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How Can I Save in Retirement?

savings for retirement in a jar

It would be understandable for many people to ask why they should save in retirement? After all, once they’ve saved for these years surely they should be enjoying the benefits.

Isn’t that what it’s all about? Well it’s a fair point, but of course each situation is different. We also need to ensure those savings last us for the rest of our lives. With this in mind there are many things we can do to save money in retirement. We can advise you on two or three of the most important things to do!

Where You Live Can Help You!

Everyone dreams of moving away to spend their retirement in a wonderful setting. Their own piece of paradise with the Beach Boys playing in the background! If you do plan on moving then it must be somewhere you can comfortably afford, and where the tax on property is much cheaper. If you can make a profit from the house you live in now then this will be of great benefit. There is a lot of information out there for retirees who have this in mind so take a closer look. Things vary across the United States so good research is vital!

Check out www.realtor.com

What the Press are Saying:

Huffington Post.: (Click article for full size)

You Might Plan of Doing Some Travelling?

Travel certainly broadens the mind but it can also be quite expensive in the long run. That said, there are many companies who cater for people of a certain age. Travelling with these companies can save you a lot of money, and you can often find the best places to eat or stay. You may even know people who have done the same thing so talk to them for advice! It really is possible to do lots of travelling quite cheaply so look around and again. Carry out lots of research!

choosing a red apple among the greens

Take Up the Many Offers Out There!

You can get a senior discount on many things – sometimes going up to ten per cent or more. So many retailers now have special deals for people in this bracket, especially those on a budget. Make sure you take advantage of this as it can save you a pile in the long run!

What About Your Home?

Everyone likes to own their own home as they can make all the decisions associated with this. Depending on the property size, this can become expensive as the home also has to be maintained. Insurance, utilities and maintenance costs generally can take a good chunk of your budget. And of course there’s the hassle these things can produce. For some people, moving into an adult community or complex can take all of these worries away.

They may have to pay monthly insurance fees or other smaller associated costs, but it does help them big time. Suddenly, a bit of a weight is off your shoulders! You can purchase smaller homes in a real estate community for older people. It all depends on your situation and the future plans you have, but you can certainly save a lot of money this way!

But There’s One Other Thing You Can Do!

So many people have clutter at home – things they really don’t need. You’d be surprised just how much in some cases! You may be able to sell older furniture, cars and even clothes to raise extra capital. It can also be about putting something back. You may even get a great vacation out of it, so look at all the options.

making the retirement way easy

And the Upshot of This All?

The truth is no matter how old you are, saving money will always bring big advantages to the individual. People can sometimes tread a fine line in later years.

You must ensure you can make your money last in retirement but quality of life is important as well. You must enjoy your retirement and take advantage of all the opportunities coming your way!

Saving and Borrowing

How Can I Get a Secured Personal Loan?

currency notes dollars secured by a lock and chain
currency notes dollars secured by a lock and chain

Ahh………..It’s the age old question………how can I go about crossing the financial minefield to get a secured personal loan. According to your bank and all the online advertising it sounds really easy.

But wait! What if the mines go off before I get there? Worse still, what If you sign up only to find another battlefield waiting further along the line?

Now Be Honest……….That’s Got Your Full Attention…Now Hasn’t It!

 
You’re already very aware a secured personal loan will be tied more often than not to your property or other such collateral (things you own). So in this case you need to be completely certain you can meet the payments comfortably. If you don’t you could run the risk of losing your property!

Check out this video before reading any further

‘Remember you are a loan consumer – get it?? A loan consumer who meets a dark stranger. It’s the story of financial love overcoming all obstacles along the way! A gripping tale of two people coming together and living happy ever after!

‘See this blockbuster at a bank near you today!………….ok well not’s forget online lenders and various other financial organisations.’

climbing over his credit score

So with clapperboard at the ready and knowing this type of loan means you’ll need collateral in exchange for a sum of money at a low interest rate, the process begins. There are a number of things you’ll need of course, but before you gather these together make sure you check your Credit Score. It should be a matter of routine for you anyway and you can get at least one free credit score each year.

www.freecreditscore.com

Now read this: http://www.usa.gov/topics/money/credit/credit-reports/bureaus-scoring.shtml

At this point you should be ready to go…………….but before the starter fires his gun and the race to a secured loan begins………..you’ll need at the ready proof of your monthly income. Any documents you have will help, and of course your employment needs to be secure for the foreseeable future. It is possible to get a loan with bad credit, but a good score will help considerably in your quest to cross the finish line first!

You need to be very clear on your objectives so:

  • How much do I need to borrow?
  • Do I have enough collateral?
  • What’s my loan limit?

With this all sorted its then time to make a list of the assets you’d like to use as collateral for your loan. These could be real estate and even a car or a boat. You might also have financial investments you could possibly use.

Important Things to Note:

‘The most sensible place to start would be at your own personal bank – you’ll probably get the best terms here as a regular customer. Having a no obligation chat won’t do any harm. Take a look at the various other options available to you as your ban’s terms may not be to your liking – in short it pays to shop around.’

happy money mascot with a thumbs up

It may sound obvious but the most important thing is the annual percentage rate or APR. The shorter the term you can get the better it will be in the long run. What you must do is ensure you understand all of the terms and the small print. There could be fees attached for things like late or missed payments.

Then you must imagine you’re the President looking to secure a loan for the land of the free!…………well alright that’s a bit over the top. But do what he would do…………NEGOTIATE!

The point is you are the one offering collateral to the would be lender so you can actually demand better terms…………In any case it never does any harm to try and get a slightly better deal. If you’ve got the best rate of interest and you’re happy then you can sign up – but be aware you’re also risking personal collateral!

Extra Info

In certain cases you may be able to use the item you purchase from the proceeds of the loan – but be aware you could get into even deeper trouble if it all goes wrong. It’s called ‘Double Jeopardy’

There are many lenders who will take investments such as stocks and bonds as collateral. This can work well as you can still continue to earn money on them while the lender holds them as collateral.

Good luck with your secured loan.

Saving and Borrowing

Ensuring You Have Enough Money in Retirement

rich old man pointing towards money
rich old man pointing towards money

Well we don’t want to worry you but even Moses himself had to wait until retirement to achieve prominence. JR just kept working and even Luke Skywalker gets older! Retirement can mean many things in the modern world and it should be very positive, but for everyday folk just how do you plan ahead to ensure you have enough cash in later years?

The Biggest Fear?

You’ve already worked it out we guess? Outliving retirement savings after you’ve stopped working. It’s the worst possible outcome, and it doesn’t do any harm to scare yourself once a day the experts reckon. But seriously, you really can avoid this so read on.

So What Do I Need to Do First?

The best thing to do is sit down with your favourite tipple and try and plan ahead realistically as that endearing term, ‘budget’ comes to mind. But delete those mental images of flash cars, boats and Moses parting the sea! Of course we hope you win the lottery, but looking at your monthly outgoings alongside the long term income you receive will be a much better bet at this stage. You may have a company pension or social security lined up, so make sure your targets are real.

What About Tax When I’m Older?

 
carrying tax burden

We’d knew you’d ask that question, and of course it’s extremely sensible to take a closer look at this as you walk the line. But even Johnny Cash would have worked out his taxable income.

Let’s say you have both taxable and IRA accounts? It would be best to take out a regular source of income from these accounts. Taking out no more than $1,000 each month won’t really mean you pay substantial tax.

This also means your accounts will have room to grow further – you may even later be able to take out a lump sum to pay off the mortgage. It keeps you at a manageable level tax wise which is very important.

So We Must Look at Debt as Well Then?

The dream would be to take care of all debt before you retire of course. Even taking out a car payment of the mortgage can make a huge difference in later years. If you aren’t luck enough to quite get there, then financing can actually help this in retirement. But do what you can to limit the debt you have and this makes things much easier for you in the long run.

Is it Safe to Mention Long-term Care Insurance?

It’s safe and sensible to take a look at this, because if you have no insurance cover any savings could quickly be wiped out. The truth is premiums are high and these costs are going up annually. Hopefully you won’t even have to think about this in retirement but check out our feature on the subject and do more research. It won’t do any harm.

Ok What Do We Do Regarding Assets and Investments?

 
dollar bundle

If you have all your savings in investments with a guaranteed return like treasury securities for example then it’s possible your income could run out at some point. Purchasing an annuity with the rider of a guaranteed income paying you a sum each and every month until death would be a very good move. It may not win you the super bowl, but it can pay dividends long term.

You may even consider Longevity insurance if you think the family will all live long. There could the possibility of you selecting a mix of equities like mutual funds or blue chip stocks. Corporate bonds are a good option along with ETFs and preferred stocks. If you can prevent dipping into your investments a little further into retirement then this will certainly give you a solid foundation. Employ the services of a good financial adviser if you must!

There are many other things you can do to boost your income in retirement and you should look at as many options as possible. Retirement is a fresh beginning for everyone – so plan well and reap the benefits!

Saving and Borrowing

Credit Card Agreements and What You Should be Aware of?

reading something carefully

Ok you carry your cards in your wallet, you make the payments and you manage your account well. But these credit card companies can cost you more money if you ignore one crucial thing!

The Change of Terms Notice!

 
shocked with the credit card bill

Oh yes, once each year credit card companies will send out this notice to customers. This letter will inform you of changes to your credit card agreement regarding both new clauses, and more importantly new fees! Now it’s true some people just take a brief look at the paperwork and think it won’t affect them too much and then just put it down. But actually some of these changes can be quite hefty. You must read any letter closely and make yourself fully aware of any changes to your credit card agreement and what they may mean.

So What Will They Look at Changing?

Well the biggest thing will probably involve the dreaded rising annual percentage rate. If you don’t pay off your card in full at the end of each month then this change in interest can see you paying a lot more in the long run!

The worrying thing is this could be up to 28 per cent in some cases. Look very closely at the small print for more information on this.

If there’s a sizeable increase then you might like to transfer the balance to another card with a lower APR! Don’t be afraid to play the long financial game!

reading something carefully

Look Out for the Clauses!

Let’s say you make late payments on your credit card on two occasions in a 12-month-period. The credit card company can throw a new clause in saying they have the right to increase the interest rate because of this.

This is just such example that could take you by surprise! Look out for the clause changes!

If You’ve Had a Cash Advance Make Sure You’re Aware of This!

 
Cash advances seem to be a growing trend in recent years, but some credit card companies will charge you for each transaction. Look out for this and possible interest charges on these advances. It has been known for a company to raise APR on the balance from 22 percent to 32 per cent. That’s an enormous hike so beware!

This is Important to Let’s Look at Disputes?

Sometimes companies make mistakes with credit card accounts or balances, and normally they’d put this right as a matter of course. But you may have to tell them first! This can range from a time period from 30 to 90 days.

All of these things can make a big difference to you financially so always read the letters and analyse the small print. Don’t let the credit card companies get ahead of you. It’s so easy just to accept things without asking questions. So take control and enjoy your credit cards!

Saving and Borrowing

Credit Card Agreements – A Quick Guide!

credit card trap

Hey you’re like a kid on Christmas day when your new credit card arrives in the post. You’re so happy you could almost kiss the postie!

You get out the card and activate it just as quick as you can, but what do you do with the paperwork? File it as you should but without reading the small print?

Oh Oh……….big mistake. Credit card agreements should be studied closely……….a bit like the runners for the Kentucky derby!

Note the ‘Truth in lending Act or TILA’ and May the Force Be with You!

 
The American government have decreed any entity issuing credit to any type of consumer must disclose various facts to them before any transaction takes place.

‘Disclosure’ provides this information, but you must ensure this helps you make informed and sensible financial decisions.

Sounds complicated but it isn’t and it’s done to protect you. No……not from an Al Gore video but from making financial mistakes!

Thank You Oh Wise People – So Explain More to Me?

If you don’t take a look at the fine print, the chances are the card will cost you a lot more in the long run. Just ask Mussolini?

crippled by credit card debt percentage

Let’s Begin With the Most Important of Things – the APR

 
The annual percentage rate is simply the cost of borrowing in terms of the interest you’ll pay. Any credit card company must tell you what the APR is on balance transfers, defaults and cash advances.

Alongside this there are tiered APR’s charging a higher rate of interest above a set amount, and introductory APR’s which go up after a certain time period. APR’s can be either fixed or variable.

Then There’s the Finance Charge!

Certain cards carry finance charges. For example if your finance charge comes out to $0.50 this month and the minimum finance charge for your card is $1, you will need to pay $1. But if you pay off the balance of your card in full each month then this charge won’t apply. Double check!

Saving and Borrowing

Can I Improve Net Worth by Decreasing Liabilities? – Part 2

Rich happy man with money raining

Click here to read part – 1

rich happy man with money raining

The problem is that for many increases in assets there is a commensurate increase in liabilities (eg. buying a house usually requires a mortgage). Additionally, people only make so much money at their jobs, and negotiating a raise may be difficult.

This creates a necessary limit on asset creation as spending beyond your ability to pay will accrue debt. This does not mean that someone should never buy a house or only buy a house with cash reserves, instead it is meant to illustrate the interconnected nature of assets and liabilities.

Ideally, one should pursue a strategy that allows for the beneficial movement of both assets and liabilities simultaneously. A good example of this would be investing in a 401(k).

Making Small Changes

carrying tax burden liability

This defers your tax-liability and increases your asset holdings. The difficulty faced by most people is that they do not have the residual income necessary to adequately increase their assets beyond their liabilities. Therefore, the most appropriate measure to undertake in order to increase net worth is to examine your spending habits or your cash outflows. Finding a new, better paying job, is not as easy as deciding to forgo dining out one day a week.

Note how you are spending money (your liabilities) and identify ways of reducing that burden. By reducing the amount needed to service debt, you increase the amount of money available to go into asset creation. Remember, decreasing liabilities is not simply about decreasing your debt payments; it is about managing your overall spending.

Decide not to buy the latest smartphone or turn off lights when you are not in a room. Small changes in behaviour can go a long way toward reducing your expenses. The bonus is that by trimming back on what you can and growing your assets, you can create more value that can be borrowed against in the future thus allowing you to increase your assets at the expense of your liabilities.

The Bottom Line

calculating household items' net worth

Taking the time to look into your household’s net worth can tell you many things and it really is a balancing act. Incurring a liability is not necessarily a bad thing if it means getting a new car when the old one breaks down or an education to improve job prospects.

The important thing is that we adequately and appropriately budget for these items and ensure that they add value over the long term. A new car to replace a dangerous clunker is a “good” purchase whereas buying a new convertible due to a mid-life crisis is less so.

Assets and liabilities play off of one another, improving your position in one allows you to make gains in the other. How you do this really comes down to your own personal spending habits and how quickly you want to be able to enact change to improve your financial health.

Saving and Borrowing

Can I Improve Net Worth by Decreasing Liabilities? – Part 1

Money arrow chart increasing
Money arrow chart increasing

It may sound complicated but the resounding answer my friends is yes! But how do you go about the process? Well first let’s look at the detail. Public companies are required to produce reports based on their financial positions.

The fact is, you’ve already heard of this! Income statements, balance sheets, cash flow statements are all in effect the very same thing! They all paint a picture of how a firm is performing financially. Now you may not be a Bill Gates or indeed have a business at all, but the point we are making is, individuals can do exactly the same thing themselves, to outline their position fiscally! It’s called working out your net worth.

Now if you’re not a mathematician or a business expert don’t worry. Once you understand where this formula comes from everything will fall into place!

ADD UP ALL YOUR ASSETS AND THEN SUBTRACT YOUR LIABILITIES – THIS WILL GIVE YOU YOUR NET WORTH!

The natural reaction to all of this is, how can I improve my net worth? In truth it’s not really a complicated process and anyone can do it quite quickly. But in order to simplify this lets tell you about the key words here and what they mean in real terms. Once you have this basic grounding then everything else becomes much easier when dealing with your net worth!

  • An asset
    This is anything you possess carrying a cash value. It could even be loose change in your pocket or purse. Cars, boats, bikes, bank accounts, absolutely anything with a cash value. Assets are important to you on a day to day basis and the more you have the better your financial standing. Companies look at assets in exactly the same way so the theory works for everyone.
  • Market value
    Basically this is another term for the cash value of all your assets – this liquidation value is about real hard money in real time. Imagine what you might get if you sold all of your assets tomorrow? You are working on their overall market value!
  • Net Worth
    When we talk about net worth we talk about how much the item would be worth today if you sold it. Individuals sometimes make the mistake of putting extra value on things because they have sentimental feelings attached to them. An asset is only worth what people are willing to pay for it at any specific time. It’s important to include your wage and other income yielded from any investments you may have.
  • Liabilities
    These are straightforward to explain and basically amount to the money you owe others. Things like student loans, car payments, credit card debt, Gas and electric bills and of course your mortgage are all liabilities. It’s really a technical term for the debt any individual carries with them, but it’s vital in calculating net worth as you’ll find out in part two.

ANY ASSETS YOU HAVE ARE KNOWN AS ‘CASH INFLOWS’ – ANY LIABILITIES YOU HAVE ARE KNOWN AS ‘CASH OUTFLOWS’

So in part two we’ll look at increasing your net worth and what’s involved – we can go into the whole process in slightly more detail. We can then sum everything up for you and give more advice on the topic so you fully understand how things work!

CHECK OUT: www.moneymanagement.org/Community/Blogs/Blogging-for

Products, Saving and Borrowing

A Quick Guide To Credit Unions

credit union logo
credit union logo

Credit Unions are as popular as pretzels, American Idol contestants and superman. Yes it’s a fact they have more than 90 million members serving more than 45 per cent of the financially active community in the States!

These wonderful institutions grew from a single church, workplace or town. They only took people on who were members or simply attended these places. They eventually came under the umbrella of the Federal Credit Union Act of 1934, described as thus:

“Groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community or rural district.”

So what are they?

 
explaining how credit union works

Credit Unions are financial institutions who don’t aim to make a profit. They are in fact owned by the members, and the overall aim is to provide a quality service, though of course they must make sensible financial decisions and pay salaries just like banks. They also need to compete with other financial institutions, though most members tend to be in the low to middle income brackets.

‘BECAUSE CREDIT UNIONS ARE NOT FOR PROFIT THEY HAVE GAINED GREAT RESPECT FROM PEOPLE ACROSS THE UNITED STATES. IN THESE DAYS OF HIGH BANK CHARGES THEY PROVIDE A CREDITABLE AND SUCCESSFULL ALTERNATIVE.’

“They really make you feel part of something in a credit union, knowing most other members may be similar to you as an individual. They put people first and I like that very much”

Says John from New York

Note the language

You’ll realise quite quickly the language used in a credit union is a little different to that of a bank. What you recognise as a checking account in a bank will be known as a ‘share draft account’. The customers are called members in a credit union. That apart they provide great competition to the banks.

What do credit unions provide?

 
covered by credit union sheild

They have very similar financial products to banks but these can vary a little. Credit Unions in some cases will choose not to provide exactly the same products however.

This is largely because they don’t carry the same volume of customers. The truth is you’ll find they offer products most members are very likely to use. You can choose between auto and personal loans and a whole host of other similar products.

The great thing is all members pool their assets to provide loans and other financial services to each other, so it’s a very personal thing to some people.

If I’m eligible how do I join a credit union?

Once you’ve established whether or not you can join as having a common bond, then all you have to do is go into a branch and simply as for an application. But you’ll need your driver’s license or some other form of identification. The form is straightforward and most unions will require a minimum deposit of $25 via cash or check. It’s as simple as that! The great thing is decisions are made locally and this means you also get a much faster service in certain circumstances. Have a good look around to find the best credit union for your own personal circumstances. The Credit Union National Association (CUNA)has its own website to help find a credit union near you. It also has various financial tools you can use to help make decision s on the product you need.

But remember!

The Credit Union may carry out a credit check on those applying for a debit card or individual checking account. Check your FICO score just in case! Remember you are entitled to at least one freed credit check every 12 months to ensure all of your details are correct.

Ben from Washington took out an auto loan from a credit union after doing plenty of research. He said:

“It amazed me to discover only one used car loan in five is through a credit union. Maybe it’s because a lot of people don’t realise their rates are very competitive against other financial institutions.”

Who supervises credit unions?

There’s a Government agency responsible for overseeing credit unions called ‘The National Credit Union Administration’

Who is the largest credit union?

At the time of writing The Navy federal Credit Union was the biggest – they serve the U.S. Department of Defence and have $45 billion worth of USD assets across 3.4 million members. It’s worth noting this is a perfect example of those sharing a common bond!

You can see why Credit Unions are so popular especially with the lower paid – why not check one out soon?

 
Is it a bird, is it a plane?…………..No it’s a credit Union………even Superman would be impress with that!!

Products, Saving and Borrowing

Student Loans

student loan

To become part of the ‘American Dream’ it seems a first rate college education is a necessity. But sadly it’s an expensive necessity as tuition fees charged by universities and private colleges can reach more than $60,000 each year. Thankfully there are various student loan options available, and its worth noting tuition fees at public universities are generally lower!

What Type of Student Loans are Available?

There are two types of student loan for undergraduates:

Federal Loans

This should be the first port of call for students as these are made by the U.S. Government directly. There are also federal loans made by other lenders including banks, and these are guaranteed by the Government. The interest on this type of loan is set at a fixed rate by the Government. All colleges and Universities should make this clear to students. Stay clear of those lenders who don’t carry government guarantees!

The ‘Stafford Loan’ of which there are two types is the most popular as these are available to everyone regardless of financial need. You can get them directly from the Government or through a lender. For those who can show sufficient financial need, the government will pay the interest on “subsidized” Stafford loans for individuals for as long as they stay enrolled at college. The flip side is loans accumulate interest while a student is in school. In this case the student can either pay the interest when it’s due or let it be added to the overall balance

happy girl with approved student loan

A ‘Perkins Loan’ is available to those students who have need for the greatest financial assistance. ‘Federal Pell’ grants are given to students from low-income families. Parents can take out federal loans. These ‘Parental Loans’ are also known as ‘Plus Loans’. Check out ‘The Federal Education department’ Interest rates can range from five through to eight per cent so make sure you shop around!

There are lenders out there who will offer discounts on the loan after for example you’ve made a certain amount of consecutive payments on time.

The government sets limits on how much money students can borrow under each loan program. This ranges from $5,500 in the first year of study up to $7,500 in later years. The highest amount an undergraduate can borrow from the Stafford loan program is $31,000.

‘Federal Student Loans are also available through the William D. Ford Federal Direct Loan Program.’

In the case of Plus Loans a family can get enough money to cover their full period of attendance, less other financial help they receive. This cost of attendance is set by law and also includes boarding, transport and books.

Private Loans

These are similar to a personal loan you’d get from a bank except interest rates will be higher and will fluctuate over time. Citi student loans are one such example. Underwriting these loans can also be a problem as many students don’t have a credit history. These private student loans however, don’t carry the level of protection you get can from a federal loan. Temporary deferment or forbearance are terms used to explain under various circumstances a borrower won’t have to make payments on the loan.

Look at: how to cope with repayment difficulties for federal loan borrowers.

 
You should know student loans taken out privately are open to special treatment in the rare occurrence a student should go bankrupt. In this case they won’t incur a total debt amounting to more than the cost of attendance. Non co-signer student loans are available for students who have a good credit score, but it’s rare for students not to be given a private loan without a co-signer anyway. Take a look at the websites of both Wells and Citi for more information

FAFSA Application Form

Every U.S. student who wants to be considered for financial assistance must fill out the Free Application for Federal Student Aid form or a (FAFSA). Financial aid offices at educational institutions use the FAFSA to work out if you are eligible for grants, loans, and work-study programs. You MUST file one of these forms every year in order to be considered for financial aid. In truth it’s a long form so you’ll need to be patient, but it can also be completed online. The good news is by filling this form in you could save hundreds of dollars in the long run so it’s worth the effort.

For those hoping to go to college there’s a wealth of information on the internet for would be students – check out ‘SimpleTuition’ and ‘Graduate Leverage’. Some of these sites are paid referral fees by the lenders themselves so make sure you do plenty of research.

For more information it would be a good move to seek out The Institute for College Access and Success (www.ticas.org).

Everyone should be able to enjoy a good further education and there are student loans to suit every background. Don’t miss out – check out!!

Products, Saving and Borrowing

Payday Loans

beautiful girl showing cash
beautiful girl showing cash dollars

This global recession has lead to a great change in the way individuals manage modern day finance. The emergence of the ‘Online Payday Loan’, is one of them. Sure , they’ve always been there in the background. But now more and more people are using them. Utilised in the right fashion they can work well.

Small amounts borrowed online a little before pay day can be paid back without any problem. And of course we all have emergencies from time to time like a car breakdown or a late bill! But sadly many more people on low incomes are being sucked into a trap of multiple instant payday loans and high interest.

WHAT IS A PAYDAY LOAN?

First of all there are many terms for such a loan from ‘Cash Advance Loans’ to ‘Deferred Deposit Loans’, ‘Check Advance Loans’ to ’30 Day Loans’. They are all the same and work in exactly the same way. The applicant applies for amounts of cash ranging from $100 to £1000 and beyond in some cases. Generally you borrow the money for a set period mainly 30 days or a calendar month.

Girl with money and laptop

On your payday the lender, who has your bank card details will take the money back from your account plus interest and any other fees. Normally $20 for every $100 borrowed. If the borrower has problems paying this back on payday then in some cases the loan can be rolled over. In this case there’s a further charge and the consumer can end up paying a lot more than the original sum they borrowed. This is very expensive on the face of things as you’re literally buying money. You probably wouldn’t entertain a credit card with such a high APR – more than 400 per cent in some cases. The truth is you’re paying for the convenience of someone solving a monetary problem for you.

Most companies will look at your credit report but there are others who don’t carry out a credit check. While most reputable lenders are just that! There are some who flout financial regulations and create extra charges just for fun. The fact is if they don’t credit check you then don’t touch them unless you want to take the risk on their reputation!

WHERE CAN I FIND PAYDAY LOANS?

There are shops in the mall who provide such a service subject to you supplying employment and personal details. But these days most payday loan companies can be found online. In most cases for first time customers they will only lend up to a certain amount. If this initial loan is paid back on time then you’ll generally be allowed to borrow more. Some will even give you a loan to be repaid back over the course of three, six or 12 months. Remember the interest rates will be high so compare several of them before taking the plunge. Payday loans online might come with an extra fee for getting the money put into your account quickly! Otherwise it might take a day or two depending on which bank you use. Make sure you shop around and go with the top names whenever possible.

WHAT ARE THE ADVANTAGES?

  • You can quickly find cash when you need it in a hurry for everyday emergencies.
  • Used sporadically and in small amounts payday loans can be of huge benefit.
  • They can cover shortfalls until your next payday.
  • You can get finances into your account from your own home.

WHAT ARE THE DISADVANTAGES?

 

  • This quick cash loan comes with a high rate of interest.
  • Rolling over a loan can quickly get you into financial trouble.
  • There can be various admin charges and fees.
  • Not all companies are what they say they are.

THINGS TO THINK ABOUT?

Pay day loans are not the answer to long term problems – they are only designed to help you in the short term. Make sure you can pay it back on your designated date. Know what you’re getting into before applying and shop around for the best deals. More importantly make sure you fully understand their terms before signing up. Check out the Federal Trade Commission’s website for more information! Legitimate lenders will always show their terms clearly and all fees will be clearly apparent. It’s always a good thing to look at the possibility of borrowing from family or friends first anyway.

If you must use a loan until your next payday then make absolutely sure you remain in full control in terms of being able to pay it back. All good companies will have transparent contact details so it’s possible to speak to a human being at the other end when you need to!

http://www.ftc.gov/bcp/edu/pubs/consumer/telemarketing/tel16.shtm