started looking for a safe haven for their money. While no place is completely safe these days, savings bonds do offer a great alternative to riskier and more volatile investments.

What are US savings bonds? They are debt obligations of the US government that give a market rate of return that is compounded semi-annually and accrued monthly over the lifetime of the bond. Since these are backed by the credit of the US Treasury and monitored by the Bureau of Public Debt, they are close to being risk-free.

So what are the main advantages of buying savings bonds? There are three main ones:

A) Competitive interest rates and monthly interest accrual -

Since the bonds are offered by the U.S. government, the interest rates are pretty competitive. Depending on the bond, some are adjusted for inflation while others are offered at a discount with a maturity date of 17 years. One other significant advantage is the monthly interest accrual. The bond interest payments accrue monthly and are compounded every six months resulting in a faster growth of your investment.

B) Tax Benefits-

U.S. savings bonds enjoy the deferred and tax exemption benefits. The interest earned on these bonds is exempt from local and state taxes. The federal taxes are deferred and will only be paid on maturity. This is especially useful to investors who are in the higher tax bracket or living in regions of higher local/state taxes. Also, if the bond is used to pay for the educational expenses of the bondholder, the spouse or a dependent then the interest could be exempt from federal taxes.

C) Convenience-

Depending on your financial situation bonds can be purchased for different amounts – $10, $25, $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. Bear in mind that the US government allows individuals to buy up to $15,000 in savings bonds annually.

It couldn’t be any easier to buy savings bonds. They can be bought at any bank using a major credit card or even on the Bureau of Public Debt’s website. If you want to redeem these you can do so at most banks after providing the appropriate identification, even if you are not an account holder.

The bonds can be redeemed after a holding period of six months but you might have to pay penalties if you have held the bonds for less than five years.

Medical debt plagues a large number of Americans on a daily basis. Aside from the fact that the healthcare system and insurance companies need a large overhaul, there are many other reasons that people wind up in medical debt and don’t know what to do. However, no matter how much debt you have or how you got into it, you need to know that you do have options for your debt relief, as long as you’re willing to invest the time and effort to look. Many people think that medical bills can wait, but as you will see below, there are at least five good reasons to get out of this situation today.

1. If left unpaid, your debt can grow due to interest and penalties. You could end up paying 2-3 times more for your debt in a year or two than you owe now.

2. The economy is getting worse, and you might not have settlement options in the future. With so many banks and lenders needing help, it’s not surprising that lending is becoming scarcer. Debt settlement might end up being the same way, so you should take advantage of it while you can.

3. Companies are waiting to help you, and they understand your situation. You won’t be banished from society for asking for help, and the companies aren’t out to get you. Their job is to help you, and that’s exactly what they want to do.

4. So you can get on with your life. Having unpaid debts can cause stress and keep you from realizing your dreams in life. Taking care of those debts will allow you to get your financial security back and be able to chase your dreams.

5. Because you can. Bankruptcy and doing nothing are not options when it comes to unpaid medical expenses. You need to take care of it by being proactive, and solve the problem before it escalates to the point of bankruptcy. You can get rid of debt, so what’s stopping you?

There are many different reasons that you shouldn’t wait any longer to clean up your medical debt. No one can tell you which options are right for you, either. You need to determine that for yourself, and make sure that you find a solution that suits your needs.

If you have a low credit score, you’re probably anxious to bring it up, and fast. The trouble is, it can be hard to get approved for a credit card when you have less than perfect credit. And filling out too many applications can make your score drop even more.

But there is good news. Secured credit cards provide a chance for you to rebuild credit and get back in the game. Here’s how.

Apply for a Card

The first step toward rebuilding credit is to apply for a secured credit card. This type of card is easy to apply for, and almost all applications will be approved. This can be a relief if you’ve had a hard time getting credit.

To find the right secured credit card, you’ll want to start your search online. You’ll find a wide selection to choose from. Since the fees vary from card to card, you’ll want to look carefully through your options. You can also read reviews about them on a number of sites.

Understand how it works

A secured credit card is very similar to a regular, unsecured credit card. You can use it to make purchases at stores or online. You can also use it at restaurants, gas stations, and any other place that regularly accepts credit cards.

The biggest difference, however, with a secured credit card is that you set your own limit. You do so by depositing money into your account. The amount you deposit becomes your new limit. If you use up the money you have deposited, you will not be able to make more purchases until you upload more into your account. This protects you from going over the limit.

Most secured credit cards come with a number of fees, including a charge for signing up and an annual fee. There may be some maintenance fees to pay as well. The price may seem high, but it is important to remember that these cards are open for all types of credit. They are set up to mitigate risk factors.

Pay on Time

If you’ve run into problems making on-time payments in the past, now is your chance to turn that around. With a secured credit card, you should focus on paying on time, every time. This gives others a chance to see that your payment habits are changing.

Many secured cards report to major credit bureaus. This is important because it gives others the opportunity to see how you manage your credit. By making small purchases and paying on time, you are demonstrating that you can handle your finances well.

Move up the Credit Ladder

A secured credit card can be your first step toward better credit because as you manage it well, your score will rise. Over time, you will be able to apply for a different type of credit card. Doing so may give you the chance to get a higher limit, fewer fees, and a better interest rate. And you’ll be able to put your new and improved spending habits into practice. All of this can make your financial future much brighter.

Payday loans, also known as payday advances, paycheck advances, or cash advances, are given to a borrower against their future paycheck(s). Listed below are some of the pros and cons of this type of loan.

The Pros:

- Payday loans allow people to get up to $1500 within 24 hours depending on your country.

- People that have a bad credit history, or even no credit,will most likely be approved for a payday loan as long as they can prove some type of income.

- The only proof that you will need is one that verifies that you are employed and will be able to repay the loan amount.

- For whatever the reason you need this money, a payday loan allows you to get the cash almost instantly.

- Payday loan applications are very simple. All that they require are a few personal details and your banking information.

- The payday loan process is very fast and takes less than 30 minutes, after which the loan amount is deposited into your bank account usually within 24 hours. They can even be applied for by fax, email, or online.

The Cons:

- The biggest disadvantage of payday loans is the very high interest rates. The interest rates are typically in the range of 15 to 30 percent of the amount of the loan for a two-week period, which translates to rates ranging from 390 percent to 780 percent when viewed as an annual percentage rate. The interest rates are so high that it can make borrowers feel like they are losing their next paycheck just to payback the loan.

- Another big disadvantage of payday loans are that they can be made in only small amounts. The maximum limit for payday loans varies from country to country, anywhere from $500 to $1500.

- For people opting for payday loans, it is important to realize that they are accountable for paying back the entire loan amount plus interest, as failing to do so can affect your credit score negatively.

- Fourteen days is normally all that you get to payback the loan. If an extension is needed, you will end up paying a much higher amount than what you originally borrowed.

- Seldom are the payday loan terms and conditions clear to a borrower that is in need to borrow money quickly. You may end up paying charges double or even triple, particularly when you allow your lender to deduct your loan charges directly from your salary.

Hopefully you will never need a payday loan, but if you do, you should check the authenticity of the firm offering the loans. You should also know who offers the best loan terms, so please do your due diligence before taking out one of these loans.

Recently, the Federal Reserve reported that debit card transactions made by Americans has been growing annually at a rate of more than 20 percent. The debit card transactions have even surpassed the number of credit card transactions processed. Debit cards, being quick and easy to use, have their lure when looking through your pocketbook and making a purchase.

Debit cards are becoming more and more appealing to people as a reliable and easy way to pay for things all the way from computer equipment to a night out for pizza. The appeal of this type of card is obvious.

What is it then that we are all missing about such a seemingly simple product? Why is it that we should NEVER EVEN CARRY AROUND OUR DEBIT CARD!

I’ll tell you and also explain why using a debit card can potentially cost you hundreds and even thousands of dollars. PULSE EFT Association reported in 2007 in it’s Debit Issuer Study that US Financial Institutions lost an estimated $662 million to debit card fraud in 2005. And this is back in 2005. How much hype have you heard about it lately in 2008. It doesn’t look as though the problem has exactly gone away.

When carrying around a card that is linked to your bank account, (WHERE YOU STORE ALL OF YOUR MONEY) you are essentially carrying around your entire cash balance in your pocket. Although cash or credit card seems more risky to some, there is absolutely no reason to think this way.

When losing a credit card, your financial liability when it comes to fraudulent charges placed on your card is limited to $50 thanks to the Truth in Lending Act. That means that once the charges are reported and a “chargeback” is initiated with your credit card company, you are, at most, liable for only $50 of the losses no matter how much the charge may have been.

When it comes to losing cash, you are pretty much limited to the cash you have on hand. Although I can’t imagine the recourse through the police system, haha, or local posters for cash losses are substantial, at least you only lost what you were carrying at the time.

Most people don’t realize the potential risks to their financial reputations were the debit cards to be compromised. And a large percentage of people keep their savings account linked to their checking account, think of the extra loot for the identity thiefs… those lucky guys. And you, the perfect mark, walking around unaware and happily whipping out the debit card for purchases.

Although the Truth and Lending Act helps to protect us consumers, debit cards do not fall under their jurisdiction and instead are regulated by another organization altogether. The Electronic Fund Transfer Act governs debit cards.

To keep the same protection and the limit of $50 for liability, a debit card user has to notify the bank within two business days of the charges. Any longer than two days and your financial liability jumps to $500 and then if you wait more than 60 days from the date of loss, you could lose anything and everything that the thief took.

Not everyone checks their account balances every day and can you imagine losing money in such a silly petty way, simply because it was “easier” to use the debit card. The easy way out is not always the smartest one. Especially when it comes to identity protection and debit card theft.

Earthquake home insurance, obviously, isn’t something that everyone needs. For those who do need it, however, it sometimes means the difference between a devastating, but manageable, crisis and a total financial loss. If your house or apartment is ruined in an earthquake, you can count on a lot of difficulties. Like fires, earthquakes can raze a structure to the ground. Unlike fires, there is little you can do to prepare for earthquakes. No matter how hard of a shake our best buildings can take, nature can always provide a shaking that’s just a little more severe.

Earthquake home insurance will even be required by mortgage underwriters in some areas. California mortgage lenders, obviously, may require that homeowners purchase such insurance. In some areas, an earthquake is among the likeliest disasters. While you’re always at risk of losing your home in such an event, you can ensure that you don’t lose your shirt, as well. A good insurance policy can cover a great many expenses, from reconstruction to the purchase of a new home to your expenses while you’re displaced. It can also cover the items within your home, which may almost equal the home itself in value.

Earthquake insurance is only the beginning of what a homeowner needs to have to mitigate their risk, however. Consider what happens after an earthquake. Oftentimes, the aftermath is more devastating than the earthquake itself. There are often fires, buildings that collapse long after the event, destroyed roads, ruined water and sewer systems and a host of other issues. In short, any significant earthquake is guaranteed to be a huge mess, both for the people who live in the affected area and for those who arrive to help clean that area up. This means that you’ll need other types of insurance if you’re to be truly covered.

Earthquake insurance will only cover the damage from the seismic event, according to the specifics of the policy. Expect those specifics to be agonizingly precise, as well. Insurance companies, however, are very experienced with these events and can tell you what additional types of coverage you’ll need to be protected in such an event. This may include fire damage insurance, damage from exposure to the elements and other possible threats. Insurance companies have to be very specific in their coverages, but they offer enough different types that you can get everything you need quite easily.