Tips to take advantage of your credit card

Credit Cards usage could be a deal of benefit for you if you use your credit card in an efficient manner. Taking purchases for granted and paying the amount with an added interest has become traditional activity.

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Following are some tips that can help you in taking the advantage of your credit card and will allow you to make most out of your credit card.

1. Look for a low interest rate : If you are going to carry a balance on a new credit card, try to find out the lowest interest rate. For many people, credit card annual percentage rates are average, between 13%-15% but some issuers are going as low as 7.9% on their rates. You may also use 0% introductory rates to your advantage.

2. Try to get free short term loan on purchases : It could only be done if you use your credit card wisely. Piling up balances or paying late can take you towards the pain of expensive debt, fees and other penalties. If you want to maximize the value of your cards, you don’t want to rack up costs and with a balance, you rack up costs.

3. Put credit card rewards out of your mind : Always use the cards as you normally would. Never give thoughts to reward programs. Instead of monitoring the rewards account, let it build up and make a note to check on it after a few months.

Hope these tips help you in getting you the best pleasure from your credit cards.

Commercial Mortgage Backed Security

A Commercial mortgage-backed security(CMBS) is a type of fixed or constant income security that is endorsed or co-lateraled by commercial real estate loans. A CMBS provides liquidity to real estate investors and to commercial lenders. The increased use of CMBS can be attributable to the fast growing rise in real estate prices over years. As they are not standardized, there are a lot of details associated with CMBS make them tough to evaluate the value. However, in comparison to a residential mortgage-backed security, a CMBS provides a lower extent of prepayment risk because commercial mortgages are frequently set for a fixed term.

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Typically, these loans are for commercial properties like office buildings, hotels, factories, apartment buildings, malls, etc. but not single family homes. CMBS make up about 2% of the total United States fixed income market. It is because of the structure of Commercial mortgage that many American CMBSs convey less prepayment risk. Commercial mortgages very often contain lockout foundation after which they can subject to abolition and prepayment penalties to protect bondholders. While European CMBS issues have less prepayment protection. Interest on the bonds could be a fixed rate or floating rate, that is, based on a benchmark like LIBOR.

How To Invest In CMBS- As of September 2012, investors had one choice that provided direct access to CMBS. It is the Exchange Traded Fund, ishares barclays CMBS bond fund. Before considering an investment, analyze and forecast the fund’s performance to make sure you are comfortable with the potential risks.

Components to Be Covered In Travel Insurance

You must have been aware of the necessity and importance of travel insurance in our life. Whether you are on a business trip or out for pleasure and leisure, travel insurance policy helps you in covering up your trips, regardless of the purpose of the trip. The major task in insuring your travel trips is to finalize the best option among the variety of policies available at different prices.

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There is an enormous range of travel insurance companies; which offer different features. However, there are some vital components which should always be present in all travel insurance cover. These components are described as follows-
1. Hospital and Medical Expenses : It would always be beneficial for you to cover yourself from all types of medical and hospital expenses during your trips you might incur unexpectedly.

2. Delayed and Missed Flights : To save your money which you will spend on hotels, restaurants, transfers and shuttling in case of delayed or missed flights, travel insurance will be the best tool. It covers all what you need.

3. Cancellations : You will definitely miss travel insurance in case if you have not applied for that and your trip cancels due to any reason. Travel insurance will help you to cover your valuable money if you have to make cancellations in your trip.

4. Personal Liability : Some travel insurance companies also cover you for legal expenses and liabilities if you cause an accident and injure someone during the course of your travels.

By having a look over the above given facts, the necessity of travel insurance is justified.

Subprime Mortgage

Generally, borrowers with credit ratings less than 600 often will be faced by Sub-prime Mortgages and the higher rates of interest that go through with those mortgages. Making bill payments late or announcing personal bankruptcy could easily land borrowers in circumstances where they can only qualify for a Sub-prime Mortgage. Sub-prime Mortgage is a type of loan, which is granted to individuals with low or poor credit histories, who, as a consequence of their faulty credit ratings, would not be able to have access to conventional mortgages. Sub-prime Mortgages outlay interest rates higher than the prime lending rates because sub-prime borrowers present a higher risk for lenders.

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The most common kind of Sub-prime Mortgage Structure is Adjustable Rate Mortgage (ARM). ARM initially charges a fixed interest rate and then converts to a floating rate based on an index like LIBOR (the London Inter-bank Offered Rate). Many lenders were more free and liberal in granting these loans from 2004 to 2006 as a result of lower interest rates and high capital liquidity. Lenders found additional profits through these higher risk loans and they charged interest rates above prime in order to compensate for the additional risk they assumed. As a result, once the rate of sub-prime mortgage foreclosures increased many lenders experienced extreme financial difficulties.

It is often useful for people with low credit ratings to wait for a period of time and build up their scores before applying for mortgages to ensure they are eligible for a conventional mortgage.

Education Loan- Revised Strategy

If you are one of the aspiring student and want to pursue higher education from a foreign university or any other higher education from your own country, you need to have a look at some revised strategies to get approval for a marginal Education Loan.

Akshat SethiThese recent changes are as follows-
1. Graduation Student can no longer receive subsidized loans- One little known- provision has eliminated the subsidized loan from the federal government for graduate and professional students.
2. A rise in defaults- To help collect payments from students who have defaulted on their loans, the education department has started hiring private debt collection companies.
3. The perils of private student loan- The private student loan market have witnessed a 300% increase in last seven years, i.e. from $5 billion to $20 billion. According to a recent report from the Consumer Financial Protection Bureau, 2.9 million students currently have private loans owing about a total of $150 billion.
4. Drowning in debt- 10% of recent graduates of four year colleges have monthly loan payments that exceed 25% of their income.
5. Jobless and indebted- According to the CFPB report, the unemployment rate was 16% in 2012 for private loan borrowers who entered the job market in 2008.
6. Approval of low student loan rates but of no help- The government has prevented the interest rate of 3.4% from doubling for new subsidized federal loans but the savings will not be considerable for borrowers.

Proper planning and adequate research should be done before opting for an education loan. Above described points will definitely help you to some extent in order to get familiar with an education loan.

Risk Management and Insurance: A Relationship Analysis

Insurance is a policy that protects specific asset, risk, or contingency. Examples include property insurance, Auto insurance, workers compensation insurance, general liability insurance, errors and omissions insurance, earthquake insurance, health insurance, etc.

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Risk Management is a term related to make arrangements for the management of risks, a part of which may be securing insurance; but more broadly the management of those insurance issues – it would include safety programs, security, anything related to managing the risks in a business. Many large companies have risk management teams or groups that meet regularly to review risks. An agenda of those meetings includes reviewing a company’s operations, expansion plans, new products, locations, new assets, etc. and then confirming that the company has the right type and adequate amount insurance/security/protection to cover those risks.

For an illustration, A company may acquire new computer equipment or increase the amount of its manufacturing equipment – the risk management group reviews these changes and makes sure that insurance policies are always updated to reflect the present position. A company may begin operations in a new state or a new country and the risk management people need to be aware of it so that new policies can be purchased, licensed and permitted in hand. Typically, a risk management group includes a cross section of many departments in a company so any changes in the company can be addressed – so risk management groups characteristically include a very senior officer of the company who is generally aware of all company operations; someone from operations; finance, Human Resources and often the outside insurance agent or broker. Meetings are held regularly – quarterly for large firms.

Payday Loans: Some Tips and Warnings

It could be a very difficult task for you to find a lender who can hand you the money when you have a bad credit. People with a black mark on their credit records are often the one who are in most need of some extra money. Unfortunately, payday loans are not always an appropriate solution to a money problem.

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To shield yourselves against the perils of this type of loan, you should take the following steps-

Evaluate all alternatives before accepting a payday loan

Assess all fees involved
Identify all eligibility issues
Create the value of your forthcoming paycheck.

Tips : You can use a Payday or any other formal loan to help rebuild your credit but only if you repay the loan in full and on time. A higher credit rating will help you in avoiding the necessity of a payday loan in future period of time. Payday loan could be very appropriate in situations where you are expecting the arrival of some extra income such as tax refund or a gift of inheritance. Be very sure that the money will arrive as expected.

Warnings : Before signing any loan agreement, a final review of interest rates and fees, as well as future interest rates is highly recommended. The Federal Trade Commission and other agencies often warn borrowers that many payday lenders are blatant for sticking borrowers with excessive debt. Ask the brainiest person you know what he or she thinks of payday loans. The person may be able to suggest you a better option.

Amortized Loan: Pros and Cons

An amortized loan is one where payments are evenly distributed over a fixed period of time. Each and every payment pays some of the interest on the loan and some of the principal or amount borrowed. Partially amortized loan means that at the end of the set payment period, a heavy additional payment, called a balloon payment is then due. It has to be paid on monthly basis.

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When finance professionals talk about amortized loans, they refer to a modern process of breaking down a conventional loan into easy monthly payment schedules. In simple words, we can say that in amortized loan system, the entire interest and principle are combined to form stable monthly payments that do not vary. Generally, Car loans can be considered as an amortized loan. Mortgage is the perfect example of amortized loan.

Talking about pros and cons of amortized loan, this loan has distinct benefits and disadvantages. One of the prime points about amortized loan is that it offers a clear, set monthly payment setup to the borrower. Since the payment amount for each month is given, the amortized loan is easier to track. Another advantage of amortized loan is that, its inclusion in mortgage lending also contributes to a more straightforward process.

When it comes to the disadvantages of amortized loan, one of the biggest harm is related to equity. With an amortized loan, the equity doesn’t build up on the front end. It means that if the borrower holds onto a property for several years, equity in that particular property will be very low. Another flaw in amortized loan system is related to the idea that amortization goes against various lending principles established by consumer advocates.

Think wisely and consider the situations described above before going for an amortized loan!


FHA Loan- Introduction and Eligibility Criteria

Most of us are unaware of what actually the FHA loan means. FHA stands for Federal Housing Administration. FHA loans are those loans which are insured by the Federal Housing Administration. FHA loans were introduced to make buying home easier for families. A number of lenders participate in FHA loans but the standard FHA requirements are the same, regardless of whosoever you use. Below are some of the major criteria which should be taken into reference before applying for an FHA loan.

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These factors matter a lot in passing your home loan and could be one of the major reasons for the disqualification of an FHA loan-

1. Employment : To qualify for an FHA loan, you must have been employed for at least two successive years. Your employment needs to be verified before getting approved for an FHA loan.
2. Credit Score : The minimum credit score requirement for an FHA loan is 620. Bankruptcies, foreclosures, repossessions and late payments can negatively affect your credit score, hence, must be prevented.
3. Debt Ratio : For the successful approval of your FHA loan, your payment, interest, taxes and insurance must be no more than 29% of your monthly income.
4. Down-Payment : FHA never finances 100% of the house you purchase, however, it will finance 98.15% of the appraisal value of your house. You may have to put down 3.5% of the appraised value of the house for yourself.
5. Property Appraisal- The FHA lender will have a formal inspection of the house, which evaluates the value of the house that the lender may be able to recover in the event that you fail on the mortgage loan.

Factors To Consider Before Taking An Insurance Plan

It happens many a times in our life when we wonder if we have taken the right decision or not concerned to our financial life. Our mind is filled with many uncertainties on whether we made the right investment decision, especially, if it is something long term like insurance. Since insurance is a long term contract of 10 or even more years, it is difficult to make amendments in these contracts during the policy term. So, it would be more comfortable for us to consider some factors before taking an insurance plan.

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These factors are as follows-

1. Need based investment : The standard rule is that the life cover should be 10 times of our annual income such that our family is not impacted in case something was to happen to us. Besides, we need to define our need like our child’s education or our retirement plans and accordingly buy a policy which will help us in future.
2. Background check and due diligence : Once we have decided on the policy plan, a background check of the company is also necessary. Do go through things like policy structure, customer service capacities, scope of network, on-line platform, etc.
3. Fund Performance : A company with a good fund performance will have a consistent track record with Fund performance of neither being too unpredictable nor extremely risky.
4. Claim Settlement ratio : Always provide true information to the insurance company so as to get a good claim settlement. An average claim settlement ratio of insurance sector is 80%.
5. Understanding the policy : Last but not the least, one should understand the features of the policy buying, specifically those related to the policy terms and conditions, premium paying term, advancement date and charges.