In an ideal situation, credit card processing service ensures that customers get the goods they purchased in good order. In addition, it also assures merchants that they get their money's worth of goods. Each get their end of the bargain in a satisfactory manner.
But in the real world, however, transactions do not go smoothly. Aberrations occur along the way. These problems could originate either from the customers, from the merchants, or from the credit card processing company. And let's face it. Merchants have practically no control on the kind of customers --- whether they be honest or deceitful-- that patronize their business. The credit card processing company can and will take care of fraudulent transactions. Likewise, merchants have no influence or control over the credit card processing system.
This leaves one controllable factor that merchants can manage well: how they conduct everyday business.
Listed below are some credit card processing pitfalls that could put merchants' business in jeopardy:
1.)SKIMMINGThe unscrupulous act of capturing card data and then using the data to manufacture counterfeit credit card is called skimming. Too often, a dishonest salesclerk or a desperately disgruntled waiter would resort to it. They use their own personal digital assistant ( PDA) with a card reader to secretly swipe and obtain credit card data.
2.)STORING UNCRYPTED CARDHOLDERS' DATAIt's very convenient to type credit card information and store these data in your PC without any form of encryption. If you do, you are opening the door wide open to identity theft and forgery. Always take the time to encrypt card information. It's a must. And if you want to back up your credit card data files, do so with the encrypted form.
3.)UNRESTRICTED ACCESS TO COMPUTERJust because they work for you does not necessarily mean you grant any or all employees access to your computers. Any one of them could potentially steal important credit card information. To prevent this, only allow a select few and trusted employees to gain access to your computers.
4.) KEEPING RECORDS ONLY FOR A SHORT TIMEMerchants must keep transaction receipts and records. But sadly, most merchants keep these records for a limited time only-- some one month,others three months,and the longest is six months. This unproductive practice could jeopardize your business. What to do? Well, keep credit card transaction receipts for at least three years. While this may sound a tall order, doing so could save you a lot money and headaches. You could easily produce the necessary supporting documents in case of card disputes even though the transaction occurred two or three years ago. Be sure your accountant keeps all the transaction receipt files within the given period.
5.)IGNORING CARD TRANSACTION SECURITY REQUIREMENTSMajor credit card companies will charge you a fee if you ignore to use built in card transaction security requirement-- Address Verification Service, for instance, or the three digit security code . These charges are called “ pass-through fees”. The amount is added to your discount rate. You could end up paying a large chunk of revenues if you ignore card transaction security requirements.
6.)GIVING LATE ATTENTION TO RETRIEVAL REQUESTSSupposing one customer disputes a credit card transaction. He or she initiates a retrieval request Your credit card processing company then requests that you furnish the necessary receipts for the disputed transaction. Normally, you should do so at the earliest time possible. But if you are busy or have a hectic schedule, you tend to put off this task some other time. Again, this is counter-productive. If you fail to provide your processor the documents within a specified length of time, you will be liable for a costly chargeback. As you well know by now, accumulated chargebacks could put you out of business for good.
Friday, May 1, 2009
Rewards Credit Cards: 5 Things You Must Know
Two good sites to search for credit cards are "CreditCards" and "ConsumerCardReport". ConsumerCardReport specializes in providing insightful guidance to consumers. CreditCards lists the most offers, but none of the extra cards seemed worth recommending.
There are a few fairly simple precautions that consumers should take when using rewards cards:
1. Pay it off each month. The interest rate on rewards cards is usually higher than on other credit cards, so make sure you pay the balance in full every month.
2. Avoid late fees. These can be as high as $39, so make it a habit to pay the credit card bill soon after receiving it -- don't procrastinate.
3. Don't overuse it. Some people are tempted to buy more stuff with their rewards card in order to increase their rebate, which can pile up unnecessary expenses. If you don't think you can control your spending, don't get the card! Some rewards cards will pay you a higher percentage as you spend more money, for example a card may pay 0.5% for the first $5,000 you spend and 1.5% afterwards. This encourages excessive credit card spending, which is why we don't recommend such cards to most people.
4. Make few applications. If you apply for one credit card your credit score will be fine, but as you apply for more cards lenders become more concerned that you may be having money problems. So the more cards you have applied for in the previous six months, the more your credit score will be decreased. After six months, your credit score returns to normal. Our recommendation for most consumers is to make no more than two card applications; but if you plan to get a mortgage or major loan in the next six months, make only one application.
Be aware that the number of credit cards you actually possess won't harm your credit score. More cards may even improve your credit score by increasing your credit-to-debt ratio. In particular, it's wise to maintain your card balances at less than half of your spending limits for those cards.
5. Check the terms. The most reliable description of a card's terms is listed alongside the card application. Although terms can sometimes change, major changes are usually rare.
While the best ways to save money will always involve old fashioned cost-cutting, obtaining a rewards credit card is still a good way to give yourself a virtual raise.
There are a few fairly simple precautions that consumers should take when using rewards cards:
1. Pay it off each month. The interest rate on rewards cards is usually higher than on other credit cards, so make sure you pay the balance in full every month.
2. Avoid late fees. These can be as high as $39, so make it a habit to pay the credit card bill soon after receiving it -- don't procrastinate.
3. Don't overuse it. Some people are tempted to buy more stuff with their rewards card in order to increase their rebate, which can pile up unnecessary expenses. If you don't think you can control your spending, don't get the card! Some rewards cards will pay you a higher percentage as you spend more money, for example a card may pay 0.5% for the first $5,000 you spend and 1.5% afterwards. This encourages excessive credit card spending, which is why we don't recommend such cards to most people.
4. Make few applications. If you apply for one credit card your credit score will be fine, but as you apply for more cards lenders become more concerned that you may be having money problems. So the more cards you have applied for in the previous six months, the more your credit score will be decreased. After six months, your credit score returns to normal. Our recommendation for most consumers is to make no more than two card applications; but if you plan to get a mortgage or major loan in the next six months, make only one application.
Be aware that the number of credit cards you actually possess won't harm your credit score. More cards may even improve your credit score by increasing your credit-to-debt ratio. In particular, it's wise to maintain your card balances at less than half of your spending limits for those cards.
5. Check the terms. The most reliable description of a card's terms is listed alongside the card application. Although terms can sometimes change, major changes are usually rare.
While the best ways to save money will always involve old fashioned cost-cutting, obtaining a rewards credit card is still a good way to give yourself a virtual raise.
Bad Credit Information Source
Today, with Americans carrying more debt than ever before, bad credit is often a way of life for millions of Americans. A bad credit personal loan is a flexible loan and allows you to use it for any of your personal needs.
Getting an unsecured bad credit loan if you are unemployed is harder to achieve. They have a notion that people with bad credit history have undesirably axed their source of funding, which comes from lending. Bad credit tenants also can avail loans, bad credit tenant loans are specially customized for them.
A really useful thing to know is that a bad credit personal loan can be used for just about everything including:
o Buying Christmas presentso Furnishing a rented homeo Paying off credit card billso A new car
Most companies that offer bad credit personal loans are not interested in what the money will be used for, they are merely interested in whether the person taking out the loan will be able to make the repayments or not. If you're interested to learn about the things you can do to fix bad credit - yours in particular - read on. But making some down payment will favour you in availing bad credit auto loans at an affordable interest rate.
With increasing competition among the lenders, getting an unsecured bad credit loan is no longer an unachievable dream. Usually a bad credit scorer has to pay high rates of interest but a bad credit scorer can also avail auto loan on competitive and low interest rate which is only possible through a co-signer. A credit score below 500 is considered a bad credit score in the eyes of a lender.
Bad credit personal loans help to improve credit scores by timely repayment of the loan amount. You can also use your home's equity to avail a low cost bad credit loans. Bad credit personal loans are offered to bad credit holders having any of the following in their credit history:
-Arrears-Defaults-Bankruptcy-County Court Judgment-Late payments-Poor credit score
Bad credit personal loans are offered to different bad credit holders with different amounts. In such situations, bad credit student loans may come in handy. When the borrower approaches for a new loan, he need not be penalised for a bad credit history.
A bad credit auto loan not only helps you to get new or used vehicles but it can also help you rebuild your credit history.
Getting an unsecured bad credit loan if you are unemployed is harder to achieve. They have a notion that people with bad credit history have undesirably axed their source of funding, which comes from lending. Bad credit tenants also can avail loans, bad credit tenant loans are specially customized for them.
A really useful thing to know is that a bad credit personal loan can be used for just about everything including:
o Buying Christmas presentso Furnishing a rented homeo Paying off credit card billso A new car
Most companies that offer bad credit personal loans are not interested in what the money will be used for, they are merely interested in whether the person taking out the loan will be able to make the repayments or not. If you're interested to learn about the things you can do to fix bad credit - yours in particular - read on. But making some down payment will favour you in availing bad credit auto loans at an affordable interest rate.
With increasing competition among the lenders, getting an unsecured bad credit loan is no longer an unachievable dream. Usually a bad credit scorer has to pay high rates of interest but a bad credit scorer can also avail auto loan on competitive and low interest rate which is only possible through a co-signer. A credit score below 500 is considered a bad credit score in the eyes of a lender.
Bad credit personal loans help to improve credit scores by timely repayment of the loan amount. You can also use your home's equity to avail a low cost bad credit loans. Bad credit personal loans are offered to bad credit holders having any of the following in their credit history:
-Arrears-Defaults-Bankruptcy-County Court Judgment-Late payments-Poor credit score
Bad credit personal loans are offered to different bad credit holders with different amounts. In such situations, bad credit student loans may come in handy. When the borrower approaches for a new loan, he need not be penalised for a bad credit history.
A bad credit auto loan not only helps you to get new or used vehicles but it can also help you rebuild your credit history.
Women Are Financially Ignorant No More
In past centuries, financial affairs was a subject that women were not familiar with. The predominantly patriarchal nature of the world had ensured that the woman remained in the kitchen. However, things had been changing for a long while, and the birth of feminism in the twentieth century transformed the existing equations. Women began to leave the comforts of the home and go to work. It was not about being forced to go to work. Women now had the option. And today's women are reaping the benefits of the feminist struggles of yesteryear. The women of today refuse to be relegated to their home. They take their dreams and ambitions seriously and are making great advances in the world of today. Hence, they are also hoping to find sound investment opportunities, and one of the most popular investment options is the house.
Real estate provides a lucrative investment opportunity. It is great value for money. Real estate prices seem to be set to keep rise for a long while. Perhaps there is a peak somewhere. But if current trends continue, that peak shall hopefully still be some distance away. That is great news for all potential investors. However, making sense of all the jargon that floats around the loan and mortgage is likely to be fairly tough. It can be a problem for someone who is new to the world of mortgage loans. Thus, it makes sense to contact a mortgage broker who can explain some of the jargon and help you come across the best deals.
The Internet is filled with sites that promise to put potential home buyers in touch with suitable lenders. If you are a woman, you should try to find a site that is specifically for women. Brokers that specialize in women-specific deals are more likely to help you find cheap mortgages that would prove to be your best bet. There might be a number of lenders who provide special discounts to women. Empowerment is still high on the agenda of many organizations. Thus, you should try to look for women-specific deals. You should save up on costs in the bargain.
As for those women who have been down this road before, it helps to look around before making a decision. The markets are inundated by some great mortgage deals. However, there are likely to be some worthless mortgages as well. Go through the fine print and objectively evaluate each deal. This will be a long term involvement, so take your time and make sure you make the right choice.
Real estate provides a lucrative investment opportunity. It is great value for money. Real estate prices seem to be set to keep rise for a long while. Perhaps there is a peak somewhere. But if current trends continue, that peak shall hopefully still be some distance away. That is great news for all potential investors. However, making sense of all the jargon that floats around the loan and mortgage is likely to be fairly tough. It can be a problem for someone who is new to the world of mortgage loans. Thus, it makes sense to contact a mortgage broker who can explain some of the jargon and help you come across the best deals.
The Internet is filled with sites that promise to put potential home buyers in touch with suitable lenders. If you are a woman, you should try to find a site that is specifically for women. Brokers that specialize in women-specific deals are more likely to help you find cheap mortgages that would prove to be your best bet. There might be a number of lenders who provide special discounts to women. Empowerment is still high on the agenda of many organizations. Thus, you should try to look for women-specific deals. You should save up on costs in the bargain.
As for those women who have been down this road before, it helps to look around before making a decision. The markets are inundated by some great mortgage deals. However, there are likely to be some worthless mortgages as well. Go through the fine print and objectively evaluate each deal. This will be a long term involvement, so take your time and make sure you make the right choice.
Credit Card Debt Reduction for the Elderly
As we age, various problems begin to raise their heads. The years that follow retirement are not an easy time. Many of these adjustments have to take place at the psychological level. For instance, the senior citizen has to get used to his new-found status as he is no longer going to be an earning member of the family. In effect, this would mean giving up the sense of independence that he had held so dear for so long. Entering the hallowed group of senior citizens generally entails that the new entrant begins to be dependent on the younger members of his family. This can give one's self-respect a beating, but is relatively unavoidable.
A lot of senior citizens find themselves running up high credit card debt to take care of costs that pertain to old age. This could include the bills for doctor's visits, medications, and other related things. Senior citizens who have to pay the heavy installments a loan that they had secured earlier may even resort to a cash advance to help them pay off that loan. The credit card does lend a helping hand to the senior citizen who is trying to pay off his bills. At the same time, running up a high credit card debt should be avoided as far as possible. Yet, many people who have passed retirement age have no other choice. Their pensions and depleted savings would not be sufficient when it comes to paying off a number of bills.
However, senior citizens can negotiate with their credit card providers for reduced debt. Many card providers take into consideration the age of the card holder and are willing to make concessions on repayment. The credit card companies recognize the fact that several senior citizens are unable to bear the burden of heavy credit card debt. Negotiating with senior citizens makes good business sense for the credit card company while also building goodwill for them with the post-retirement age group.
Senior citizens would also do well to look for cards that are more affordable. Switching credit cards may be a good idea for senior citizens who have a very high interest. Moreover, with the zero percent balance transfer credit cards available in the market, even the act of switching need not be too costly. There are great bargains to be found if one does a lot of asking around. Growing old may not be the easiest thing in the world. But senior citizens can reduce their worries considerably.
A lot of senior citizens find themselves running up high credit card debt to take care of costs that pertain to old age. This could include the bills for doctor's visits, medications, and other related things. Senior citizens who have to pay the heavy installments a loan that they had secured earlier may even resort to a cash advance to help them pay off that loan. The credit card does lend a helping hand to the senior citizen who is trying to pay off his bills. At the same time, running up a high credit card debt should be avoided as far as possible. Yet, many people who have passed retirement age have no other choice. Their pensions and depleted savings would not be sufficient when it comes to paying off a number of bills.
However, senior citizens can negotiate with their credit card providers for reduced debt. Many card providers take into consideration the age of the card holder and are willing to make concessions on repayment. The credit card companies recognize the fact that several senior citizens are unable to bear the burden of heavy credit card debt. Negotiating with senior citizens makes good business sense for the credit card company while also building goodwill for them with the post-retirement age group.
Senior citizens would also do well to look for cards that are more affordable. Switching credit cards may be a good idea for senior citizens who have a very high interest. Moreover, with the zero percent balance transfer credit cards available in the market, even the act of switching need not be too costly. There are great bargains to be found if one does a lot of asking around. Growing old may not be the easiest thing in the world. But senior citizens can reduce their worries considerably.
Credit Counseling Info Source
Unlike bankruptcy or debt settlement, you'll still be liable for paying the entire balance owed over a number of years, but as stated, if you can realistically commit to a long term payment arrangement, and you don't mind waiting a few extra years to become debt-free, consumer credit counseling may be right for you. As a result, many people are unsure if credit counseling can actually help them get out of debt. Typically, credit counseling involves working with the counselors to work out a financial strategy to manage the debts.
Credit counseling was created with the consumer in mind, some companies failed to recognize that. It helps to keep in mind that appropriate Federal and Senate committees have taken cognizance of the profitable nature of some of the non-profit credit counseling agencies. The biggest learning factor provided by a reputable consumer credit counseling agency will be knowledge they present you with in order to bring a more disciplined financial environment into your life resulting in less stress in terms of your current financial shape.
However, consumer credit counseling is not a free service and this, unfortunately, is a barrier in itself for those individuals too far in debt to afford the service. And, in case you find that you are not having a sound credit record, then, don't waste time to go for credit counseling because it helps immensely. Of course, counseling at the Consumer Credit Counseling Service is confidential and at no cost.
Contact Consumer Credit Counseling, As mentioned earlier, Consumer Credit Counseling is a non-profit group funded by creditors to help consumers negotiate repayment plans. Solid, reputable credit counseling agencies are an invaluable resource for debtors who have reached the end of their financial rope. Finally, it is important that you curb spending urges, since the benefits gained from the credit counseling will be lost if you have not learned to better manage your finances and avoid the situation that lead you to credit counseling in the first place.
It isn't going to do you any good to get out of debt if the credit counseling doesn't teach you how to manage your money so that you don't come knocking on debt's door again. Some families have found credit counseling to be one of the best solutions for avoiding bankruptcy. Credit Counseling Offers Third Party Advice, another option for debt consolidation is to get third party advice as to which program is best for your situation.
If you do find yourself in a predicament like this and you need professional help then you should really think of seeing a credit counselor or credit counseling service. You may want to check your particular states finance and banking department if you have questions regarding the status of the credit counseling organization you are speaking with. It is advisable to consult agencies that are accredited to either the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.
If you'd like access to more information and resource links pertaining credit counseling, then check out my site at: Free Credit Counseling
Credit counseling was created with the consumer in mind, some companies failed to recognize that. It helps to keep in mind that appropriate Federal and Senate committees have taken cognizance of the profitable nature of some of the non-profit credit counseling agencies. The biggest learning factor provided by a reputable consumer credit counseling agency will be knowledge they present you with in order to bring a more disciplined financial environment into your life resulting in less stress in terms of your current financial shape.
However, consumer credit counseling is not a free service and this, unfortunately, is a barrier in itself for those individuals too far in debt to afford the service. And, in case you find that you are not having a sound credit record, then, don't waste time to go for credit counseling because it helps immensely. Of course, counseling at the Consumer Credit Counseling Service is confidential and at no cost.
Contact Consumer Credit Counseling, As mentioned earlier, Consumer Credit Counseling is a non-profit group funded by creditors to help consumers negotiate repayment plans. Solid, reputable credit counseling agencies are an invaluable resource for debtors who have reached the end of their financial rope. Finally, it is important that you curb spending urges, since the benefits gained from the credit counseling will be lost if you have not learned to better manage your finances and avoid the situation that lead you to credit counseling in the first place.
It isn't going to do you any good to get out of debt if the credit counseling doesn't teach you how to manage your money so that you don't come knocking on debt's door again. Some families have found credit counseling to be one of the best solutions for avoiding bankruptcy. Credit Counseling Offers Third Party Advice, another option for debt consolidation is to get third party advice as to which program is best for your situation.
If you do find yourself in a predicament like this and you need professional help then you should really think of seeing a credit counselor or credit counseling service. You may want to check your particular states finance and banking department if you have questions regarding the status of the credit counseling organization you are speaking with. It is advisable to consult agencies that are accredited to either the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.
If you'd like access to more information and resource links pertaining credit counseling, then check out my site at: Free Credit Counseling
Debt To Income Ratio
Debt to income is a ratio of your total monthly debt payments to your total monthly income expressed as a ratio or percentage. It is a rather simple calculation but it can be deceiving unless you include all debt and all income in the calculation.
The calculation of your debt to income ratio is a straightforward one. You simply divide your total monthly debt payments by your total net income (that is your income after taxes). While some debt is unavoidable and may even be desirable for achieving your financial goals the real question is how much debt is too much; just where do you draw the line. Obtaining credit is often a function of a loan officer calculating the debt to income ration as a way of determining your ability to meet new obligations. Too high a debt to income ration will also have a negative impact on your FICO score, often making credit obtained more expensive than it needs to be. Below I suggest categories for inclusion in calculating your debt to income ratio to see where you stand.
Monthly Debt Payments to Consider:
Mortgage or rent paymentsPayments on a home equity loanCar paymentsStudent loan paymentsMinimum credit card payments times 2Other outstanding loan amount paymentsChild support payments
Monthly Income to Consider:
Total net or take-home payChild support or alimony payments received1099 Income after taxes divided by 12Other monthly income
Now add up debt and income and divide.
The above list is only a guideline for gathering personal information. It may include every possible aspect of your debt/income but you may need to add categories or not use some of the categories in your calculation. If you add lines to your debt calculation do not include bills for services or products unless you have placed such bills under a payment plan such as establishing a fixed payment plan with your dentist. Under income do not include windfalls such as one time gifts, an insurance settlement, an inheritance or lottery winnings.
So now you have made the calculation. How can we answer the question how much is too much? When applying for credit, the loan officer will look at your debt to income ratio as one factor in making a decision but it will not be the only factor considered. The same debt to income ratio may be great for one family but may have a negative impact on another. Debt to interest ratios in the end are a subjective tool for loan officers to make decisions about your ability to meet a new obligation. There are some general guidelines, however, that will give you a reasonably solid picture of where you stand in the eyes of a loan officer.
30% or less is generally considered as an excellent ratio by the vast majority of loan officers20% - 36% is a good ratio and will most likely not cause any problems with loan officers or have a negative impact on your FICO score36% - 40% puts you on the edge of the limits of acceptability. Most lenders will ask for an explanation for why your debt to income ratio is so high. In addition, a debt to income ratio in this range begins to have a negative impact on your FICO score so lenders look to other strong numbers before making a decision to loan more money to you40% or higher sends up red flags with lenders and your FICO score. Often, this high a ratio will be a deal killer with most lenders
By calculating your own debt to income ratio you begin to get a handle on your own financial situation. If the ratio is too high it tells you you are too deep in debt and you must do something to reduce debt. Of course, if it is very low then you need do nothing. For most lenders and the impact of debt to income on your FICO score a positive reduction in the ratio is presumed to be a sign of a healthy financial condition and goes a long way in enhancing your credit history.
The calculation of your debt to income ratio is a straightforward one. You simply divide your total monthly debt payments by your total net income (that is your income after taxes). While some debt is unavoidable and may even be desirable for achieving your financial goals the real question is how much debt is too much; just where do you draw the line. Obtaining credit is often a function of a loan officer calculating the debt to income ration as a way of determining your ability to meet new obligations. Too high a debt to income ration will also have a negative impact on your FICO score, often making credit obtained more expensive than it needs to be. Below I suggest categories for inclusion in calculating your debt to income ratio to see where you stand.
Monthly Debt Payments to Consider:
Mortgage or rent paymentsPayments on a home equity loanCar paymentsStudent loan paymentsMinimum credit card payments times 2Other outstanding loan amount paymentsChild support payments
Monthly Income to Consider:
Total net or take-home payChild support or alimony payments received1099 Income after taxes divided by 12Other monthly income
Now add up debt and income and divide.
The above list is only a guideline for gathering personal information. It may include every possible aspect of your debt/income but you may need to add categories or not use some of the categories in your calculation. If you add lines to your debt calculation do not include bills for services or products unless you have placed such bills under a payment plan such as establishing a fixed payment plan with your dentist. Under income do not include windfalls such as one time gifts, an insurance settlement, an inheritance or lottery winnings.
So now you have made the calculation. How can we answer the question how much is too much? When applying for credit, the loan officer will look at your debt to income ratio as one factor in making a decision but it will not be the only factor considered. The same debt to income ratio may be great for one family but may have a negative impact on another. Debt to interest ratios in the end are a subjective tool for loan officers to make decisions about your ability to meet a new obligation. There are some general guidelines, however, that will give you a reasonably solid picture of where you stand in the eyes of a loan officer.
30% or less is generally considered as an excellent ratio by the vast majority of loan officers20% - 36% is a good ratio and will most likely not cause any problems with loan officers or have a negative impact on your FICO score36% - 40% puts you on the edge of the limits of acceptability. Most lenders will ask for an explanation for why your debt to income ratio is so high. In addition, a debt to income ratio in this range begins to have a negative impact on your FICO score so lenders look to other strong numbers before making a decision to loan more money to you40% or higher sends up red flags with lenders and your FICO score. Often, this high a ratio will be a deal killer with most lenders
By calculating your own debt to income ratio you begin to get a handle on your own financial situation. If the ratio is too high it tells you you are too deep in debt and you must do something to reduce debt. Of course, if it is very low then you need do nothing. For most lenders and the impact of debt to income on your FICO score a positive reduction in the ratio is presumed to be a sign of a healthy financial condition and goes a long way in enhancing your credit history.
Good Credit Card Advise For The First Timer?
I remember my first credit card like it was just yesterday. There are so many things I did not know when I first applied for it. Just like most kids today, I filled out the application and sent it in and presto there it was in the mail. I ran out the door after activating it and shopped until it was maxed out. Then I learned a hard lesson. I learned about late fees, minimum payments, and ATM fees. Before I knew it I was in debt, and it was the worst kind of debt. This is the debt we can't get out of. I lost my job shortly after maxing out the card. I had bill collectors calling me and my references, which were my friends asking "where is your payment?" Now after 300 of these phone calls and 4 former friends later I had to find help. Had I only read the terms of the agreement I probably would have walked a little slower out the front door the day I got the card.
Here is some advise for all of you who are about to receive your first credit card. Remember the 3 rules to credit. Rule number one; credit is a privilege not a right. Rule number two; read the terms of your agreement several times before you activate the card. Make sure you understand all of the terms of the agreement. Rule number three; remember that if you go over board with your spending to refer back to rule number one. If you get behind in payments the card-issuing bank will hit your credit report. In other words game over!
I recommend that parents should first teach their kids about credit. At my house my teenage daughters both get a prepaid card. When they need money like a loan for say. I load what they need on the card. In return they have to work off the balance. If they don't then the card is taken away, and the debt has to be worked off before they get the card back. This is similar to the way real life works. The only difference is that the mark on the credit report stays.
Here is some advise for all of you who are about to receive your first credit card. Remember the 3 rules to credit. Rule number one; credit is a privilege not a right. Rule number two; read the terms of your agreement several times before you activate the card. Make sure you understand all of the terms of the agreement. Rule number three; remember that if you go over board with your spending to refer back to rule number one. If you get behind in payments the card-issuing bank will hit your credit report. In other words game over!
I recommend that parents should first teach their kids about credit. At my house my teenage daughters both get a prepaid card. When they need money like a loan for say. I load what they need on the card. In return they have to work off the balance. If they don't then the card is taken away, and the debt has to be worked off before they get the card back. This is similar to the way real life works. The only difference is that the mark on the credit report stays.
10 Steps To Tackling Your Credit Card Debt Problem
First of all, you can take comfort in the fact that you are not the only one fighting credit card debt problems. There are hordes of people who have even worse credit card debt problems when compared to yours; all of them seeking an effective way to eliminate the credit card debt. So what is the solution to your credit card debt problem?
Well, the solution really is to smash the credit card debt with full force and eliminate it completely. Now how do you do that?
There are many ways in which you can solve your credit card debt problem. Different people suggest different ways of tackling it. However, here is a simple step by step account of what you can do to get rid of your credit card debt.
1. Take stock of the situation i.e. draw up a table with the following fields – Credit card name, balance, payment due day (the day of the month by which you are required to make payment of your credit card bill), APR, reward points earned, redemption offers applicable for your reward points balance, remarks.
2. Fill the table up with data from your various credit cards.
3. Check if any reward points that you may have accumulated can be used to make partial payments or cover any kind of fees or even if the points can be bartered for something you need.(spending less means preventing the credit card debt problem from getting worse).
4. If you have any available credit on any of your credit cards it would worth your time to call those credit card companies and check on the availability of lower interest rate balance transfers. If they offer reduced interest rate balance transfers, it would be wise to transfer any balance of a higher interest rate credit card.
5. You may also consider applying for another credit card (I know, I know, your trying to eliminate your credit card debt, not create more.) Hear me out first. If you can get a lower interest rate balance transfer credit card that you may be able to consolidate one or more of your credit cards into one, this would allow you to do two things: first you can eliminate at least one (hopefully more) of your higher interest rate cards. Second, it will cause your required monthly payment to be lower allowing you to pay a larger amount towards your principal, not just your interest.
6. First eliminate debt on the credit card contributing the most to your credit card debt problem i.e. highest APR (interest rate) and highest balance. Start with one. Pay the minimum required monthly payment on all the other credit card while applying the most money you can afford to the credit card first on your list to pay off. This will allow you to reduce the balance faster and to break the cycle of the never ending balance payoff.
7. Once you have eliminated the debt from one credit card, do yourself a favor and destroy it. In todays day and age it is almost a necessity to have a credit card, but you only need one and if you have to use it, you should pay the balance off completely every month.
8. Practice controlled and healthy spending habits (after all you are looking to get rid of credit card debt problem for good and not just temporarily.
9. Look for alternative means of adding to your income (more money means earlier termination of credit card debt.)
10. See your debt reduce with time and celebrate the day when you finally put an end to your credit card debt problem.
Remember,it is ultimately up to you to make a change in the way you use and percieve credit cards and credit card debt. You CAN take control of your financial future and put and end to credit card debt forever.
Well, the solution really is to smash the credit card debt with full force and eliminate it completely. Now how do you do that?
There are many ways in which you can solve your credit card debt problem. Different people suggest different ways of tackling it. However, here is a simple step by step account of what you can do to get rid of your credit card debt.
1. Take stock of the situation i.e. draw up a table with the following fields – Credit card name, balance, payment due day (the day of the month by which you are required to make payment of your credit card bill), APR, reward points earned, redemption offers applicable for your reward points balance, remarks.
2. Fill the table up with data from your various credit cards.
3. Check if any reward points that you may have accumulated can be used to make partial payments or cover any kind of fees or even if the points can be bartered for something you need.(spending less means preventing the credit card debt problem from getting worse).
4. If you have any available credit on any of your credit cards it would worth your time to call those credit card companies and check on the availability of lower interest rate balance transfers. If they offer reduced interest rate balance transfers, it would be wise to transfer any balance of a higher interest rate credit card.
5. You may also consider applying for another credit card (I know, I know, your trying to eliminate your credit card debt, not create more.) Hear me out first. If you can get a lower interest rate balance transfer credit card that you may be able to consolidate one or more of your credit cards into one, this would allow you to do two things: first you can eliminate at least one (hopefully more) of your higher interest rate cards. Second, it will cause your required monthly payment to be lower allowing you to pay a larger amount towards your principal, not just your interest.
6. First eliminate debt on the credit card contributing the most to your credit card debt problem i.e. highest APR (interest rate) and highest balance. Start with one. Pay the minimum required monthly payment on all the other credit card while applying the most money you can afford to the credit card first on your list to pay off. This will allow you to reduce the balance faster and to break the cycle of the never ending balance payoff.
7. Once you have eliminated the debt from one credit card, do yourself a favor and destroy it. In todays day and age it is almost a necessity to have a credit card, but you only need one and if you have to use it, you should pay the balance off completely every month.
8. Practice controlled and healthy spending habits (after all you are looking to get rid of credit card debt problem for good and not just temporarily.
9. Look for alternative means of adding to your income (more money means earlier termination of credit card debt.)
10. See your debt reduce with time and celebrate the day when you finally put an end to your credit card debt problem.
Remember,it is ultimately up to you to make a change in the way you use and percieve credit cards and credit card debt. You CAN take control of your financial future and put and end to credit card debt forever.
Collection Accounts – Have a Plan to Pay
Your first action is to obtain your credit report and have it in your own hands. To do so, visit http://www.annualcreditreport.com, where your free credit report is available through all three credit bureaus and will be provided to you once every year. By viewing your credit report, you will know exactly how much you owe each and every creditor. Their contact information will also be included. Sometimes information needs to be corrected, and it is vital that you review and dispute any such items.
After reviewing your credit report, you will have the information necessary to create a monthly budget. Your remaining income can go toward your collection accounts. By seeing exactly how and where you spend your money, you will be able to see how and where you can save your money. Your goal now is to stay on course and stick with the budget.
Talk with the creditors. The total sum of debt can be overwhelming, so focus only on one creditor at a time. See if you can get them to agree to accept a lower amount. However, be prepared because, even if they agree to settle for less, they'll still want you to pay within a certain period of time. More often than not, they may try to push you into paying more than you can afford, which will get you no where. So don't be bullied into paying more than you can. Committing to a payment you cannot make is fruitless.
If you would rather, you can choose to completely pay off the entire debt or possibly ask for a settlement, if your budget allows. If you can avoid a settlement, you should because it looks best when you have paid the entire amount. However it is more important that you get your balance down to nothing. So, after all the damage is done, your goal is to pay it off; no balance is best over all else.
People can and have been taken to court by collection agencies, having their wages garnished. To prevent the legal process, establish payment arrangements with the creditors. It is difficult to work out a payment schedule. Collection agencies tend to try and avoid payment arrangements, however many are willing to work with you. Keep in mind, you will likely make a mistake without strict guidelines; follow your plan!
After reviewing your credit report, you will have the information necessary to create a monthly budget. Your remaining income can go toward your collection accounts. By seeing exactly how and where you spend your money, you will be able to see how and where you can save your money. Your goal now is to stay on course and stick with the budget.
Talk with the creditors. The total sum of debt can be overwhelming, so focus only on one creditor at a time. See if you can get them to agree to accept a lower amount. However, be prepared because, even if they agree to settle for less, they'll still want you to pay within a certain period of time. More often than not, they may try to push you into paying more than you can afford, which will get you no where. So don't be bullied into paying more than you can. Committing to a payment you cannot make is fruitless.
If you would rather, you can choose to completely pay off the entire debt or possibly ask for a settlement, if your budget allows. If you can avoid a settlement, you should because it looks best when you have paid the entire amount. However it is more important that you get your balance down to nothing. So, after all the damage is done, your goal is to pay it off; no balance is best over all else.
People can and have been taken to court by collection agencies, having their wages garnished. To prevent the legal process, establish payment arrangements with the creditors. It is difficult to work out a payment schedule. Collection agencies tend to try and avoid payment arrangements, however many are willing to work with you. Keep in mind, you will likely make a mistake without strict guidelines; follow your plan!
Making it in the Mortgage Industry
Now are very challenging times for Mortgage Brokers.
One of the most important factors to surviving in this market is not listening to all the media and "bad news." A lot of the information is not based on fact and is being communicated by people who do not know what they are talking about. In fact I was flipping through the TV stations last night and I saw a woman who gives advice for credit & financial management on the TV. She said you need at least a 750 FICO, full income disclosure and money down to buy a home. She is a respected TV personality and she was telling America that you need a 750 FICO and money down to buy a home, that 100 is true but the rest is total garbage.
As we as brokers know, there are 100 financing program under their own proprietary names such as "Gain" "Champ" or "Flex100." Right now quite a few lenders will go down to 620 with 100 and there is talk of the LTV being raised to 100 financing. Those who live by the sword, die by the sword… it was the media that created a panic several years ago that all of us benefited from. It was called the "Refi Boom." The media created a real sense of urgency to refinance before it was too late. Now we are experiencing another sense of urgency in our industry that is being fueled by the media. Unfortunately this one is not helping our business.
Now the next important item here is to continue to promote your business and get prospects like never before. If you listen to the media and your fellow brokers you can go into apathy and stop promoting. That is the worst thing you can do. In fact I stop socializing with and talking to brokers and realtors that are continually negative. You need to be continually talking to people, handing out cards, making calls, whatever you need to do to keep your business going. I must admit, I have fallen a victim of all the bad news and stopped wearing my hat getting prospects for my own business. I won't do that again!
The other item that will help you stay in business for a long while is to be vigilant for fraud. Make sure you check and verify all the information on the application is correct. If a borrower chooses to use stated, not verified income look up their profession on line and make sure their stated income is reasonable for that profession. Additionally, I have my borrowers sign a release form stating they actually make what they have stated and they have disclosed all their debts.
If you work with investors make sure you disclose all the real estate they own. You do need to disclose real estate owned whether or not it shows up on their credit report. Also, remember that a primary residence is owner occupied and the owner can only occupy one home. Don't be afraid to say, "no" to a client. Particularly if you are not comfortable with the loan.
Miles LossFlorida Licensed Mortgage Broker
One of the most important factors to surviving in this market is not listening to all the media and "bad news." A lot of the information is not based on fact and is being communicated by people who do not know what they are talking about. In fact I was flipping through the TV stations last night and I saw a woman who gives advice for credit & financial management on the TV. She said you need at least a 750 FICO, full income disclosure and money down to buy a home. She is a respected TV personality and she was telling America that you need a 750 FICO and money down to buy a home, that 100 is true but the rest is total garbage.
As we as brokers know, there are 100 financing program under their own proprietary names such as "Gain" "Champ" or "Flex100." Right now quite a few lenders will go down to 620 with 100 and there is talk of the LTV being raised to 100 financing. Those who live by the sword, die by the sword… it was the media that created a panic several years ago that all of us benefited from. It was called the "Refi Boom." The media created a real sense of urgency to refinance before it was too late. Now we are experiencing another sense of urgency in our industry that is being fueled by the media. Unfortunately this one is not helping our business.
Now the next important item here is to continue to promote your business and get prospects like never before. If you listen to the media and your fellow brokers you can go into apathy and stop promoting. That is the worst thing you can do. In fact I stop socializing with and talking to brokers and realtors that are continually negative. You need to be continually talking to people, handing out cards, making calls, whatever you need to do to keep your business going. I must admit, I have fallen a victim of all the bad news and stopped wearing my hat getting prospects for my own business. I won't do that again!
The other item that will help you stay in business for a long while is to be vigilant for fraud. Make sure you check and verify all the information on the application is correct. If a borrower chooses to use stated, not verified income look up their profession on line and make sure their stated income is reasonable for that profession. Additionally, I have my borrowers sign a release form stating they actually make what they have stated and they have disclosed all their debts.
If you work with investors make sure you disclose all the real estate they own. You do need to disclose real estate owned whether or not it shows up on their credit report. Also, remember that a primary residence is owner occupied and the owner can only occupy one home. Don't be afraid to say, "no" to a client. Particularly if you are not comfortable with the loan.
Miles LossFlorida Licensed Mortgage Broker
The Benefits of the 15 Year Loan
Recently people have been interested in a lot of the more exotic loan programs from no interest loans to negative amortization. There has been some negatives associated with these loans with the changes in the mortgage industry. So I wanted to take some time to talk about the almost forgotten 15 year loan. Some people see the 15 year loan as drab and boring compared to all the fancy loans out there, but there are a lot of benefits of the 15 year fixed-rate loan.
For one, you pay the loan off in half the amount of time you would with a 30 year loan. So if someone is currently 30 years old, they would pay off the loan when they are 45 instead of 60. Because it takes half the time, people frequently think that the payment on a 15 year loan is twice as much as on a 30 year loan, but this is far from the case. For instance, if we look at Compass Bank today a 30 year $160,000 loan will have a monthly payment of $1037.75. On the other hand, a 15 year loan is $1382.80 a month.
This shorter loan life translates to paying significantly less interest over the life of the loan. To figure out the interest, we take the total payments per year over the life of the loan and subtract the original amount of the loan which is 160k. So for the 30 year loan we use the formula ($1037.75 * 12 * 30yr) - $160,000 = $213,590. So you are pay a total of $213,590 in interest over the 30 years. On the other hand, for a 15 year loan using the same formula ($1382.80 * 12 * 15yr) - $160,000 = $88,904, you end up paying only $88,904 in interest, which is a 59 for a 15 year and 6.75% for a 30 year.
Are there any downsides to a 15 year loan? The biggest is probably inflation. If we went through a period of rapid inflation then for the last 15 years of the loan the payments would effectively be less because of inflation.
I am not saying everyone should get a 15 year loan. Frequently, people cannot spare the extra money per month and need to put that money into getting a larger house because of children or other needs. And I would never expect a 15 year loan to be the most prevalent mortgage used. But before picking a mortgage, it's probably a wise move to consider the 15 year mortgage and weight out its advantages.
For one, you pay the loan off in half the amount of time you would with a 30 year loan. So if someone is currently 30 years old, they would pay off the loan when they are 45 instead of 60. Because it takes half the time, people frequently think that the payment on a 15 year loan is twice as much as on a 30 year loan, but this is far from the case. For instance, if we look at Compass Bank today a 30 year $160,000 loan will have a monthly payment of $1037.75. On the other hand, a 15 year loan is $1382.80 a month.
This shorter loan life translates to paying significantly less interest over the life of the loan. To figure out the interest, we take the total payments per year over the life of the loan and subtract the original amount of the loan which is 160k. So for the 30 year loan we use the formula ($1037.75 * 12 * 30yr) - $160,000 = $213,590. So you are pay a total of $213,590 in interest over the 30 years. On the other hand, for a 15 year loan using the same formula ($1382.80 * 12 * 15yr) - $160,000 = $88,904, you end up paying only $88,904 in interest, which is a 59 for a 15 year and 6.75% for a 30 year.
Are there any downsides to a 15 year loan? The biggest is probably inflation. If we went through a period of rapid inflation then for the last 15 years of the loan the payments would effectively be less because of inflation.
I am not saying everyone should get a 15 year loan. Frequently, people cannot spare the extra money per month and need to put that money into getting a larger house because of children or other needs. And I would never expect a 15 year loan to be the most prevalent mortgage used. But before picking a mortgage, it's probably a wise move to consider the 15 year mortgage and weight out its advantages.
What Is A Money Merge Account?
Lately there has been alot of talk about setting up a “money merge account” What exactly is a money merge account? Well simply put, it’s a way of managing your money to help you quickly eliminate your mortgage. It is truly a revolutionary way to use the money that you already have to pay-down a mortgage very quickly. You will find that several mortgage lenders are learning about this concept and offering you there own version of this type of account. There are two issues with going through a lender or other company offering this:
1. They are going to charge you a hefty fee for you to set-up this account with them and teach you how to use it.
2. It’s limited to just homeowners when a large part of the population has debt and should be able to take advantage of this type of account and information.
In conclusion, a money merge account is like any other great idea who’s time has come, but why pay such a high price to take advantage of this information when you can very easily set this up yourself with just a little bit of knowledge.
1. They are going to charge you a hefty fee for you to set-up this account with them and teach you how to use it.
2. It’s limited to just homeowners when a large part of the population has debt and should be able to take advantage of this type of account and information.
In conclusion, a money merge account is like any other great idea who’s time has come, but why pay such a high price to take advantage of this information when you can very easily set this up yourself with just a little bit of knowledge.
Mortgage Refinance Bad Credit Loan
In this article, you will be provided information to help you understand what options you've available to you when it comes to the matter of debt consolidation loan and mortgage refinance options.
The fact is millions of Americans with bad credit; refinance their home mortgage loans every year, using sub prime mortgage refinance loans. Virginia mortgage refinance loans can be used to pay off either the first or second Virginia mortgages. Finding a California sub prime mortgage refinance loan lender requires research.
By doing a price and cost comparison, by taking the time to shop around, you will be able to find a debt consolidation loan and mortgage refinance option that will actually meet your needs. You usually will not have to pay anything to the broker to aid you in finding a debt consolidation loan and mortgage refinance options that you can consider. You will want to make certain that you are dealing with a debt consolidation loan and mortgage refinance lender that is experienced, reputable and reliable.
These lenders have dedicated staffs, who work with consumers that have low credit scores, seeking mortgage refinance loans. The most popular options for bad credit home loans are cash out mortgage refinance and home equity loans. When it comes to debt consolidation loan and mortgage refinance options, you will want to keep in mind the very lender through which you have your current mortgage.
A bad credit mortgage refinance may be possible for you. Bad Credit Lenders provide poor credit mortgage refinance loans, bad credit home loans, and hard money loans. You can access these types of lenders that specialise in debt consolidation loan and mortgage refinance options both online and in the real world.
If you decide that mortgage refinancing is your best option, then pay careful attention to the mortgage refinance rate. The big question is 'can you get a mortgage refinance loan with a low credit score'. A Virginia mortgage refinance loan is a good solution for those individuals in Virginia who cannot meet their monthly mortgage loan payments.
Yes - it is a true that a person with a credit score above 670 will find it easier to get a mortgage refinance loan than a person with a low credit score - but this is doesn't mean that you cannot find a loan. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan. When you get the bad credit mortgage refinance you are using your house as collateral.
You will be able to find the debt consolidation loan and mortgage refinance option that makes the most economic and financial sense for you, a loan package that will work for you today and down the road into the future as well. If you’d like access to more information and resource links pertaining Mortgage Refinancing, then check out my site at: Mortgage Refinancing
The fact is millions of Americans with bad credit; refinance their home mortgage loans every year, using sub prime mortgage refinance loans. Virginia mortgage refinance loans can be used to pay off either the first or second Virginia mortgages. Finding a California sub prime mortgage refinance loan lender requires research.
By doing a price and cost comparison, by taking the time to shop around, you will be able to find a debt consolidation loan and mortgage refinance option that will actually meet your needs. You usually will not have to pay anything to the broker to aid you in finding a debt consolidation loan and mortgage refinance options that you can consider. You will want to make certain that you are dealing with a debt consolidation loan and mortgage refinance lender that is experienced, reputable and reliable.
These lenders have dedicated staffs, who work with consumers that have low credit scores, seeking mortgage refinance loans. The most popular options for bad credit home loans are cash out mortgage refinance and home equity loans. When it comes to debt consolidation loan and mortgage refinance options, you will want to keep in mind the very lender through which you have your current mortgage.
A bad credit mortgage refinance may be possible for you. Bad Credit Lenders provide poor credit mortgage refinance loans, bad credit home loans, and hard money loans. You can access these types of lenders that specialise in debt consolidation loan and mortgage refinance options both online and in the real world.
If you decide that mortgage refinancing is your best option, then pay careful attention to the mortgage refinance rate. The big question is 'can you get a mortgage refinance loan with a low credit score'. A Virginia mortgage refinance loan is a good solution for those individuals in Virginia who cannot meet their monthly mortgage loan payments.
Yes - it is a true that a person with a credit score above 670 will find it easier to get a mortgage refinance loan than a person with a low credit score - but this is doesn't mean that you cannot find a loan. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan. When you get the bad credit mortgage refinance you are using your house as collateral.
You will be able to find the debt consolidation loan and mortgage refinance option that makes the most economic and financial sense for you, a loan package that will work for you today and down the road into the future as well. If you’d like access to more information and resource links pertaining Mortgage Refinancing, then check out my site at: Mortgage Refinancing
Is The Federal Interest Rate Cut Enough to Stabilize Subprime Mortage Woes?
As the subprime mortage debacle continues to play out across the United States, the Federal Reserve has opted to cut interest rates by half a percentage point, from 5.25. This cut makes all loans relatively cheaper, thereby encouraging a pantheon of economic activity to increase, hopefully in the troubled housing market. Such tactics have been used with relative success in the past, most notably in 2000 when the US economy suffered a major downturn in the wake of the dot-com collapse. This collapse triggered a recession, which took three years to completely stabilize.
Since 2003, the Fed has slowly brought interest rates up in order to help keep dangerous inflation and reckless consumer spending down. These effects have been in line with forecasts at the time, showing that the Fed was relatively in touch with potential economic problems. Yet the slow buildup of the interest rates may have occured too late for them to be high enough to combat the problems in the housing market because the federal interest rate still has a limited and indirect effect on housing purchases, which depend on a myriad of other factors, not least of which is the agreed interest rate on a given mortage. Since those terms are decided between the lender (companies like Countrywide) and the borrower, (regular people) a rate cut can have many positive effects on overall spending without targeting the sickly housing market directly.
Even though the Federal Reserve have made a definitive statement on the seriousness of subprime mortage defaults by cutting rates for the first time in four years, they are convening imminently to discuss a further rate cut, of an estimated .25. This rate cut will certainly stimulate some aspects of the US economy, but its effects on mortages is less predictible. This is because unlike other, larger areas of the economy like job growth and retail spending, housing loans are tied to many other secondary industries that suffer slumps regularly whenever too many houses are on the market. Examples include the auto industry and the household appliance market, which accounts for many products that are still made in the US.
The increasing interest rates of the past several years have had a negligable effect on the ability of lenders to lure millions of Americans into signing up for a sub-prime mortage, even when as many as one third of those who have these faulty contracts would have qualified for safer prime mortages. Rising interest rates also did little to curb the booming housing market and its aforementioned secondary industries from expanding, possibly to proportions that cannot be sustained. So will another interest rate cut be enough to bring back the mortally wounded housing market back from the brink of death? The possibility exists, but it appears to be unlikely without some other mechanism for assisting the housing market.
The Fed works like an opiate- it treats all symptoms by allowing a patient in a lot of pain to get much-needed rest, but does little do address an underlying specific cause. Most would agree that, despite the rise in interest rates over the past several years, the economy has been relatively robust. Yet the subprime mortage issue has gone unchecked for years, while millions of Americans who have bought into the classic dream of owning a home despair and the lender/broker machine goes on unchecked. The only reason this fleecing of (usually) the poorest homeowners has come to any economist's attention is because of the spread of these faulty mortages through markets all over the world. Without some degree of governmental regulation over lending practices, and reexamining the credit reporting agencies that allowed risky mortages to be converted into bonds and securities in the first place, a federal interest rate cut can only do so much. Whether that is enough to stimulate the economy away from a recession is still unfortunately up in the air.
Since 2003, the Fed has slowly brought interest rates up in order to help keep dangerous inflation and reckless consumer spending down. These effects have been in line with forecasts at the time, showing that the Fed was relatively in touch with potential economic problems. Yet the slow buildup of the interest rates may have occured too late for them to be high enough to combat the problems in the housing market because the federal interest rate still has a limited and indirect effect on housing purchases, which depend on a myriad of other factors, not least of which is the agreed interest rate on a given mortage. Since those terms are decided between the lender (companies like Countrywide) and the borrower, (regular people) a rate cut can have many positive effects on overall spending without targeting the sickly housing market directly.
Even though the Federal Reserve have made a definitive statement on the seriousness of subprime mortage defaults by cutting rates for the first time in four years, they are convening imminently to discuss a further rate cut, of an estimated .25. This rate cut will certainly stimulate some aspects of the US economy, but its effects on mortages is less predictible. This is because unlike other, larger areas of the economy like job growth and retail spending, housing loans are tied to many other secondary industries that suffer slumps regularly whenever too many houses are on the market. Examples include the auto industry and the household appliance market, which accounts for many products that are still made in the US.
The increasing interest rates of the past several years have had a negligable effect on the ability of lenders to lure millions of Americans into signing up for a sub-prime mortage, even when as many as one third of those who have these faulty contracts would have qualified for safer prime mortages. Rising interest rates also did little to curb the booming housing market and its aforementioned secondary industries from expanding, possibly to proportions that cannot be sustained. So will another interest rate cut be enough to bring back the mortally wounded housing market back from the brink of death? The possibility exists, but it appears to be unlikely without some other mechanism for assisting the housing market.
The Fed works like an opiate- it treats all symptoms by allowing a patient in a lot of pain to get much-needed rest, but does little do address an underlying specific cause. Most would agree that, despite the rise in interest rates over the past several years, the economy has been relatively robust. Yet the subprime mortage issue has gone unchecked for years, while millions of Americans who have bought into the classic dream of owning a home despair and the lender/broker machine goes on unchecked. The only reason this fleecing of (usually) the poorest homeowners has come to any economist's attention is because of the spread of these faulty mortages through markets all over the world. Without some degree of governmental regulation over lending practices, and reexamining the credit reporting agencies that allowed risky mortages to be converted into bonds and securities in the first place, a federal interest rate cut can only do so much. Whether that is enough to stimulate the economy away from a recession is still unfortunately up in the air.
What You Should Know About the Option ARM Mortgage
Everybody I have talked to finds the elaborate vocabulary of mortgages distressing and complex. There is the Pay Option, the Pick-a-Payment, the Cash Flow ARM, and then there is the Option ARM.The beauty of these types of loans it that there is a different start rate, i.e., rate at the beginning and different monthly payment options. But as they say, "buyer beware." These mortgages are the esoteric beings of the financial world that you must make sure and understand.They say that when you take a loan, the lender takes away an arm and a leg. Well, the ARM in this case is that Adjustable Rate Mortgage. This means that you, the borrower, can decide up front the nature of monthly payments you would like to make. This schedule of payment is then set out in black and white in your loan document. That is why such options are called Pay Option, Pick-a-Payment, Cash Flow ARM, or Option ARM loans?Investigate further: The Option ARM loans have a starting introductory period which has the lowest interest rate. If you have good credit rating, and can put down a hefty down payment, the start rate will be lower. But do not get taken away by the low interest rate, sometimes as low as 1.25%, in the start. This start period will last only for one to three months. But this start rate will be used as a factor in the computation of your lowest possible payment for the first year.In the good ol' 30 year mortgage, there is no "index" that you need to think about. But in the case of the Option ARM mortgage, your rate of interest rate is recomputed each month after the initial honeymoon "start" period. And the basis of this rate of interest is the index.You can be sure that the eventual interest rate will never sink to the "low levels" of the initial starting period interest rate. The index that is used to determine your rate of interest is primarily based on the COSI, or Cost of Savings Index. COSI is not the only index used and there are many other indexes that can be deployed with ARM loans. So the key feature to keep in mind while opting for an ARM loan is the description of the index that will be used to compute your rate of interest.You also need to know whether the interest rate re-adjustment will happen monthly or quarterly or annually or at some other time period.Now we move the other important feature: the margin. The margin is like the profit that the lender makes over and above the index that is being used. For instance, the ARM mortgage may stipulate that there would be a 3% margin. That will mean that in addition to the inflation in the index, you will pay 3% more.When you look closer you will find that the Option ARM loans often give borrower four payment options: Minimum Payment, Interest-Only Payment, Fully Amortized Payment, and 15-Year Payment.The above description has just managed to tell you about the basics of the ARM loan. A smart buyer begins by comparing the credit options. Then she/he compares loan-providers. It is smart on your part to shop around and bargain. That is the way mortgages work.
Bloopers And Blunders While Agreeing On A Mortgage
Getting a mortgage need not be love at first sight. So do not rush to the first company your come across. At times this might work out well. Like in the case of any important product or service that you intend to buy, make sure to complete your due diligence. Where money is involved, time is of the essence and other factors such as reliability and credibility need to be assessed. Understanding the whole loan process and the paper work involved can become a little too much. But this must be done to protect oneself from getting into incomplete agreements.
If there wasn't enough thought and effort that went into evaluating a mortgage, you might be in for some surprises down the line. All this is because of lack of preparation and awareness. Some of the other common mistakes made by mortgage buyers are:
1. Consider a mortgage to be a long term commitment - Sometimes buyers do not do this. They look at loans as an option for ending their current dilemma. If one wishes to invest in real estate, they need to think about what the house will fetch if sold and if they will be able to sell it. All this must be discussed with a banker or a real estate agent before signing on the mortgage agreement.
2. Paper work, paper work, paper work - Some buyers relay solely on oral communication. If they are not in possession of the contract, the companies may cheat them or they will lose out on certain benefits that were discussed during the meetings.
3. Is there limit to how much you can borrow? Do you know what that limit is? - Buyers assume they will be eligible for any amount of loan from the mortgage company which is not true. And even if they offer you the same, you will end up paying high rate of interest. This will only add to your financial woes. You will have to work towards repaying your debts as well as struggle to meet your interest payments, so one need to think it through before agreeing to the same.
4. Additional costs -- When closing the mortgage deal, buyers have to make some additional payments such as legal fees and taxes. Redemption penalty might also be charged if the loan is cleared before the stipulated time. Better prepared than sorry! So, it is best to talk to your mortgage company about this before jumping right in.
If there wasn't enough thought and effort that went into evaluating a mortgage, you might be in for some surprises down the line. All this is because of lack of preparation and awareness. Some of the other common mistakes made by mortgage buyers are:
1. Consider a mortgage to be a long term commitment - Sometimes buyers do not do this. They look at loans as an option for ending their current dilemma. If one wishes to invest in real estate, they need to think about what the house will fetch if sold and if they will be able to sell it. All this must be discussed with a banker or a real estate agent before signing on the mortgage agreement.
2. Paper work, paper work, paper work - Some buyers relay solely on oral communication. If they are not in possession of the contract, the companies may cheat them or they will lose out on certain benefits that were discussed during the meetings.
3. Is there limit to how much you can borrow? Do you know what that limit is? - Buyers assume they will be eligible for any amount of loan from the mortgage company which is not true. And even if they offer you the same, you will end up paying high rate of interest. This will only add to your financial woes. You will have to work towards repaying your debts as well as struggle to meet your interest payments, so one need to think it through before agreeing to the same.
4. Additional costs -- When closing the mortgage deal, buyers have to make some additional payments such as legal fees and taxes. Redemption penalty might also be charged if the loan is cleared before the stipulated time. Better prepared than sorry! So, it is best to talk to your mortgage company about this before jumping right in.
Mortgage: The Key Points that You Should Know
A mortgage is a kind of an agreement made to pay the money, which was loaned, to a person by keeping the house as collateral. Mortgage is a promise made to pay the debts by putting it in writing basically. Mortgages have terms and interest rates which are either adjustable or fixed.
Mortgage terms:
Mortgages are designed in such a way that they can be paid in installments for a certain period. The time frame which allows the person to pay back his mortgage is called the term. The term may be 10 or 15 or even 30 years. The length of the term determines the amount of money to be paid, which is actually spread in installments.
Mortgage interest rate:
The interest rate depends on the percentage to be paid on the mortgage loan amount. The interest rates vary according to the credit score of the person. If the credit score of the person is very high, the interest rate and the amount of monthly installments are lower. If the credit score is lower then the interest rates and the monthly installment amount are higher. Hence a good credit score will help getting lower interest rates to the debtor.
Types of mortgages:
Mortgages - Adjustable rate of interest
Under this type of mortgages, the interest rate changes from period to period according to the fluctuations of the market. The degree of change of mortgage interest rate is directly associated with the index to which it is tied. Since index will differ as they may be tied to a foreign bank rate of interest in certain cases, it is good to ask to which index the adjustable rate of interest is tied to. Usually they are fixed for a period of 1-5 years and then become adjustable.
Mortgages – fixed rate:
The interest rate of the loan amount is fixed in the case of fixed rate mortgage till the end of the term regardless of the market fluctuations. The debtor will never have to pay more than the fixed interest rate at any cost. The only means by which a fixed rate mortgage can change is through Refinancing.
Refinancing:
It is a process of changing the existing mortgage terms of agreement. The debtor can go for refinancing when the interest rates are lower so that he can save money qualifying for the lower rate of interest. The length of the term can also be adjusted to be either long or short using refinance option. Care needs to be taken when going for refinancing of mortgages as it entails for new closing costs. Fees and closing costs are involved in this method.
Appraisal:
The crucial part of mortgage is the appraisal. Before going for a loan from a bank, the value of the house must be assessed properly. An appraiser can determine how much the house is worth actually by inspecting the features of the house and by comparing it with the neighborhood houses. If any addition or embellishment is made to the house, it can raise the value of the house, but may require to appraise the new value of the document.
Mortgage terms:
Mortgages are designed in such a way that they can be paid in installments for a certain period. The time frame which allows the person to pay back his mortgage is called the term. The term may be 10 or 15 or even 30 years. The length of the term determines the amount of money to be paid, which is actually spread in installments.
Mortgage interest rate:
The interest rate depends on the percentage to be paid on the mortgage loan amount. The interest rates vary according to the credit score of the person. If the credit score of the person is very high, the interest rate and the amount of monthly installments are lower. If the credit score is lower then the interest rates and the monthly installment amount are higher. Hence a good credit score will help getting lower interest rates to the debtor.
Types of mortgages:
Mortgages - Adjustable rate of interest
Under this type of mortgages, the interest rate changes from period to period according to the fluctuations of the market. The degree of change of mortgage interest rate is directly associated with the index to which it is tied. Since index will differ as they may be tied to a foreign bank rate of interest in certain cases, it is good to ask to which index the adjustable rate of interest is tied to. Usually they are fixed for a period of 1-5 years and then become adjustable.
Mortgages – fixed rate:
The interest rate of the loan amount is fixed in the case of fixed rate mortgage till the end of the term regardless of the market fluctuations. The debtor will never have to pay more than the fixed interest rate at any cost. The only means by which a fixed rate mortgage can change is through Refinancing.
Refinancing:
It is a process of changing the existing mortgage terms of agreement. The debtor can go for refinancing when the interest rates are lower so that he can save money qualifying for the lower rate of interest. The length of the term can also be adjusted to be either long or short using refinance option. Care needs to be taken when going for refinancing of mortgages as it entails for new closing costs. Fees and closing costs are involved in this method.
Appraisal:
The crucial part of mortgage is the appraisal. Before going for a loan from a bank, the value of the house must be assessed properly. An appraiser can determine how much the house is worth actually by inspecting the features of the house and by comparing it with the neighborhood houses. If any addition or embellishment is made to the house, it can raise the value of the house, but may require to appraise the new value of the document.
The Role of Mortgage Broker
A mortgage broker is a well-trained professional representing those who seek home mortgages and provides them an ideal solution. He is thorough with the entire mortgage processes. Hence, he will give the clients the best mortgage solution. A mortgage broker is considered as financial matchmaker between the borrower and the lender. Mortgage brokers are very knowledgeable professionals, as they have contacts with many lenders. They find the best interest rate for the borrowers to suit their needs by taking quotes from various lenders and picking the right one for their clients. Federal laws, state laws and licensing boards, regulate all most all the mortgage brokers. The mortgage brokers charge a nominal fee for the services he renders to the customers. Even though the borrower spends money on a mortgage broker, he still saves a lot of money due to the advice got from the mortgage broker. Mortgage brokers have access to lot of mortgage services and products at wholesale prices and they in turn market these services and products to their customers.
Need for using a commercial mortgage broker:
By engaging a mortgage broker, the customer gets his value for money spent on him. They provide the customers with excellent financing options according to their needs and objectives.
Locating a mortgage lender is not an easy task. By engaging a mortgage broker, this process is simplified as he has contacts with many lenders offering various financial options to the home loan seekers. With the help of a mortgage broker, the customer has all chances of getting loan options for an unbelievable amount.
When working along with a mortgage broker, the borrower’s loan application has the possibility of being submitted to various lenders, this in turn increases the chances of the loan getting funded and also gives the mortgage broker the power to bargain in getting the best deal.
Since each and every kind of property has its own advantages and disadvantages, hiring a mortgage broker who is specialized in that particular loan type, will definitely be an advantage to the borrower. Also it saves a lot of time to the borrower in locating the right kind of the lender offering the best deal.
Advantages of hiring a mortgage broker:
The mortgage brokers have extensive knowledge about the mortgage market. They can find the borrower the best financial solution from the available options. They have access to more number of lenders and sometimes might even help the borrower to get mortgage from a mainstream bank itself. Since, mortgage involves lot of paperwork; it is taken care by the mortgage brokers. They reduce the time spent on searching for options by the borrower. They also can negotiate well with the lender and get the best possible interest rate to the borrower.
Disadvantages of hiring mortgage brokers:
Some kind of unscrupulous brokers might be there who show bias towards the lenders and make the borrower pay higher fees and commissions instead of providing an appropriate product or service to him. Some brokers may be void of training and knowledge about the mortgage industry but may make the customers believe that they are good knowledgeable people. Not all the brokers may have good contacts with the lenders. Some mortgage brokers might also charge heavy fees to their customers.
Need for using a commercial mortgage broker:
By engaging a mortgage broker, the customer gets his value for money spent on him. They provide the customers with excellent financing options according to their needs and objectives.
Locating a mortgage lender is not an easy task. By engaging a mortgage broker, this process is simplified as he has contacts with many lenders offering various financial options to the home loan seekers. With the help of a mortgage broker, the customer has all chances of getting loan options for an unbelievable amount.
When working along with a mortgage broker, the borrower’s loan application has the possibility of being submitted to various lenders, this in turn increases the chances of the loan getting funded and also gives the mortgage broker the power to bargain in getting the best deal.
Since each and every kind of property has its own advantages and disadvantages, hiring a mortgage broker who is specialized in that particular loan type, will definitely be an advantage to the borrower. Also it saves a lot of time to the borrower in locating the right kind of the lender offering the best deal.
Advantages of hiring a mortgage broker:
The mortgage brokers have extensive knowledge about the mortgage market. They can find the borrower the best financial solution from the available options. They have access to more number of lenders and sometimes might even help the borrower to get mortgage from a mainstream bank itself. Since, mortgage involves lot of paperwork; it is taken care by the mortgage brokers. They reduce the time spent on searching for options by the borrower. They also can negotiate well with the lender and get the best possible interest rate to the borrower.
Disadvantages of hiring mortgage brokers:
Some kind of unscrupulous brokers might be there who show bias towards the lenders and make the borrower pay higher fees and commissions instead of providing an appropriate product or service to him. Some brokers may be void of training and knowledge about the mortgage industry but may make the customers believe that they are good knowledgeable people. Not all the brokers may have good contacts with the lenders. Some mortgage brokers might also charge heavy fees to their customers.
What Are the Components of a Renters Insurance Policy?
A renters insurance policy protects the contents of a rented property against losses incurred due to theft, fire or damage due to a hurricane and other natural disasters. Renters insurance also offers protection for liability. It pays for liability for accidents, such as a visitor slipping on your floor and breaking an arm. This type of insurance is primarily designed to protect consumers from unexpected financial hardships.
Renters policies specifically state what it insures against. There is a standard set of named perils covered by a renters insurance policy. Some of them are fire, lightning, windstorm, smoke, vandalism or malicious mischief, theft and accidental discharge of water due to a burst pipe. It can also include payment for the medical expenses of non-residents. Floods and earthquakes are oftentimes purchased separately from the renters policy in coastal areas and places prone to either. In most cases, windstorm coverage is also purchased as a rider to the main renters policy.
Renters policies use two methods of valuation of the home contents, these are the actual cash value and the replacement cost. The actual cash value pays only for what the belongings were worth at the time of the loss. A household appliance worth about $500 three years before will cost significantly lower at the time of loss. On the other hand, the replacement cost will reimburse policy-holders for the actual cost of the property at the time of the loss.
Highly expensive items such as jewelry and antique should be declared at the time of purchase as separate policies or rider policies might need to be issued for these items. If highly expensive items are not declared, the policy-holder will not be able to recover the possible losses pertaining to these items.
It is wise to inventory all the belongings to ensure adequate compensation for loss. The inventory should include the value and serial number of every item. Policy-holders should also keep the receipts of expensive items in another place, preferably outside of the house to ensure proper documentation and safekeeping.
If the dwelling becomes uninhabitable due to a burst pipe or a fire, the insurance policy will pay for additional living expenses. Certain types of rented property have additional benefits. Condominium units usually come with a waterbed liability provision so that in the event that a waterbed bursts, the policy will cover the water damage caused to the unit under the policy-holder's package. In terms of pets, there are insurance providers that do not underwrite renters policies for customers owning certain dog breeds.
A renters insurance policy is an effective way of protecting the property and its occupants from unforeseen expenses. Paying for the rent might take its toll on a person's purse and making sure that no additional and unexpected expense comes one's way to add more financial burden would be a wise move.
Renters policies specifically state what it insures against. There is a standard set of named perils covered by a renters insurance policy. Some of them are fire, lightning, windstorm, smoke, vandalism or malicious mischief, theft and accidental discharge of water due to a burst pipe. It can also include payment for the medical expenses of non-residents. Floods and earthquakes are oftentimes purchased separately from the renters policy in coastal areas and places prone to either. In most cases, windstorm coverage is also purchased as a rider to the main renters policy.
Renters policies use two methods of valuation of the home contents, these are the actual cash value and the replacement cost. The actual cash value pays only for what the belongings were worth at the time of the loss. A household appliance worth about $500 three years before will cost significantly lower at the time of loss. On the other hand, the replacement cost will reimburse policy-holders for the actual cost of the property at the time of the loss.
Highly expensive items such as jewelry and antique should be declared at the time of purchase as separate policies or rider policies might need to be issued for these items. If highly expensive items are not declared, the policy-holder will not be able to recover the possible losses pertaining to these items.
It is wise to inventory all the belongings to ensure adequate compensation for loss. The inventory should include the value and serial number of every item. Policy-holders should also keep the receipts of expensive items in another place, preferably outside of the house to ensure proper documentation and safekeeping.
If the dwelling becomes uninhabitable due to a burst pipe or a fire, the insurance policy will pay for additional living expenses. Certain types of rented property have additional benefits. Condominium units usually come with a waterbed liability provision so that in the event that a waterbed bursts, the policy will cover the water damage caused to the unit under the policy-holder's package. In terms of pets, there are insurance providers that do not underwrite renters policies for customers owning certain dog breeds.
A renters insurance policy is an effective way of protecting the property and its occupants from unforeseen expenses. Paying for the rent might take its toll on a person's purse and making sure that no additional and unexpected expense comes one's way to add more financial burden would be a wise move.
Dental Insurance For Better Dental Health
Dental diseases are the most common and prevalent diseases affecting almost everybody in the world. Today the cost of dental treatment is enormous.
Treatments to treat these dental diseases are of two types, occasional and routine. Occasional dental treatments include tooth extraction, braces, root canal treatment etc., while routine treatments include cleaning, plaque removal, X-rays, etc.
People today care more about their teeth and image than they did few decades ago. With wide television coverage nowadays on cosmetic dentistry, having a good-looking smile has become even more important. Dental insurance plan is a good way to reduce the impact of dental treatment especially for large families. Almost 55% of Americans are covered by dental plans.
Insurance plan for dental treatments is coverage for individuals to protect them against the high cost of dental treatments, and is usually included in health insurance. For this plan the individual has to pay a monthly premium to the insurance company. The insurance company then provides the cost of medicines and treatment procedures to the individual for a specified period. Usually the period is limited to one year. The insurance has to be renewed after the period. The premium set by the company usually increases year by year. For sicker and older individuals the premium is higher than for healthier individuals, which has been a cause of controversy and debate in the western world. The premiums range from 15$ a month to 70$ a month depending upon the type of insurance plan taken and the health of the individual.
Dental insurance plan usually involves a lot of health records, age records, screening and paper work. The insurance company tries to avoid adverse selection. Adverse selection means people with poor dental health who are more likely to opt for dental insurance plans than healthier people. This increases the insurance cost to the insurance company. Most individual dental insurance plans require a waiting period before having any major or minor restorative work done. However there are annual limits to the cost of treatment that one individual can claim under dental ainsurance plans.
When the employer provides employer dental insurance plan then it works out better than discount dental plans opted by individuals. However the trend of employers providing insurance plans is on the decrease.
Dental insurance plans help improve the dental health of individuals as they are paying premiums and hence opt for dental treatment. Employer dental insurance plan is more common and less costly than the individual insurance plan.
Treatments to treat these dental diseases are of two types, occasional and routine. Occasional dental treatments include tooth extraction, braces, root canal treatment etc., while routine treatments include cleaning, plaque removal, X-rays, etc.
People today care more about their teeth and image than they did few decades ago. With wide television coverage nowadays on cosmetic dentistry, having a good-looking smile has become even more important. Dental insurance plan is a good way to reduce the impact of dental treatment especially for large families. Almost 55% of Americans are covered by dental plans.
Insurance plan for dental treatments is coverage for individuals to protect them against the high cost of dental treatments, and is usually included in health insurance. For this plan the individual has to pay a monthly premium to the insurance company. The insurance company then provides the cost of medicines and treatment procedures to the individual for a specified period. Usually the period is limited to one year. The insurance has to be renewed after the period. The premium set by the company usually increases year by year. For sicker and older individuals the premium is higher than for healthier individuals, which has been a cause of controversy and debate in the western world. The premiums range from 15$ a month to 70$ a month depending upon the type of insurance plan taken and the health of the individual.
Dental insurance plan usually involves a lot of health records, age records, screening and paper work. The insurance company tries to avoid adverse selection. Adverse selection means people with poor dental health who are more likely to opt for dental insurance plans than healthier people. This increases the insurance cost to the insurance company. Most individual dental insurance plans require a waiting period before having any major or minor restorative work done. However there are annual limits to the cost of treatment that one individual can claim under dental ainsurance plans.
When the employer provides employer dental insurance plan then it works out better than discount dental plans opted by individuals. However the trend of employers providing insurance plans is on the decrease.
Dental insurance plans help improve the dental health of individuals as they are paying premiums and hence opt for dental treatment. Employer dental insurance plan is more common and less costly than the individual insurance plan.
Best Way To Determine The Insurance For Your Car
Auto insurance can be confusing and mind boggling sometimes and it's hard to determine exactly why some individuals are receiving rates which are lower than others. There are many factors which contribute to the rate of auto insurance, some you have control over and others you don't.
Below you will find valuable information regarding the factors which are compiled in order to determine the rate of your car insurance. These will help you understand important aspects of auto insurance and why some individuals receive higher rates than others. Here are the top five factors which auto insurance companies will consider when determining your rate of insurance:
1. Age - Your age will greatly affect the rate of your car insurance. Teenagers and individuals who are just beginning to drive will have higher rates for no reason other than their age. There is nothing you can do about this, as you get older and become a more experienced driver your rates will go down. Although they will go down, they will not stay down. When you reach a certain age your car insurance rates will go back up because you are an elderly driver and your eyes and coordination may not be as effective anymore.
2. Auto Insurance Companies - This is a factor which you have control over. Some car insurance companies offer lower rates than others for many reasons. It is up to you to choose which one will benefit you the most both now and in the long run.
3. Gender - Whether you are male or female will also affect the rate of your car insurance. This is yet another factor which you have no control over. Females generally have lower car insurance rates because according to insurance companies men are seen as potential dangerous and careless drivers who are more likely to be involved in car accidents.
4. Type of Vehicle - As much as we would all love to be driving a shiny silver Porsche Boxter all around town, the insurance rates for these types of vehicles are unreal. If you want your auto insurance rates to be low, I would suggest driving a car with a lower price tag. The more money your car is worth, the higher your car insurance rate will be.
5. Driving Violations - This is another factor which you have control over. I know how tempting it is to race your friends the moment you get your license for the first time, but the amount of money you will pay in the long run hardly seems worth it. Any form of ticket you receive can potentially raise the rate of your car insurance. If you want to pay less for car insurance I would suggest abiding by the rules of the road.
Although these are the most important factors in determining your rate of car insurance, there are many other factors which also play a part in how much you will pay. Auto insurance is something we all have to pay for, but by researching and understanding the aspects of this form of insurance you are learning how to reduce your rate to your best ability.
Below you will find valuable information regarding the factors which are compiled in order to determine the rate of your car insurance. These will help you understand important aspects of auto insurance and why some individuals receive higher rates than others. Here are the top five factors which auto insurance companies will consider when determining your rate of insurance:
1. Age - Your age will greatly affect the rate of your car insurance. Teenagers and individuals who are just beginning to drive will have higher rates for no reason other than their age. There is nothing you can do about this, as you get older and become a more experienced driver your rates will go down. Although they will go down, they will not stay down. When you reach a certain age your car insurance rates will go back up because you are an elderly driver and your eyes and coordination may not be as effective anymore.
2. Auto Insurance Companies - This is a factor which you have control over. Some car insurance companies offer lower rates than others for many reasons. It is up to you to choose which one will benefit you the most both now and in the long run.
3. Gender - Whether you are male or female will also affect the rate of your car insurance. This is yet another factor which you have no control over. Females generally have lower car insurance rates because according to insurance companies men are seen as potential dangerous and careless drivers who are more likely to be involved in car accidents.
4. Type of Vehicle - As much as we would all love to be driving a shiny silver Porsche Boxter all around town, the insurance rates for these types of vehicles are unreal. If you want your auto insurance rates to be low, I would suggest driving a car with a lower price tag. The more money your car is worth, the higher your car insurance rate will be.
5. Driving Violations - This is another factor which you have control over. I know how tempting it is to race your friends the moment you get your license for the first time, but the amount of money you will pay in the long run hardly seems worth it. Any form of ticket you receive can potentially raise the rate of your car insurance. If you want to pay less for car insurance I would suggest abiding by the rules of the road.
Although these are the most important factors in determining your rate of car insurance, there are many other factors which also play a part in how much you will pay. Auto insurance is something we all have to pay for, but by researching and understanding the aspects of this form of insurance you are learning how to reduce your rate to your best ability.
How Much Life Insurance Is Enuogh?
Before you can start requesting quotes for life insurance online you first have to determine how much insurance it will take to cover your needs. Everyone's life insurance needs are different depending on their own unique personal situation. A young couple with several children will have drastically different needs than a middle aged man with no dependents.
One of the simplest methods for figuring your life insurance needs is to simply multiply your current annual earnings by the number of years you expect to work before you retire. For example if you are currently 35 years old and plan on retiring when you are 65 then you have 30 years left that you are expecting to be working. If you currently gross $50,000 a year then you would expect to make $1,500,000 or 1.5 million over your working life time.
To directly replace that means that you will need a life insurance policy worth 1.5 million. Now this may seem like an extremely high level of insurance but as you will see there are some factors that can increase the amount needed as well as factors that will reduce the amount needed.
The number we came up with using the above calculation is simply a starting point, now we will discuss some factors that can actually increase the amount you should purchase.
The first thing to consider are the costs involved with death, the most obvious one is the cost of an actual funeral. The cost of an average funeral today runs between $6,000 and $10,000, this is an added expense that you should figure in when determining how much insurance to purchase. The other possible death expenses you need to consider are medical bills, legal costs, and any applicable taxes.
The other thing to keep in mind are the other benefits of your job that will be lost when you pass. Probably the largest and most important one to consider is health insurance. If you health insurance is currently provided by your employer then you need to figure what it will cost your family to purchase health insurance somewhere else and add that to the amount of life insurance that you purchase. For example if you determine that a non-employer subsdized health insurance will cost your family $300 a month then you will need to add $108,000 ($300 X 12 months X 30 years) to the amount you need.
Now for some good news, we will discuss the factors that will reduce the amount of insurance you need to purchase. In most cases people will subtract the amount of money they have in any current savings plan from the amount of insurance they need to purchase. Probably the most significant factor is social security death benefits. If you have dependents and have paid enough into social security then they will be eligible to receive monthly payments. The amount of benefits that your dependents can receive is based on many factors to find out exactly what your family could receive you will need to contact the social security office. For our example we will use a total monthly benefit of $2000 for the family. In this case you take $2,000 X 12 months X 30 years for a total pay out of $720,000. Now if you take our original 1.5 million and add the $108,000 for health insurance and then subtract the social security benefit of $720,000 you end up with: $888,000. This has dropped the amount you need to purchase by nearly 50%.
This is just one method of figuring your life insurance needs, everyone will have different needs for life insurance.
One of the simplest methods for figuring your life insurance needs is to simply multiply your current annual earnings by the number of years you expect to work before you retire. For example if you are currently 35 years old and plan on retiring when you are 65 then you have 30 years left that you are expecting to be working. If you currently gross $50,000 a year then you would expect to make $1,500,000 or 1.5 million over your working life time.
To directly replace that means that you will need a life insurance policy worth 1.5 million. Now this may seem like an extremely high level of insurance but as you will see there are some factors that can increase the amount needed as well as factors that will reduce the amount needed.
The number we came up with using the above calculation is simply a starting point, now we will discuss some factors that can actually increase the amount you should purchase.
The first thing to consider are the costs involved with death, the most obvious one is the cost of an actual funeral. The cost of an average funeral today runs between $6,000 and $10,000, this is an added expense that you should figure in when determining how much insurance to purchase. The other possible death expenses you need to consider are medical bills, legal costs, and any applicable taxes.
The other thing to keep in mind are the other benefits of your job that will be lost when you pass. Probably the largest and most important one to consider is health insurance. If you health insurance is currently provided by your employer then you need to figure what it will cost your family to purchase health insurance somewhere else and add that to the amount of life insurance that you purchase. For example if you determine that a non-employer subsdized health insurance will cost your family $300 a month then you will need to add $108,000 ($300 X 12 months X 30 years) to the amount you need.
Now for some good news, we will discuss the factors that will reduce the amount of insurance you need to purchase. In most cases people will subtract the amount of money they have in any current savings plan from the amount of insurance they need to purchase. Probably the most significant factor is social security death benefits. If you have dependents and have paid enough into social security then they will be eligible to receive monthly payments. The amount of benefits that your dependents can receive is based on many factors to find out exactly what your family could receive you will need to contact the social security office. For our example we will use a total monthly benefit of $2000 for the family. In this case you take $2,000 X 12 months X 30 years for a total pay out of $720,000. Now if you take our original 1.5 million and add the $108,000 for health insurance and then subtract the social security benefit of $720,000 you end up with: $888,000. This has dropped the amount you need to purchase by nearly 50%.
This is just one method of figuring your life insurance needs, everyone will have different needs for life insurance.
Insurance Broker ? You Will Need Them For Protection
Call them insurance brokers or insurance agents; or better still, personal financial advisors. All these titles indicate to those people who engage their whole time to ensure your life?s security. No wonder their profession is in much demand, and insurance sector is the largest employer in the nation, as they sell such financial products which protect your family and/or dependents when you are no more there.
As a matter of fact, not all the insurance sector workers are brokers; a good 70% work in administrative responsibilities of the total 2 million plus strong work force.
The Three Main Areas of Insurance BrokingAn insurance broker being the front face of insurers works on three main areas of the whole business. Life insurance, Health insurance and Property insurance are these three areas. A broker is required to have a commanding and comprehensive knowledge of the financial market and economy as a whole in order that he advise his clients and help them choose the appropriate policy. Within an interaction or two with the clients the insurance broker will gather sufficient information about the clients? financial positions and future needs that he can tailor a solution for them.
An Insurance broker?s basic duties include collecting premiums at designated intervals from policy holders, helping the family members of the policy holders in the event of death of the policy holders during the term of policy with claims and settlements etc.
Depending on how creative is an insurance broker; he can tailor products for children?s college fees, healthcare benefits and hospital covers.
Health insurance brokers prefer a different style of working unlike life and property (car, house hold articles etc) insurance brokers. Accordingly, they are rather seen working with groups of employees more than with individuals. For those who specialize in health insurance, they are expected to be well versed with healthcare issues too. The governmental Medicaid policy is serviced by brokers who are directly employed by the government.
Lastly, property insurance covers both damages done by and to the policy holders. The claim settlements of property insurances need to be precariously handled as there are possibilities of policy holders fraudulently making false claims.
Career as Insurance BrokerThere is a slender difference between insurance agents and brokers. Agents work as employees of insurers where as brokers are independent entrepreneurs. Because of their vast experience and time availability, they are engaged in activities as real estate broking and investment consultation etc to supplement their incomes. Insurance broker is qualified and licensed (Personal Financial Advisor) through examination as per US Patriot Act.
As a matter of fact, not all the insurance sector workers are brokers; a good 70% work in administrative responsibilities of the total 2 million plus strong work force.
The Three Main Areas of Insurance BrokingAn insurance broker being the front face of insurers works on three main areas of the whole business. Life insurance, Health insurance and Property insurance are these three areas. A broker is required to have a commanding and comprehensive knowledge of the financial market and economy as a whole in order that he advise his clients and help them choose the appropriate policy. Within an interaction or two with the clients the insurance broker will gather sufficient information about the clients? financial positions and future needs that he can tailor a solution for them.
An Insurance broker?s basic duties include collecting premiums at designated intervals from policy holders, helping the family members of the policy holders in the event of death of the policy holders during the term of policy with claims and settlements etc.
Depending on how creative is an insurance broker; he can tailor products for children?s college fees, healthcare benefits and hospital covers.
Health insurance brokers prefer a different style of working unlike life and property (car, house hold articles etc) insurance brokers. Accordingly, they are rather seen working with groups of employees more than with individuals. For those who specialize in health insurance, they are expected to be well versed with healthcare issues too. The governmental Medicaid policy is serviced by brokers who are directly employed by the government.
Lastly, property insurance covers both damages done by and to the policy holders. The claim settlements of property insurances need to be precariously handled as there are possibilities of policy holders fraudulently making false claims.
Career as Insurance BrokerThere is a slender difference between insurance agents and brokers. Agents work as employees of insurers where as brokers are independent entrepreneurs. Because of their vast experience and time availability, they are engaged in activities as real estate broking and investment consultation etc to supplement their incomes. Insurance broker is qualified and licensed (Personal Financial Advisor) through examination as per US Patriot Act.
Cheap Life Insurance Something Else To Consider
One source of cheap life insurance is Group Life Insurance. This type of insurance is generally offered through your place of employment. Because many individuals are covered under a Group Life Insurance plan, the rates your employer offers tend to be very affordable. While Group Life Insurance may sound enticing, realize that the coverage being offered is usually not going to be enough to meet the needs of you and your family.
In other words, it might be necessary to supplement this cheap source of life insurance with another policy.
Two big assumptions
How can an employer offer such cheap life insurance? Typically, the employer acts as the owner of the policy and participating employees are considered the insured. Under this scenario, the insurance agency calculates its risks based on a "pool" of individuals. Agents start with the assumption that it is extremely unlikely all or even a significant portion of the insured will die at the same time.
The insurance company also assumes that not everyone will work at that place of employment until retirement age. What that means to the insurance company is that it will be covering the group for a shorter term than it would when only insuring an individual. These two assumptions alone enable the insurance company to offer significantly reduced rates.
How much do employees contribute?
A company that offers group life insurance to its employees may offer participation in the group plan at no cost to employees. That's definitely cheap life insurance! Life insurance in this case is promoted as a company benefit. When employees don't pay into their life insurance plans, their death benefits generally are equal to one year of salary. Sometimes a company offers more benefits to management or to union employees.
In the case where an employee has the option to voluntarily contribute money towards the Group Life Insurance plan, death benefits generally are much more substantial. When an employee contributes, it's usually also possible for the employee's spouse and child(ren) to get life insurance coverage under the Group Life Insurance plan.
Not only is it usually cheaper to get life insurance through a Group Insurance Plan, employees benefit in another way. They usually won't have to take a medical exam. In other words, an employee is insurable even if he or she has a preexisting medical condition.
When you're looking for cheap life insurance, don't overlook your employer. It's a reliable source even if it's necessary to supplement this source. If you do decide to pursue this option, it's important to thoroughly understand the company policy as it applies to life insurance. In particular, you want to know what happens to the policy should you decide to voluntarily terminate your employment.
The policy typically terminates upon your departure; however, some company policies offer the option of continuing the Group Insurance Plan. In this situation, employees should expect to pay more out of pocket expenses. Even so, it's still going to be a cheap source of life insurance.
In other words, it might be necessary to supplement this cheap source of life insurance with another policy.
Two big assumptions
How can an employer offer such cheap life insurance? Typically, the employer acts as the owner of the policy and participating employees are considered the insured. Under this scenario, the insurance agency calculates its risks based on a "pool" of individuals. Agents start with the assumption that it is extremely unlikely all or even a significant portion of the insured will die at the same time.
The insurance company also assumes that not everyone will work at that place of employment until retirement age. What that means to the insurance company is that it will be covering the group for a shorter term than it would when only insuring an individual. These two assumptions alone enable the insurance company to offer significantly reduced rates.
How much do employees contribute?
A company that offers group life insurance to its employees may offer participation in the group plan at no cost to employees. That's definitely cheap life insurance! Life insurance in this case is promoted as a company benefit. When employees don't pay into their life insurance plans, their death benefits generally are equal to one year of salary. Sometimes a company offers more benefits to management or to union employees.
In the case where an employee has the option to voluntarily contribute money towards the Group Life Insurance plan, death benefits generally are much more substantial. When an employee contributes, it's usually also possible for the employee's spouse and child(ren) to get life insurance coverage under the Group Life Insurance plan.
Not only is it usually cheaper to get life insurance through a Group Insurance Plan, employees benefit in another way. They usually won't have to take a medical exam. In other words, an employee is insurable even if he or she has a preexisting medical condition.
When you're looking for cheap life insurance, don't overlook your employer. It's a reliable source even if it's necessary to supplement this source. If you do decide to pursue this option, it's important to thoroughly understand the company policy as it applies to life insurance. In particular, you want to know what happens to the policy should you decide to voluntarily terminate your employment.
The policy typically terminates upon your departure; however, some company policies offer the option of continuing the Group Insurance Plan. In this situation, employees should expect to pay more out of pocket expenses. Even so, it's still going to be a cheap source of life insurance.
How to Get a Term Life Insurance Quote
Getting a term life insurance quote is a smart move. Not only is it the first step towards ensuring your beneficiaries will be financially secure in the unfortunate event you pass away, but nowadays, term life insurance quotes are very easy to obtain.
Given the competitive nature of the life insurance industry, you may even find you're able to negotiate an even better deal than the quote you're given.
Which Insurance Company is Best?
There's no one answer to the question of which insurance company is best. Only you can decide that. If you have a preferred insurance provider, maybe you're familiar with the business from advertising, then start by contacting that source.
If you already work with an insurance carrier that provides other types of insurance, such as your automobile insurance or your homeowner's insurance, or even insurance on your business, then go ahead and contact that company for a term life insurance quote.
If your regular insurance provider offers term life insurance, you may be eligible for a discount just because you are an existing customer.
If you are new to the world of insurance, then do what most newbies do. Fire up your search engine and get a term life insurance quote online. After just a few clicks, you will have before your eyes numerous options to pursue. There's no need to feel overwhelmed with the choices.
Many of the internet sites are set up to get term life insurance quotes from a number of insurance agencies. If you're interested in getting multiple quotes without having to fill out multiple applications, this may be the best way to proceed.
Before selecting this type of multiple quote website, you may want to find out which insurance agencies that particular website deals with. This information generally is listed right on the home page.
Free Term Life Insurance Quotes
Once you've found a website you feel comfortable with, find the link to receive your free term life insurance quote. Be sure to look for the word "Free." If the website wants to charge you for this type of service, you should leave and continue your search. You should never have to pay for a term life insurance quote, but it is the Internet, so you've got to be aware.
After clicking on the link to receive your free term life insurance quote, you'll be presented with an online application form. The amount of information required for each form will vary from site to site.
At a minimum you can expect to provide the following information: age (or date of birth), gender, your health categorization, the amount of term life insurance coverage you seek, the term, your state or country of residency, and whether or not you use tobacco products.
That information will get you a "general" term life insurance quote. The amount of your actual premium will ultimately be determined by a more in-depth review of your personal information and medical history.
Given the competitive nature of the life insurance industry, you may even find you're able to negotiate an even better deal than the quote you're given.
Which Insurance Company is Best?
There's no one answer to the question of which insurance company is best. Only you can decide that. If you have a preferred insurance provider, maybe you're familiar with the business from advertising, then start by contacting that source.
If you already work with an insurance carrier that provides other types of insurance, such as your automobile insurance or your homeowner's insurance, or even insurance on your business, then go ahead and contact that company for a term life insurance quote.
If your regular insurance provider offers term life insurance, you may be eligible for a discount just because you are an existing customer.
If you are new to the world of insurance, then do what most newbies do. Fire up your search engine and get a term life insurance quote online. After just a few clicks, you will have before your eyes numerous options to pursue. There's no need to feel overwhelmed with the choices.
Many of the internet sites are set up to get term life insurance quotes from a number of insurance agencies. If you're interested in getting multiple quotes without having to fill out multiple applications, this may be the best way to proceed.
Before selecting this type of multiple quote website, you may want to find out which insurance agencies that particular website deals with. This information generally is listed right on the home page.
Free Term Life Insurance Quotes
Once you've found a website you feel comfortable with, find the link to receive your free term life insurance quote. Be sure to look for the word "Free." If the website wants to charge you for this type of service, you should leave and continue your search. You should never have to pay for a term life insurance quote, but it is the Internet, so you've got to be aware.
After clicking on the link to receive your free term life insurance quote, you'll be presented with an online application form. The amount of information required for each form will vary from site to site.
At a minimum you can expect to provide the following information: age (or date of birth), gender, your health categorization, the amount of term life insurance coverage you seek, the term, your state or country of residency, and whether or not you use tobacco products.
That information will get you a "general" term life insurance quote. The amount of your actual premium will ultimately be determined by a more in-depth review of your personal information and medical history.
When the Water Rises
Disasters usually have a way of reminding us of important lessons. In late-summer 2005, that disaster was Hurricane Katrina, and the lesson was to always be prepared.
Out of the rubble of the Gulf Coast region emerged a lack of preparedness on a variety of levels. On a basic level, most citizens lacked flood insurance, even though New Orleans is a city surrounded by water. In fact, it was estimated that between only 30-40% of residents hit by Katrina had any form of flood insurance. In some places, this number was even lower.
Many policyholders do not realize that basic homeowners insurance does not include protection from flood damage. Instead, the Federal Emergency Management Agency (FEMA) administers flood insurance through a federal program.
In many cases, if your home is in a high-risk area for flooding, you must get flood insurance in order to get a mortgage. In the wake of Katrina and later, Hurricane Rita, many called for flood insurance to become mandatory in high and even medium-risk areas. Just as auto insurance is required by the government, flood insurance could be too. Increased participation would also mean much lower rates, the more people who sign up, the cheaper the insurance is.
Flood insurance is actually quite affordable. But that has yet to increase its popularity. According to insure.com, only one-quarter of the most vulnerable homes are insured, even though statistics have shown that their homes are much more likely to be flooded than be destroyed by fire.
And in the case of Katrina, flooding wasn't the only damage to homes and businesses. Looting and fires ended up destroying many possessions.
Prices depend entirely on the amount of coverage you wish to purchase and the area your home is located in. The "average" cost of flood insurance is about $438 for a year. Costs for the insurance can range from around $2,000 a year in a flood-prone area for $250,000 in building coverage with $100,000 coverage for the contents. If you simply live near a flood zone, instead of in it, the prices for $35,000 in building coverage and $10,000 for the contents will cost about $300 a year. This is for people who live in a low to medium risk area.
Recently, flood insurance providers in South Carolina and California, two flood-prone areas, have received a large increase in calls asking about flood insurance policies. This may be a sign that the disaster in the Gulf has helped to remind people of the need for preparation.
Flood insurance may not be right for you, and you may not live in a high-risk area. But at any given moment, many formerly safe areas can be flood-prone and the results can be devastating. Hurricanes Katrina and Rita have taught us all to be more prepared in the event of a disaster and one of the best ways to make sure your home and possessions are safe, is to buy flood insurance.
Out of the rubble of the Gulf Coast region emerged a lack of preparedness on a variety of levels. On a basic level, most citizens lacked flood insurance, even though New Orleans is a city surrounded by water. In fact, it was estimated that between only 30-40% of residents hit by Katrina had any form of flood insurance. In some places, this number was even lower.
Many policyholders do not realize that basic homeowners insurance does not include protection from flood damage. Instead, the Federal Emergency Management Agency (FEMA) administers flood insurance through a federal program.
In many cases, if your home is in a high-risk area for flooding, you must get flood insurance in order to get a mortgage. In the wake of Katrina and later, Hurricane Rita, many called for flood insurance to become mandatory in high and even medium-risk areas. Just as auto insurance is required by the government, flood insurance could be too. Increased participation would also mean much lower rates, the more people who sign up, the cheaper the insurance is.
Flood insurance is actually quite affordable. But that has yet to increase its popularity. According to insure.com, only one-quarter of the most vulnerable homes are insured, even though statistics have shown that their homes are much more likely to be flooded than be destroyed by fire.
And in the case of Katrina, flooding wasn't the only damage to homes and businesses. Looting and fires ended up destroying many possessions.
Prices depend entirely on the amount of coverage you wish to purchase and the area your home is located in. The "average" cost of flood insurance is about $438 for a year. Costs for the insurance can range from around $2,000 a year in a flood-prone area for $250,000 in building coverage with $100,000 coverage for the contents. If you simply live near a flood zone, instead of in it, the prices for $35,000 in building coverage and $10,000 for the contents will cost about $300 a year. This is for people who live in a low to medium risk area.
Recently, flood insurance providers in South Carolina and California, two flood-prone areas, have received a large increase in calls asking about flood insurance policies. This may be a sign that the disaster in the Gulf has helped to remind people of the need for preparation.
Flood insurance may not be right for you, and you may not live in a high-risk area. But at any given moment, many formerly safe areas can be flood-prone and the results can be devastating. Hurricanes Katrina and Rita have taught us all to be more prepared in the event of a disaster and one of the best ways to make sure your home and possessions are safe, is to buy flood insurance.
Understanding UK Life Insurance Cover
Having adequate UK life insurance cover is a simple yet effective way to provide protection for you and your loved ones. In fact, a lot of people include UK life insurance cover as part of their overall financial planning.
Start by figuring out your needs
UK life insurance cover can be a simple term policy or it can include extras. And that's a good thing because everyone has different needs. Determining your needs is an important first step in determining which type of UK life insurance cover will best match your overall needs.
For example, you may want life insurance that simply pays a death benefit to your beneficiaries upon your death.
But you might instead want UK life insurance cover that pays off your mortgage. If so, you have a choice and it depends on the type of mortgage you have. If it is an Interest Only mortgage, you'll want to make sure the life insurance cover you select equals the value of your mortgage.
In addition, the term of the life insurance cover needs to be the same as the term of your mortgage.
If you have a Repayment mortgage, you need to consider another type of insurance called Mortgage Life Insurance. This type of UK life insurance cover fluctuates as you make your mortgage payments. The goal is to reduce the amount of cover as you reduce the amount of your mortgage.
Upon your death, your Mortgage Life Insurance benefit will be equal to the amount still owed on your mortgage. The payout is then used to pay off the balance of the mortgage. This is a good way to ensure your family isn't left to worry about how they'll pay the mortgage in your absence. It's also an option that's affordable.
Terminal Illness vs. Critical Illness cover
This type of mortgage may or may not include something called Terminal Illness coverage. Basically what this means is that you'll receive immediate payout of your cover in the event your doctor diagnoses an illness that likely will cause you to die within a year. While the situation is unfortunate, protecting your family in this manner is prudent.
Don't make the mistake of confusing Critical Illness cover with Terminal Illness cover. There is more difference than just the names. Critical illnesses are defined by the insurance company so check to see which ones are covered.
When you consider the fact that being diagnosed with a critical illness such as a heart attack or vision loss doesn't necessarily mean you will die but may mean you're no longer be able to hold down your job, this type of additional UK life insurance cover make sense.
You won't be able to collect under your Terminal Illness cover or your UK life insurance cover until you die, but Critical illness cover will provide a payout shortly after a diagnosis of a covered illness is made. The purpose is to supplement the probable loss of income that results from such an illness.
Start by figuring out your needs
UK life insurance cover can be a simple term policy or it can include extras. And that's a good thing because everyone has different needs. Determining your needs is an important first step in determining which type of UK life insurance cover will best match your overall needs.
For example, you may want life insurance that simply pays a death benefit to your beneficiaries upon your death.
But you might instead want UK life insurance cover that pays off your mortgage. If so, you have a choice and it depends on the type of mortgage you have. If it is an Interest Only mortgage, you'll want to make sure the life insurance cover you select equals the value of your mortgage.
In addition, the term of the life insurance cover needs to be the same as the term of your mortgage.
If you have a Repayment mortgage, you need to consider another type of insurance called Mortgage Life Insurance. This type of UK life insurance cover fluctuates as you make your mortgage payments. The goal is to reduce the amount of cover as you reduce the amount of your mortgage.
Upon your death, your Mortgage Life Insurance benefit will be equal to the amount still owed on your mortgage. The payout is then used to pay off the balance of the mortgage. This is a good way to ensure your family isn't left to worry about how they'll pay the mortgage in your absence. It's also an option that's affordable.
Terminal Illness vs. Critical Illness cover
This type of mortgage may or may not include something called Terminal Illness coverage. Basically what this means is that you'll receive immediate payout of your cover in the event your doctor diagnoses an illness that likely will cause you to die within a year. While the situation is unfortunate, protecting your family in this manner is prudent.
Don't make the mistake of confusing Critical Illness cover with Terminal Illness cover. There is more difference than just the names. Critical illnesses are defined by the insurance company so check to see which ones are covered.
When you consider the fact that being diagnosed with a critical illness such as a heart attack or vision loss doesn't necessarily mean you will die but may mean you're no longer be able to hold down your job, this type of additional UK life insurance cover make sense.
You won't be able to collect under your Terminal Illness cover or your UK life insurance cover until you die, but Critical illness cover will provide a payout shortly after a diagnosis of a covered illness is made. The purpose is to supplement the probable loss of income that results from such an illness.
Worst Case Scenario: Will Your Home Buildings Insurance Cover You?
Nobody likes to consider the ramifications of a worst case scenario, least of all the financial consequence. However, did you know that if a major storm (of the likes we experienced in the UK in the late 1980s) struck the UK today, almost one-half of all homes in the UK would have inadequate home buildings insurance to cover the cost of repairs!
Valuation of your home buildings insurance - is it being done correctly?
Before you consider the value of your home, ask yourself a quick couple of questions:- what is the principal reason why you have home buildings insurance?- who assess the value of your home buildings insurance?
In most cases, the answer to the first question is you need to have home buildings insurance because it is a requirement under your mortgage agreement. The answer to your second question is also likely to be your home mortgage provider, because they feel they know the value of your home better than you do. So, what's the problem? Well, the problem is, each year your home mortgage is going down, but hopefully the value of your home is going up. As your insurance is principally to cover your outstanding mortgage, a disparity - between the value of your home and the outstanding mortgage amount - will rapidly arise. Therefore, it is vital that you keep control of valuing your home for home buildings insurance purposes and always ensure that the insurance relates to the actual value of your home, not the outstanding mortgage amount.
Improvements to your home - are they being included?
Likely as not, over time you are going to do some building work to your home. Maybe you'll add an extension. Put in a greenhouse. Add a conservatory. Etc. The question is - are all of these add-ons being included in the additional value they bring to your home, or are you only continuing to insure the main part of the home that was part of the original policy?
Increased costs - have you factored these in?
Nearly every insurance policy comes with an excess amount. Essentially what this means is that you have to pay a threshold amount before you can claim against the insurance company. Fine, let's take an example: say you bought your home in 1980 and set the threshold amount at ?500. Would you get more or less in materials and labour today if you were still maintaining an excess sum of ?500? Answer, far less and you'd be claiming on your insurance far sooner, which in turn means your premiums are likely to be higher.
As you can see then, home buildings insurance is not as simple as guessing what you think the value of your home is. It takes certain precision and year-on-year upkeep if you want to make sure you'll be sufficiently insured should the unfortunate worst case scenario occur.
Valuation of your home buildings insurance - is it being done correctly?
Before you consider the value of your home, ask yourself a quick couple of questions:- what is the principal reason why you have home buildings insurance?- who assess the value of your home buildings insurance?
In most cases, the answer to the first question is you need to have home buildings insurance because it is a requirement under your mortgage agreement. The answer to your second question is also likely to be your home mortgage provider, because they feel they know the value of your home better than you do. So, what's the problem? Well, the problem is, each year your home mortgage is going down, but hopefully the value of your home is going up. As your insurance is principally to cover your outstanding mortgage, a disparity - between the value of your home and the outstanding mortgage amount - will rapidly arise. Therefore, it is vital that you keep control of valuing your home for home buildings insurance purposes and always ensure that the insurance relates to the actual value of your home, not the outstanding mortgage amount.
Improvements to your home - are they being included?
Likely as not, over time you are going to do some building work to your home. Maybe you'll add an extension. Put in a greenhouse. Add a conservatory. Etc. The question is - are all of these add-ons being included in the additional value they bring to your home, or are you only continuing to insure the main part of the home that was part of the original policy?
Increased costs - have you factored these in?
Nearly every insurance policy comes with an excess amount. Essentially what this means is that you have to pay a threshold amount before you can claim against the insurance company. Fine, let's take an example: say you bought your home in 1980 and set the threshold amount at ?500. Would you get more or less in materials and labour today if you were still maintaining an excess sum of ?500? Answer, far less and you'd be claiming on your insurance far sooner, which in turn means your premiums are likely to be higher.
As you can see then, home buildings insurance is not as simple as guessing what you think the value of your home is. It takes certain precision and year-on-year upkeep if you want to make sure you'll be sufficiently insured should the unfortunate worst case scenario occur.
Swinton setting new standard for penalty pointed drivers.
Drivers with six points or more on their licence looking for motor insurance could soon be viewed as ‘standard’ rather than ‘non-standard’ says Swinton, the UK’s largest high street motor insurance broker.
Pointed drivers are no longer automatically penalised at Swinton as a result of the increase in the number of motorists now saddled with penalty points. And the move reflects a change in attitude by the motor insurance industry as the estimated number of pointed motorists tops 6 million*.
With the 6,000 speed cameras on our roads already catching over 2 million speeders each year, and driving whilst using a mobile phone now costing the driver three points, an unblemished licence is becoming rare.
Swinton announced it had seen a 12% increase in the number of drivers with points looking for cheaper motor insurance during 2006 - and as a result has set up a dedicated unit to deal with this rising demand. Swinton Specialist was launched earlier this year for drivers of imported, modified and high performance motors. The division is now also handling drivers with penalty points, and is already experiencing a high volume of calls.
Neil Ackinclose, head of Swinton Specialist Motor insurance, explained: "Over the last few years we have seen a dramatic increase in the number of drivers with penalty points requesting insurance. A few years ago insurers might have assumed that a motorist with six or more points on their licence was a reckless driver, but that is no longer necessarily the case.
"A 2006 YouGov survey estimated that 16% of drivers now have points on their license. As that figure continues to grow - with some estimating the actual number of pointed drivers to be in the region of 10 million - insurance providers are having to accept that points alone can no longer be used as a yardstick for driver evaluation.
"Here at Swinton we have set up Swinton Specialist - a dedicated unit to deal with non-standard motor insurance - where drivers with any number of points are treated as individuals. We look at full driving history and aim find a value policy to suit each car owner, whatever the vehicle."
Any driver interested in talking to Swinton Specialist should call 0800 781 8400.
Pointed drivers are no longer automatically penalised at Swinton as a result of the increase in the number of motorists now saddled with penalty points. And the move reflects a change in attitude by the motor insurance industry as the estimated number of pointed motorists tops 6 million*.
With the 6,000 speed cameras on our roads already catching over 2 million speeders each year, and driving whilst using a mobile phone now costing the driver three points, an unblemished licence is becoming rare.
Swinton announced it had seen a 12% increase in the number of drivers with points looking for cheaper motor insurance during 2006 - and as a result has set up a dedicated unit to deal with this rising demand. Swinton Specialist was launched earlier this year for drivers of imported, modified and high performance motors. The division is now also handling drivers with penalty points, and is already experiencing a high volume of calls.
Neil Ackinclose, head of Swinton Specialist Motor insurance, explained: "Over the last few years we have seen a dramatic increase in the number of drivers with penalty points requesting insurance. A few years ago insurers might have assumed that a motorist with six or more points on their licence was a reckless driver, but that is no longer necessarily the case.
"A 2006 YouGov survey estimated that 16% of drivers now have points on their license. As that figure continues to grow - with some estimating the actual number of pointed drivers to be in the region of 10 million - insurance providers are having to accept that points alone can no longer be used as a yardstick for driver evaluation.
"Here at Swinton we have set up Swinton Specialist - a dedicated unit to deal with non-standard motor insurance - where drivers with any number of points are treated as individuals. We look at full driving history and aim find a value policy to suit each car owner, whatever the vehicle."
Any driver interested in talking to Swinton Specialist should call 0800 781 8400.
How to Sell Your Life Insurance Policy for More Than the Cash Value
Most people do not know they can sell an insurance policy. There are companies that will pay you more than the cash value. Even term insurance, which has no cash value, is a candidate for purchase.
This transaction is called a life settlement. Life settlements have been on the scene since 1995; they are not new. While the purchase is facilitated by an insurance company, the buyers typically are pension and institutional funds which hold the policies in their investment portfolios.
Here are three common reasons why a person would sell their insurance policy…
1. The policy has outlived its usefulness.
78% of all insurance is purchased for family protection. Families with children insure the breadwinner(s) until they have had the time to build up an estate or an adequate 401(k) plan to provide for the family, pay off a mortgage and educate the children. Most people have been there and done that.
However, later in life these needs may have disappeared. The house is paid for, the kids have been to college and your 401(k) plan has a balance ten times greater than your life insurance face value.
Rather than continue to pay premiums, or surrender it for its cash value, you can sell it for more than the cash value. Buy a boat, take an extended vacation or go down to the dealership and plunk down cash for that car you have always wanted.
2. The policy has a large loan.
There are three common ways a policy can acquire a large loan.
First, at some point you simply took a maximum loan against your policy. It could have been to satisfy an emergency, take advantage of an investment opportunity—any number of things. But the loan was never repaid.
Second, you could have taken a modest loan years ago and never paid anything toward the principal. Every year, however, you received a bill for the interest due. If you are like many people, this goes in the round file and you never pay the interest. What happens is that the interest gets added to the loan. So what is originally simple interest turns into compound interest.
Over time, the loan and the unpaid interest can consume the entire cash value. That's when you get the letter from the insurance company telling you that to keep the policy in force, you need to come up with some astronomical amount of money.
But that's not the worst of it. When you call your agent to see what your other options might be, he or she informs you that if the policy lapses, there will be a gain (cash value less premiums paid) that the insurance company is required to report to the IRS. Worse yet is the fact that there is no money in the insurance policy to pay the tax (remember it lapsed for lack of premium payment and/or lack of any remaining values). So you are going to have to come up with the tax from someplace else. I don't think you would consider getting this information one of your better days.
3. You own Universal Life and interest rates have declined.
Getting this news is another bad day at the mail box. This time the letter from the insurance company says that in order to keep the policy in force, you have to come up with more than you could get for your first born.
How this occurs goes back to when you bought your policy. One of the major factors in determining the premium for a given face amount of Universal Life is the interest rate assumption made in the original proposal. Remember the double-digit interest rates? You could have bought your policy during this time frame. Most insurance agents would have suggested using a lower interest rate assumption to be conservative. However, interest rates have declined to even below these play-it-safe assumptions.
The sale of your insurance policy averts all three of these problems. In the first case, you don't have to pay any more premiums for coverage that is no longer needed. In the second, the problem you have with the loan disappears and is replaced by cash. And in the third, the probable lapse of the policy due to the fact that the premium to maintain the coverage is off the charts is offset by the cash received via a sale.
This transaction is called a life settlement. Life settlements have been on the scene since 1995; they are not new. While the purchase is facilitated by an insurance company, the buyers typically are pension and institutional funds which hold the policies in their investment portfolios.
Here are three common reasons why a person would sell their insurance policy…
1. The policy has outlived its usefulness.
78% of all insurance is purchased for family protection. Families with children insure the breadwinner(s) until they have had the time to build up an estate or an adequate 401(k) plan to provide for the family, pay off a mortgage and educate the children. Most people have been there and done that.
However, later in life these needs may have disappeared. The house is paid for, the kids have been to college and your 401(k) plan has a balance ten times greater than your life insurance face value.
Rather than continue to pay premiums, or surrender it for its cash value, you can sell it for more than the cash value. Buy a boat, take an extended vacation or go down to the dealership and plunk down cash for that car you have always wanted.
2. The policy has a large loan.
There are three common ways a policy can acquire a large loan.
First, at some point you simply took a maximum loan against your policy. It could have been to satisfy an emergency, take advantage of an investment opportunity—any number of things. But the loan was never repaid.
Second, you could have taken a modest loan years ago and never paid anything toward the principal. Every year, however, you received a bill for the interest due. If you are like many people, this goes in the round file and you never pay the interest. What happens is that the interest gets added to the loan. So what is originally simple interest turns into compound interest.
Over time, the loan and the unpaid interest can consume the entire cash value. That's when you get the letter from the insurance company telling you that to keep the policy in force, you need to come up with some astronomical amount of money.
But that's not the worst of it. When you call your agent to see what your other options might be, he or she informs you that if the policy lapses, there will be a gain (cash value less premiums paid) that the insurance company is required to report to the IRS. Worse yet is the fact that there is no money in the insurance policy to pay the tax (remember it lapsed for lack of premium payment and/or lack of any remaining values). So you are going to have to come up with the tax from someplace else. I don't think you would consider getting this information one of your better days.
3. You own Universal Life and interest rates have declined.
Getting this news is another bad day at the mail box. This time the letter from the insurance company says that in order to keep the policy in force, you have to come up with more than you could get for your first born.
How this occurs goes back to when you bought your policy. One of the major factors in determining the premium for a given face amount of Universal Life is the interest rate assumption made in the original proposal. Remember the double-digit interest rates? You could have bought your policy during this time frame. Most insurance agents would have suggested using a lower interest rate assumption to be conservative. However, interest rates have declined to even below these play-it-safe assumptions.
The sale of your insurance policy averts all three of these problems. In the first case, you don't have to pay any more premiums for coverage that is no longer needed. In the second, the problem you have with the loan disappears and is replaced by cash. And in the third, the probable lapse of the policy due to the fact that the premium to maintain the coverage is off the charts is offset by the cash received via a sale.
New Kid on the Block: Indexed Universal Life
Whole life insurance has been around for over 150 years. Universal life was introduced in the early 1980's. Universal Life offered the ability to increase or decrease the premium and death benefit and credited the cash values each year with a current interest rate. Variable life followed, which allowed policy owners to invest their cash values in equities. All three have their plusses and minuses.
Now there is a new kid on the block: Indexed Universal Life.
Here are the salient features:
1. Indexed Universal Life (IUL) is similar to Universal Life (UL); premiums and death benefits are flexible. You can increase or decrease premiums, or even stop them altogether. As your situation changes, you can decrease or increase (subject to insurability) the death benefit.
2. IUL is similar to Variable Life (VL) or Variable Universal Life (VUL) as the cash value is based on the increases of one or more stock indexes. The most common are the DJIA, NASDAQ 100 and the S & P 500.
Variable Life contracts allow direct investment in equities, much like a mutual fund. Indexed Universal Life policies do not invest directly in equities, so you do not have the same downside risk. The insurance company assumes all the risk.
If the index that you have chosen goes up over a given time frame (usually one year), your cash value goes up. However, if the index goes down, your cash value either stays the same or is credited with a minimum guaranteed interest rate, i.e. 2%.
3. How cool is that? If the market goes up, you get to participate in the growth. However, if the market goes down, your account doesn't go down; it stays the same. It gets even better. Any gains are locked in. They can never be taken away due to future decreases in the market. It's like walking up a flight of stairs. If the market goes up, you take a step up; if the market goes down, you stay where you are.
4. Indexed Universal Life has only been around for a few years. Only a few companies offer this contract. However, since 2000 the annual growth rate for this type of policy has been 24%.
When you speak with your life insurance agent about IUL, there are a few new terms you will need to understand:
1. Crediting Options
Crediting options are the math behind how the insurance company determines how much to credit your cash value at the end of each crediting period. The two most common are point to point and monthly average.
Point to point looks at the value of the stock index you chose at the beginning of each contract year and compares it to the value at the end of the point-to-point period. This is normally one year, but could be 2 or 5 years, depending on your contract choice.
Whatever happens in the interim doesn't matter. You could have a very high growth rate if the market and the corresponding index have a growth spurt during the last few months of the term. On the other hand, you could end up with a healthy loss if the index takes a dive during the latter part of your term with what to a regular investor would be a gain for the year.
The monthly average method takes a reading of the index each month. Then at the end of the year, adds them up and divides by twelve. This approach tends to smooth out the fluctuations.
Which one is better? It depends on your tolerance for risk and how the market performs during your policy's time frame. Since a life insurance policy is a long-term proposition, in the real world both should end up about the same over an extended period of time.
2. Participation Rate
Participation rate is the percentage of the increase in the index credited to your Indexed Universal Life policy each year. It could be, for example, 55%, 80%, 100% or 135%. Any given percentage rate is not necessarily better than another. It is simply the insurance company’s way of factoring in their downside risk and is a component that allows you to negate a cash value decrease if the market goes down.
3. Cap Rate
The cap rate is the maximum rate of return the insurance company will credit to your policy each year. For example, if the cap rate is 12% and the index you chose went up 10%, your policy is credited with a 10% gain. However, if the index increased 15%, your policy is credited with 12%, the cap. Not all Indexed Universal Life contracts have a cap. Participation rates and cap rates work in conjunction with each other.
Indexed Universal Life is an exciting new approach. If you are looking for a rate of return that is higher than traditional whole life or universal life, but don't want the market risk of variable life, indexed universal life may be for you. The fact that the cash values are based on the performance of the equity market, coupled with the feature that prevents loses and locks in gains should be enough to warrant further exploration.
Now there is a new kid on the block: Indexed Universal Life.
Here are the salient features:
1. Indexed Universal Life (IUL) is similar to Universal Life (UL); premiums and death benefits are flexible. You can increase or decrease premiums, or even stop them altogether. As your situation changes, you can decrease or increase (subject to insurability) the death benefit.
2. IUL is similar to Variable Life (VL) or Variable Universal Life (VUL) as the cash value is based on the increases of one or more stock indexes. The most common are the DJIA, NASDAQ 100 and the S & P 500.
Variable Life contracts allow direct investment in equities, much like a mutual fund. Indexed Universal Life policies do not invest directly in equities, so you do not have the same downside risk. The insurance company assumes all the risk.
If the index that you have chosen goes up over a given time frame (usually one year), your cash value goes up. However, if the index goes down, your cash value either stays the same or is credited with a minimum guaranteed interest rate, i.e. 2%.
3. How cool is that? If the market goes up, you get to participate in the growth. However, if the market goes down, your account doesn't go down; it stays the same. It gets even better. Any gains are locked in. They can never be taken away due to future decreases in the market. It's like walking up a flight of stairs. If the market goes up, you take a step up; if the market goes down, you stay where you are.
4. Indexed Universal Life has only been around for a few years. Only a few companies offer this contract. However, since 2000 the annual growth rate for this type of policy has been 24%.
When you speak with your life insurance agent about IUL, there are a few new terms you will need to understand:
1. Crediting Options
Crediting options are the math behind how the insurance company determines how much to credit your cash value at the end of each crediting period. The two most common are point to point and monthly average.
Point to point looks at the value of the stock index you chose at the beginning of each contract year and compares it to the value at the end of the point-to-point period. This is normally one year, but could be 2 or 5 years, depending on your contract choice.
Whatever happens in the interim doesn't matter. You could have a very high growth rate if the market and the corresponding index have a growth spurt during the last few months of the term. On the other hand, you could end up with a healthy loss if the index takes a dive during the latter part of your term with what to a regular investor would be a gain for the year.
The monthly average method takes a reading of the index each month. Then at the end of the year, adds them up and divides by twelve. This approach tends to smooth out the fluctuations.
Which one is better? It depends on your tolerance for risk and how the market performs during your policy's time frame. Since a life insurance policy is a long-term proposition, in the real world both should end up about the same over an extended period of time.
2. Participation Rate
Participation rate is the percentage of the increase in the index credited to your Indexed Universal Life policy each year. It could be, for example, 55%, 80%, 100% or 135%. Any given percentage rate is not necessarily better than another. It is simply the insurance company’s way of factoring in their downside risk and is a component that allows you to negate a cash value decrease if the market goes down.
3. Cap Rate
The cap rate is the maximum rate of return the insurance company will credit to your policy each year. For example, if the cap rate is 12% and the index you chose went up 10%, your policy is credited with a 10% gain. However, if the index increased 15%, your policy is credited with 12%, the cap. Not all Indexed Universal Life contracts have a cap. Participation rates and cap rates work in conjunction with each other.
Indexed Universal Life is an exciting new approach. If you are looking for a rate of return that is higher than traditional whole life or universal life, but don't want the market risk of variable life, indexed universal life may be for you. The fact that the cash values are based on the performance of the equity market, coupled with the feature that prevents loses and locks in gains should be enough to warrant further exploration.
Car Insurance Discounts That You May Qualify For
Car Insurance Discounts That You May Qualify For:Many auto insurance companies offer car insurance discounts to individuals or entities who meet a certain condition or conditions. Each company is a bit different, often specializing in one particular area or another, so the availability of discount auto insurance will vary depending on where you live, whether you meet certain eligibility standards, and of course on the particular company that you're dealing with.
Whenever you're shopping for a new policy, make sure to ask if there are any auto insurance discounts that you may be eligible for. It costs nothing to ask, and you may be pleasantly surprised. It may even be worth your while to “become eligible” for some of this “discount auto insurance” by taking certain actions or joining certain organizations.
Low Cost Car Insurance, or the Cheapest Car Insurance Possible?Only you can decide how vigorously to pursue the cheapest car insurance rate possible. Your driving history and habits are certainly one of the biggest factors, and something that you largely control, but perhaps by adding safety features, anti theft devices or joining the appropriate organization, you could achieve the cheapest car insurance rate possible for yourself. Even if you are eligible for only one or two discounts, the savings could be worth it. Low cost car insurance is achievable if one pays attention to the various factors involved.
Keeping in mind that our list is not complete, not all of these discounts may be available in your state, and that each insurer usually has different eligibility requirements, the following comprises some of the more common car insurance discounts that are available:
The ‘good driver’ insurance discount: - This is one of the rewards of not having had an accident or a damaging ticket in a long time. The importance of being a good driver cannot be overstated, as it is one of the most important factors in achieving “low cost car insurance”.
The ‘good student’ car insurance discount: - If you're a student with good grades, the assumption is that you'll also be a conscientious driver, and a somewhat lower risk to insure.
The ‘safe driver course’ insurance discount:- Taking and passing an accredited driver safety course proves that you've invested some extra time in learning how to safely operate a vehicle on the roads. Car insurance companies tend to like this, as it's perceived as a lower insurance risk for them.
The ‘anti-theft’ car insurance discount:- Given the cost to the insurance industry of car theft and break ins, installing devices that lessen the possibility of such can lead to lower cost car insurance.
The ‘safe vehicle’ insurance discount:- Given the cost to the insurance industry of injury and death related to car accidents, it should come as no surprise that the safer your vehicle is, the better the chances of obtaining cheaper car insurance.
The ‘mature driver’ insurance discount:- Typically, once you've reached a certain age, usually 50 or 55, and up to a certain point, you are regarded as a lower risk driver by auto insurance companies. A certain age range may entitle you to a car insurance discount.
The ‘low mileage’ car insurance discount:- It stands to reason that if your vehicle is not driven very often, then you probably stand a lower risk of a car accident. Consequently, low cost car insurance may be available for you.
The ‘occupation’ auto insurance discount:- If you hold a certain degree, or work in a certain field, insurance companies sometimes view you as a lower risk driver.
The ‘auto club’ insurance discount: - Membership in an auto club like AAA, may entitle you to a lower rate.
The ‘association’ car insurance discount: - Certain associations, like your alma mater may also entitle you to a discount on your auto insurance.
The ‘long-time customer’ discount: – Loyalty and a long-time association with a particular insurance company can have its benefits. Sometimes a company will even overlook a certain “negative” regarding your driving history if you've been a long-time customer.
The ‘multi-vehicle’ insurance discount: - If you have multiple vehicles to insure, it is usually a good idea to insure them all with the same insurance provider. Generally speaking, an insurance discount would apply.
The 'multi-line' auto insurance discount: - Using the same insurance provider to insure both your home and auto, can also result in insurance savings.
As you can see, it is not so difficult to achieve one or more of the requirements for car insurance discounts, but obviously, one of the main factors is your previous driving record and your car insurance history.
If you want low cost car insurance, or the cheapest car insurance rate possible for your situation, the first and best place to start is with your own driving habits on a daily basis. Pay attention at all times when behind the wheel, and when you are ready to purchase a policy, don't forget to compare quotes from multiple insurers, and ask about the all of the car insurance discounts that you are eligible for.
Interestingly an insurance company that offers some discounts may not have the overall lowest price. It can't be said often enough - shop around before you buy. kanetix can help you find cheap car insurance
--------------------------------------------------------------------------------------------------
The above description/explanation is intended as a guideline only, and is not to be interpreted as a recommendation to buy or sell any insurance products, or to provide legal or financial advice of any kind. Also, Kanetix Ltd. does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.
Whenever you're shopping for a new policy, make sure to ask if there are any auto insurance discounts that you may be eligible for. It costs nothing to ask, and you may be pleasantly surprised. It may even be worth your while to “become eligible” for some of this “discount auto insurance” by taking certain actions or joining certain organizations.
Low Cost Car Insurance, or the Cheapest Car Insurance Possible?Only you can decide how vigorously to pursue the cheapest car insurance rate possible. Your driving history and habits are certainly one of the biggest factors, and something that you largely control, but perhaps by adding safety features, anti theft devices or joining the appropriate organization, you could achieve the cheapest car insurance rate possible for yourself. Even if you are eligible for only one or two discounts, the savings could be worth it. Low cost car insurance is achievable if one pays attention to the various factors involved.
Keeping in mind that our list is not complete, not all of these discounts may be available in your state, and that each insurer usually has different eligibility requirements, the following comprises some of the more common car insurance discounts that are available:
The ‘good driver’ insurance discount: - This is one of the rewards of not having had an accident or a damaging ticket in a long time. The importance of being a good driver cannot be overstated, as it is one of the most important factors in achieving “low cost car insurance”.
The ‘good student’ car insurance discount: - If you're a student with good grades, the assumption is that you'll also be a conscientious driver, and a somewhat lower risk to insure.
The ‘safe driver course’ insurance discount:- Taking and passing an accredited driver safety course proves that you've invested some extra time in learning how to safely operate a vehicle on the roads. Car insurance companies tend to like this, as it's perceived as a lower insurance risk for them.
The ‘anti-theft’ car insurance discount:- Given the cost to the insurance industry of car theft and break ins, installing devices that lessen the possibility of such can lead to lower cost car insurance.
The ‘safe vehicle’ insurance discount:- Given the cost to the insurance industry of injury and death related to car accidents, it should come as no surprise that the safer your vehicle is, the better the chances of obtaining cheaper car insurance.
The ‘mature driver’ insurance discount:- Typically, once you've reached a certain age, usually 50 or 55, and up to a certain point, you are regarded as a lower risk driver by auto insurance companies. A certain age range may entitle you to a car insurance discount.
The ‘low mileage’ car insurance discount:- It stands to reason that if your vehicle is not driven very often, then you probably stand a lower risk of a car accident. Consequently, low cost car insurance may be available for you.
The ‘occupation’ auto insurance discount:- If you hold a certain degree, or work in a certain field, insurance companies sometimes view you as a lower risk driver.
The ‘auto club’ insurance discount: - Membership in an auto club like AAA, may entitle you to a lower rate.
The ‘association’ car insurance discount: - Certain associations, like your alma mater may also entitle you to a discount on your auto insurance.
The ‘long-time customer’ discount: – Loyalty and a long-time association with a particular insurance company can have its benefits. Sometimes a company will even overlook a certain “negative” regarding your driving history if you've been a long-time customer.
The ‘multi-vehicle’ insurance discount: - If you have multiple vehicles to insure, it is usually a good idea to insure them all with the same insurance provider. Generally speaking, an insurance discount would apply.
The 'multi-line' auto insurance discount: - Using the same insurance provider to insure both your home and auto, can also result in insurance savings.
As you can see, it is not so difficult to achieve one or more of the requirements for car insurance discounts, but obviously, one of the main factors is your previous driving record and your car insurance history.
If you want low cost car insurance, or the cheapest car insurance rate possible for your situation, the first and best place to start is with your own driving habits on a daily basis. Pay attention at all times when behind the wheel, and when you are ready to purchase a policy, don't forget to compare quotes from multiple insurers, and ask about the all of the car insurance discounts that you are eligible for.
Interestingly an insurance company that offers some discounts may not have the overall lowest price. It can't be said often enough - shop around before you buy. kanetix can help you find cheap car insurance
--------------------------------------------------------------------------------------------------
The above description/explanation is intended as a guideline only, and is not to be interpreted as a recommendation to buy or sell any insurance products, or to provide legal or financial advice of any kind. Also, Kanetix Ltd. does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.
Insurance In South Africa
When looking for insurance South Africa offers plenty of options for you to choose from. There are some giant and well-established financial services companies in the country, all with insurance provision or administration divisions. These include a who's who of the Johannesburg Securities Exchange, like Old Mutual, RMB, Liberty, Investec, Momentum Sanlam and Nedcor. The one big advantage of having your insurance in South Africa taken care of by large corporate entities such as these is that you enjoy a high level of confidence that their insurance operations are solidly underwritten, and that the investment options taken with the money that is housed with them in premium form is generally sensibly invested.
With insurance companies South Africa has also seen the emergence of a plethora of direct insurance companies, which specialise in offering insurance directly to the consumer, rather than using specialist brokers or other middle men. One of the major purported advantages of this that is you save on brokering fees, and another is that the process is usually significantly simplified in order for you to be able to make informed insurance choices by yourself.
Many of the aforementioned large corporations still operate via a network of brokers, which has left the direct insurance door open to some newcomers to the industry that have capitalised on this and have established high profile names for themselves in the market. Probably the most visible and successful of these has been OUTsurance. Not only do insurance companies in South Africa like this go directly to consumers, they have also opened other channels of procuring insurance not traditionally used by other companies, such as the Internet and call centres. Both of these allow you to immediately take out insurance policies with a minimum of fuss or bureaucracy.
Similarly, with car insurance South Africa offers you a wide range of choices, with the 300-pound gorilla most likely being Auto & General - although many of the above insurance corporates and direct insurance companies also operate specifically in this market. They cover all sorts of insurance as well as car insurance in South Africa, such as watercraft, leisure vehicles, 4x4s, motorbikes, caravans and trailers. Options to insure the contents of vehicles are also available, as are roadside assistance, accident insurance and insurance against retrenchment, which will continue to pay your car premiums for a specified period of time. As a result the essential cover that car insurance in South Africa provides becomes more worthwhile all the time.
With insurance companies South Africa has also seen the emergence of a plethora of direct insurance companies, which specialise in offering insurance directly to the consumer, rather than using specialist brokers or other middle men. One of the major purported advantages of this that is you save on brokering fees, and another is that the process is usually significantly simplified in order for you to be able to make informed insurance choices by yourself.
Many of the aforementioned large corporations still operate via a network of brokers, which has left the direct insurance door open to some newcomers to the industry that have capitalised on this and have established high profile names for themselves in the market. Probably the most visible and successful of these has been OUTsurance. Not only do insurance companies in South Africa like this go directly to consumers, they have also opened other channels of procuring insurance not traditionally used by other companies, such as the Internet and call centres. Both of these allow you to immediately take out insurance policies with a minimum of fuss or bureaucracy.
Similarly, with car insurance South Africa offers you a wide range of choices, with the 300-pound gorilla most likely being Auto & General - although many of the above insurance corporates and direct insurance companies also operate specifically in this market. They cover all sorts of insurance as well as car insurance in South Africa, such as watercraft, leisure vehicles, 4x4s, motorbikes, caravans and trailers. Options to insure the contents of vehicles are also available, as are roadside assistance, accident insurance and insurance against retrenchment, which will continue to pay your car premiums for a specified period of time. As a result the essential cover that car insurance in South Africa provides becomes more worthwhile all the time.
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