Saturday, 25 May 2013

Understanding APR (Annual Percentage Rate)

If you are in the process of applying for a loan, you might be looking for the loan with the lowest interest rate. While lenders announce an interest rate when offering you a pre-approval, the Federal Truth in Lending Act also requires lenders to disclose the Annual Percentage Rate, or APR, of the loan to ensure that borrowers can compare offers accurately.

Calculations in interest, especially in the mortgage industry, can be complex. If you fail to understand how the APR of a loan differs from the interest rate you have been quoted, you may be comparing apples to oranges instead of apples to apples. Here is a straightforward guide to understand APR and why understanding APR is so important.

What is the Definition of APR?

APR is the average finance charge charged by the lender annually.  To determine the APR, the lender must add the average annual finance charge, the average fees, and then divide the total by the amount borrowed.  Luckily for consumers, lenders must do this calculation so you do not have to worry about using your math skills to come up with an accurate figure. 

What is the Significance of Understanding APR?

You probably understand that a loan with an interest rate of 7% has higher interest charges than a loan with an interest rate of 6%. Unfortunately, if you base your opinion on this fact alone, you are overlooking all of the fees and costs that are associated with obtaining the loan and servicing it. The interest rate of a loan does not take any of these fees into consideration, but the APR does.

This percentage rate will include the interest rate that the lender charges as well as any fees you will take on.  Because the interest rate and fees are included in the APR, APRs are always slightly higher than the interest rate. Some of the fees included in the stated APR are the origination fee, administrative fees, point charges, premiums charged for Private Mortgage Insurance (PMI), application fees, closing fees, processing fees, etc.  If you do not take these fees into consideration, you may select a loan that carries a lower interest but still will cost you more in the long run.

How a Lower Interest Loan May Carry a Higher APR than a Higher Interest Loan

Now that you understand the basics of APR and why knowing this figure is important, it is time to review a real life example. Just because an interest rate on a loan is lower than the rate on another loan does not mean it will have a lower APR.

Lender A charges 6 percent interest with no points, and Lender B charges 6 percent interest with 1 point. While you may assume Lender A is the best choice, they charge a 3% origination fee and Lender B charges an industry low 0.5 percent origination fee. While the point from Lender B will cost you $1000 on a $100,000 loan, the origination fee from Lender A will cost $3000 in fees. This raises the APR and makes the APR for Lender A higher, even though there are no points.

While understanding APR completely can be difficult, understanding why you need to compare APRs of a loan is essential. By taking into account all of the fees you will be paying and how this will equate in terms of interest, you can select which lender you should really borrow from.

This article was written by Richard Craft, an MBA student who loves to share what he learns throughout the web. He writes this for Kanetix, your number one choice when looking for an insurance policy on your home. Saving money by finding the best plan for you can be as important as finding the right investments!

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Friday, 24 May 2013

When you should not opt for binary option trading

There are huge prospects of trading binary options and if you have the guidance of experienced binary options brokers, your battle is half won already. Although binary trading yields a lot of excitement, nevertheless, there might be times when you will have to suffer anxiety and not excitement in the event you invest your cash in the wrong underlying assets or at the wrong time.

In this article, we will focus on the times when you should not invest in binary options trading. It is a well known fact that the profit you make or the investment you lose is determined on the ability to predict the movement of the price in the market that is tagged to the underlying assets.

When you approach well versed binary options brokers and if they are genuine, they will usually ask you not to trade on the following instances. These instances are given below. So, read on for better insight.

It is desirable not to trade when NEWS, something that is sensational has just been announced. Depending on whether it is a political event or a social event that has struck, the status of trade can be markedly influenced by these events. There were several instances in the past when traders have withdrawn from the trade on receiving NEWS that was sensational or could influence the price movement of the underlying assets on which you are trading. So, if you ever sense such a situation, it is best not to opt for binary trading options on that day. Also it is a wise move to wait and watch how the market progresses after the NEWS comes out and how other traders react.

Do not go for binary options trading when the Japanese Yen crosses. The economy of Japan is dependent on a weak Yen so that it can sell the products at a cheaper rate to the trading partners with which it deals. As such when the Japanese Yen becomes strong, the traders in Japan are not very happy about the scenario. This holds true for the USDJPY currency pair in particular. So, if you find that the Japanese Yen is getting stronger, do not go for binary options trading. In fact, binary options brokers will suggest not to.
The other instance is when you find that a particular trading platform does not offer the provision of trading with the CHF pair. However, you will find few binary options brokers that have retained the pair for trading to offer the facility for those traders that like to take risks. According to Swiss National Bank, it was contemplating to increase the peg to 1.2500 from the exiting 1.2000. If such a situation arises, the CHF will get adversely affected too that might jeopardize the chances of earning good profits in trading these currency pairs.
Given above are just a few instances, there are several other instances when you ought to think twice before you shell out your hard earned money for binary options trading. Talk to binary options brokers that can guide you in the appropriate manner.

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Thursday, 23 May 2013

High Stock Price and Low Profits?

Some companies pull in enormous profits quarter after quarter and deserve the loyalty of the buyers of their stock. For example, Apple Computer (AAPL) regularly reports profits that beat analysts’ expectations by significant margins. Apple’s stock price has dropped significantly from its high of over $700 a share despite continuing to beat expectations, and more importantly, despite continuing to rake in huge profits.

What about companies like Google or Priceline? Do their stocks deserve the high dollar price? Indeed, do their stocks represent the value of the underlying company?

A company goes public and raises money by selling a number of shares at a given price. The perceived value of the company on the date of the IPO, its products and services prior to the IPO, and more importantly, the perceived value it will have after the IPO all play a part in determining the company’s stock price. The IPO might be heralded with a lot of fanfare (recall Facebook), with the pundits emphasizing what the company has done heretofore, how valuable it is for the many users of the company, and what market penetration it enjoys as a precursor to its future potential. With that kind of hype, the underwriter expects the IPO to bring in a lot of money.

How is Value Assessed?
After the IPO a company must perform. It must show the public that it deserves its price. Retirement plans, mutual funds, and large institutions must have confidence in the prospects of the company to produce as expected. If the company does not perform as expected, as measured by earnings in subsequent quarters, the stock of that company will be sold, sometimes aggressively, by both retail as well as institutional investors. This creates a vicious cycle in many cases, in which the mere drop of the stock price instigates continued selling.

But beyond quarterly earnings and whisper numbers (say, 30 percent of perceived worth), beyond how many widgets a company produces (another 30 percent), or how deep its market penetration, how established it may be in emerging markets (40 percent) – beyond all these tangible matrices is something known as goodwill.

Goodwill is an intangible factor that might be compared to reputation. For example, service cannot be quantified, but it can be qualified and a company’s reputation rests on the overall impression the public has.

When BP Oil suffered that tragic spill three years ago, there was little spoken in the media about the 13 people who lost their lives in the tragedy. What was discussed at length was the amount of oil that continued to flow from the ocean depths. Most astoundingly, BP’s chairman at the time Tony Hayward, appeared completely indifferent and insensitive to the tragedy when he said “I just want my life back” in an interview. That seemed to have struck the death knell for the company in terms of goodwill. The company’s stock fell hard, and perhaps deservedly so.

High Stock Prices/Low Profits
But what about the companies that continue to sport high stock prices yet whose profits seem too low? Amazon is one such company. Institutions and retail investors alike seem to love it, and continue to hold up its high stock price by buying Amazon stock aggressively, in spite of the underlying company itself is not that profitable.

People seem to trust Amazon, not only the model of selling online with a minimum of headaches and a maximum of services in the form of easy returns, easy payments, easy credit, but also the promise of future gains, increased services, increased ease of doing business. Jeff Bezos has shown himself to be a master businessman, a visionary, and a rather conservative man on the personal front. He has created a company that seems to be direct, concerned with people’s needs and wants, caters to those needs, and constantly positions itself to listen to the customer.

That is goodwill, and although it cannot be quantifiable, it would certainly rank in the top 70 percent of a company’s value in the eye of its investors.

This article was written by Richard Craft, an MBA student who is sharing more of his financial knowledge with you so you can make better investments. He writes this on behalf of KEL Credit Repair, your number one choice when looking for credit repair services. Visit their website at for more information on what they can do for you!

Monday, 20 May 2013

The Ripple Effect of Missing Credit Card Payments

The privilege and convenience of using a credit card is within reach of most consumers and managing one effectively, certainly isn’t rocket science. There are a few simple rules to follow that even a child would understand. Never borrow more than you can afford to repay no matter how much available credit you have and always pay the bill on time. Easy! Right? Well, it should be! However, problems arise with wrong-headed thinking that says ‘what’s the big deal?’ when a payment is missed or one is made late.

Prior to the rules implemented by the CARD Act of 2009, the window of opportunity to pay your credit card bill vary from one lender to another. There would be times when a payment was due in less than ten days, making it difficult to juggle funds in such a short time to pay within the allotted time. The new rules mandate that consumers be given 21 days to pay their credit card bill, ample time that leaves little excuse for missing the deadline.

What you need to know before haphazardly discounting the importance of paying on time is that there is a resulting ripple effect for missing credit card payments that goes way beyond a simple penalty fee imposed by the credit card company. The areas that may be negatively affected include:

  • Employment

  • Mortgage

  • Apartment Leasing

  • Auto Loans

  • Insurance

Damaging to Your Credit History

The damage to your credit history, as a result of missed payments, is the key to the negative affects listed above. Information collected by the credit agencies on how you manage every credit card, loan, mortgage or lease is used to generate your personal reports. Your credit reports reflect the risk you pose to potential lenders and showcase both your poor credit management records and properly maintained accounts, including; how you handle your credit card bills. The way you choose to manage your finances early will effects your future financial options.

Institutions that you look to for help in purchasing a home or car; securing an apartment or insurance and even for gainful employment will request copies of your reports to review when determining whether they will provide what you’re seeking. If your reports include missed payments, six factors will be considered:

Length of credit history

How recent was the indiscretion

How late was the payment

Size of the outstanding balance

How many occurrences

Number of active accounts

The harshest penalty comes from having a recent infraction. Keep in mind that the data on your reports will remain for a minimum of seven years, however; as the years pass, one lone late payment will be less of an issue.

An individual’s circumstances will have a huge impact on how a delinquency affects their credit profile. Interestingly, the higher your credit score the more impact one late payment may have, dropping as much as 110 points, according to an FICO study.

Hoping for the Best - Being Prepared for the Worst
It’s not unusual for a first time occurrence to be go unreported, especially if it was less than 30 days past due. If you have a long history of paying on time, you’re more likely to be forgiven your one late payment.

If you’re not one of the lucky ones to dodge the bullet and your late payment is posted to your credit reports, be proactive and contact the lender to discuss the issue. Ask that the blemish be removed with a promise to be more conscientious with your payments from now on. No matter how your appeal turns out, follow through and put in place a plan to avoid future indiscretions to protect your credit score and your ability to borrow down the road.

Noreen Ruth is a staff writer at and also writes for a variety of finance based websites and blogs. She primarily writes on credit/debt management and enjoys educating consumers about the latest rules and government regulations, along with the best ways to establish, grow and maintain a good credit rating.

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Thursday, 16 May 2013

Some Urgent Cash in Hand: Just a Click Away

Ever wondered what would you do when there is a need to shell out some extra cash when your pocket doesn’t permit and on top of everything else you don’t have enough time to arrange for the same? Given the tight situation with the pocket these days, any extra expenditure at any point of time is sure to put you in trouble and tension. But here is some reason to smile. All those who have been bogged 

Some Urgent Cash in hand
Personal loan
down by the pressure of arranging for some extra money for certain unaccountable yet absolutely mandatory expenditure, here comes the option of payday loans. Now, arranging for some extra dollar doesn’t really look like a monstrous task. 

Urgent cash advance: Here’s your friend in need

What is even more convenient is that you can apply for the loan. As a matter of fact you can get the entire loan amount credited to your bank account with just a few clicks of the mouse. With the option of personal loans online arranging for some extra cash has become really easy. So, all of you who have had dreading times in the past while arranging for some urgent cash advance in a short term basis, it is time to take it a little easy.

• No waiting periods like in case of conventional loans
• The loan amount gets sanctioned as early as within 24 hours
• Unlike the conventional cash advance the entire process involves minimum documentation
• There is no credit check, if you don’t have the best of credit records backing your application. You need not worry, your application still gets sanctioned

Yes, unbelievable the aforementioned points might appear to be, but truthfully they are. Wondering what is the basis on which the lender offers you the cash? All they see is your current employment status; you have to pay back immediately after you receive your next paycheck. You choose not to pay back, you keep adding on to your own burden. Therefore, it is to maintain a decent looking credit history and to save yourself from the tension by adding on to your debt account it is advisable that you pay back right on time.

It is a must so do your homework well

There is no contesting the fact that this short term cash advance option has blessed many with peace of mind. However, to make the most out of this easy, fast and convenient option some amount of research and survey is strongly recommended. There are a few things you need to take into account before you actually click on the apply button.

• The first thing to take into account is the fee that the lender is charging
• More than often there are lenders who charge exorbitant fees. It is through research that you find out a lender with nominal charges

Not many strings attached, not many conditions to fulfil, no complicated procedure to get the money in hand - this is indeed a wonder option for all who are in desperate need of some urgent cash advance.

Author bioSam has gathered considerable experience in blogging and his primary interest lies in custom-made loan products and services like online personal loans and same day cash loans.

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Friday, 10 May 2013

Sterling Should Eventually Move Lower

Sterling has remained strong as the Bank of England has left its Gilt purchase program on hold and the country released surprise data that showed the economy was stronger than many expected.  Following a better than expected manufacturing report, the government released a better than expected GDP report which kept the country out of recession (two consecutive quarter of negative growth).  Despite the strong patch, without assistance to further stimulate the economy, the UK is unlikely to show sustainable long term growth.

In early May, the UK released the CIPS manufacturing purchasing manager’s index which was better than expected, rising to 49.8 from 48.6 in March. Despite a print in contraction territory (below 50) the news was a positive follow up to the first quarters better than expected GDP report.  The new order component rose above 50 which is a sign that future manufacturing should be positive.



Prior to the release of the PMI report, the UK released first quarter GDP.  Analysts had been expecting a flat reading and were surprised by the 0.3% increase which generated positive momentum for both the Pound and the FTSE.   Many believe the UK avoided a double dip. The economy seems to have stalled but market participants believe this is much better than moving in the wrong direction.  Output is 2.8% below the first quarter of 2008 peak, prior to the demise of the global economy during the US financial crisis.  Unfortunately, this respite will allow the hawks in the MPC to hold off on additional quantitative easing which is what the UK economy really needs.

Yield differentials between the US and UK 10-year tenor continues to point to a higher currency pair (as  highlighted by forex training).  Gilt yields, which are not seeing substantial artificial buying as experienced in the US, remain at a higher yield driving investors into the GBP/USD currency pair.  The yield is now pointing to a potential target of 1.56.



Sterling broke out in early May jumping above resistance on the heels of better than expected economic data.  Support is seen near the 10-day moving average while resistance is seen near a horizontal trend line near 1.5840.  The trend in the GBP/USD is upward, with a relatively smooth trajectory.

Momentum on the pound is solid with the MACD (moving average convergence divergence index) printing in positive territory.  The MACD generated a buy signal in late April where the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread.  The RSI (relative strength index) is printing near 62, which is on the top end of the neutral range but losing trajectory which could be a sign of slowing momentum.

Author:  Marcus Holland is the editor of – a new but fast growing education resource.

Wednesday, 8 May 2013

Online Loans Same Day: What Happens If You Fail To Pay Them

Description: Knowing the consequences of the non-payment of a same day online loan is important since you can be careful from the very beginning about the repayment of the loan you have taken.

Same day online loans are available to the borrowers in spite of their poor credit rating and blemished credit background. You just need to have a steady job and a bank account to be eligible for this loan. The application process is easy and fast and there is no requirement of any collateral or faxing of any paperwork. In fact, the approval takes just few minutes.

Now, you have qualified for the loan and the amount has been successfully transferred to your bank account. However, if you fail to pay off the loan or become a defaulter, a number of things will happen which are not going to be very pleasant for you. Given below are some of the events that may happen if you default on your fast cash loan. Knowing these consequences will help you stay away from defaults or missed payments.

1) Collection operations

The lender or collection agency might initiate collection operations against you to recover the amount that is overdue. The normal collection operations include communication via email, telephone, an SMS or a written notice. The lender reserves the authority to initiate action against you as laid down by the contract which you signed with them. The lender can also sell their debt to a third party debt buyer. They also have the choice to employ a collection agency that will conduct collection operations against you.

2) Financial significances

At present, lenders typically do not charge for any extra interest rates for being overdue on the borrowed amount. Nonetheless, some late fee may be imposed on you for your missed payments. In addition, the lender might also ask for a returned item fee when a check has bounced as a result of insufficient funds or an electronic payment has failed. Returned item charges and late fees differ from one state to another. For further information on this, you have to check out the contract that was signed between you and the lender.

3) Renewal of the loan

There is normally no provision on behalf of the lender to renew the loan that you have taken in an automatic manner. According to your financial situation, you might ask for a refinance or renewal of your loan by sending an online application. However, you have to do this prior to the due date and this should be permitted in the state where you are living. If you are approved for this, you have to sign a new contract for the refinance/renewal and the interest rate for the refinanced amount will also be different.

4) Effect on your credit score

More often than not, your credit activity will not be reported by the lenders to the credit report agencies. When you default on your monthly payment, your credit score goes down as a result of this delinquency. You will also face difficulties in getting eligible for any type of credit in the future. Lenders refer to credit bureaus such as Experian, Equifax, TransUnion or FactorTrust for pulling the borrower's credit score.

Therefore, online loans same day are payable on time like all the other loans and non-payment is strictly a no-no.

Author bio: Sam has gathered considerable experience in blogging and his primary interest lies in custom-made loan products and services like online personal loans and same day cash loans.

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