2 Bad Habits to Break to Increase Savings

Your power of will should not be held liable to pay for your important liabilities and monthly bills. Furthermore, also the choice of how much to deposit on your emergency savings fund should not rest on the same criterion. Willpower is not enough to keep you going with your financial duties.

According to David Bach the author of a book entitled The Automatic Millionaire relying on your willpower will just lead to the mismanagement of your life’s choices. Some people would try to reason out that their lack of organization or their lack of financial support that’s why they fall astray in their finances, and tend to pay late. Late payments mean you paying a more expensive debt; this is because companies would require a $39 fee from clients who fail to pay on time, not only that, there is also an additional interest charge that is added up in the debt as well.

Bach advices that important bills should be made on time and also, you should never fail to make a monthly savings deposit for your and your family’s future need. Automatic payment is the answer to avoid making late payments.

You should get on track on your payments, make a schedule of tentative dates you can pay your due, subtract the due date by a week and make that your target date to settle accounts. Another solution is to make automatic payments via online banking.When you break away from the bad habit of paying your fees late, you can just sit back and relax because you will only have to pay lesser amount of debt.

Ulzheimer has another concern, paying only the minimum amount on a credit card. This is not very good for the credit card borrower. Paying only the minimum will roll over about 97% of the remaining amount and will just be another addition to the interest you have to pay.

You should make sure that you set your automatic payments (if you decide to pay automatically) larger than the minimum amount.

Cards to Regain  From Your Financial Problems

As the years pass more and more citizens are starting to need more help financially, they would go to banks or other financial intermediaries for loans to pay for their cars, college tuition and other necessities. However, people with poor credit have been preyed upon by these institutions by charging interest and processing fees aside from the yearly fees for customers.

The new Consumer Financial Protection Bureau however, has taken a step back from fighting these additional fees. There is a law that prohibits the charge of fees from these banks when it exceeds 25% of the customer’s initial deposit. The First Premier Bank filed a law suit to justify the $95 fees it is implementing on customers before they set up a loan.

The bank also charges a yearly fee of $75, monthly charges that sums up to another $75 in the end of the year and an interest rate of 36%.

But people with bad credit need something else other than this card that First Premier is offering. They need something called a secured credit card. And here are some of the best of these credit cards out there.

The Orchard Bank Classic Card which secures clients with a safety deposit. If you are able to get a membership, they do not care about your current credit record as long as you maintain the $200 minimum deposit. What’s more, they do not charge the $35 fee for the first year you get your card.

The Wells Fargo Secured Visa which requires a client to be recovered from bankruptcy for more than a year and have no other unpaid liabilities. There is also a secure deposit which ranges from $300 to $10,000 and an annual fee of $25.

The U.S. Bank Secured Visa it has an end of the year fee of $35 and secures your deposit in savings account that helps you earns interests.

Though not everyone can be qualified to get access of these cards, it is best that you try and get your hands on them to help you get back on your feet financially. Be smart and cautious with whom you choose to be your financial partners, make sure they do not prey on you and lead you to deeper debt rather than help you with your financial needs.

Don’t Let Liability Spoil Your Retirement

Twenty years ago, debt was often associated with retirement. Once you are becoming old and nearly approaching the time that you will have to rely only on fixed pensions or income from your investments to support yourself, you become intent in paying off your liabilities and celebrating that all of them are behind you.

However, according to the latest Census data, today there are more elder people ranging from 65 and above are suffering from debt.This is alarming since it is not only limited to the middle class citizens. Seventy five percent of the rich who earn more than $100,000 have mortgage liabilities.

You do not have to be spotless of debt once you are retired, all you have to do is to make sure can manage your mortgages and loans so that it does not haunt you for the rest of your life. Here are some tips in order for you to be safe from debt even after you are retired.

First, remember that you will have lesser money to spend once you have to leave your office. You have to estimate how much you will be getting from your pension. Then make a budget plan, cut off excessive costs on loans that you will no longer need after you are retired.

You can sum up all your loans and monthly bills then divide the cost to your current wage, so that it can keep you going on for years. While you still have your job you should make sure you avoid spending 25% of it on long term debts.

Second, figure out which liabilities are “bad” debts. Pay off your current credit cards and ask your company to switch into lower interest card once you are approaching your retirement days. You should be able to save for your future. Once you have paid off all your credit cards do the same for other debts that have no more value for you in retirement and have high interest rates like your old car loan.

Finally, ask yourself if your good debts are really beneficial for you. You should try and equalize your financial standing. Make sure you keep on paying your loans so that you will be able to keep its perks and benefits. Furthermore, you can also help balance out your credit by selling some of your belongings that have value. The amount you lose for the payment of your liabilities should be worth more than the amount of lost from assets you sell.

A Company’s Credibility is Not in Their Credit Ratings

Agencies that have been announcing corporations’ credit ratings are currently being put into the hot seat by economic experts. These companies have been actively participating in the finance business ever since the United States’ economy started to fall, and according to study, their reliability is dubious.

According to Dr. Mungo Wilson, their study proved that these credit ratings only show low scores and are discouraging for companies; they are not clear or distinct proof of an organization’s credibility. These ratings sadly remain as one of the primary ways that measure a business’s quality, making it frustrating for some people who are engaged in the industry.

It is quite unfair that they only monitor and measure the standing of a company through inaccurate terms. The researchers argue that the financial reports and market figures of the companies are enough to measure a company’s ineptness. They put this recommendation to a test model to come up with the default risk of a company.

They then compare it to the company’s capability to Standard & Poor’s credit ratings. They tested their model with the data from the year 1986 to 2008, and the researchers found out that the ‘failure score’ of their model is more reliable compared to the currently used system based on credit ratings.

The data they gathered also revealed that ratings are greatly dependent to the systematic default risk of companies. They estimated how clients would be affected in case a sudden downfall happens to the economy. These findings are helpful for companies and investors alike, for it will give them a clearer understanding to make wiser decisions.

The researchers also pointed out that if these companies only looked at one basis on a company’s credibility, it is less rational. Default prediction of data would only show a partial scale of a company’s ratings, in the other hand, measures of systematic risk shows not only the updated credit rating or a company, but also its cumulative credit condition.

Consumer Financial Protection Bureau Takes the Side of Bankers

The United States’ legal watchtower against loan sharks and predatory loaners has released the best news for these financial intermediaries to date. This announcement is about the amendments in the Federal Reserve prohibition to expensive applications to credit-cards and application fees.

The old law in 2010 prohibited the charging of issuing a credit-card to be greater than 25% of the client’s credit limit in the initial year deposit. Though it did not specify the regulations on additional charges and fees, the agency opt to include them in the Act to save borrows with not so spectacular credit from being preyed upon.

The Washington Post reported that one of the financial institutions filed a law suit to the agency. According to them they were complying with the Act’s imposed limit of 25% because they only required $300 as the credit limit for clients with a yearly additional fee of $75. However, it also required clients to pay a processing fee of $95 before the customer gets to open an account. This makes it exceed the 25% boundary set by the federal board.

Last September the bank was able to get a First Primer sanction from a court located in South Dakota against the Federal Reserve. Just this week, Ohio’s very own Richard Cordray, who headed the new office of the Consumer Financial Protection Bureau, proposed the change in the initial ban of the law. They also asked the public’s opinion about the proposal.

Credit-cards are risky loans; banks charge expensive fees because there is no guarantee that all those who get them will be able to pay the loans. Moreover, if clients who fell into bad credit fail to get their hands on a credit card, it will be hard for them to reestablish a healthy attitude towards their loans.