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Top 5 risks we take with credit cards

November 23rd, 2010

Here are a few other dangerous things you might be tempted to do with a credit card:

1. Give it to your kid

The inherent danger involved with giving your offspring a credit card is nothing new to parents. But the Credit CARD Act has created some new situations to think about.

The law prohibits card issuers from giving credit cards to anyone under 21 unless that individual has proof of enough income to pay off debt. As a result, some parents are co-signing on cards for their under-21 kids or adding their kids as authorized users on their own credit cards.

A young person with Mom’s or Dad’s GE Money credit card can be dangerous unless you have a plan. Make it clear that your kid needs your permission to make a purchase with the card. Stress that the card is an alternative to carrying cash — not a way to get something that there isn’t money to pay for.

Make sure you monitor credit card purchases, just in case that plan isn’t being followed.

2. Give it to an employee or contractor

One of the most-famous examples of this situation involves Kim Kardashian. She was hired as a “consultant” for R&B singer Brandy Norwood. Kardashian claimed that Norwood’s mom gave her a credit card to make purchases and allegedly went on a shopping spree with her client’s credit card. The damage? $120,635.82.

If you run a business and you need to give a credit card to an employee or contractor, choose a card that allows you to set spending limits. Another option on the horizon is MasterCard’s inControl, which lets you set a limit on your card. When a cardholder reaches the limit, the card is rejected. But the best step is to monitor your credit card statements and know what your balances are.

3. Use it on a website that’s not encrypted

You must make sure you’re on a secure, encrypted website before you key in your credit card number. Secure websites have encryption software designed to prevent identity theft.

When you’re on a secure website, you’ll see a lock icon in your browser’s address bar and “https” in the URL. Note the “s” at the end of “http.”

4. Spend all the way up to your limit

There are a couple of issues here, with piling up debt being the obvious problem. But maxing out your cards also has the potential to damage your credit scores. Scores are partly tied to credit-utilization ratios — card balances compared with available credit. Max out your cards, and your utilization ratio goes up. This scenario usually results in credit scores going down.

There are also “intangibles” to think about. If you suddenly use up your credit limit, your card issuer could take this as a signal that you’re in dire straits. An alarmed issuer might raise your interest rate. (Note that issuers can still raise your interest rate after the first year if they give you 45 days’ notice.) And what if you suddenly need a new dishwasher? You should, of course, have an emergency fund for such unexpected expenses. But in these uncertain economic times, that’s not always possible.

5. Dispose of it improperly

If you decide you no longer want to keep a particular card, you need to do three things:

  • First, make sure the balance is paid off before you close the account.

Second, call customer service and confirm that your balance is zero. If it’s zero, go ahead and inform the service rep that you’re closing the account. The amount of hoop jumping at this point depends on the card issuer. But stick with it until you’re sure you’ve closed the account. It’s also a good idea to send a letter to the issuer stating that you’ve closed the account and to include details from the call.

Third, cut up your card. There’s actually a correct way to do this. You need to disable the magnetic strip with a strong magnet or by scoring the strip with scissors. Then shred the card or cut it into pieces. If this is a bad “breakup” with your issuer, you might even find the process a little cathartic.

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What is Bridge Loan?

October 13th, 2010

Bridge loan is an effective vehicle which is used until the permanent financing is put in place. It is a financing secured by a borrowers current home and is used to finance the purchase of a second home. It is also known as swing loan, gap loan, or bridge financing.

Features of Bridge loan:

  • Short term loan – It is a short term loan, usually up to one year.
  • High interest rates – It offers higher interest rates.
  • Gap bridging – It bridges two different types of cash gaps.
  • Expensive – It is expensive since it is intended for a very short period.
  • Equity usage – Here a borrower uses equity on his current home for securing finance for his second home.

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Mortgage applications rise on lower interest rates

October 13th, 2010
For the first time in six weeks, the number of people applying for mortgages is up, pushed higher by record low interest rates.
The refinance share of mortgage activity increased to 83.1 percent of total applications from 78.9 percent the previous week and is the highest refinance share since January 2009.

The average interest rate for 30-year, fixed-rate mortgages decreased to 4.21 percent from 4.25 percent, the lowest on record.

The average interest rate for 15-year, fixed-rate mortgages decreased to 3.62 percent from 3.73 percent, also the lowest on record.

The average interest rate for one-year, adjustable-rate mortgages decreased to 7.03 percent from 7.11 percent.

What kind of an impact the moratorium many lending institutions are placing on foreclosures will have on new mortgage applications remains to be seen.
Read more: Mortgage applications rise on lower interest rates – South Florida Business Journal


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What is Adjustable rate mortgage?

October 13th, 2010

Adjustable rate mortgage is a type of mortgage in which the rate of interest and monthly payment move up and down as market interest rates fluctuate. It is also known as ARM, renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.

Features of adjustable rate mortgage are as following:

  1. It is an effective tool of financing under certain conditions, such as rising income expectations, high interest rates, etc.
  2. It has four basic components. They are as following:
    • Initial interest rate
    • Adjustment interval
    • Index
    • Margin
  3. It is exactly opposite of fixed rate mortgage.
  4. It offers a very low initial interest rate.
  5. Here the rate of interest is tied to a variable index.
  6. It also has a built-in cap to reduce the risks of large increases in payments.

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Free Debt Analysis within 30 Seconds!

September 28th, 2010

There is a wonderful website which offers FREE debt analysis for just 30 seconds for you. They claims that they are in to this business for so many years, with written guarantee and 100% confidential and save up to 70% of your unsecured debt.

They are also providing an online chat help for your questions.

Visit their website Here…

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Fair Debt Collection Practices Act – Download.

July 18th, 2010

Now you can download the Fair Debt Collection Practices Act. This is in PDF format.

Here is the link : http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

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Laws of Debt collection

July 18th, 2010

Many people were asking questions like Do debt collectors have to follow any law?

Definetly YES! Thee federal Fair Debt Collection Practices Act (FDCPA), 15 USC §1692-1692o, says collectors cannot use abusive and deceptive practices.

in addition to the federal law, many states have adopted laws that provide more protection against abusive collection practices. For example, the federal FDCPA applies only to third-party collectors, but not to creditors attempting to settle their own accounts. State laws may, however, apply whether the debt is being collected by an outside collector or the creditor.

Debt collectors may also be subject to other laws. For example, the Fair Credit Reporting Act, 15 USC §1681, prohibits the sale or transfer of a debt caused by identity theft

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More risks means more profit?

July 4th, 2010
Risky investments generally pay more than safe ones (except when they fail).Investors demand a higher rate of return for taking greater risks. That’s one reason that stocks, which are perceived as riskier than bonds, tend to return more. It also explains why long-term bonds pay more than short-term bonds. The longer investors have to wait for their final payoff on the bond, the greater the chance that something will intervene to erode the investment’s value.

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How safe to invest in US treasury bonds?

July 4th, 2010

U.S. Treasury bonds are as close to a sure thing as an investor can get.The conventional wisdom is that the U.S. government is unlikely ever to default on its bonds – partly because the American economy has historically been fairly strong and partly because the government can always print more money to pay them off if need be.

As a result, the interest rate of Treasurys is considered a risk-free rate, and the yield of every other kind of fixed-income investment is higher in proportion to how much riskier that investment is perceived to be. Of course, your return on Treasurys will suffer if interest rates rise, just like all other kinds of bonds.

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What is a debt market?

July 4th, 2010

The debt market is any market situation where trading debt instruments take place. Examples of debt instruments include mortgages, promissory notes, bonds, and Certificates of Deposit. A debt market establishes a structured environment where these types of debt can be traded with ease between interested parties.

The debt market often goes by other names, based on the types of debt instruments that are traded. In the event that the market deals mainly with the trading of municipal and corporate bond issues, the debt market may be known as a bond market. If mortgages and notes are the main focus of the trading, the debt market may be known as a credit market. When fixed rates are connected with the debt instruments, the market may be known as a fixed income market.

Individual investors as well as groups or corporate partners may participate in a debt market. Depending on the regulations imposed by governments, there may be very little distinction between how an individual investor versus a corporation would participate in a debt market. However, there are usually some regulations in place that require that any type of investor in debt market offerings have a minimum amount of assets to back the activity. This is true even with situations such as bonds, where there is very little chance of the investor losing his or her investment.

One of the advantages to participating in a debt market is that the degree of risk associated with the investment opportunities is very low. For investors who are focused on avoiding riskier ventures in favor of making a smaller but more or less guaranteed return, going with bonds and similar investments simply makes sense. While the returns will never be considered spectacular, it is possible to earn a significant amount of money over time, if the right debt market offerings are chosen.

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Improve Your Credit History With A Bad Credit Credit Card

June 27th, 2010

Cardholders who have a bad credit score often seek secured credit cards in order to improve their credit history andincrease their credit score. There are many lenders who offer bad credit credit cards so that people who have made credit mistakes in the past will be able to repair their credit score without having to fight against high interest rates that come when someone’s score drops.

There are many financial institutions that will offer secured credit cards but it will be important for a cardholder to do research and make sure they find a secured credit card from a reputable lender that will not charge excessive fees and fines. Avoiding a high interest rate will also be necessary seeing as how the point of getting a secured credit card is in part due to the affordability.

It’s important to remember that a secured credit card is not guaranteed to improve one’s credit score. Individuals who charge excessively and buy unnecessary items with their credit card are often the people who find themselves in a bad credit situation. Learning to budget, live within your means, and save money will be vital to using a secured credit card in a beneficial way.

Any cardholder who obtains a secured credit card and makes the necessary changes to their financial habits will find a secured credit card can be a valuable asset when trying to improve a bad credit history and raise a poor credit score.

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The Bet against the American Dream – Funny Video!

June 23rd, 2010

The Bet against the American Dream – watch this funny Video!

Bet Against the American Dream from Alexander Hotz on Vimeo.

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