Category Archives: Spending

Overuse of Overdrafts: The Most Expensive Form of Legal Credit

Overdrafts can be a financial lifesaver for individuals and small businesses alike. Many use overdrafts as a readily available and convenient form of credit, especially when more traditional sources of personal credit or additional operating capital are unavailable. The individuals and businesses who rely upon overdrafts to cover cash shortages often view the fees they are charged for overdrafts as an unavoidable cost of doing business, but those fees can get to be awfully expensive – more expensive, in fact, than other personal and business costs that the individual would reject as being altogether exorbitant.

Banks have a love/hate relationship with overdrafts…

To be sure, overdrafts and the fees they generate are a pretty sweet deal for the banks, as they are able to collect many millions of pounds in overdraft fees every year. Despite the inordinately high profit potential that overdraft fees represent to the banks, however, roughly £5million worth of overdraft services are being taken away from small and medium enterprise (SME) owners every day, according to a Bank of England report that came out in October 2015. The elimination of overdraft services often amounts to a significant reduction in the working capital upon which many SMEs rely for their business to function.

Small businesses are seeking out alternatives to replace their lost overdraft services
In response to the loss of this relied-upon source of working capital, small business owners have sought out and used alternative funding and finance options, including secured loans from the Bank of England, an increase to the tune of £76 billion in 2015 alone. Ironically, the same banks that have been eliminating the highly lucrative overdrafts are beginning to offer those same business customers more traditional, less expensive forms of credit.

Individual account holders are being hurt, both by high overdraft fees and the removal of overdrafts

It’s not just businesses that are suffering; individual consumers are having overdraft woes as well. Individuals often get too dependent upon overdrafts, and some don’t even realise how much they are actually paying for what they thought was “free” banking. Part of this has to do with the “culture” in UK banking, which includes a lack of transparency about the real costs, but part has to do with consumers not educating themselves about these matters. In some cases bank customers are actually trapped with bank accounts that offer poor value, but they can’t switch because they have to pay off their overdraft debt. And even if they could switch banks, there is no guarantee that the new bank will offer the same – or any – overdrafts on the new accounts.

Breaking the overdraft cycle

Small business owners and individuals alike can free themselves from the seemingly unbreakable cycle of overdrafts, but doing so can be difficult. The most obvious solution is to avoid spending more than you have, but that is not always an easy course. The account holder who runs out of money before they run out of month might actually be unable to break the cycle, as the added cost of overdraft fees often equals or even exceeds the amount of shortfall in a given month, which ensures that the following month will also find the account in overdraft status. In worst-case scenarios, such as when the bank removes the overdrafts, the account might even go into default, resulting in its being closed and processed for collection.

There does exist a sort of saving grace that is becoming more available as banks are getting more liberal in their lending policies. For customers who lack the funds in savings to pay off their overdrafts (which would seem to constitute a majority of those who rely upon overdrafts), yet are still in good standing with their credit card accounts, a money transfer from the credit card to cover the overdrafts might be a viable alternative. While credit card debt typically carries a higher interest rate than other more traditional types of loans, that interest rate is still likely to be less expensive than the fees charged for overdrafts.

As a last resort, it might be possible to convince the bank to refund overdraft service fees that are deemed to be excessive or inappropriately applied. This is admittedly an unreliable process, as the lack of transparency into banking operations makes it difficult to prove that the charges were inappropriate.

Whatever method you choose to break free of the overdraft cycle, it is imperative that greater focus and commitment be made to ensuring that you don’t slip right back in. If nothing else, emerging from what amounts to a compounded cycle of overdrafts can be even more difficult to emerge from than was the original situation.

Helpful tips for saving a business

One of the first, proactive steps that you can take in order to save your business is to identify the areas in which you can save money, or the company assets that could be sold or simply got rid of.

Is your business using more paper than it needs to? With cloud computing systems, email, online filing and document services, and office software, it is easier than ever to go paperless. While the initial outlay may cost more than a ream of paper, you’ll certainly notice the long-term discount and the amount of space you’ll now have in your office.

Negotiating with your service providers is also a fantastic way to save yourself a little money; from energy bills and communication systems, to the cleaning company employed to keep house, it is important to make sure you’re getting the most for your company’s money.

Similarly, some office supply companies will offer discounts to those who pay in advance, so explore every payment option available to you, or build a profitable credit relationship with those you use most. In terms of making money, always look at the assets you no longer need; cartridges and recyclable office waste can often be traded in for cash, while old furniture, cleaning products and electrical items can also be sold on when no longer needed.

Say you’ve sold all of your valuables, cut as many corners as you can while retaining your focus, and renegotiated every bill, but you’re still facing trouble; what now? Well, are you maximising your business’s opportunities and prioritising your spending? Simply by monitoring every payment and expenditure, you stand a much better chance of keeping afloat. Do you know exactly how much you have coming in every month, and understand the bills that have to be settled? It’s time to get to know your accounts intimately. It may also be time to assess the advantages of outsourcing staff over keeping a full-time workforce, particularly if your business operates around a skilled industry.

An international saviour: foreign investment

Merging, which is the act of two firms coming together to form one, is often hugely beneficial to both parties, throwing a lifeline to failing companies. Mergers can create numerous networking opportunities, increase the potential for research and development, reduce competition, as well as introduce new angles to business meetings.

Similarly, seeking foreign investment can reinvigorate lacklustre operations; an injection of cash often provides salvation for companies, allowing them to remain open for business far longer. Where should you start? It’s time to seek out the professionals. Businesses such as M1 Group, which was founded by brothers Taha and Najib Mikati over 40 years ago, is well versed in foreign investment, and has reinvented numerous businesses in the real estate, fashion, retail, communication and energy industries. The company’s experience and business acumen could prove vital to a smaller company beginning to flounder, while its worldwide connections are fantastic for any company to have in its address book.

Hopefully you have made contingency plans long before business took a downturn, but if you haven’t, don’t worry; from selling assets and watching every penny, to accepting mergers and foreign investment, there are numerous ways to keep your business afloat.

Compare the Market to Avoid Overpaying

“It is easy to pay too much in fees and interest rates for home loans. Those with a damaged credit history may feel it is worth accepting the first offer. That would be wrong because good online lenders are willing to listen to good applications and respond with competitive quotations. ”
There is legal protection for people who are looking for real estate finance. If you are looking to refinance or want an installment loan based upon the equity you hold in that home, the Home Ownership and Equity Protection Act (HOEPA) identifies practices by unscrupulous companies that are acting unfairly or trying to deceive. One of the first principles when looking for finance is to talk to a company that has built up a reputation and is committed to providing a good service.

HOEPA

* For others the Act requires compliance with a number of principles if:
* Your original mortgage’s APR is more than 8% points above rates on Treasury securities over a comparable term.
* The second mortgage is more than 10% above those securities
* The fees chargeable exceed as specific figure or a specific percentage of the total loan.
* The Act requires disclosures by the lender three days in advance of closing on the loan:
* Written notice must state that the loan need not be finalized even though the agreement has been signed.
* Written notice of the consequences of default.

The detail of APR, monthly payments while if the rate is variable an explanation of the consequences of the APR changing.
For payments over a year in term, there are limits on the lump sum that can be required to finally pay off the principal. This is one of a series of features that are banned and it is essential for anyone seeking finance to understand those features or seek advice from someone able to explain the situation. There is an expectation that borrowers will behave ethically of course.

Affordability
The real estate market has stabilized. For a time it was difficult to value property and hence to identify the collateral in a house. It is easier now but there is a condition of lending that aims to avoid the toxic debt that led to Collateralize Debt Obligation Crisis when affordability was often ignored by lender and borrower. Their logic was that growth minimized any risk. Today lenders must take into account whether a borrower can afford the installments even if there is significant equity in the property.

Research

Borrowers have rights that they can exercise if they feel they have been deceived in any way. You can get compensation and costs but it is so much better to think about your financial situation in the first place. You should do your research from the start.

Today’s online lenders are different from the traditional members of the financial sector. Traditional institutions often reject an application for finance on credit score alone. That is no reason for anyone to be driven towards companies that are feeding off the desperation of people in need of help. If you have a regular income and are realistic in your financial requests you are likely to be approved for a loan by online lenders. They look at affordability as their primary way to approve an application. Anyone that looks capable of paying back a loan over the term should get approval, and quickly.

There are acts such as HOEPA to protect innocent people from unscrupulous companies but surely it is so much better to minimize the chances of facing problems in the first place? That means dealing with financial companies that have demonstrated their integrity time and again.

Here’s the Deal with Bank Accounts Rewards. Are They Worth the Monthly Fee?

Are you checking out some different banking options? Understandably, you want to ensure you research the best current accounts offering rewards. However, you also see that you need to pay a monthly fee to maintain these accounts, and you want to know if it’s worth it. The answer to that question depends upon a variety of factors.

How You Get the Rewards
You must consider what you need to do in order to procure the rewards to decide if it is worth your while. For example, maybe you need to make a certain number of transactions each month or keep a certain balance in your account. Decide if those terms are reasonable for you. If you feel that it is unlikely that you’re even going to have the ability to get the rewards in the first place, then the fee won’t be worth it for you.

Amount of Rewards vs. the Fee
You also need to take a look at how many rewards you could possibly get in a month in comparison to what the monthly fee is. When the fee is going to cost you more than you’ll ever get in rewards, then it doesn’t make sense to maintain that type of account. Furthermore, if you decide to sign up for the bank account, ask if you can switch to a different one if this program doesn’t work for you. After a few months of using the program, you may determine that the rewards are nominal and that you would rather have the cash in your account.

The Type of Rewards
Another way to determine if the rewards are worth it is to see exactly what they are. For example, if you earn petrol points or airline ticket points when you use your account but you rarely travel and don’t drive, then it does not make sense to sign up for the program. On the other hand, if you are earning more in rewards than you spend on the monthly fee, keeping this type of account open can prove smart in the long term.

No one answer exists as to whether or not a bank account with rewards and a monthly fee is worth it. The answer depends heavily on the type of account and whether or not it will work for your financial situation. Make a comparison to help you get to make the right decision.

Being financially prepared for university

Going away to university can be a tough experience. For most students, this is the first time they are leaving home. This new found independence is a heady feeling. You are no longer dependent on your parents and you can make your own decisions. One of the big challenges you are sure to experience has to do with money. You will have to learn how to manage all your cash and how to stretch it to cater for all your needs.

Although making your funds last until the end of the term can be tough, a few changes you make in your university life can go a long way towards helping you achieve this goal. Before going off to university, there are some things you can do to ensure you have some level of financial stability when you finally report. First of all, you need to carefully consider what the university has to offer and whether you can afford all that will be required. At the same time, you need to start thinking about any internship programs that can add value to your course. Some, such as the EUSA Academic Internship Programs, are designed to cater for different fields of study and offer placements all across Europe. This program allows you to immerse yourself in new professional and social cultures and gives you the chance to expand on experiences outside the classroom. Additionally, you need to get a student account that offers numerous perks for students.

There are a number of these available, so make sure you shop around for a suitable account that meets your needs. You should also look into applying for a student loan to give you enough funds to cover your costs as you pursue your education. Once you report at the university, you need to hone your budgeting skills in order to make the most of the money you have. For instance, instead of purchasing new course materials, you can save cash by buying second hand books. You can make some money by selling them once you are done with them. Another way you can save cash is by going into cheaper accommodation. Perhaps you can share accommodation with a roommate or a group of your friends. This way, you can all share rent and other utility costs. You will also need to factor in travel costs once you are in the university.

Applying for a student travel card is one of the best ways to manage or reduce the costs of getting around. As a cardholder, you may be entitled to discounts or subsidised fares on some routes. When it comes to shopping for food, clothes and toiletries, it is always a good idea to take advantage of coupons, special offers and value brands. Some shops and stores also give great student discounts, so learn to make the most of them. You might find managing your money while at university trickier than you thought it would be. Take heart and remember that with a good plan and budget, you will be able to live quite comfortably.

Looking for help when starting a new business

Starting your own business can be challenging and rewarding at the same time. The thought of being your own boss and making your own business and career decisions can be empowering. In order to make the most of it and build up a successful business from scratch, you will need to learn a variety of skills. You are also likely to require some assistance.
Business requirements

You will need several things before starting your business. The first of these is a sound business plan to help you map out how you will start and run your business. The business plan acts as a roadmap to guide you in your new endeavour.

You will also need to decide on a location for your business. Select one that is customer-friendly, easily accessible, affordable and suitable for your needs. These days, thanks to the internet, you can start a business right in your home. If your business requires a physical location, ensure that you meet all the zoning laws and you have the requisite business licenses and permits.
Another thing to consider when developing a start-up is the legal structure. You have the option of making your business a sole proprietorship, partnership, limited liability company (LLC), corporation or cooperative. The choice is yours, but make sure you fully understand the legalities involved in each.

Additionally, if your business is big enough, you’ll need to hire staff. This presents new challenges and responsibilities. Luckily, you have the option of outsourcing several functions to freelancers and other contractors instead of hiring fulltime staff.

Finally, you need to consider how you will finance your business. There are several viable options ranging from venture capital and bank loans to government backed loans and grants. Alternatively, you can decide to draw funds from outside investments. If you decide on the latter, make sure you ask for advice from the experts. For instance, Charterhouse Capital Partners, buyout specialists, will be able to advise you on the best investment opportunities available.

Getting help
As you can see, an entrepreneur has plenty to think about and numerous decisions to make. It is therefore advisable to take full advantage of the many entrepreneurial training options available in your city or country. Find out where you can get training or mentorship from other experienced entrepreneurs in your chosen industry and take the necessary classes, either online or in person.
Furthermore, enrol for as many business seminars, workshops and retreats as possible in order to increase your knowledge in your area of specialization. These events also provide excellent opportunities for you to meet and network with other entrepreneurs, further helping you to promote, grow and improve your business.
Learning never stops for an entrepreneur. Always keep an open mind, ask questions and seek help whenever you need it. Entrepreneurship is exciting and there are countless opportunities for you to take advantage of. Remember that there are no shortcuts to hard work, but with the right mind-set and a lot of determination, you are sure to realise your dreams.

Working With Coupons Is Easier Than You Think! – Part 2

A great coupon idea is stockpile particular items you are going to eventually use while you have coupons for them. You might not be tempted to buy in such a large quantity, but when you do the math, you’ll save a lot more money by buying more of an item while it’s on sale.

Make your coupon search faster by adding a toolbar to the Internet browser you use. Before purchasing anything online, check for coupon codes to help you save. You’ll find lots of great deals this way.

Try to shop at stores that will double your coupons. The potential for increased savings is significant, and there are a surprising number of stores that offer this. In some cases, doubled coupons mean free items. It’s always better to get something for free! As well, you may be able to test some products you’d never try otherwise.

Spend your time usefully. Collecting and organizing coupons is not as easy as it may seem. When using coupons, you must have dedication in order to save lots of money. Begin by cutting coupons and organizing coupons for a set amount of time. Tweak your existing schedule.

Do not waste money buying several copies of newspapers; instead ask your friends and family for their coupon inserts. If you know someone who does not use coupons, ask for their Sunday paper inserts. This will allow you to gain the coupons that you need without spending additional money. Don’t forget to show appreciation to anyone who helps you. Give them a free item thanks to your coupons or some inexpensive cupcakes that you bake yourself.

Understand how to best organize your shopping list to take advantage of the money-saving coupons that you have available. If you have coupons for an item that you can stock up on, then it is best to buy multiple items of that product if a good deal comes along. The overall savings are well worth it.

Watch the cashier during checkout time to ensure that all the coupons were properly scanned. Everyone makes mistakes now and then, and the cashier may forget to swipe one or two of your coupons as they can stick together. You should ensure you get all of the discounts you deserve.

Choose your coupons carefully. Even though you may get a discount, it could be wasted money if it is an item you don’t use. Write a list of the things you actually want to get at the store before you even look at your coupons. If you do, you won’t make impulse purchases because you have a coupon.

With luck, you now are more aware of how to handle coupons. Though there is a lot to learn overall, with this information and more, your success will be a given. Use these suggestions to save money in virtually all of your shopping endeavors.

Working With Coupons Is Easier Than You Think! – Part 1

Although you may feel like your back is against the wall, there are all kinds of ways to save when using coupons at the store. However, it is important to learn how to use coupons correctly. In addition to learning how to use coupons, you need to learn where to find coupons. Keep reading for good advice that can help you save money.

There are many places in which you can look to find coupons. The Sunday paper usually contains many coupons inside. Coupons can be collected from magazine, store flyers and even the internet. You can also visit websites to help you customize your coupon preferences.

Don’t always rush out to use your coupons as soon as you get them. Save the most by using the coupon when the item goes on sale. Doing so can lower the cost significantly, and you may even get it for free.

Go couponing one day each week. This will allow you enough time to find coupons that you can use. Try to spend a good amount of time researching and clipping to make the most of your couponing efforts.

Pair your coupons with your grocery store’s sales. This will allow you to get the most savings. Since most coupons have an expiration date that allows you a few months to use them, keep them on hand until you find a sale. Combining coupons and sales together can take off a large percentage of your bill.

Make sure that your coupons do not take more time than you can allot. Going thru pages and pages of coupon circulars can be a time consuming task. Dedicate no more than an hour or two a week to cut out coupons.

There are some stores that allow you to double and even triple your coupons. Look around to find which stores offer these type of deals. Check with friends and family, or go online to find out.

Consider shopping where you can purchase items in bulk. Use your coupons on vital items when you are using this strategy. Coupons have an expiration date. Many products you will purchase will last a long time. Use up extra coupons when you have them. You can save a ton of money after a while.

If you really love certain brands or companies, “like” them on Facebook. When you like a brand on Facebook, you may receive access to sales and special coupons. When loyal fans are rewarded, you want to be a part of the group.

You don’t have to be shy when you use coupons. Especially in tough economic times, coupons are an effective method to saving money. You will join the many smart shoppers making their money work more effectively. This is nothing to be embarrassed about.

You can save money by creating your grocery list, and then search online to see what coupons are available. If you can’t find all the coupons you like, you can adjust your list in order to use coupons that are available.

Make sure you’re only purchasing the items that can be stored in your home. If you do not think you can use a coupon in time, or use the product, you should either give the coupon away or simply not use it.

Get On Top of Your Mortgage by Following These Steps

Get On Top of Your Mortgage by Following These Steps

When you first get into your home, you may have every expectation of staying on top of your mortgage. Everything seems smooth sailing, but then perhaps you hit a bump. Maybe you lose a job, or maybe you realise that some of the repair bills on the property were a little higher than you thought they were. What can you do to stay on top of your mortgage when you feel as if you might be sinking?

Rebudget

It seems simple, but the truth is that most people simply look at their bills on a one by one basis. They do not see the bills as a cohesive whole that needs to be paid out of a common budget. If you find that you have less money than you thought you would at the end of the month, it is worth your while to sit down and budget everything. Throw out the original budget and start from scratch. Where is the money coming from, and where is it going?

Notify Your Lender

As you pay your mortgage, you are entering into a long relationship with your lender. Ideally, most of it will go by without a single ripple of strife, but you will discover that this is not always the case. If there is a change in your circumstances or if something affects your ability to pay, always be willing to contact your lender to let them know what is going on. You may have your payments reduced, or you may be able to put off payment for a short time. As soon as you suspect that there is a problem, let them know.

Contact an Independent Financial Adviser

The terms of your mortgage were agreed upon by you and the lender, but over time, you might suspect that there is a better deal for you out there. This may be the case, but if you are not certain, it is a good idea for you to consider speaking to an independent financial adviser. This is an expert who can make a huge difference to your mortgage payments. He or she will be able to tell you how your mortgage compares to other deals out there, and they can give you advice on how to proceed.

Consider a Second Loan

As you move forward with paying for your mortgage, things may reach a point where you want to take out a second loan. A second loan can get you through a bad spot, but it is also worth remembering that it can become another onerous payment for you to think about. Before you go for a second loan, take a moment to consider how you will pay for it and what kind of surety you are offering. To be sure, make use of a loan repayment calculator to ensure that the amount is something you can manage.

A mortgage can be handled responsibly, but it requires time and effort. Be careful with yours!

Looking after your money the mobile way

Looking after your money the mobile way

Managing your finances abroad used to be a tricky business. You needed to ensure you carried sufficient funds for everything you planned to do during your trip. Often once you were out of reach of your nearest bank branch you had no way of keeping track of your finances, ensuring bills were being paid, or getting more money should you need it.

The situation has now changed dramatically, and the last few years have seen an explosion in online and mobile banking across the world. As Alex Bray, Retail Channels Director at Misys, has said:

“With the introduction of online and mobile banking, managing your finances abroad is simple”

Customers can now maintain control of their money from anywhere in the world.

Some countries quickly embraced mobile apps and online banking, while others have been slower to adapt to the growth of mobile technology. In many ways it has been countries in Asia which have been at the forefront of mobile banking. A good example of this is e-bank Japan, a bank with more than three million customers, no physical branches, and less than 200 staff. Opening an account with e-bank Japan can be done entirely on your computer or mobile phone, and identity documents can be photographed using your camera phone and transmitted to the bank using your mobile. This reduces costs for the bank, and speeds up the application process for the customer.

Similar operations exist in India where many rural customers conduct all of their banking using mobile devices. The Indian bank is one example of a bank which offers a mobile app for fund transfers and account checking, as well as a full online service.

Perhaps the biggest market for mobile banking exists in China where a host of different banks now offer downloadable apps to allow customers to check their balance and transfer funds. You can choose from well known names such as ICBC, or UOB (China), China Merchants Bank, or even China Bank, all of whom have mobile apps available. In most cases you will need an account with the bank before you are able to use the app you downloaded.

Kenya leads the way

Surprisingly, for many people, the global leader in electronic money transfers and payments is Kenya. Kenya leads the way due to M-Pesa, their system of money transfer using mobile devices.  Since launching in 2005 the M-Pesa app has changed money transfer in Kenya, and is now expanding throughout Africa, and even India. Electronic money transfer has proven to be particularly popular in Kenya due to the high number of workers who regularly send money home to their families. M-Pesa makes the transfer a quick and low cost option.

One sleeping giant in the world of mobile banking is Brazil. Brazil was one of the first countries to establish the principle of ‘branchless banking’ and can boast one of the largest agent networks in the world, but it has proved slower at adopting mobile banking. Brazil has very recently started to catch up with the trend with HSBC launching a Windows phone app early in 2014.

In many cases Western countries have proved slower to adapt to the changing world of banking – perhaps for cultural reasons or because of the extensive branch networks that exist in many countries. One western country where mobile banking has made a breakthrough is Canada where both RBC Canada and HSBC Canada offer mobile apps to their customers.

Of course, it is not just mobile banking that is growing. Banks are continually seeking new ways to stay in touch with their customers. One method that has proved to be especially effective has been interaction via social media.

According to Alex Bray, this is a case of:

 “Be where your customers are – and help customers to interact with your services via social media.”

If customers now spend time online, rather than in their local bank branch then it makes sense for the banks to follow their customers and engage with them where they are.