Archive for October, 2011
The Fed is Driving Deposit Rates Lower- Save or Payoff Credit Card Debt?
The Federal Reserve’s policies are driving deposit rates to record lows every month. Right now the best savings account rates are even lower at less than 2.00%. A better investment might be to pay off high interest rate credit cards. because the best savings account rates are low right now. Investors who pay their credit card bills will actually be saving more money than investing, especially with high interest credit card rates.
Also being late you may face a major hike in their interest rate — often to between 29 and 35 percent, the highest savings account rates were never that high. Credit bureaus, lenders and other companies also produce “credit scores” that attempt to summarize and evaluate a person’s credit record using a point system.These may include borrowing money to make payments on loans you already have, deliberately paying bills late, and putting off doctor visits or other important activities because you think you don’t have enough money.
For information about your rights to obtain free copies of your credit report and have errors corrected, see the FTC’s fact sheet Your Access to Free Credit Reports online.Everybody makes mistakes with their money.You probably think of loans and credit cards as services — as ways to borrow money and buy things, instead you should invest and compare some of the best savings account rates from banks. The best CD rates on certificates of deposit on 5 year CD rates are some where around 3.00%.
If you pay the entire balance on your credit card or as much as you can to avoid or minimize interest charges, which can add up significantly.Our suggestion is to try any system, ranging from a computer-based budget program to hand-written notes. that will help you keep track of your spending each month and enable you to set and stick to limits you consider appropriate.Both are part of your overall credit history, which can determine your chances for a low-cost loan or a lower interest rate on a credit card.
Even if you start with just $25 or $50 a month you’ll be significantly closer to your goal.While one or two late payments over a long period of time may not significantly damage your credit history, if at all, making a habit of missing payments can result in a higher interest rate, higher fees or both when you apply for any type of loan or credit card.
But experts say it’s also important for young people to save money for their long-term goals, too, including perhaps buying a home, today’s mortgage rates are so low, or owning a business or saving for your retirement.
Over time you could be charged a higher interest rate on your credit card or a loan that you really want and need.Every time you have an urge to do a little “impulse buying” and you use your credit card but you don’t pay in full by the due date, you could be paying interest on that purchase for months or years to come.In addition, each card you own.
Even the ones you don’t use — represents money that you could borrow up to the card’s spending limit.Often the simplest way is to arrange with your bank or employer to automatically transfer a certain amount each month to a savings account or to purchase a savings account.
The Federal Deposit Insurance Corporation wants to help you reap the benefits of loans and credit cards at the lowest possible costs Not saving for your future.The important thing is to start saving as early as you can — even saving for your retirement when that seems light-years away — so you can benefit from the effect of compound interest.
Also be aware that card companies aggressively market their products on college campuses, at concerts, ball games or other events often attended by young adults.And of course, you’re right about that.Learn to be a good money manager by following the basic strategies outlined in this special report.Not watching your expenses.
But given the astounding array of credit-related services available today, with their varying degrees of complexity and costs, it’s smart to think of mortgages, credit cards and auto loans as products — tangible items that you should research and compare before you buy, and then use with care.Lenders put more emphasis on your recent payment history, so be particularly careful with payments in the months before you apply for a loan.And one of the best ways to accomplish that is to learn from the mistakes of others.
Taking on too much debt can be a problem, and each year millions of adults of all ages find themselves struggling to pay their loans, credit cards and other bills.Not only will you incur late-payment fees (see Avoid late-payment fees), but perhaps more importantly you risk triggering higher interest costs.
If you pay only the minimum amount due on your credit card, you may end up paying more in interest charges than what the item cost you to begin with.But if you charge a purchase with a credit card instead of paying by cash, check or debit card (which automatically deducts the money from your bank account), be smart about how you repay.Saving money and investing wisely is something you constantly have to stay on top of.
If you’re just starting out of college and looking to make the right financial decisions for a lifetime you will need to sit down and figure out a game plan.Late payments on that card also can trigger rate increases on other cards or loans, especially if your credit record shows other signs of risk.Here is our list of the top mistakes young people (and even many not-so-young people) make with their money, and what you can do to avoid these mistakes in the first place.
Don’t wait until the last minute to pay your monthly bills.Ask yourself if you really need the item.Paying bills late or otherwise tarnishing your reputation.Spending money for something you really don’t need can be a big waste of your money.Start by paying yourself first.
Savings Bond or an investment, such as a mutual fund that buys stocks and bonds.Two to four cards (including any from department stores, oil companies and other retailers) is the right number for most adults.Companies called credit bureaus prepare credit reports for use by lenders, employers, insurance companies, landlords and others who need to know someone’s financial reliability, based largely on each person’s track record paying bills and debts.
Pay your bills on time to maintain a good credit record and qualify for low rates.Also recognize the warning signs of a serious debt problem.A credit score is a number that is based on your credit report and reflects your financial responsibility.A credit report is a compilation of how you pay your credit card bill, loans, rent, and selected other debts and bills.
Unfortunately these days the highest savings account rates are very low and almost nil along with CD rates which are also very low.In fact your parents have probably put off retirement because their 401k accounts are not “fat” enough.The first step to staring a plan is to figure out where you stand with your savings and credit.That’s because your payment history on your debts and bills is one of the biggest factors in your credit report and credit score.That means even before you pay your bills each month you should put money into savings for your future.