This article looks at the way banks exploit customers with NSF and overdraft fees. It contrasts this with the other option known as payday or cash advances and proposes that these are in fact cheaper than bank fees. It goes on to show how banks lobby aggressively against the payday industry fearing cuts in there fees. The findings are based on a US study by the federal government and is freely down loadable.

This is an independent agency part of the federal government - created in 1933, just when thousands of banks failed. The 1920s and early 1930s saw thousands of banks fail. The FDIC is managed by a five-person Board of Directors, all of whom are appointed by the President and confirmed by the Senate, with no more than three being from the same political party.

This study of overdraft programs began in 2006. It was initially a response to the banks growth of automated overdraft programs. This is a system where the bank honors customers obligations using computer rules to determine non-sufficient qualification for overdraft coverage. Data and information were gathered through a survey of a sample of institutions representing 1,171 FDIC-supervised banks, and a separate data request of customer account and transaction-level data from a smaller set of 39 institutions.

FDIC publishes the results of a 2 year study on the banking systems use of overdraft programs. The study found that a typical NSF check can result in overdraft fees and interest in excess of 3,500 percent APR. In addition, the study found that customers in low-income areas (median annual income of less than $30,000) were nearly twice as likely to incur these charges.

The FDIC study reinforces the payday loan industry’s position that short-term cash advance loans are significantly less expensive than traditional bank overdraft fees. The study also found that, unlike payday loan companies that offer on-demand products, most banks (75.1 percent) automatically enrolled customers in overdraft programs that carry APRs and other fees far more expensive than the typical cash advance loan.

The FDIC study concluded that a typical bank customer repaying a $20 overdraft in two weeks would incur a $27 overdraft fee (the survey median) at an APR of 3,520 percent. A customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173 percent and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067 percent. Oddly enough the faster one pays down the overdraft the higher the APR turned out to be.

Some consumer advocacy groups like the CRL are lobbying to ban payday loans. This leaves customers with no option than to pay overdraft fees to the banks. CRL have led a charge to pass a law banning payday lending in Ohio. In 2006, Ken Compton, CEO of Advance America, said, “Contrary to the CRL’s spin, responsible uses of the payday product provides consumers firm footing to overcome unexpected financial circumstances,”.

Some key findings;

90 percent of banks surveyed allow NSF transactions to be completed without informing the consumer that funds are insufficient - even though the information is immediately available. Only 8% inform consumers that funds are low before completing the transaction. There is little opportunity to cancel the transaction so avoiding the fee.

Consumer complaints about automated overdraft programs were received by 12.5 percent of banks that operated these programs.

Almost 9 percent of consumer accounts had at least 10 NSF transactions during a 12-month period. Nearly five percent of customers have 20 or more NSF transactions. Customer accounts with 20 or more NSF transactions were charged $1,610 per year in NSF fees on average.

Portfolio lending is becoming increasing popular. One of the reasons for this is portfolio lending is not restricted to the horrific 4 property rule. Through a portfolio lender, it is possible to acquire a multitude of mortgages. However, those looking to procure loans through entities such as Fannie Mae and Freddie Mac will run into the 4 property rule wall.

It is obvious that the $750 billion bailout did not do a thing to free up capital. And now the 4 property rule is a slap in the face to all real estate investors. In fact, this particular rule is a complete rejection of the principles that our capitalist society is founded on. In my opinion, the 4 property rule is designed to put real estate investors out of business. Just when the government should be inviting us to participate in the economic recovery.

So, what specifically is the 4 property rule? Essentially, the new rules of conventional lending state that a person will be limited to four financed properties at one time. Again, this is a thoroughly absurd rule that undermines many benefits of real estate investing. Basically, if you are limited to only four financed homes, you can not flip property in vast numbers.

Specifically, if you are still financing your primary residence, you can only flip three properties if they are currently being financed! Again, this type of rule does very little for aiding investment circles. Really, it is a form of protectionism. And, as history shows, protectionism has the inverse consequence of what it was originally intended. That is to say, it does nothing to help the market and overall economy. Instead, the 4 property rule can significantly weaken the economy.

Prior to the mortgage meltdown, most real estate investors took advantage of astronomical appreciation. They practiced what all good investors practice: buy low/sell high. Most investors were buying everything they could and mortgages were easy to come by. Some bought to flip, some held in their own rental portfolio and some bought properties in bulk. All of those activities pumped a lot of money into the economy.

That is, in the absence of the 4 property rule, the sale of massive volumes of real estate would yield a number of positive effects. For example, the revenues generated could be invested into the stock market. Once invested, it would provide liquidity to many different companies. It would also generate significant tax revenue to the state and local governments. And, of course, the wealth created by this multiplexing of real estate sales would greatly expand purchasing. This would improve the economy in other sectors of the market. With the onset of the 4 property rule, all of this would cease and much of the economy could be undermined. Hopefully, this rule will eventually be revoked and return a more free market approach to the world of real estate.

Portfolio lenders, thank goodness, are not bound by this crazy rule. If you need to finance multiple properties, a portfolio lender should be your new best friend.

Do you have plans to attend college, but you dont know how you will pay your tuition? If so, you may be on the lookout for different scholarship or loan options that would work for you. If you decide that a student loan is a good option, youll of course want to get the one that best suits your needs and is the least expensive in the long run.

As you review your options for student loans, you will discover there is one referred to as a government guaranteed student loan. Just what does the guarantee mean? It means that the government backs the loan for the lending institution who is offering the loan.

The federal government has been supplying the public with this type of loan service for over fifty years now. They take on part of the responsibility for the loan and that allows that bank to provide more loans with less risk. Lenders don’t take your credit into account with these loans since the government backs them up.

There is also another way the government is involved in guaranteeing the loan. There is a specific kind of loan referred to as the subsidized Stafford loan. With this type of government loan, they take responsibility for the interest on the loan as long as you are in school and for the first six months after completion.

Many students are able to stay in school simply because they don’t have to make payments on these loans during school. Interest doesn’t even compound because it’s taken care of by the government.

Subsidized Stafford loans provide students with a six month grace period after they graduate. This allows them to find a good job, get settled, and save a little money before the payments on the loan start.

But now, any loan which is guaranteed against default by the government is referred to as a government guaranteed loan. Subsidized Stafford loans are still the least expensive loans since there is the benefit of not accruing interest, but in order to qualify for one, you have to prove financial need.

If you can qualify for these loans, they are definitely the best way to go. They will provide you with a reasonable time period without payments and are reasonable in their interest rates.

If you’re anything like most people, the cost of college is a little outside your price range. Paying $15,000+ each year as a 19-24 year old is definitely outside the reach for most people that don’t have help from their parents. If you’re struggling to meet financial obligations while attending college, having bad credit can magnify your difficulties. However, student loans for people that have bad credit are available and finding the right ones can help you to pay for school.

Student loans can be classified in two different categories; ones issued according to financial need, and ones that arent based on financial need. Many of the loan options are supported by the Federal Government.

The subsidized Federal Stafford Loan and Perkins Loan are two loans that use financial need as a qualifier. In the case of the subsidized Stafford Loan, the government pays the interest as long as you are in school and for the first six months after you leave school. The Perkins Loan is also issued based on financial need, although there are less of them given out compared with the subsidized Stafford Loan. However, if you can qualify for one, it is a really great thing as it will save you money in the long run.

If you have an unusual amount of financial need, you may also be able to qualify for grants that don’t need to be paid back. Pell grants are considered gifts and will never need to be paid back to the government. If your Pell grant doesn’t give you enough money, you can still consider getting loans to pay for your education.

If you don’t have enough need for financial aid, you won’t be able to get Pell grants or subsidized Stafford loans. However, you can still get bad credit student loans that are unsubsidized. Interest will start to accrue right away, but you will be able to pay for school. This option is more expensive than most subsidized loan options.

People that take out unsubsidized Stafford loans will have to start repaying them immediately. There is no grace period for these loans since they are offered to people that don’t have financial need.

It is true. The economy just doesn’t look very promising right now. The effects on business are being felt everywhere. As a business owner, what you need to know is how to get a business loan despite the dire circumstances you hear about daily on the news.

Business owners in this bad economy have the simple desire to simply stay afloat as the economic downturn worsens by doing one thing. Hard work. Its an American heritage that will never die More often than not, however, growing a business takes more than just working harder than the guy down the street. It takes getting more money to grow your enterprise through business financing.

Even in this economy, we have been able to secure personal and business financing for business entrepreneurs in need. With the current economic black cloud hovering over the nation, this is no small feat.

Contrary to what most people think, the money is out there and depending on your business and its financial situation, it can be a lot faster and easier to get than for others. When you choose a business financing consultant, it is important to have someone who has numerous connections to successfully securing the capital that is needed. Ask them for business references, check out their BBB record, and get to know them. You want to be treated like a valuable client, not just a number in line for a business loan.

About Our Firm: Our business capital consulting service will get the best source of small business financing for your working capital, start-up, expansion or acquisition needs. We will work closely with you to determine your unique needs in order to create the right path to financing for your business.

It is true. The economic environment just doesn’t look good at the moment. The economic pinch is reverberating not only across the United States but around the world. From the average Joe to auto workers in Detroit to traders on Wall Street, money seems like it much harder to come by, but there is money to be borrowed.

I see business owners everyday who are surviving the economic climate the best way they know how. Hard work. More often than not, however, growing a business takes more than just working harder than the guy down the street. It takes getting more money to grow your enterprise through business financing.

Even in this bad economic environment, it is possible to secure personal and business financing for business entrepreneurs in need. With the current economic black cloud hovering over the nation, this is no small feat.

The money is available and depending on your business and its financial situation, it’s a lot quicker and easier to get than for others. When you work with a business financing company, it is vital to have someone who has multiple connections to successfully securing the capital that you need in an expedient manner. Ask them for references, check out their BBB record, and get to know them. You want to get a feel for the person who is helping you, that they are not just trying to use you in any way.

About Our Firm: Our business financing consultation service will help you find and secure the best source of small business financing for your cash flow, business start up, expansion or acquisition needs. We will work closely with you to determine your unique needs in order to find the right path to financing for your business.

If you have a home loan and you think that your property went up in value by ten percent or more since you took out your current loan, you might be a good candidate to refinance. It can save you loads of money on your mortgage payments, improve your terms, or both.

When you take out a home loan, the bank uses your home as collateral for the loan. The more expensive the collateral is, the lower will be the bank’s risk that you will default on the loan and walk away from that collateral.

So, if over the years, the collateral grows in value, the bank’s risk is reduced and therefore you should be able to qualify for a lower rate. If your home went up in value by ten percent or more, banks will then consider your home loan to be a less risky investment, and would be able to offer you a lower rate. This is assuming that you kept the same job and income, made all of your payments on time, and your market interest rates are the same or lower.

Having a lower interest rate can benefit you in several ways. You can go for a home loan refinance and lower your monthly payments, or have your shorter loan term refinanced, and that would mean, you will be making the same monthly payment, but you will be able to pay off your home sooner.

Before having to home loan refinance, you have to consider the cost of doing it and then compare it to your savings. If it would cost you $5,000 to refinance and you have $25 savings per month then it would surely not be worth it because it will take you over 16 years to just break even. But if you have $250 savings per month or 5 years worth of mortgage payments, then it would be good move to refinance your home loan.

And so, before you apply for a home loan, it is important to ask for copies of your credit reports and review them carefully for any errors. If there are errors, you will need to immediately dispute the errors with each credit agency.

Comparison shopping for a mortgage will really help you find the best home loan offer. The Internet is a useful tool for quickly locating and comparing mortgage offers, and you can easily screen mortgage loans from dozens of lenders with little time and effort.

The one too common mistake homeowners make when having to home loan refinance is rushing through and accepting the first promising offer they receive. But if you take the time to learn mortgage terminology, you will be able to understand the home loan offers you consider. Just remember, don’t rush your financial decisions and you can save yourself money and future financial problems.

If your credit is less than stellar, you may have difficulty securing loans. Banks are taking a risk by lending to you and for this reason, you may have to shop quite a bit to find an institution that can help you out. Even though that is the case, you can find help if you look enough.

For many, the worse their credit gets, the harder it is to get a loan to help consolidate their debt to make repayment possible. In truth, for people with bad credit, there are a lot less options for borrowing money. But, if you need to borrow money for unexpected expenses, or to help consolidate debt, it is not hopeless. Personal loans are still an option for people with bad credit.

There are quite a few different types of loans that are issued for people that need to secure some extra funds. In the case of payday personal loans, the term is usually only a few weeks and you can get them even if you have poor credit.

With payday type personal loans, there will be no credit check. However, these loans will have an excessive amount of interest because the lender will have to take on a lot of risk to provide you with the loan.

Before getting personal loans that have a lot of interest, you may want to take a look at some other options that may be available. For example, asking your employer for a short term loan will generally work and will save you a lot in interest.

Depending on the type of personal loan that you decide to get, it may help your credit score. Signature personal loans will help your score as long as you always make on-time payments. However, payday loans won’t help your credit score.

Taking out a loan that will help your credit score to improve is always the best way to go if possible. That way it will be much easier to get a loan in the future.

Clearly, the point here is to portray Scrooge as being in the very worst possible sort of business , but what the screen writer seems to have been unclear on is that if you hold a mortgage as a lender the very worst thing that can happen …

Read the original here:
DarwinCatholic: The Economics of Scrooge

In order to properly define a home mortgage, let us define first a mortgage. A borrower takes a mortgage for a real estate property rather than for other movable properties. A mortgage loan is then used to buy a property that has been used as collateral. So home mortgages are basically loans taken by borrowers to purchase a home, which is the security of the loan.

When you get a home mortgage, it will enable you to defer paying for the house that you bought. Usually, it takes two parties in a home mortgage, which are the creditor, which is the one giving the loan, and the debtor, the person taking the mortgage. If you like, you can also include a legal advisor, a mortgage broker, and a financial advisor.

Like conventional loans, mortgages can be repaid in various ways: capital and interest, interest-only, no capital or interest, interest and partial capital, and more. Other kinds of mortgages include second mortgages, refinance mortgages, and bad credit mortgage loans.

The mortgage rate is one of the most important factors in home mortgages as it is the interest rate to be paid along with the capital. Home mortgages can be categorized as fixed-rate mortgages and adjustable-rate mortgages based on the rate.

The type of mortgage that the borrower can take actually depends on the requirements and the borrower’s situation. Other factors that could also influence the type of mortgage include the price range, how much can be borrowed, and the tax advantages of taking the mortgage.

Origination is the home mortgage process wherein it involves the following stages: submission of an application and documentation about the credit history and income, the underwriter checking the documents and credentials, and granting of the mortgage. For you to secure a home mortgage it is essential for you to have a good credit history. The creditor charges all fees that are included for the mortgage such as the entry and exit fees, administration fees, and lender’s mortgage insurance.

Nowadays, with technology at its peak, getting a home mortgage is no longer a long and painful process. In fact, many of the lenders provide online websites so borrowers can just conveniently discuss about mortgage, submit applications and even compare different options. With just a click of the button, borrowers can get all kinds of payment information and tax advantages through the sites’ home mortgage calculators.

Believe it, but many of these home mortgages websites also feature financial advisors who can give out financial advices online or on the phone. The Internet is truly a lifesaver, now searching for that best mortgage dealer wouldn’t be that complicated. Keep in mind though to check out their credentials.