loans and credit

With all of the negative publicity being heaped on banks lately, one of the areas that has been complained about most of all are the senseless fees that banks charge for so many routine services. As the billions of dollars these fees generate for banks have made headlines, some banks are working to build some goodwill by eliminating some of their fees. Still, most banks still have a variety of ways to bleed their customers out of a few dollars here and there and those nickel-and-dime fees can really add up.

Most of the fees banks charge are avoidable with some planning and foresight. The majority of bank fees are charged for convenience or when a transaction has to happen quickly. Consider some of these bank fees and the ways you can avoid them to make sure your money stays in your account.

– ATM Fees: Everyone needs some cash from time to time and ATM machines are one of the most convenient ways to access cash anytime. ATM withdrawals are almost always free at any banking where you already have an account. However, accessing cash from a bank that you don’t have a relationship with is going to cost you and many of these fees are going up. Bank Of America, for instance, recently announced that they will charge a $3.00 fee for any withdrawal from a non-banking customer. Your bank often tacks on a fee of their own if you make a withdrawal through another bank’s ATM machine.

ATM fees are avoidable if you plan ahead and get cash from your bank account or your bank’s ATM machine to avoid the fee. Other ways to help avoid this fee include getting cash back at a grocery store from a debit card purchase or using a smartphone to locate your bank’s ATM machines in your immediate area. Most bank websites also have an ATM locator that can be helpful in avoiding fees.

– Balance Transfer Fees: Consumers with high-interest credit card debt often look for opportunities to transfer this debt to a card with a lower interest rate. This is a great way to save on interest expenses but many banks are now charging between three and five percent on balance transfers. The amount of the fee needs to be factored in to the transfer decision. It doesn’t make a lot of sense to transfer from a 22% credit card to one with an interest rate of 18% if there is a 5% fee to make the transfer. Always read the fine print on any balance transfer.

– Low Balance Fee: Some bank accounts require the account holder to keep a minimum balance in the account in order to avoid paying a fee. Banks don’t highlight this fact when the account is opened and many times customers fail to notice the fee on their statement. These fees are usually between $8 and $10 for every month that the minimum balance was not maintained and they can really add up over time. There are plenty of account types and banks that don’t charge this fee so don’t hesitate to move your money if the minimum balance is not realistic for you. Every dollar that you have to keep tied up in a low-interest account to avoid this fee is a dollar that you could be getting a better return somewhere else.

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Bad credit can make it hard to do a lot of things and one of the most difficult things to obtain if you have poor credit is a credit card. It makes sense–if you were a credit card issuer and you had an applicant that had struggled to pay their bill on time in the past, would you be eager to lend to that borrower? Probably not. However, there are good reasons for an individual with bad credit to have a credit card.

One of the challenges of having bad credit is that it’s hard to establish new opportunities to fix that credit. One of the best ways to repair bad credit is to start making timely payments on something though and a new credit card is a great way to start that process. Even with a poor payment history, many credit card companies will consider your current income and your current debt ratio in deciding whether or not to issue a card. Your initial line of credit might be low, but it’s a starting point! If you’re having trouble obtaining credit, here are some tips that might help.

– Limit Your Applications: Every credit card application is recorded and can affect your credit score. Too many denied applications will make other lenders and credit card issuers view you as a credit risk, so do some homework and try to determine credit card issuers that might be more likely to extend credit to someone with poor credit. Don’t worry as much about the interest rate on the card as you should be using the card sparingly and paying it off each month to rebuild credit.

– Get A Secured Card: Some credit card companies are not going to willing to extend credit to a risky borrower without some collateral. One common method of securing credit is to send a check to the card issuer. Many card companies will issue a line of credit for $1000 if you’re willing to send them a check that they can hold against that line of credit in case you aren’t able to make payments. As long as you make your payments on time, the money you secure your loan with will earn interest just like it would in a savings account. Securing your credit line with collateral will also give you incentive to make payments on time, since you have something on the line. After you establish a pattern of making reliable payments, many companies will return your deposit to you.

– Communicate With Your Credit Card Company: If you have struggled to make payments with a credit card issuer in the past and they are threatening to close your line of credit, try to work something out that will allow you to continue making payments. It’s much easier to maintain an existing relationship with an issuer than to establish a new one, especially with borderline credit.

– Monitor Your Credit Report: When you’re trying to repair your credit, the last thing you need is a mistake sending your credit score even lower. It is worth the cost to use a reasonably-priced credit monitoring service and make sure your credit report is a true reflection of your payment history.

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If you’ve ever wondered if unsecured personal loans are a viable option for anything from consolidating debt to home repair and more, the good news is yes. However, as has been mentioned numerous times in various articles about loans, they’re not all created equal. Low interest personal loans are available, often even with not so great credit, but you’re going to have to do your homework. It is in your best interest to invest the time and research to get the best loan possible, to perhaps consult a financial adviser, and use every tool at your disposal when it comes to what kind of personal loan interest rate you will receive.

Today, we are lucky to have such a comprehensive research tool as the Internet at our fingertips. In times past, you can imagine how much literal legwork it would have taken to get all this information from various lenders, and that availability would have been only within your own town, state, etc. With the ability to research online, the possibilities are greatly expanded, both good and bad. However, it is still a great tool, and if used wisely, can be an invaluable resource. There are good lenders out there, willing to offer decent interest rates on unsecured personal loans, but again, you’ll have to shop around. It is not unheard of to be able to find rates better than most credit cards offer, again though, that is obviously based on a number of factors that lenders look at when calculating your risk factor.

So, one of the first things that you’ll want to do is start to compare personal loan rates, and see who can do what for you. Remember that negotiating and not jumping at the first lender who says “yes” are wise courses of action, as you want to get as much information and as many offers as you can deal with to form a clearer picture of what’s out there financially for you. As you may know, personal loans can help folks out with a large number of things that may be pressing needs at a time when they are a little “cash poor”. Besides debt consolidation and home repair (which is often considered a very good reason to take this kind of loan, as it increases your property value) people will take out loans to help with school, to aid in a major purchase where a down payment is required, and a number of other reasons (a nice vacation? Maybe, though not often considered a wise use of the money). The main point here is that managed wisely, for the right reasons, a loan can be of real help, right now.

Consumer confidence continued to fall throughout July, perhaps because U.S. consumers are increasingly worried about such gloomy matters as debt reduction, falling home values, unemployment and rising bankruptcy filings. A story by ABC News reported that U.S. consumer confidence, reacting to the still weak economy, fell two points to -44 in late July. It now looks as if 2010 will go down as the second-worst year ever for consumer confidence. The only year that will go down as worse for this measurement? It’s 2009, of course; there’s no surprise there.

Wary Consumers

As the measurement’s name suggests, the consumer confidence rating measures how optimistic consumers are about the state of the U.S. economy. These days, consumers are far from optimistic. They’re downright gloomy. According to ABC News, a scant 12 percent of consumers rated the U.S. economy positively. Only 28 percent of U.S. consumers said that the buying climate was good. Under half of U.S. consumers, 47 percent, said that they were optimistic about their personal finances. The reasons for this are obvious: The economy is in recovery mode. But it’s a painfully slow recovery. Unemployment, still above 9 percent across the nation, is still too high. At the same time, a growing number of homeowners are watching helplessly as the values of the homes continue to fall. Many other consumers are struggling with debt reduction. It’s not the best time to be a U.S. consumer.

Debt Consolidation Programs

For many U.S. consumers, this is a time to start thinking about searching for the best debt consolidation loans. These loans, of course, are far from perfect: They cause consumers’ credit scores to fall. And they often come with high interest rates and origination fees. But at least when consumers seek debt consolidation help, they are taking steps to control their overwhelming amounts of revolving credit card debt. A debt consolidation program will take all of consumers’ outstanding debts and consolidate them into one single loan with a monthly payment that these individuals can afford. As long as consumers pay off this loan on time each month, the calls from collection agencies will stop. This form of debt reduction can be a bit costly, but it does, at least, eliminate much of the stress that comes from having high levels of debt.

Debt Reduction is Key

In today’s economy, debt reduction is key. Consumers with high levels of debt sometimes feel as if they’ll never escape. And having too much debt damages these consumers’ credit scores. When this happens, they struggle to obtain mortgage, auto and personal loans at favorable interest rates. Consumers, then, should do all they can to reduce their revolving debt. If they do, they’ll find that their lives will improve dramatically.

When one is going through difficult financial times, personal loans may be just the thing to help you get out of a tough situation. As with any type of loan, there are positives but also things that you should be aware of. Of course, it is always wise to look at all of your options before making a decision. It is a good idea to talk to a financial adviser before taking out loans of a personal nature.

Reason Number 1: You Want to Avoid Taking a Payday Loan

This is an excellent reason, and one that more and more people are stating as a primary reason for taking out small personal loans. It is no secret that the so-called “payday” loan is perceived by many to be both a terrible deal for the consumer, and predatory in nature. With extremely high fees and interest rates that reach into the triple digits, it is easy to see why these should be avoided.

Reason Number 2: A Personal Loan Can Have Many Benefits for the Consumer

Right away it is easy to see one benefit: the interest rates are far more reasonable. According to various sources, rates for personal loans range between 6.75% and 18%. With the right personal loans, consumers are able to get out from underneath a temporarily difficult situation and get back on track with their budgets, while not being trapped by increasing debt from a bad loan. Many lenders are eager to establish new relationships with borrowers, and look at lending these relatively small amounts as a good way to do just that. Another benefit would be that there is a wide perception that this kind of loan can be of help in building a better credit score.

Reason Number 3: You Don’t Have to Have Perfect Credit to Qualify

This is something that we hear all the time, and while it is true, there are some caveats that you should be aware of. Depending on your circumstances, it may be that you could do better using your credit card, or accessing your home equity, if that is a possibility. However, if that’s not the case and you feel that personal loans are right for you, know that the better your credit score is, the better deal you should be able to get. While you don’t have to have perfect credit, it is wise to take the time to go over your credit report so that you know it is correct. Another important tip is to have as many of your bills as possible showing that they are current. These few steps can make a world of difference when it comes to getting the best loan possible.

The evidence continues to mount that U.S. consumers are moving toward a future of fewer debt consolidation loans and greater savings. According to the latest monthly report from the Federal Reserve Board, consumer revolving credit fell again in April. This is significant because it marks the 19^th consecutive month in which this debt, made up mostly of consumer credit card debt, has fallen. Before the Great Recession began, no one would ever have predicted that U.S. consumers could have been so frugal. After all, the U.S. consumer – at least since the days of the ‘80s – hasn’t exactly been known for their ability to delay instant gratification.

Credit Card Debt Falls

The fear was that consumers would need to turn more than ever to debt consolidation loans once the nation fell into recession. The theory made sense: Consumers who lost their jobs or had their hours slashed, would have fewer dollars available. They’d then run up more debt on their credit cards in the hopes that their economic situation would eventually improve. But that hasn’t happened, at least not according to the Federal Reserve Board’s numbers. Consumer revolving credit now stands at $838 billion. That may still seem like a lot of revolving credit out there. Consider, though, that in October of 2008 this figure stood at a far higher $976 billion. That’s right, since that month, U.S. consumers have managed to shave $138 billion off the total amount of revolving credit. And they’ve somehow done this during some of the worst economic times in U.S. history.

A More Frugal Nation?

Are we seeing the birth of a more frugal nation? Will trips to the mall be made only out of necessity rather than to pass the time? Will consumers shop for the best deals and put off purchases until they can afford them? That’s hard to predict. But the Federal Reserve Board data does point to consumers who are embracing saving rather than spending. The board reported that consumer spending fell in April while consumer saving rose. That last bit is important; it’s the first that consumer savings rose in four months.

What Lies Ahead?

Of course, no one can predict how U.S. consumers will react once the economy’s recovery picks up speed. They might go back to their free-spending ways. They might again run up their credit card bills. And they might again turn to debt consolidation loans to help them deal with all their new debt. Or, as the Federal Reserve Board numbers seem to say, U.S. consumers might have learned their lessons during this worst economic slump in decades: Saving money is important. And sometimes it makes good financial sense to put off those big purchases.

What’s the perfect recipe for debt consolidation companies hoping to see their business increase? How about consumer spending rising faster than income? That’s exactly what’s happening now, and it could mean an increase in future profits for debt consolidation lenders. After all, consumers can only increase their spending so much while their incomes remain largely stagnant. Eventually, that kind of spending pattern is going to catch up with them, resulting in high credit card bills. When that revolving debt gets high enough, many consumers will turn to high-interest-rate debt consolidation loans as a way to control their spiraling credit card debt.

Intriguing Numbers

The U.S. Department of Commerce released some interesting numbers charting the spending patterns of consumers in March. According to the department, U.S. consumer spending was up 0.5 percent in March. That’s more than the country’s pre-recession peak, which was set in November of 2007. At the same time, incomes in March rose just 0.2 percent. This, of course, means that spending rose faster than did incomes, never a sign of sound financial management. The country’s personal savings rate fell to 2.7 percent. That’s the lowest that number has stood since September of 2008.

Forgotten Lessons?

This all begs the question, have consumers already forgotten the lessons of the Great Recession? During the economic slowdown, the federal government actually wanted consumers to resume some of their previous free-spending ways. That’s what was behind all those stimulus packages. The goal was to have consumers help spend the country out of the recession. That didn’t happen, but the country is now working its way out of its economic doldrums the natural way. Consumer confidence is steadily increasing, leading to consumers who aren’t as nervous about spending their dollars. During the recession, though, consumers socked their money away, helping to significantly boost the country’s overall savings rate. It appeared that consumers had learned just how important saving was. Now, though, the Commerce Department numbers seem to indicate that it’s a lesson consumers have largely forgotten.

A Debt Consolidation Formula

If consumers continue to overspend, it will be little surprise if debt consolidation companies see their business increase. After all, there’s only so many months that consumers can spend faster than their incomes rise before they’ll eat through their savings and start running up their credit card bills. Of course, we’ll have to wait and see what happens in the coming months. But if consumers show more evidence that they’ve returned to their old spending habits, don’t be surprised to see a sudden surge in debt consolidation loans.

Whether your air conditioner goes out in the dead heat of summer, or you have a blowout on the way to work, personal loans can be your best way to finance the repairs necessary to fix your situation. Most people are unsure of how to apply for personal loans, and think they must ask a friend or family member for cash. However, loans between friends and relatives are rarely a good idea, as they can seriously strain your relationships.

When it comes to personal loans, trusting to a neutral third-party institution is the best way to go. The lender can objectively assess your situation and make the loan with a reasonable amount of interest and a clearly defined payback period. There are three main types of lenders: banks or credit unions, payday lenders, and peer-to-peer lenders. Depending upon several factors, such as your credit history and FICO score, the amount of money you need, and your income, chances are you can secure a loan from one of these three lenders:

Banks and Credit Unions

Banks and credit unions are the most common and obvious of lenders. Depending on your history with the bank and your credit score, you may be able to get a personal loan. Some banking institutions even run “sales” on certain types of personal loans, such as vacation loans as summer nears. Generally speaking, a personal line of credit is unsecured, making it prone to a high interest rate.

Payday Lenders

Payday lenders offer quick cash, and you pay the balance of the loan back on payday, the idea being that you are borrowing against your own paycheck. Generally payday lenders do not run a credit check but they will verify the details of your employment with your supervisor, such as how long you have been employed and how much you earn. Usually payday lenders charge a flat fee per loan, such as $15 for a $100 loan, but then interest rates kick in if you miss a payment.

Peer-to-Peer Lending

Peer-to-peer lending is a new breed of personal lending, connecting people directly rather than going through a third-party institution such as a bank. There are several different models of this kind of personal loan, but the general idea is that the borrower goes to the P2P lending website and makes a request for a loan. The lender (or a pool of investors) can decide to grant the loan based primarily on the borrower’s credit history. Although there is the potential for fraud in this model of lending, it remains popular because it cuts out the middle man and allows people to connect on a one-to-one basis.

Big banks have spent most of the past few years in trouble. They’ve been in trouble with their shareholders, with the government, and now they’re in a great deal of trouble thanks to their unhappy customers. The banking world has sustained a black eye through the recession and financial crisis that won’t disappear for quite some time; and rebuilding relationships of trust with their customer base is going to be an uphill battle.

During the course of the recession, banks seemed to determine that every customer was a potential liability rather than an asset. Every customer was someone who could potentially fail to make a payment on time or would withdraw their funds out of fear of a bank failure. As a result, banks stopped putting their customers first. They stopped being a source of financing, stopped being willing to negotiate with customers struggling to make payments, and stopped paying reasonable rates of interest on deposit products. Now that the worst of the storm is over, banks want to restore the confidence of their frustrated customers. Here’s how they’re going about it.

Feel-Good Advertising: During the Winter Olympics, financial institutions have been well represented during commercial breaks. The ads have been intended to make customers feel good and make them feel like their bank is almost a part of the family, there for them during the most important moments in their lives. The slogans suggest stability and strength after one of the most volatile and weak periods of time in the banking sector’s history. Although the ads have been positive and upbeat, spending on advertising from the nation’s biggest bank was only about half in 2009 of what it was in 2008. In other words, there’s a message to get out, but there’s not much budget to help spread the word.

Accentuating The Positive: The headlines on banks are still mostly negative and bank officials seem reluctant to contribute their opinions to those stories. Occasionally though, the news come out with a story about an increase in small business lending or some other positive update. In these brighter news stories, quotes from bank officials are easy to find. Banners in bank lobbies also promote what the bank is doing well in hopes that customers will forget about areas where big banks have fallen short. Banks are being extremely transparent in areas where they’re performing well after many complaints of a lack of transparency.

Downplaying The Negative: Bank executives are having to make very tough decisions right now. The best decision for the bank is not always the one that looks best to the scrutiny of the media or the public eye. Bank bonuses are a perfect example. There are smart and talented people high up in big banks that need to be retained. These people didn’t personally make decisions that led to the credit crisis but the thought of executives getting big bonuses after so many customers have suffered due to bank decisions seems unfair to customers. Banks are working to keep their names out of the headlines when it comes to negative news and are working hard to keep some decisions under the radar.

If you’re considering opening a new business, odds are good that you are investigating financing options such as personal loans. Especially in small businesses, start-up costs are typically financed with the use of one or several funding sources. If you’re starting a business with no or little start-up costs involved, you still have to consider how you’re going to cover the operating costs of the business until the company becomes self-sufficient and eventually turns a profit. Consider all or some of the small business financing options available to you before you choose one.

Personal Savings & Credit Cards

Many small business owners first take a look at the amount of cash they have stockpiled away into their personal savings account. If you’re depending on the business for full-time income, you want to make sure that you have enough money in savings to not only cover the business expenses but also your personal expenses for six to12 months. When personal savings isn’t an option for seed money for the business and the start-up costs are small, many would-be business owners use personal credit cards to buy the equipment or supplies they need to get started, and pay off the credit card balance as the business starts generating money.

Personal Loans & Home Equity Lines of Credit

It can be difficult for a business just starting out to get a loan since it does not have a business credit history. For this reason, many new business owners apply for personal loans to obtain the money needed to start the business. Personal loans require the applicant to be personally liable for repaying the business loan. Since a personal loan is personally guaranteed by the borrower, personal loans are approved on your personal income, assets, and your ability to repay the loan. While personal loans do not require collateral, another option is a home equity loan, which is a loan secured by your home. Similar to personal loan, home equity loans are personally guaranteed but also based on the value of your home and how much equity you have built up in the home. One issue with a home equity loan is that if you default on the loan, you have the chance of losing your home in the process.

Small Business Loan

While the other options – personal loans, credit cards, home equity loans, and cash savings – are all personal forms of financing your business, you also have the option of applying for a small business loan. The Small Business Administration (SBA) helps small business owners obtain loans to start and grow a business. Applying for small business loans can require more work than applying for personal loans because you may have to put together a formal business plan to illustrate how the money will be used and how the business is projected to generate enough money to repay the loan.