Archive for the Personal Finance Category
Comprehending the wide array of information contained in the card holder agreement is not only time-consuming for several consumers but also boring too. The language, the technical jargons and long statements can be too overwhelming for some consumers. Moreover, most consumers don't have time or interest to read each word of the credit card agreement.
Although it is important to read the card holder agreement, yet you may avoid the hard work just by asking a few questions to the credit card issuer. Check out the 4 questions that you may ask the credit card issuer to understand the terms and conditions of the agreement correctly.
When will you have to pay the overlimit fees?
A lot of consumers still don't have any knowledge about credit limit and the overlimit fees, which is not good. You won't be able to cross your credit limit until you opt in for the overlimit fee. Ask the credit card issuer about the amount you'll have to pay for overlimit fee.
It's quite insulting to know from the cashier that your card has been declined. Overlimit fees save you from that disgrace after you cross the credit limit. However, as per the credit experts, it is best to not opt in for these fees since you may develop a habit of paying more than your means. You may get into severe financial problems at anytime.
When will you've to pay late payment fees?
You can never predict future. It is quite possible that you're confident about your payment capabilities. You may make a good amount of money every month. As such you don't have any worries about late payments. However, a fat paycheck doesn't guarantee that you'll make timely payments. You may just skip or forget the payment date.
Ask the card issuer about the consequences of making late payments. Find out when late payment fees will be imposed upon you. Ask questions regarding how much you've to pay for the late payment fees too and if they will increase your annual percentage rate as well.
How much will you have to pay for balance transfers?
Credit card balance transfer fees can drain funds from your account. If you're unable to calculate the fees properly, then you may have to pay a huge amount to the credit card issuer. Usually, card issuers charge a specific percentage of the overall transferred amount. Still, to be on the safer side, you can ask if there are extra charges. For instance: if a bank charges 4 percent fee, then you've to pay $400 for transferring $10,000 to the new low rate card. Don't forget to ask about how much will the interest rate increase after the introductory period is over. Usually, the rate gets doubled after the promotional offer expires.
Will you really benefit from the reward cards?
Usually, reward cards carry a high rate of interest. In fact, the interest rate is higher than that of a normal credit card. If you do carry a balance every month, then a reward card won't be that much beneficial for you.
As far as the airline miles card is concerned, you should ask the credit card issuer about the blackout dates. Ask when the credit card issuer will disqualify you for the reward programs. Will you lose reward points after getting delinquent on the credit card?
Secured credit cards help you repair your tarnished credit. The rate of interest is usually low and you can spend only up to a certain amount. However, some credit card issuers charge fees like annual fee, maintenance fee, application fee, etc. You may also have to pay fee for speaking with the customer care officer. It is better to know about these fees from beforehand so that you don't get a shock later. Ask if the card issuer will report to the credit reporting agencies. Your credit score will not improve unless the card issuer reports the payments to the credit reporting agencies.
Tragedy has struck Moore, Oklahoma. While the memories of Hurricane Sandy and the subsequent destruction it caused is still fresh in the national consciousness, an EF5 tornado struck the city of Moore and has caused a staggering amount of death and damage. 24 fatalities, 2400 damaged homes and roughly 10,000 affected people have been left behind in the wake of the storm.
As the population and urbanization throughout America increases, it is but a predictable outcome that natural disasters on the scale of Sandy or the Moore tornado would cause wanton destruction. Your only hope for any kind of financial relief is to be prepared, at least up to a certain level.Where would disaster relief be coming from?
Although FEMA is the organization tasked to take control of recovery operations in such situations, there are smaller but equally significant instruments of reconstruction.Insurance
The last time a disaster of such magnitude occurred, it was in Missouri with tornado Joplin tearing through. By May of 2012, insurance companies received 61,000 claims amounting to a grand total of $2.16 billion.
Going by the statistics, most of the damage recovery funds for both homeowners and businesses alike are going to come from insurance companies. According to III statistics, without insurance coverage, at least a fifth of the 10,000 affected will not be able to recover financially.Charitable donations
The Red Cross, the Salvation Army and a gamut of other charitable organizations have stepped up to the plate and begun a campaign to gather donated funds for disaster relief. The larger portion of the funds acquired by these organizations through donations would be used to take care of immediate needs like food, water and temporary shelters.
Oklahoma City Thunder’s Kevin Durant has already taken the lead and donated $1 million to the Red Cross. Following suit, the Thunders also matched Durant’s contribution to disaster relief. Large corporations like the Chesapeake Energy Corp. has also promised to donate significantly to fund the Red Cross’ relief efforts.Federal and state aid
State and Federal aid is something on which rebuilding efforts are largely dependent on. After the 1999 hurricanes and tornado Joplin, the state created a fund to solely cover costs in case of such a disaster. After Joplin, the state received Federal aids totaling to $350 million.
The governor of Oklahoma, Mary Fallin has already announced at a press meeting on Tuesday that the state would match whatever Federal funds are received for disaster recovery. As of now, they are spending primarily on temporary shelters, clearing debris and rebuilding infrastructure.
Although the disaster was not as devastating as Joplin, more than 10,000 people have lost their homes and have been jolted out of their daily lives. Relief efforts are ongoing but progress is going to be slow as far as rebuilding is concerned. The primary priority is giving immediate relief to the disaster struck people. FEMA and charitable organizations have stepped in to accelerate the rescue process.
Consumers tackled their credit card debt in the first quarter of 2013 quite well. They should get special appreciation since it is the period when most people remain busy in filing income tax returns and eliminating holiday debt with the tax refunds.
Credit card default rate during the time period between January and March (2013) was less than 0.73 percent, a figure reached during the last quarter of 2012. Usually, the credit card usage increases in last 3 months of any year. People tend to heavily depend upon the cards for their holiday shopping and thus fall into debts.
As per a recent report of TransUnion, the credit card delinquency rate (for more than 90 days) dropped by around 19 percent from 0.85 percent to 0.69 percent in the last quarter of 2012.
A 2 percent increase in the Social Security payroll tax and the postponed income tax returns in 2013 didn’t prevent people for making the credit card debt payments.
Although the credit card delinquency rate has dropped in this year, yet there is nothing to be extremely happy about it since the figure is still higher than the historically low level. As per the TransUnion, the lowest delinquency rate was reached in 1990s. The rate during the July-September period in 1994 was 0.56 percent. In 2011, the default rate reached 0.60 percent in the country. This is the closest figure reached in the country recently.
Everything said and done, the credit card default rate has averaged 1.03 percent since the year 1992. This fact has been revealed by the TransUnion credit reporting agency, whose information is based upon 27 million credit records.
Ezra Becker, vice president of TransUnion is quite optimistic about the latest development in the credit industry of the country. As per her, the slight increase in delinquency is not matter of major concern since rates are still at historic lows.
Situation was really very different during the Great Recession of 2007. People were more inclined to spend money instead of repaying credit card debts. Plus, the subprime mortgage crisis forced people to give more importance towards home loans than the credit cards. When the choice was between saving the roof above their head and the credit card, maximum people had to go for the first option. Hardly any other option was left for them. So, people couldn't be blamed for spending their money towards the mortgage payments during that period.
Four years have passed since recession. The job market has not improved drastically. However, it is improving gradually. The unemployment rate reached 7.5 percent in April 2013. The national economy has been continuously generating jobs, the house price is increasing, and even the stock market has been performing well.
The slow but steady progress of the economy has given confidence to the people to spend. However, it seems that people have learned their lesson quite well. They’re not ready to repeat the same mistake again. They manage their debt payments carefully nowadays.
Poor financial health of the parents is affecting parent-children relationships. Parents with money problems are unable to keep their children at home. Although more than 54 percent of parents opine that there's no fixed time when children should leave home, yet some are forced to leave parents due to severe financial problems.
Why kids are leaving parents early on in their lives
The economic condition of the country has not made a remarkable improvement post the Great Recession in 2007. It is true that the unemployment rate has dropped to 7.5 percent in April 2013, but this doesn't mean that people are living a luxurious life in the country. Several parents are still facing problems in managing family expenses. In fact, 26 percent of parents have been forced to incur fresh debts to meet kids' expenses. Nearly 7 percent of parents have postponed retirement just to fulfill the financial needs of their children.
Financial problems create additional mental stress upon the parents. This in turn affects the strength of parents-children relationship. The bond between the parents and children weakens as mental stress creates lots of problems in the family – fights, arguments, psychological disorder, aggression, divorce, etc. A lot of teens decide to leave parents when the monetary problems create too much stress in their life. They prefer to leave home and start earning bread and butter on their own.
Some parents are simply not able to fulfill the financial requirements of the children. As such, children are indirectly forced to do some extra tasks and earn dollars. Some are leaving home to look for jobs in order to generate cash for fulfilling their day-to-day needs.
Rising cost of education is yet another reason why kids are leaving parents early on in their lives. It has become almost impossible for several parents to pay the college tuition fees. Either parents or students have to take out educational loans to pay the college fees . In most of the cases, parents take out loans or become a co-signer on the loans to sponsor the 4 years that children spend in college campus. Students are unable to payoff the loans till they get a job. On the other hand, parents (especially on the verge of retirement) often fail to make payments on the loans due to financial constraints. As such, several students leave the shelter of their parents and try to look for jobs in order to meet their regular expenses and pay the interest rates on the loans.
Juggling part-time jobs and studies is a tough task to follow. Moreover, several students study at out-of-state colleges to finish their education. So, they’ve to leave parents and home early on their lives naturally.
However, it would be wrong to say that a huge number of children leave parents at an early age. According, to a recent poll conducted by the National Endowment for Financial Education, nearly 40 percent of the adult children between the age group of 18 and 39 live with parents. Several adult children are moving in to their parents' home as many of them are losing homes to foreclosure. They can at least save the rentals by living with their parents. As it has already been mentioned, the job market of the country is not at all in a good condition. Several graduates are yet to find suitable jobs. As such, they're opting for higher studies. They're just staying with their parents and pursuing higher studies.
Have you given out a loan to your friends? If yes, then it's high time to get back your money from them. Under the normal circumstances, friends pay you back as soon as possible. However, such things hardly happen nowadays. Your friends just forget the fact that they owe you money. Well, your friends can easily forget about paying you back but this doesn't mean that you should overlook the matter. Rather, you should stop being shy and ask your friends to repay you, albeit in a smart way.
Read along to know about how you can make your friends remember the loan and pay it off.
4 Ways to get back your money from your friends
If you love your friend too much, then you can just overlook the fact that the loan has not been repaid. However, if you love your financial health more than friends, then it’s time to give up all your inhibitions right now. Check out the 4 smart ways to collect money from your friend.
1. Go out for lunch with your friend but make him pay the bill
Have you paid the bills whenever you went to restaurant with your friend? If yes, then make special plans for lunch or dinner with your friend. Just casually pop in the question –“So, who will pay the bill this time?” If your friend gives a shrug or a non-committal answer, then be bold and ask him to pay this time. Make sure you’ve this discussion before going to the restaurant. Both of you can avoid embarrassing each other.
2. Ask your friend to give you a free ride
Carpooling is a fantastic way to save dollars. If your friend also happens to be your neighbor, then just ask him to give you a free ride on his car. Don’t wait till your friend gives you the offer. Just hop in your friend’s car and tell him that the cost of fuel has increased a lot. So, you’ve decided to keep your car in the garage for the next 1-2 weeks and commute by his car. Give this piece of information to your friend with a bright smile. Your friend won't be happy with you, but will get your message.
3. Have a frank discussion about the loanSometimes polite talks are not enough. You've to be bit tough. Remind your friend about the loan at least once a week. If your friend doesn’t bother to pay you back, then tell him that you need money desperately. You've offered financial help when he needed money. Now, it is the payback time.
4. Take legal steps against your friend
This is perhaps the worst way to get back money from your friend. However, if the loan amount is too big and your friend doesn’t show any interest to repay it, then you may go to the court. Think about the pros and cons of taking legal steps against your friend before going to the court. Your friend can turn your foe after the court case. There is yet another point that you need to consider. If you haven’t drawn up a contract, then it may be difficult to win the case. Verbal agreements are not always legally binding.
Money matters complicate relationships. So, if you want to have a beautiful relationship with your friend, then avoid giving out a loan unless there is no other way out. If you do agree to lend money, then draw up a written agreement where the repayment terms and conditions will be specified.