High Yield Savings Accounts

The year 2012 is a shaky year for finances. The economy is still sluggish, the job market is questionable and the credit scores of millions of Americans have taken a serious hit since the downturn of the economy in 2008. This makes looking for a loan in 2012 a slippery slope for many Americans. Even if you have impeccable credit history, you may still have a problem securing a loan for a rate that is affordable. Banks and other lenders are becoming stricter regarding who they will lend money to, meaning that if your credit score is phenomenal, you may be denied a loan because you have too much debt or because you work for yourself; plenty of other situations apply, as well.

Students – If you are looking for a student loan in 2012 you may have trouble finding one. Many banks are not offering private student loans anymore. Those that are require significant credit history with an impeccable score, meaning many students will need a parent or friend with excellent credit to cosign a loan on their behalf. The federal government does offer loans to students that do not require a credit check; these are called Stafford loans. These loans must be repaid once a student graduates or leaves school and they do not require a credit check or credit history.

Home buyers – Home loans are still being offered to people. Those that have less than perfect credit will need a large down payment or the help of a federal program to apply for a home loan. Additionally, home loans for people without exceptional credit will come with steep interest rates, making payments more expensive and the cost of the home much more over time. Still, many people without good credit are still managing to find a way to apply for a home loan in 2012.

Car shoppers – Vehicle loans are more difficult to get. Without a hefty down payment, many lenders and auto companies are unwilling to finance buyers for a new or used car unless they have perfect credit. This is leading to an increased number of vehicle sales through buy here pay here car dealerships, which often require at least 20 percent of the total cost of the vehicle up front; sometimes more.

Consolidation loans – Consolidation loans are loans that are big in 2012. Many people are looking to consolidate their finances by taking out a large lump sum loan in order to pay off their smaller debts; freeing up their income and making one large payment to their consolidation loan rather than several small payments for their debts. Consolidation loans are much easier to secure than a home loan or a vehicle loan and many people are opting for them.

Obtaining the type of loan you want or need in 2012 may be very easy or it could be a process; it all depends on your credit score and your personal finances. Always remember to shop around for the best rates for loans; banks and credit unions are a good starting point for obtaining loan information.

Photo  credit: alancleaver_2000

Quick reactions are a survival trait. When we began the long trek from our point of origin on Earth responding to threats, like lions, and opportunities, like deer, meant the difference between life and death. We owe our existence today to the quick reactions of our forebears.

Those hunters reactions survive in us today. They make us good drivers or excellent at games like table-tennis. They make us adept and alert, able to spot targets instantaneously and react with lightning speed. They can also fill our cupboards with stuff we neither need or really want. Quick reactions aren’t a survival requirement on a shopping trip.

Are you an impulse shopper?

Being aware of the wiring that makes us impulse buy can help us bring it under control. Shopping with the hunter’s mindset feels rewarding if we’ve camped on the pavement at the start of the sales but isn’t as rewarding if every target has been stunned before we arrive. That rush of tension which we feel when we spot something desirable comes from the same place as the impulse to freeze when our prey is spotted. For a second or two we hold our breath. And then we pounce. It’s over in seconds. That hunter’s instinct is satisfied. We’ve bagged another trophy.

On the plains of Africa hunters could wander for days before finding something lunch-worthy. In a shopping center it’s hard to wander for a minute without going “Oooooo, I wonder how much that is?”

As hunters ourselves we should consider this. Have we wandered into someone else’s trap? Retail outlets today are designed like wonderful mazes with a delightful surprise around every corner. It’s almost like they know we’re coming.

Impulse buying is unsatisfying because we put so little into it. There’s a cost, of course, but if we’re hammering plastic that cost is deferred. It can even lead to omniomania, or a shopping addiction. The real downside is that feeling of doubt. Outside on the pavement, loaded down with bags it starts to creep in. It carries on when we get home and survey our spoils. Do we really need this stuff? Some of us go so far as to squirrel away recent purchases, hoping that partners or loved ones won’t spot them. Bags are folded away neatly and stuffed in the garbage. It’s almost like nothing has happened. But of course something has happened. We’ve hammered the plastic and there’s a bill coming soon.

Even if we’ve shopped carefully, that bill is going to be unpleasant because unless it’s settled immediately all of the supposed savings are going to be wiped out by interest. Borrowing to “save” money is a truly terrible strategy but it’s what we do when we impulse buy a ‘bargain’. To hunt effectively we need to be light on our feet, not weighed down by debt. If price tags in store were able to show us the real cost perhaps we could check that hunter’s instinct for a second or two and think carefully before bagging another trophy.

Photo credit: Annie Mole

More and more people are turning to loans for an extra boost of cash in these tough times – but it’s a risky game to play. Statistics from the Federal Reserve indicate consumer debt, such as money borrowed from credit cards and loans, stood at nearly $2.4 trillion in 2010 – nearly $7,800 for every person in the U.S. The good news is consumers are working hard to dig themselves out of debt. Figures from the American Bankers Association show that the US consumer delinquency rate (late credit repayments) fell in second quarter of last year and suggest that individuals are wising up to the dangers of late or missed loan repayments.

Loan Guide – Types of Loans

Our loan guide below has been designed to explain the various types of loans available on the market so consumers can know exactly what they are getting themselves into when searching for a loan.

Unsecured loan

An unsecured loan is one which is backed against no particular asset – this can be compared to a secured loan which is usually secured or guaranteed against a property. Due to the current financial climate, unsecured loans which were once readily available are now harder to come by. Despite this, borrowers wanting smaller loans over a shorter period of time will find an unsecured loan their best option. As a rule of thumb, unsecured loans are more readily available for smaller amounts of money usually up to $25,000 as there is less at stake for the lender. Although there is much less of a risk of having your assets repossessed should you fail to meet repayments, you may however pay a higher interest rate than that of on a secured loan.

Secured loan

A secured loan, also known as a homeowner loan, is borrowed money which is secured an asset – something of financial value – that you own such as a property. Banks and lenders are more willing to lend if a loan can be backed against an asset, particularly on larger amounts from $40,000 plus, because it proves less risky for themselves.

Our current economic situation means that lenders are much more cautious lending out unsecured loans for which they have no guarantee of repayment. As a result, secured loans – which were once considered as a last resort option – are now in use more than ever. Indeed, if you are a borrower with a less than perfect credit history it is now much easier to access a loan which is secured against your property. Although the consequence of late or failure to meet repayments can be severe – at worse your home could be at risk of repossession – you may be charged less interest on a secured loan compared to an unsecured one.

Other loans also fall underneath the secured loan category and will depend on your mortgage status; a second charge loan is one that is secured against a mortgaged household, whereas a first charge is one secured against a property in which the mortgage has been wholly repaid, or in other words, owned outright.

Auto Title Loan

An auto title loan is a specific type of secured loan which is guaranteed by the borrower’s vehicle. The amount borrowed is usually based on the value of the car. Auto title loans typical have term (the repayment time frame) of one month and loan sizes usually range between $600 and $2,500.

Payday loan

Payday loans, also known as cash advances, are small unsecured loans which are usually paid back by the borrowers next pay check. Best used as a short-term loan solution, they are often used for paying unexpected large bills. Borrowers should be aware that payday loans which are not paid back promptly are at a very high risk of spiraling out of control. Some lenders are known to offer the loans with interest rates costs regularly exceeding 30% a month with hefty late or missed repayment charges to boot. Although hugely controversial in the US – a number of states have passed laws capping maximum interest rates – a payday loan is still a viable borrowing option if used with caution.

Consolidation loan

Consolidation loans, also known as debt consolidation, is a method of combining a number of existing loans into one single new loan. Used carefully, it can often be a good way of controlling your finances by managing and monitoring multiple and often confusing loan repayments and deadlines. They can also potentially lower monthly repayments by offering smaller interest rates and by spreading the repayments over a longer period of time – although this means you may pay more in the long run.

Whilst it may be best to avoid borrowing money wherever possible, sometimes our financial circumstances mean that you will need that extra cash injection. 0% interest, or interest free loans, are particularly rare to come by these days which means that you will always be paying more than the original amount you borrow. Whichever loan you chose, always read the terms and conditions of your contract; weigh up both the positive and negative aspects and make an informed decision.

As promised, I continue to dig for potential threats to the financial integrity of American consumers. Most recently I reported on scammers spoofing caller ID numbers of Chase and Bank of America cardholders to gain access to sensitive information to steal from consumers. Now we are taking a look at fake credit cards – how they are made and how to avoid becoming a victim to these identity and credit card thieves.

There are many ways that crooks can illegally obtain account numbers – via stolen mail, dumpster diving, scamming at the register, skimming email, breaching retail accounts, etc. Once they have the account numbers, the thief sells them to another who then assembles fake cards, which are quickly used to rack up huge amounts debt. Many people are not aware there’s a problem until they get a call from the credit card company about suspicious transactions.

• Recoding Cards: An actual card is required for crooks to use this method to fake a legitimate account. The information on the magnetic stripe is recoded to tap a stolen account without reflecting that information on the front of the card. In essence, it looks legit with the user’s name but purchases are charged against a stolen account number. To make it more difficult to recognize a fraudulent account, they’ll make an ID from another state, knowing that most people won’t be able to discern a fake ID from a real one.
• Cloning Duplicates: In this situation, the thief takes the stolen account number and imprints it onto a blank card and uses it as the original. Cloning a credit card takes seconds. While a card is being swiped for payment – dishonest staff can swipe the card details which are downloaded on the computer. A duplicate card is made and until your next credit card statement arrives to alert you the cloner can spend at will.
• Faking Gift Cards: This is one of the more ingenious ways to steal using credit cards. Counterfeit gift cards are imprinted with the stolen number. Merchants think nothing of accepting what appears to be a legitimate gift voucher to pay for a purchase, while all the while they’re actually paying with someone’s stolen credit card account. Requiring no identification, fake gift cards are difficult to track; the perpetrators can perform the embossing from the trunk of a car and are known to travel across the country to perform their fraud.

Financial institutions work to keep ahead of the latest scams online and off. The Federal Trade Commission offers educational resources like the articles “Avoiding Credit and Charge Card Fraud” on their website to help consumers avoid becoming a victim. Credit card companies also are actively involved in preventing fraud. If you are a victim, contact the institutions involved and file a complaint with the FTC or call 1.877.382.4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.