Is your low interest credit card really low interest? Following is a list of the four most common methods of calculation regarding how finance charges are figured:
Calculation Methods
Average daily balance – The credit card company averages your daily balance. For example, if you charged a purchase of $200 on the 1st day of July and $300 on the 17th, your average daily balance would be $250. That number multiplied by approximately one-twelfth of your annual percentage rate (APR) equals your monthly finance charge. The company may calculate your interest on either a daily or monthly basis.
Daily balance - The credit card company takes the actual balance you carry each day of your billing cycle and multiplies it by approximately 1/365th of your APR and then adds it together.
Two Cycle Balance – This method of calculation is similar to an average daily balance except the daily average is based on your last two billing cycles, not just one. If you do not pay off your credit card in full one month, you will be hit with retroactive interest on your next bill.
Previous Balance – The beginning and ending balance of your statement are shown. The finance charge is based on the outstanding balance when the billing cycle begins.
Other charges are also factored into the cost of your credit card. There are annual fees and late fees as well as other penalty fees to be considered based upon your method of bill paying and credit history. Awareness of your own payment style is important because if you know that you are occasionally late with your credit card payments – in spite of your best efforts to be timely – perhaps a card with a slightly higher interest rate but lower late fee might be a better deal for you.
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Posted in Credit.
If you have been staying on top of the mortgage industry, there is a phenomenon occurring that might make Americans’ uneasy. The death of the sub prime mortgage market seems to have seen its beginning.
Sub prime lenders are the banks that serve borrowers with low credit scores, people with previous bankruptcy, foreclosure, other repossessions and judgments. They are the banks that offer many of the highly popular no down payment or 100% loans.
In the last few months, I have seen 4 very large productive and strong sub prime banks go out of business. It was shocking to see banks that I have used many times as a mortgage broker; banks that I know provide very good service to much of the mortgage industry closing their doors. It made me take notice and others are talking as well.
What is to happen if this phenomenon continues and these types of banks disappear completely? Only borrowers with good credit scores and a sizable down payment will be able to purchase homes. What does that mean for the rest of the country? Will hoards of people be shut out of home ownership and be chained to apartment living when its time to start their families?
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Posted in Credit.
Almost all your actions in this materialistic world have some financial repercussions. Whether you want to buy a motor car or spend some holidays with your family, money has its own role to play. As long as your desires can be fulfilled within your own income, there is no problem. The problem arises only when your desires exceed your income. In such circumstances, personal loans might be useful. But, remember that personal loans should be sporadically used and you should not allow yourself to become slaves to them. So, never make seeking loans a day to day affair. Rather, use them prudently and reap their benefits.
Personal loans help different types of borrowers, whether they are tenants or homeowners or self-employed professionals. Personal loans can be secured or unsecured. Secured personal loans can help homeowners get a big loan amount at low rate of interest. But, homeowners must provide their homes as a security before the lenders. However, if they are not willing to give their homes as a security then they should opt for unsecured personal loans. All the tenants who want to borrow can also do the same.
Personal loans are also available to people who have bad credit record against their names. Lenders perceive bad credit personal loans as high risk proposition and, therefore, charge a higher rate of interest in comparison to regular personal loans. As far as borrowers are concerned, bad credit personal loans give them a chance to recover and come out of their bad credit history. Any borrower who is in the bad records of the creditors can improve his credit rating by taking a bad credit personal loan, and repay the creditor with all the punctuality and regularity. Over a period of time, lenders will take a note of the positive developments and your credit rating will start improving.
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Posted in Loans.