Archive for August, 2007
Debit cards function almost exactly like credit cards when used to make a purchase or reservations or to provide collateral for renting automobiles or equipment. However, on the consumer’s end, there is a difference.
While credit cards allow the consumer to add to a balance owed, a debit card removes funds from an account already belonging to the consumer. Often they are issued by banks on the consumer’s checking account, and function exactly as if a check had been written, withdrawing the funds and transferring them to the establishment accepting the card as payment. They may also be issued by some other agency, such as a government agency offering welfare, money for food purchases, or handling child support payments. They can also be a gift card or deposit card, where the card is purchased for a sum of money which is then available to be spent until it is exhausted (and can usually have additional deposits made).
The advantages of debit cards are many. The consumer does not have to physically write a check, and the bank is saved the trouble of processing paper checks. The cost of purchasing checks is saved. Debit cards can also be used as credit cards for reservations or rental collateral, where checks are generally unacceptable for these. Debit cards, unlike credit cards, will not allow a consumer who lacks self-control to go over his ability to pay and drown him in debt. Many debit cards also allow cash withdrawals from ATM’s (automatic teller machines), sometimes without a fee.
The disadvantages are few, but they do exist. Funds are immediately withdrawn from the checking account, if it is a bank debit card. While sometimes checks are also processed immediately, this is not always the case. So it becomes more important than ever to ensure that the funds are available for withdrawal before presenting the card. Often a bank debit card will incur the same charge as an insufficient check if the consumer tries to use it for an amount greater than the available balance. This is sometimes even true if the consumer uses the card to withdraw cash from an ATM, even his own bank’s ATM. So it is of the utmost importance to keep up with account balances at all times when using debit cards. There is also a bit more potential for fraud with electronic means than when using paper checks.
First time home buyers can easily be overwhelmed by the choices of mortgages available, the unfamiliar terms used, and the factors that are under consideration by the mortgage company which can significantly impact the terms of their mortgage. It is important to secure the best financing available when purchasing a home, because it is probably the largest single type of purchase most people will ever make, and the interest and fees will often double or triple (or more!) the amount that must be repaid.
The first thing a potential home buyer should do is to honestly evaluate their credit history. Hopefully they have been responsible in the debt accumulation and repayment because credit scores are one of the most important factors affecting the availability of better mortgage terms. It might be necessary to postpone home ownership until the credit history can be improved, or alternatively, to expect to refinance within a short period after repairing the credit history.
The second major consideration will probably be whether to consider a fixed or an adjustable rate mortgage. Fixed rate mortgages are sold at a particular interest rate which will never change for the life of the mortgage. Adjustable rates will of course vary over time, based on several factors. The best choice depends on the individual’s situation, especially the current interest rate (and projected rates) and how long the purchaser intends to own the mortgage. If rates are currently high, and expected to drop, it can be better to purchase an adjustable rate and then refinance to a fixed rate when the interest rate drops. However, if the rate does not perform as expected, the costs for the purchaser can be higher than anticipated. An adjustable rate may also be favorable if the purchaser does not intend to own the mortgage for a long period, for example if they know they will be transferred in two years. Always consider the points to be paid, the interest rate, and any associated fees (as well as penalties for early repayment) when deciding between mortgages. It is well worth your time to become well-informed in order to make the best decision as effect upon overall repayment can be enormous.
Another major consideration is the repayment term. Interest rates are generally lower for shorter term loans, and when added to the fact that less time is involved, the effect on repayment totals (and thus the savings) is substantial. However, the monthly payments will be higher, and the consumer must make sure they will be able to afford the higher payments to avoid going into default or being forced to refinance (especially when a forced refinance often occurs after a period of struggling, which usually involves late payments that damage the credit rating and thus drive up rates for refinance). If the consumer is unsure of being able to afford the higher monthly payment, it is always possible to initiate a longer term loan (which of course will then incur a higher interest rate) but request a copy of an alternate payment schedule that will allow repayment within a shorter term. Payments can be made according to that schedule as much as possible, allowing the loan to be repaid sooner and allowing at least some of the savings that would have resulted from a shorter term without resulting in foreclosure if the consumer is faced with unexpected circumstances or for other reason is unable to repay at an accelerated rate.
These are just a few of the factors involved in mortgage selection, and the most basic ones. We will cover other types of mortgages and other alternatives in later posts.
US News & World Report released a rating guide of US colleges which takes into account quality indicators of over 1,400 institutions and further compares costs, including tuition, fees, and room and board. A number of resources are available regarding the best colleges and universities for 2008.
The top ten best values for national universities are similar to previous years’ standings with Harvard coming in at number 1, followed by Princeton, Yale, California Institute of Technology, Massachusetts Institute of Technology, Stanford, Dartmouth, Columbia, University of North Carolina-Chapel Hill, and Duke. Those national universities that graduated the greatest number of debt-free students were Princeton, CIT, and Harvard. (Incidentally, the amount of debt was also lowest in the same order.)
After choosing a college or university offering the best value for cost, it is also worth considering a variety of avenues to help pay for your education, as well as knowing which to avoid. Be sure to check out information on finding the best student loans, saving on loans, and avoiding scams.
Also, don’t forget the value of good old-fashioned hard work. While it is important not to load down a student so heavily that studies suffer, working to earn some of the funds to pay their own way can be an enriching experience, decrease later debt, create networks
The disadvantages emerge when the consumer doesn’t pay the full balance at the end of the month. Interest charges can quickly balloon the amount you are required to repay. The typical user will often charge a few things that cannot be paid for immediately, carry over a balance, continue to use the card to charge more items, and soon is making only the minimum required payment, which will never pay off the balance if the card continues to be used, and will require repayment of up to several times the original charged amount if the minimum payment is paid each month over a period of years.
The best credit card rates are available to consumers who have good credit history, and have paid their bills responsibly and on time without building up too much overall debt. Definitely shop around and compare the fine print to make sure you are getting the best rate possible, while taking note of the results of late payments and going over the credit card limit. It is always best to pay off balances monthly, if possible, and if you fail to do so for two or three months in a row, realize that it could be getting out of hand and stop going further in debt before you reach the point of no return. Credit cards are best used for the sake of convenience and paid off monthly, or reserved for use in emergencies. (However, if you keep one or more cards solely for emergency purposes, it is wise to charge something small every few months and pay it off in order to keep the card viable. Some companies will cancel cards on which there is no activity for a long period.)
And as far as our opening statement is concerned, often a debit card may be used in place of a credit card in order to make reservations and rentals. If the amount is not actually charged when the reservation is made (and usually it is not) then you may not need a credit card after all and can protect yourself from the temptations that sink the financial ships of many.
Having a credit card offers many conveniences that would otherwise not be available to the consumer, even if they have no desire to defer payments. Usually a credit card will be required in order to make reservations for hotel rooms, rent a car, and often to rent anything else.
What exactly is a credit card? It is a card issued by any one of several agencies that allows you to use the card to pay for anything for which credit cards are accepted, and the agency keeps a record of the total amount spent. At the end of the billing cycle (usually a month, or 30 days) you usually must repay the full amount or else a finance charge will be assessed on the total balance, and a percentage of the total MUST be paid, or else your credit rating will suffer and extra fees will be charged, and many times your future interest rate will be increased. Some cards require an annual fee to be paid for the privilege of owning the account, and some are free. Most charge an extra fee for such conveniences as a cash advance, available at many ATM’s (automatic teller machines).
Some of the benefits of owning a credit card include the ability to use it to make hotel reservations, rent cars and other things, etc. Another advantage is that you are able to buy things you don’t already have the cash to afford at that time. Some people like to use credit cards to simplify their bookkeeping, having everything appear on their monthly statement for easy record-keeping, or using separate cards for different purposes, allowing you to keep personal expenses and business expenses separate, for example.
Corporate investments are managed by corporate decision-makers within the area referred to as “corporate finance.” Those working in the field of corporate finance analyze all of the details relevant to any proposed venture in order to reach a decision that hopefully will maximize the corporation’s value (through liquid income or increase of assets) while at the same time managing the related financial risks as much as possible. The goal is to seek a balance between potential return and related risk that maximizes profits.
Related Resource Information:
Before a corporate investment, there are quite a number of investment meetings. They usually decide in favor or against the investing, depending upon the current status of mutual funds. The final decision is given by the investment center after they go through the detailed financial planning for the year. It is quite a different game from online trading.