6 Blunders You Need to Avoid

Money they say is what makes the world go round. It a luxury not everyone can afford, so to avoid further future financial problems you should learn the no-no’s on handling money and banking.

Here are some blunders people make about money and banking:

First, being unable to save for unforeseen emergencies, it’s wise if you have savings for emergencies and other unexpected events that might happen in the future. It can be something like a contingency fund, when something goes wrong. The money could be used to pay for your hospital bill, or car, it can keep you going for months when you suddenly lose your job, etc. So always make it a point to save, even if it’s only a dollar every day that would make all the difference.

Second, learn how to make a budget and follow it, budgeting does not disallow you to buy whatever you want. On the other hand, it is a helpful tool to ensure you buy what you surely need. It also allows you to monitor your expenses, making you more conscious about how much money you might be wasting on useless things.

Never let your bad spending habit cause you to overspend. Though budgets may be hard to follow at first, in the long run, it is a guaranteed life saver. So always keep a notebook close and record what you are spending, you might be surprised with how much money you are “burning”.

Third, relying on credit cards and rewards cards to pay for all your expenses, sure these cards can payoff everything, you don’t need to pull out your cash. But that is a big mistake. Paying with credit cards will only cause you to have more debts, and it will lead you to eventually feel meager. Don’t let your debts take over your life. Pay off your bills now, and use money to buy things, this will make you more conscious if you really need the item or not.

Fourth, borrowing money to pay off a liability, like the saying goes: “don’t fight fire with fire”, when you are promised that your problems will be solved, they are lying. Paying through borrowing does not make the debt go away, it just gets transferred. It’s a short-term solution that does not make the problem go away, just adds to it.

Fifth, taking advice to “opt in”, sure the fear of the unforeseen can really make you want to do everything you can right now to prevent it from happening. But writing too many checks or using your debit card to pay for payments will just add fuel to the fire. Bankers make estimations about people’s situation and encourage them to “opt in” to their plans of protection so that people can buy things they “need”. But really this is not solution. The better solution is to stash money and save for the unforeseen disaster.

Finally, taking on your debts alone, sure you want to keep to yourself when it comes to financial problems, but if every effort you try is in vain, then that doesn’t make you weak, it just means you need help. If you find yourself struggling to pay off your debts on time, find someone trust worthy to help, like a non-profit organization. You can always pay a free visit to the National Foundation for Credit Counseling or the Association of Independent Credit Counseling Agencies.

Best Buy Placed on Credit Watch by S&P

Last Wednesday, the shares of Best Buy Co. Inc. fell to 2.55 percent because its corporate credit rating was only one level ahead of the so-called “junk” status.

Best Buy, an electronics retailer in Richfield, was put on credit watch with negative implication by Standard & Poor’s Ratings Services. The statement was made one week after Best Buy revealed it is planning to close 50 branches and take some actions that will cause a lot of discharged employees and approximately $800 million worth of savings after five years.

At present, Best Buy has a BBB- credit rating, which is the lowest investment-grade. After that is the BB+, which is a non-investment grade or simply known as the “junk” status.

According to Jayne Ross, director of Standard & Poor’s Ratings Services, the restructuring of operations was brought about by the problems Best Buy is facing in terms of its business model.

In addition, Ross said that a company placed on credit watch means there is one-half probability the current rating will be the same and the another one-half probability that the rating will be demoted.

Best Buy replied through email that they are conscious of S&P’s decision to put their company on credit watch. In addition, they are willing to discuss with S&P for further information about their business strategy. Best Buy said they have a good overall financial condition as evidenced by their ability to generate cash for operations and free cash flow, and their $2.5 billion credit capacity with major banks.

Moreover, they have a high level of flexibility and financial awareness because of their ability to generate excess cash and conventional capital structure.

However, they refused for an interview asking the company officers to talk about the rating.

The credit agency might demote the rating in a span of 90 days, that is, if there are no actions done by the company to give details or improve factors that cause the credit watch. Standard & Poor’s looks forward to settle the issue after talking with Best Buy’s management.

Don’t Make a Deal to Get Better Credit

Who would not want to try out a deal, when it will only take you a couple of bucks to get a better credit score?

Today, a lot of ads from fliers to large billboards offer this opportunity for customers but really, even if money is indeed to boost your credit you do not need other people to do that for you. Oftentimes, instead of helping you gain a better credit, they give you with a bigger headache.

Take the experience of Pine Bluff, he gave $500 so that he could have his credit score improved. His long wait for the credit status improvement never paid off. Bean Eagle, the man he gave the money, was nowhere to be seen.

After searching for Ben’s whereabouts, the authorities found out that he has been locked behind bars for over a year, and he’s got another year to go to for his sentence: insurance fraud.

Clients should be careful who they give their trust to. Here are some things you should always put to mind: don’t trust anybody who asks for money in exchange for good credit or if that somebody tells you that talking to credit bureaus will be no help.

Bad credit is not the kind of problem that goes away overnight. When someone asks you to drop everything and leave it all to them that they will take care of your problem, they are lying.

Anyone who is really willing to help you restore your credit will ever charge money. They will not take the responsibility of improving your credit score for you.

So, you want to have better credit? Take these tips at heart: first step in recovering from bad credit, pay bills on time, even if you just pay for the minimum amount. If you fail to pay on time, don’t wait after a month to settle the account.

Second, always check your credit score and review them for possible mistakes. Finally, use money to pay for your purchases and bills until your credit account is back on track.

Benjamin Eagle may be behind bars, but he’s not the only criminal who’s willing to prey on unknowing clients.

Borrowers Must Challenge Credit Card Debt Charges

It is recommended that every borrower must challenge credit card lawsuits, according to Felix Salmon, who is a Reuters blogger.

This recommendation is to some extent valid. For instance, the case of Bank of America and its credit card division showed that creditors have the capacity to force collection bureaus to pursue debts that are not valid. This consequently puts the collection bureau into greater jeopardy than Bank of America imagined it would be in itself.

If the debt is in reality not valid, then it would seem right for the consumer to challenge a lawsuit.

In contrast, Salmon’s recommendation becomes odd when he said that borrowers must not be afraid to require a proof out the upright feeling that they must pay off their outstanding debt.

This is not in the best interest of a lot of persons who are in some way associated with the consumer.

First is the creditor, who gave the loan to the borrower for him to use in whatever he thinks he should buy.

Second is the collection bureau, which now has the responsibility to take care of a borrower who believes he is not to blame for the liability he made.

Third are the borrowers who pay their credit card debts in good time.

Fourth are the borrowers who have to sort out higher costs because of the consequences of poor retail debt.

In addition, Salmon has a poor conclusion. He said that if all persons begin to challenge the lawsuits as a whole, then that will certainly lessen the advantages, to the financial institutions, of advertising written-off debt to corrupt collection bureaus as a whole.

However, it is probably unreasonable to classify collection bureaus who buy credit card debt as corrupt. It weakens a significant component of the receivables management business. Also, it weakens the business that places persons to work in all types of profitable settings.

Want a Car? Bad Credit Won’t Stand on Your Way

When you have bad credit, then you’re probably scratching your head right now, trying to figure out how you can get an automobile loan. But to worry is really not what you should be doing.

According to a field study by J.D. Power & Associates there has been a significant decrease in the FICO score in the credit worth of automobile purchasers this past two months. From the average of 737 in 2009, it has gone down to 725 this 2012. This also led to the decrease in the retail transactions of vehicles from $29,223 by the end of 2011 to $27,953 this February.

The recession that occurred in the United States in 2009 led to the bankruptcy of credit cards in the country, this also affected the sales of vehicle manufacturers. But the impact was not at all that bad since it also paved way for the credit criteria to be less demanding, and the auto industry was able to recover right away. Now, according to the study by Power, those with bad credit have better chances of getting a car compared to those with excellent credit scores.

The D tier, those with 0 to 624 FICO scores have the highest percentage of purchases at 23% compared to last year. The C tier those with score of 625 up to 649 grew at 19%, the B tier with 650-679 increase at 15%, the A tier, those with good credit at 680 to 719 at 11% and the most excellent credit the A+ tier with credit standing of 720 to 999 composed the least percentage at 7%.

As a result of this slide toward the least-able consumers, “C” and “D” buyers combined accounted for 15 percent of all retail sales in the first two months of this year.

Those who composed the C and D tier composed 15% of the retail purchasers in January and February. These customers are young people with lesser money than other car buyers.

This also took as an advantage with the U.S. automobile industry’s drive for creating fuel-efficient cars. These automobiles are less expensive and they will definitely take the retail market by storm.

Transaction price are what people pay for when they purchase new automobiles, other fees just follow. According to TrueCar.com consumers in the United States have spent roughly $30,091 for a single vehicle purchase in March. This estimation is slightly smaller than the price during November last year, and the record of General Motors had for March.

But Power has a different view on events, according to them if transaction prices continue to decrease then there will post a problem for the industry’s profit.