Prime Rate Credit

There may be some good news for those of you who A.) own a home and B.) have been thinking of using the equity leverage of your home to help you to consolidate some high interest debts that are doing nothing to help improve your financial standing and in fact may be hurting your financial rating, known as your credit score, or FICO. What do I mean by possible high interest debts?

Well, credit cards with high interest, for one. There are also loans that are high interest and other forms of revolving debt or personal loans that are detrimentally high and would do much better for the consumer if consolidated under one roof of lower interest debt. Or of course you could consider a low apr balance transfer credit card to do the same.

The form of consolidation we are talking about here of course is a home equity loan or home equity line of credit, most of which offer a substantial benefit over higher interest revolving debts and installment loans that happen to be a high interest debt as well. Take for instance a furniture loan that you took out, which increased the percentage dramatically most likely when your introductory period was over and started charging interest, many times retroactive back to the date of purchase, once that intro period was over.

Wouldn’t it be nice to use the equity of your home to do something good for your family and your debt management, and use it to your benefit instead of paying thousands of dollars in interest to several different vendors? The other good thing now about home equity loans is that a portion of the loan is actually tax deductible, which can make this loan a lot more attractive.

Of course, there are always balance transfer credit cards if you don’t own a home which can offer an attractive alternative to those seeking to consolidate their debts.

I read a story the other day that really touched a nerve with me, because I had lived in constant fear of how I was going to pay my bills month to month, let alone my rent in my small one bedroom apartment my boyfriend affectionately now calls the “cracker box” apartment, for years. I was working on one salary, and a modest one at that.

I was making a car payment, paying electric, heat, insurance, groceries - basically everything, and God forbid something go wrong with my car or anything came along that required hundreds of instant dollars, because I simply didn’t have it. I would have to charge it on a credit card, and that’s how I got myself into trouble with credit cards for a long time.

You see, people don’t realize how important an “emergency fund” is, because they simply don’t have the money leftover at the end of the month to even think about it. I know I felt this way. I thought, jeez, if I can barely make ends meet now, how am I going to worry about setting aside any additional money every month for a fund that I’d probably have to dip into every month anyways, because I’d fall short on the bills and have to use one of my four credit cards which never seemed to get paid down to un-stressful levels.

I’ve said before that one of my friends had a great idea when she started saving almost all of the change she ever got from anything in a jar. At the end of the month, many times she’d have almost fifty to a hundred dollars, and that was a nice little sum to start stashing away for a rainy day, or something worse, like bad health or a defunct car that costs hundreds of dollars to repair.

Look, I know financial times can be really hard sometimes, I’ve been there. But an emergency fund of some sort is almost like insurance for times when we need money the most and feel the most pressure to put things on credit, which can always snowball out of control if we’re not careful.

I’ve decided that I’ll be definitely signing up for a United frequent flier miles credit card for business purposes. The reason I chose the United airline miles credit card is because first of all, I like to fly United, and second of all, the United Business Airline miles credit card that I researched has the best deal on introductory bonus airline miles and also seems to have the least restrictions and the most spelled out reward program when it comes to airline miles credit cards, which I like, because I’m too busy to read a bunch of fine print that very well may be detrimental to the consumer and most rewarding for the credit card company.

Most airline miles credit cards do have blackout dates, which means you cannot use the free tickets you’ve earned by making purchases with them on certain dates of flight, and United does have blackout dates, but this to me doesn’t really matter because I am going to be pretty open to booking my travel time around these blackout dates anyways.

Another thing to look for is the amount of points you get for each dollar you spend on purchases. Oh, and make sure you don’t get the shaft like I did on one card not to be mentioned here, because supposedly the purchases only translated into frequent flier points if they were what the company deemed as “eligible” purchases for reward points. So, when I thought I was really racking up the points every month, I’d be disappointed when I got my airline points credit card statements and it showed about a third of what I thought it should be.

So, just be careful, and be sure to ask around, see what your friends have and if they’re happy with the deal, and that way you heard it from an actual customer as to what kind of company and deal it is you’re gonna get, and whether you’ve got one of the best airline credit card deals going, or one of the worst.

When the need arose in my personal life that I financially wanted a stockbroker to assist with investing money, my choice was simple. I went to a stockbroker my parents had used for many years who I knew was honest, helped their money grow and he had a known good track record with them.

The choice is not always that easy and it is imperative to find a high quality stockbroker to invest well for you and keep your nest egg secure and growing. If you do not know, via personal history, any individual brokers, how do you go about selecting one?

There are some basic items to both look for and to watch out for when searching for a stockbroker. One of the better ways to start is to ask friends and relatives for referrals and references. You want to look at and ask about their work history and want to see a long term record of staying with the same firm instead of switching companies all the time.

Another thing you can do when looking for a stockbroker is to check the background of the potential candidate. You can do this by contacting the state Division of Securities by phone or you can go online to nasd.com then click on Investment Information and next click on Check Out Brokers and Advisers.

You may interview several brokers before selecting one that is right for you. Discuss your goals, your tolerance for risk and what you expect from your financial investments. Ask about costs of investing up front and see what the commission base is and expense ratios of doing business.

Once you have found a broker, you can and should keep track of your account via mailed statements and online. You should keep all statements and records and report any mistakes or discrepancies immediately. Keep yourself informed at all times of your personal financial picture.

In the age of increased cyber awareness, it’s a wonder that online identity thieves still find it worthwhile to send out what are called “phishing” emails to get people to unwittingly give up their personal information, credit card numbers, and bank routing and account numbers over the internet and have hundreds if not thousands of dollars stolen from them.

But there is a reason these phishers still do it, because it is still a profitable enough business and they’re still getting away with it to enough of a degree to make money at it. You may think, well who could fall for those phishing email scams?

Well, there are still a lot of people, many times not as internet saavy, many times older folks who simply haven’t had the same amount of experience online and with the new world of emails and online business, who may fall into this trap, but there are also younger people who fall for very high tech scams that seem so real, you and I might even take a second look.

For example, one day I received a Wells Fargo email asking for me to confirm some details about my account before it was officially “open”. And guess what the ironic part was? I actually am waiting for a Wells Fargo Business account to be opened right now, and thought this was real at first. The fact that the email was not filter out by my email spam filter, coupled with the fact that I really was opening a Wells Fargo account, made me think that this was a real request for information at first.

But on second look, I became weary because it provided a link to a website and asked for a user name and password, both of which I did not even have yet. I knew already at this point that this was phony, but just wanted to do a little more investigating. I actually kept the email but banned the email address from sending me future phishing emails.

You have to be really, really careful. Do not ever follow links and provide your user name and password. If you’re unsure, and really do business with the bank of credit card the email says it’s from, log onto the website directly and send the customer service an email to see if the company requested info. At the very least, report the spam to the company so they are aware a spammer and possible phisher is sending emails under the companies name for information.

I remember when I was in my early twenties, trying to pick up the mess my credit score and finances had become after I found myself in over my head with credit card debt. At that time, I did not know that you shouldn’t actually cancel your credit cards, but instead you should just cut them up and not cancel them. It is only natural to want to cancel a card that you never have any intention of using again, but you should really stop and think about it before you call or write the credit card company and tell them to cancel the line of credit.

I made this mistake, and although I can’t be sure if it really “hurt” my credit score by cancelling the cards rather than just cutting them up and never charging anything on them again, I have a feeling it didn’t make matters any better when it came to my credit score, or FICO score. So what sense does it make that cancelling credit cards doesn’t help your credit score, and in fact may hurt it? Why would creditors care if you cancelled a card vs. never charging anything on it again?

Well, as with everything financial, it’s not a 100% given that your score will be hurt or hindered by cancelling vs. cutting up, but most financial whizzes do say that to be safe you should not cancel. You see, part of your credit score is your “total available credit line”, and that is bounced off the amount you actually have charged on that available credit line.

If you actually cancel a credit card with say, a five thousand dollar limit on it, you’re essentially taking down that “available credit” number and increasing your ratio of available credit to credit used, which is not favorable in the eyes of a prospective lender, nor is it to your credit score that many financial companies would be looking at to determine whether you’re a good credit risk or not.

Now it makes a little more sense, doesn’t it? So, if you keep that five thousand dollar credit card around and don’t cancel it, you’re essentially bumping up the available credit you have on your report, while the credit utilized looks smaller, and creditors will look at this as you being more financially responsible, as well as more able to take on additional credit.

Much easier to understand now, isn’t it? If you’re worried about yearly maintenance fees on your credit card still being charged, you should call the creditor and discuss this, and whether they can be waived if the card will not be used again. But, in the end, if the yearly fee is still charged, it may be worth paying the thirty bucks to keep your available credit number up. This is another reason why yearly fee credit cards, unless you’re getting something in return, like say airline miles for purchases, are not a good idea.

Well, in the already struggling home buying and home selling business, more bad news strikes, in the form of record ten months mortgage loan rate highs. That means the mortgage loan interest rates have gone up, to the detriment of both home buyers and home sellers alike, in an already struggling home market which has been plagued by too many houses for sale with not enough buyers on the market for the past two years or so. So how much did the mortgage rates go up?

Well, on paper, it doesn’t look that significant, but believe me, these few little decimals can add up big time if you buy a home, for the simple fact that most interest is charged up front and the second simple fact that you are paying on your mortgage loan for a very long period of time, comparatively speaking with other forms of credit lines, so the seemingly small difference can add up to thousands more dollars paid in interest over the life of the loan unfortunately.

That is, unless you’re independently wealthy and can afford to pay cash for a new home. But how many of us are in that lucky boat? Not many! And that’s not the worst of it either, analysts are forecasting that the mortgage rates may reach nearly 7% by the end of this year, which could really put a damper on things for prospective home buyers, not to mention the mortgage and home buying business as a whole.

I think my gosh, you know, we got a secondary loan to pay for just twenty five percent of our home, and that secondary loan is almost eight percent interest, and believe me, that is the first loan we are paying off, because the primary loan we got at nearly the prime rate going for home mortgage loans calculations at the time we purchased the home, so that loan will be paid normally, we won’t be trying to accelerate that one because it is at a lower interest. With a nearly seven percent “norm” it will be tough for people to rationalize buying a home when the rates are so high.

Also, what about people with ARM loans, won’t they be hurting when their mortgage skyrockets because the rates have increased? Just another reason why ARMS are not a good idea for most folks, unless you are in a unique position.

To rent or to own, that is the question on many 20 and 30 something year olds right about now. With the home buying market still at a buyer’s advantage, it’s still a good time to buy a home, but the sellers market is still struggling amidst a lot of uncertainty in the housing market, and plummeting prices.

But, what are some of the reasons that many young people do not opt to buy homes right away nowadays, as was customary back in the day?

Well, I for one, considered a few things. Renting meant that I didn’t have to worry about maintaining the structure of where I lived, nor the grounds. If something major went wrong like with the heating system, AC units, or hot water heaters, all I had to do was call my landlord who was ultimately responsible for the upkeep of the home and property, not me.

Another consideration was that I did not have to pay property taxes. However, you do have to consider that many times property taxes are a tax deduction at the end of the year.

What about the fact that when you own you don’t have to answer to a landlord, or that you can also usually decorate and garden however you’d like. These things are very appealing. To have a house, there are so many little expenses that you have to consider before you can figure out if your budget allows for home ownership or not.

Ben Bernanke, the guy who took over as the head of the federal reserve after Alan Greenspan retired, and arguably one of the most powerful men in America, is getting passionate about teaching youngsters (by this we mean teens and college students) about finances. It is a pre-emptive strike against all the trouble young people tend to get in with high debt and not enough money to pay that debt, especially in college, when the temptation of easy credit is too much to resist when you’re broke and starving.

He is speaking at schools now, urging kids to learn more about financials, and acknowledges that it may not be the most exciting subject matter for young people today to read about, but that teaching kids about finances at an earlier age can help prevent the slew of youngsters that tend to get themselves in over their heads, especially with credit cards, when they don’t really understand the principles of revolving debt and bad, high interst debts.

This comes in the wake of alarming news that when high school seniors were quizzed on pretty basic subject matter they failed miserably and therefore were going in blind when it came to being a fiscally responsible adult and taking care of their own finances.

I myself have always wondered why finances and personal budgeting and education are not more of a prominent part of the high school and college curriculum. I think if it were, more kids would become adults not being in complete and hopeless debt, and we wouldn’t be seeing ads every five minutes on tv and the internet for “getting out of debt” or debt management help that so many people need these days because they didn’t know about finances and are now paying for it as a full grown adult.