How to Manage Your Credit Cards

How to Manage Your Credit Cards

We make many financial decisions in life- some are big, some are of lesser importance. Credit card accounts and how they are managed impacts your future more than you may realize. Whether you reply to those offers you receive in the mail or if you succumb to the “instant credit” offered by the sales assistant in your favorite store, there are several things to consider when opening these accounts.

Let’s start with the good news first. There are some positives to having a credit card. To be perfectly honest, in this day and age, a credit card is pretty much a necessity. Many times it is required to have a credit card to make a reservation for a hotel or to book a flight. Having a credit card can also be a lifesaver in an emergency. A prime example of this would be car repairs. Ideally, this is an expense that should come out of savings, however, if the money isn’t in savings, the car still has to be fixed. It’s not an option to wait and save up to pay for the repairs. Also, initially having a reasonable spending limit on a credit account and utilizing this wisely will allow for the establishment of a credit history. Managing credit by paying bills on time every month will help achieve a good credit score.

Another advantage to having a credit card is that are some rewards or points systems attached to certain cards. Points acquired through the use of a particular credit card can be redeemed in exchange for airline tickets, merchandise, or even gift cards. Finally, there are special offers on big ticket items that are only valid when purchased with a specified credit card. There are lots of retailers who advertise zero interest for promotional periods on a specified minimum purchase made with their store’s credit card. These offers may be for 90 days to 24 months. There are even furniture retailers who have offered as much as 48 month interest free as long as the purchase is made with their store card. These are wonderful deals on higher cost things as long as all the payments are made on time and within the specified period set to pay off the debt.

Unfortunately, there is a down side to having a credit card. There are more than a few horror stories and it is worth avoiding the pitfalls that come with managing credit. It has been said, although not nearly enough, that when we have to reach in our pockets for cash, we tend to think a little harder about whether or not we really need to spend that money. With plastic it is easy to overspend without thinking because not being able to afford something is not usually considered. The second thing to note is the interest charged with a revolving credit account. When this is factored into the cost of the items purchased with credit, the items easily double or even triple in cost from their original price tags.

Overuse of credit cards can quickly create a situation where more is owed in monthly bills than is being earned as income. It creates a worrisome debt-to-income ratio which can cause most reputable creditors to shy away from approving additional credit. This excess of monthly obligations can begin to affect one’s ability to pay things like utility bills on time which in turn negatively impacts the credit score. In addition, this lower credit score resulting from late payments or nonpayment can affect employability. Many employers as well as landlords now conduct a credit check along with a criminal background check prior to hiring or renting to an individual. These days bad credit can literally prevent you from getting a job or an apartment. Also, the lower the credit score, the higher the interest rate charged for new loans or credit accounts. Chronic misuse of credit cards can lead to years of trying to get out from under the yoke of debt or even ultimately, to bankruptcy. Having to go into bankruptcy may alleviate some of the burden or at least make it more manageable, but it will destroy a person’s credit for about seven years. No one likes having to go back to square one.

It seems harsh to describe credit cards as a necessary evil. They are more like a necessary temptation in our fast paced lives. Credit cards, managed properly, can help build a high credit score which leads to the opportunity for home ownership and being able to replace vehicles when the time comes. This is a good thing considering that most people have to finance such large purchases. Credit accounts that are mismanaged and overused create enormous hardship to those card holders. The resulting low credit scores and high debt-to-income ratio, can make personal finances a nightmare.

Business Finance and Credit

Business Finance and Credit

Rule #1 of a Business Line of Credit – Banks Finance Performance Not Vision:

As a business owner, you have probably felt the wrath of your bank’s credit policies and are still wondering what happened; or worse, still have a relationship with them on their terms! What you probably did not realize is that it has always been a one sided, unrequited relationship. The majority of business owners have little or no idea how bank credit works and how it can affect their operations. Unfortunately, business owner will constantly return to their banks repeatedly expecting a different outcome (definition of insanity).

Have you ever been declined for a business loan that you needed to increase or improve revenue? The cardinal sin of the majority of business owners is that they use a completely different matrix for finance than their banks. This is because the majority of business owners make two erroneous assumptions:

  1. A short term liability like a business loan is exactly like cash on a balance sheet
  2. Internal growth rate is a function of debt service

First, I will address number one. Have you ever heard of a company that “grew into bankruptcy”? Sounds counterintuitive but this is how it happens; Although an operating line looks and smells like cash to a small business owner because they can purchase inventory, make payroll, expand their business, etc; it is a liability! The bank knows this, which is why the finance performance not vision. They cannot accurately measure your financial condition without determining the ability to cash flow the debt you as a business owner are requesting from the bank. Business owners generally dismiss this because they treat liabilities like cash but neglect to acknowledge the drag they are creating on their business.

This leads to number two. Internal growth rate is the retained earnings of a business that also projects the ability to handle debt. This is what banks look for. If your projected growth is beyond the internal growth rate your company can handle, by definition you need external financing. What if you have a potential for explosive growth as the result of an improving economy? Refer to rule number 1! For a lack of a way to put it, banks do not care. They are more concerned about debt service and collateral and vision provides neither.

To be fair to banks, it is extraordinarily difficult to quantify their client’s operational capacities without underwriting performance. Performance is the matrix for banks because performance signals several things:

  1. Barrier to entry has been met
  2. Equity is more than likely build into the success of the business
  3. There it probably more collateral
  4. The businesses systems and operations are prove
  5. Core competencies are well defined

Therefore, a bank can peruse through the financial condition of the prospective business and determine their ability to debt service the short-term liability they are providing with depositors cash deposits who are expecting a guaranteed return on the money. The truth is, the cost of money from banks is very inexpensive however, it is many more time more difficult to fit within their credit box, which is why vision is not financed.

There are options but you need to be prepared to divorce your bank and find other financial products. Here are some very solid suggestions:

  1. Factor your receivables – It costs more but it is boundless. As fast as you can turn your A/R is as fast as you can have cash in hand to cease all the opportunity in your market. Even if you qualify for a business line of credit, that may not be enough to finance your growth and if you commit to this, refer to rule number 1. Always treat this as a method to find a new plateau for your business and once you have capitalized on the increase market share and growth rate is between 2-5% return to the bank.
  2. Finance your building with a non-bank SBA Lender – Non-bank SBA lenders are transactional lenders. They will generally subordinate soft assets like A/R and Inventory, which will allow the business owner to fully utilize all credit instruments to their maximum potential.

Finance Definitions: Market Liquidity

Finance Definitions: Market Liquidity

Market Liquidity refers to an investment’s capability to be transferred instantly to cash without diminishing its current value. Cash or money is the supreme example of a liquid asset. Determining a liquid asset is quite easy, as long as it can be exchange quickly with little or no change in value. One other factor is the presence of buyers and sellers at any given time. If the there are a large amount of buyers and trader, then an asset is considered very liquid. When this happens, the effects of the transactions will most likely have definite impact on the overall market prices.

On the other hand, an asset that cannot be exchange quickly and may have difficulty in marking its value is called an illiquid asset. A product’s liquidity can be calculated by how much it is traded by buyers and sellers, and the result of this is volume. Investments such as stocks and futures are liquid compared to other assets such as property and real estate. Speculators and investors usually cause market liquidity. They profit from the stock market by anticipating the current prices of each asset. The effect of their trading and transactions provide a continuous flow of money and capital to promote liquidity.

As we move along to the futures market, there is no definite guarantee that a market’s liquidity will occur to make up for the commodity contract at any time. Future trading is known as a very liquid trading environment. The most common factors to check for liquidity are the volume of trading and open interest.

Liquidity in banking has a broader term. In this sector, it is known as the facility to reach financial objectives without suffering any undesirable losses. Bankers who manage liquidity keep an eye on trends and cash flows to make sure that proper amount of liquidity is sustained. It is important to maintain stability on short-term assets and liabilities. Primary funding in banks is mostly sourced thru deposit accounts, while primary assets are from the loan portfolio. The main source of liquidity comes from the investment portfolio. Investment assets and securities have the ability to be liquidated to complement bank withdrawals and growing loans. By selling loans, borrowing from other financial institutions and raising capital, these factors all contribute to generate liquidity. In times of financial difficulties, the depositors can ask for their finances if the bank is incapable of generating cash without getting more money losses.

Financial institutions such as banks can usually maintain a certain level of liquidity required, and this is because the government insures bank deposits. If liquidity issues do arise, rates can be raised to ensure that it goes back to normal. Take note that banks attract more money thus providing more liquidity that influences all the movement of money in the world.

Market Liquidity is such an important factor in finance. It plays a part in transferring various stocks to their respective values, and vice versa. So, be safe all the time. Invest in investment assets with fast liquidity.

Online Loans Instant Approval

Online Loans Instant Approval

We can not predict what is going to happen in the next minute and we make plans for the whole future. Adversities are a part and parcel of our daily lives, be it monetary or any other. In case you are also facing this issue and you are from the salary class then you can opt for online loans instant approval. With the help of this fiscal service, the borrower can get hold tiny funds with quick sanction. To enjoy these benefits, you need to earn a fixed month-end income that is at least £1000, need to possess an active bank account, which is at least 3 months old and should be of or above 18 years of age.

Here, you can gather cash advance that falls in the range of £80 to £1500 and comes to you according to your settlement stability and financial condition. One has to settle the borrowed sum in the suitable repayment time span of 1 to 30 days. The borrower can put a full stop in his short-term needs until he gets his next month’s income. One can pay the installments of the credit card, can make small changes in the home decor, can pay the household and utility bills, can pay the kid’s school and tuition fees, can pay meet the expenses of medical emergencies and so on.

As far as online loans instant approval is concerned, there is no need for you to get into any kind of filling and faxing of papers. The money lenders have a flexible approach as far as any kind of documentation is concerned. The borrower should consider his needs and capacity as the rate of interest of this service is considerably quite high.

You can easily apply with a free of cost and no obligation online application form that would be given on the website of the money lenders. From the comfort of your home or office, fill it with your authentic personal details. After the process of verification, you would get a quick approval. In as less as 24 hours, the sanctioned amount would get transferred into your bank account.

There is no process of credit check, thus, there is no requirement from your side to give any credit confirmation. Blemished credit scores such as IVA, arrears, late payment, CCJs, missed payment, payment overdue, insolvency, bankruptcy, foreclosures and so on would not be given any importance.

Instant Loans for Bad Credit

Instant Loans for Bad Credit

Having a bad credit history does not make you very different form other borrowers. It is just that due to a past mistake of late repayment or bankruptcy you are tagged as a poor credit holder. You can change your future by consolidating your debts. Urgent expenses crop up in everybody life. Apply for instant loans for bad credit are your first step towards improving your credit history.

These are readily available to all kinds of customers. Firstly you can consolidate all your petty debts, pay off all the pending expenses like medical bills, telephone bills, electricity charges, for home improvement and so on with instant loans.

The repayment period can also be extended with loans for bad credit. The company manager will charge you a supplementary fee each time you broaden the settlement period.

This finance does not involve any credit checks as they are granted for a short tenure and they are meant for defective title holders. You have to prove your repaying ability and assure the lender that you are credit worthy. This indeed will lessen the lenders risk.

You have to fill an application form. The information must be true. The lender will verify your details. Once your application is approved the funds will be transferred to your account within few working hours.

You get instant loans for bad credit within few hours as they do not involve long procedures. You can use the funds to change your credit history by repaying the loan amount within the required time.

Instant loans for Bad credit are readily available to serve your fiscal problems. You can now change your credit rating and consolidate your debts. Access the internet to find out the interest rates charged by different lenders. These finance offer quick and hassle free approval to perk up your credit rating.

Refinance Your Mortgage and Save Money

Refinance Your Mortgage and Save Money

With all the hubbub about the mortgage industry right now, you may be feeling you should stay away from mortgage lenders. But at least one positive thing has come out from all economy troubles…low interest rates. Rates are at record lows right now, making it a great time to refinance your mortgage.

If you currently have a mortgage, check to see what your rate is. The rule of thumb is that if you can lower your interest rate by a point or more, you should refinance. For example, our currently mortgage interest rate is 6.875% and we have the opportunity to refinance at 5.5%. This change will save us over $120 on our monthly payment, not to mention thousands of dollars in interest payments…definitely worth it.

A great resource for determining the saves is Bankrate.com. They have tons of financial calculators including a refinancing one. The site also provides national interest rate averages and will even give you suggestions on mortgage lenders in your area.

For the ease of refinancing, you may be better off contacting your current lender to see what rates they are offering. Also check other institutions in your area for a comparison. Most lenders will post their current rates on their websites. This is an easy way to research rates in your area. Also, look for a large capacity lender. Smaller banks make money off of selling their mortgages to larger banks. If you start out at a large bank, you may be able to get a lower rate.

Still be weary of the “too good to be true” lender. Go with a lender that is reputable…do your research. Do not sign any papers until you feel entirely comfortable with your lender and the terms of the loan.

Also, when calculating your savings, be sure to include closing costs. Closing costs often vary due to the amount being borrowed, but figuring about $2000 is a good average. Often these fees can be rolled into your refinance, but you will still need to pay at least the appraisal fee upfront.

Not only can you save money, you can also save years of payment. Be sure to ask about shorter term mortgages that may not save you money on your monthly payment, but will surely save you thousands in interest payments by paying off your home in less time. Consider reducing from a 30 year to a 20 or even 15 year. If you have a 20 or 15 year, look at a 10 year or the rare 7 year. You will save big time that way. If you have ever paid attention to the amortization schedule, you will see the huge chunk of your monthly payment goes towards interest. This is a great way to pay less to your lender…more money in your pocket.

Depending on the type of loan you currently have, you may qualify for a streamline refinance which can save you time and money on closing costs. Ask your lender if you qualify for that program.

Now is the time to refinance. Get online and start your research, then call you lender to begin saving. It may seem intimidating, but you will be glad that you did…I know I am!