People have a habit of thinking that they are always smarter than that ‘other guy.’ Whether it is the coworker who supports a different professional sports team than you do, or that uncle of yours who has radical political views, we all seem to think that we usually know what’s best for other people. Let’s face it – getting up on a soapbox and looking down on others can often be a real rush for some people. This has become even more obvious in the Information Age, as everyone and their sister has a point of view about things that they are sure is more informed than yours.payday-loans-61

This all applies to payday loans. Many people seem to think that payday lenders are predators and that the people who take out loans from these lenders are ill informed and in need of rescuing. The lenders charge supposedly sky-high interest rates and “trap” their customers into a never ending cycle of debt. At least, that’s how the story gets told online time and time again. Oh, and those customers who take out payday loans?? They simply don’t know enough about finances to understand just how much they are screwing up by taking out payday loans, right?

This mindset is poisonous, judgmental and, as it turns out, not at all correct. Recent information that was released by the Consumer Financial Protection Bureau seems to reveal the truth about both payday lenders and their customers, and this truth is not at all what you’ve heard or read about in all of those online exposes or local news stories. In fact, it looks like payday lenders are providing very much needed financial services, and, contrary to popular belief, the people who take out payday loans are actually pretty financially savvy.

The CFPB recently analyzed the complaints that they have received over the past three years. When all of the data was laid out on the table, it appears that payday lending really isn’t a problem at all. In fact, only about one percent of the consumer complaints logged online had anything to do with payday loans. The vast majority of complaints were related to mainstream financial services, like mortgages and regular old credit cards. Debt collection was also factored in, and those three areas all added up to over 66 percent of the complaints that were officially logged to the CFPB. This data is backed up by data from the FTC that pretty much reveals the same stats.

The date from the CFPB also disclosed that if people use overdraft protection – the mainstream financial alternative to payday or short term loans – and the APR terms used for payday loans were also used for those overdrafts that people would be much worse off. The APR on the typical overdraft protection fee would come in at an astonishing 1700 percent, while the average APR on a payday loan is only around 350 percent. The CFPB also noted that since people understand payday loan fees as flat, one time fees, rather than bloated APRs that they are better equipped to pay back their loans on time, without any misunderstanding.

We know that the websites and news organizations that love to beat up on payday lenders are not going to change their tactics any time soon. But knowing that even an organization like the CFPB understands that payday loans are not the scourge of the financial world, like so many people pretend that it is, goes a long way in helping to really understand how the payday lending industry compares to other types of financial service providers. And it’s nice to know that payday loan customers really are not the ignorant, helpless people that so many reporters from the mainstream news community like to make them out to be.

It is nice to have the bragging rights that come with having a high credit score, but there are other reasons you should do all that you can to improve your credit rating. Your credit score is an important aspect of your life, and one that can impact several areas of day-to-day living.credit-score (1)

It’s no secret that our credit scores are closely scrutinized for everything from applying for a new job to getting a new insurance policy. If your credit score is low, you may be suffering from the effects of bad credit without even being aware of it.

If you are on a mission to rebuild your credit score, it is important to be armed with the information you need to meet your goals. It all starts with pulling your credit report. But there’s more to your credit rebuilding master plan that you need to know about. Here are the things you need to do to take a day-by-day approach to improving your credit score.

Start off by Assessing the Situation

Once you have your credit report, take a look at the details to see if there are any errors. If you find errors, work with the credit reporting bureau and any creditors involved to get those issues resolved. You should also take a look at your credit score. If your FICO score is lower than 620, many creditors will consider you to have subprime credit. This means that immediate actions must be taken – and sometimes repeated – to improve your credit score. Don’t get discouraged if your credit score is lower than you thought, as there is no such thing as having a score so low that it cannot improve.

Open a Line of Credit

If you don’t have a credit card, getting one can be tricky. Thankfully, though, there are things that you can do to work toward opening your first credit card, or getting a new one if your credit score is low. Start off small by applying for a store or retail credit card. These types of cards are easier to qualify for and making timely payments improves your credit score, little by little, every month.

You may also want to apply for a small loan at your local bank branch. Be prepared to get turned down, but do your best to apply for a small loan. Your goal right now is to show that you are a responsible person and that you pay your bills on time every month. You can’t do that unless you are regularly paying on loans and/or lines of credit, so you will have to bite the bullet and see if you can qualify for small dollar loans or lines of credit to get the ball rolling in the right direction.

Avoid the Temptation to Have too Many Credit Cards

There are people who go overboard and end up opening too many lines of credit. Remember, your credit score is calculated via five different factors: payment history, total debt amount, length of time you have had credit, the types of credit you possess and recent credit card activity. Your payment history and total debt amount added together account for 65 percent of your credit score. Reducing your credit card balances and maintaining a spotless payment history will do a world of good when it comes to improving your credit score.

A great credit score doesn’t just happen overnight. You have to take matters into your own hands. Making smart financial decisions can take practice, but before too long it becomes a habit – something you do day in and day out. That habit will ultimately increase your credit score.

 

Pennsylvania is one of a handful of states that actually has laws to prohibit payday lending. But despite the best efforts of the state, many people living in Pennsylvania are still able to take out payday loans via online lending sites and other companies that have ties to lending companies on nearby American Indian Tribal lands. The state seems to be fit for a fight, though, as new lawsuits are being filed to help the state of Pennsylvania crack down harder on payday lending companies that are offering services to the people of this state.

Case in point – the recent lawsuit filed by the state attorney general against a Texas-based lending company for allegedly scheming Pennsylvania citizens via an online payday loan scheme. The Attorney General of Pennsylvania, Kathleen Kane, recently announced that her office filed this suit against Think Finance Inc., a company that backs quite a few payday lending companies, like RISE Credit, for violating Pennsylvania laws and targeting borrowers in Pennsylvania to take out expensive payday loans.

The lawsuit alleges that Think Finance used the sway of three Native American tribes to allow them to target consumers in the state of Pennsylvania and to sell those customers alternative financial products (i.e. payday loans.) The tribes, which supposedly served as a cover for the lender, made it possible for Think Finance to bring in earnings through the many financial services that it charges to the actual tribal affiliations.

According to the complaint, this is not the only time that Think Finances has engaged in these types of covert lending actions in order to get around the state’s tough payday lending laws. It has been previously reported that the company was involved in a “rent-a-bank” scheme in which it made use of a Philadelphia bank to cover for the provision of small dollar, high interest loans to consumers in the state. This operation was actually shut down by the federal government not too long ago.

The Attorney General’s suit also named Selling source LLC – the company that backs MoneyMutual – as a defendant in this lawsuit because this company allegedly played an active role in the actions of Think Finance. It is alleged that MoneyMutual’s website and TV commercials – those famous spots with Montel Williams – have been used to generate online leads for Think Finance backed loans, and that MoneyMutual received commissions for these leads.

The lawsuit also claims that Selling Source continued with its efforts to refer Pennsylvania consumers to Think Finance after the company was ordered to cease the referrals back in a 2011 agreement with the Pennsylvania Department of Banking.

Other defendants named in this lawsuit were several debt collection agencies, including the Washington law firm of Weinstein, Pinson and Riley and National Credit Adjusters LLC, which were supposedly used to collect on the debts initiated by the illegal loans provided by Think Finance.

All of the defendants are currently accused of violating multiple Pennsylvania laws, including but not limited to violations against the Unfair Trade and Consumer Protection Law and the Fair Credit Extension Uniformity Act. The lawsuit is seeking restitution for all the consumers who were taken in by this scheme and there will also be some civil penalties handed out of up to $1,000 for every violation of state laws and $3,000 for every charge that involved lending/debt recovery to senior citizens in the state. It seems that Pennsylvania is very serious about taking action against short term lenders and that payday lending companies may want to think twice before trying to offer any such financial services in this state.

The Consumer Financial Protection Bureau (CFPB) officially commented on a proposal that will take direct action against No-Action Letters. The policy is designed to go after new financial products or financial services that promise to bring substantial benefits to consumers, but that are still a bit uncertain how regulatory or statutory provisions will be applied in the near future. The documents on this proposed policy are set to be released to the public on December 15, 2014.

Bringing up No-Action Letters reminds some of the SEC No-Action Letters which usually involve scenarios where the requester is not sure whether or not a particular financial service or product is in violation of existing federal security laws. In the letters that were released, SEC employees agreed not to ask for a legal action to be taken against the requester because of the facts that were presented. An alternative that exists is for SEC staff to draft a letter to bring clarity about a specific regulation or rule.

The CFPB No-Action Letters bare similarities to the SEC Letters. These letters would inform the business requesters that their staff is not going to recommend enforcement action due to specific aspects of a known legal requirement or policy. However, the CFPB No-Action Letters Policy is different from the SEC’s in that it only applies to financial products that are offered to the general consumer market, or for financial services which have no existing legal uncertainty.

By limiting the CFPB No-Action Letter Policy to only consumer-related products and services, the Bureau is able to remain consistent with how it interprets that Title X of the famous Dodd-Frank Consumer Protection Act of 2010, which provides governance for the CFPB, is intended to be helpful to consumers and to provide all consumers with access to transparent, fair, innovative financial markets. Additionally, the CFPB is bound to a statutory mandate that promises to promote and facilitate innovation and access in the market for consumer financial services and products.

To meet this goal, the CFPB created an innovative project called “Project Catalyst” in the fall of 2012. This project will support financial innovators that create consumer friendly financial products and services. The No-Action Letter Policy is quite simply the most recent module of Project Catalyst to be put into action.

Consumer friendly financial products and services can get assistance from the CFPB No-Action Letters. Recent consumer spending in the U.S. led to recent financial difficulties, although more complex financial institutions and high dollar deals greatly increased the financial woes of recent years. Quite a bit of effort has been put in to deal with more sophisticated financial businesses during the financial recovery that has been underway for the past few years. And while all of this has been underway, less attention has been focused on underbanked, unbanked and very low income communities around the country; not to mention consumers who may currently use traditional bank accounts but also use non-traditional payment methods too.

Not too long ago, the CFPB began to take steps to bring these sectors to the attention of the rest of the country when it began in inquiry into mobile financial solutions. The Bureau found that nearly 90 percent of United States consumers own cell phones and that this growing trend has led to a whole plethora of new mobile payment solutions that allow unbanked and underbanked households to take more control of their individual finances. We will all have to keep our eyes open to see whether or not these new mobile payment solutions continue to warrant scrutiny from the CFPB and to see how the No-Action Letters pan out for new financial services that are launched in the months and years to come.

When the economy took a negative turn the housing market suffered. Since 2007 foreclosure rates have been high. Now they seem to have dropped back down to the rate they were back then. This is giving many, new hope for the economy and the future of the housing market.

The good news is that the foreclosure crisis seems to be over. This is allowing many to breathe a sigh of relief as things have been rough for many for some time. While this is good news some are wondering what is causing the change.

New regulations in California have a big part to play in this. For years the state had been recording the highest number of foreclosure filings of any state in the country. A Homeowner Bill of Rights has been put into place. This offers more protections for the borrowers in this state that have gone into default. As a result of this foreclosure filings in this state alone dropped 62% in one month.

English: Sign of the times - Foreclosure

Under these new protections all mortgage servicers must cut short all foreclosure proceedings once the borrower applies for a mortgage modification. Servicers must also be careful because if they file multiple unverified documents in foreclosure proceedings they can face fines up to $7,500. No mortgage servicer wants to pay these fines, so they are watching their step, which is taking some stress off of the borrower.

Now that California is not the top state in foreclosures, Florida has taken that title. In Florida, one out of every three hundred homes files foreclosure applications. The next states to follow are Nevada and Illinois.

This does not mean that the foreclosure problem our nation has been facing is fixed. It does however; mean that we are getting closer to fixing it and ending it. Every step we take in the right direction means we are one step closer to this being over.

There is light at the end of the foreclosure tunnel. The crisis is over but the problem itself is not fixed. We are working toward fixing it but more time is necessary. It is obvious we are getting close. If we look we can see all around us that things are getting better. It may be slow, but it will be worth it.

03.05.2014

A shop window advertising payday loans.

About fifteen years ago payday lenders were almost unheard of. Now things are very different. In some places in this country payday lenders out number some fast food chains. This may seem strange to some, but others are incredibly grateful that these businesses have popped up, because without them some people would not get the help that they need.

Some may not see the appeal that these loans have for some people. These loans are very convenient and they are small. When someone needs just a little help to make it until their next payday these businesses can do that for them without all the trouble of going to a bank for help.

Banks do offer these small short term loans, but they do not advertise it. This leaves some not knowing if their bank offers them or not. Many people who do not know for sure if their banks offer small short term loans do not want to take the time to go to their bank and find out if they can get one from them. Instead it is much easier to find a storefront payday lender who they know will help them out and get their loan there.

Payday lenders realize that times are tough. They offer roll over on loans if it is needed. Some people do not know what this roll over for loans is. What it is, is if you take out a loan and agree to pay it back with your next check, but then when the time comes to pay back if something happened and they do not have the full amount, the lender will allow them to roll the loan over to their next paycheck for a fee.

Payday lenders to some seem to be all about making money. But to the people who need their services they are all about helping the people in the community that they serve. Everyone needs help from time to time, and not everyone has a lot of options as to where they get that help from. For those people having a payday lender nearby is exactly the help that they need.

Many people do not need the help of a payday lender, but many do. Those who do need the help are often grateful that these businesses are around. Many who do not need them do not like them and do not want them to be around. One must keep in mind however if you have never been in the position to need a payday lender you do not know just how much they help people out. If you have never needed on do not pass judgment on the lender or the borrower until you have been in their position.

budget

budget (Photo credit: Backdoor Survival)

No one wants to spend more money on anything than they have to, but without realizing it Americans all over are wasting money every day. Their intentions may be good, or they may not be thinking at all. Here are some tips to help you realize what does waste your money so you can stop wasting your money.

One thing that many people do not think about is that sticking with current providers for certain things can waste your money. Many people will stick with their current service providers for their cell phones, cable, or internet companies simply because it is easier. Others will stick with them because they think that if they do they will get discounts for loyalty. This is not always true. Search around look for the best deal that you can find. Why pay more than you have to.

Not unplugging electronics is a waste of money. This is something that many people simply do not think about. Many people think about turning them off, but not about unplugging them. It is true that turning them off will help keep you from wasting money, but unplugging them will help you keep from wasting even more. Even if the electronic device is off, if it is plugged in it is still using some electricity costing you money.

Paying ATM fees are a total waste of money. These can range anywhere from two dollars to three or four dollars. Think about how many times you get money out of an ATM. Know where all your bank’s locations are or where there are free ATMs. Do not pay for ATM fees unless you are desperate and do not have another choice. ATM fees add up to quite a bit over a year. Spend a month tracking how many times you use an ATM and think about if you paid a fee every time compared to getting your money for free every time.

Couponing is a great way to save money. However if you are couponing just for the sake of couponing then you are wasting money. If you are using a coupon on something you would not normally buy just because there is a coupon for it, then you are again wasting your money. Do not use coupons unless they are for something that you actually use and normally would buy. Otherwise the coupon is actually costing you money.

Saving money is something that almost everyone wants to do. If you are trying to save money do not forget to think about ways that you are wasting money. You have to watch out for anything that wastes your money because sometimes they are not very obvious, we simply let them slip past our money saving radar and then we waste money. Make sure you pay attention to anything and everything so you can stop wasting your money.

Not everyone can afford to buy a new car and often you can find a good deal on a used car from a private seller. Not all private sellers are honest though, some will try to scam you. Before you go to look for a used car from private sellers, know these various scams that they use to take your money and leave you with a hunk of junk.

If the seller wants money or a wire transfer but you have to wait to get the car, let this be a red flag that it could be, and most likely is, a scam. There may not even be a real car for sale. The supposed seller wants to take your money and then not contact you again. You should not have to give any money for a car until you are able to take the car from the seller.

If the deal seems too good to be true, then it probably is. If the car seems to be in great condition and the price seems to be super low, expect that something is wrong. Most private sellers who do this will not tell you that something is wrong with the car. The best thing you can do is take the car for a test drive to your mechanic and have them look it over and let you know what is wrong with it. If you do it that way, at least you know what you are getting into and are not buying a car thinking it works just fine just to have it break down a week later.

Ford Corsair V4 estate 1966. The stylish Corsa...

If the private seller is trying to offer you a third party protection plan on the used car that they are trying to sell you, know that it is a scam. The people who do this know how to make it seem like you are talking online with someone from the company when in reality it is just them reassuring you. Then when you purchase the plan, they get the money, but you do not get the protection plan.

If the seller suddenly changes gears in the middle of the negotiations take that as a red flag, it is a scam! If their story suddenly changes then you know that something is wrong. Take that as an opportunity to just get out of the situation before you get scammed and lose money.

If the seller tells you that the car that is for sale is not at their residence, then you should see a red flag. Typically when a vehicle is for sale it is either at the person’s home or somewhere it is easy to advertise that it is for sale. Depending on where they say it is, you should be able to determine whether or not it is a scam. If it is sitting out where it is easily seen then you do not need to worry as much. However, if the seller tries to tell you it is at their friend’s house, you might want to forget about that car all together.

When you are buying a car from a private seller you can get a better deal, if you are careful and know what you are doing. You always have to be careful of scams. There are plenty of people out there who would not think twice about scamming you and you should not think twice about walking away from a car if you feel a though you could be in a situation where you could be scammed. If you know the most common ways that people try to scam others then you will have a better defense against getting scammed, which is always a good thing.

01.06.2014

There are many myths out there when it comes to credit scores. You have most likely heard at least some of them. No one really knows where they came from, but we do know they are myths. If you are unsure of what is a credit score myth and what is a credit score fact you should continue reading so you know fact from fiction.

One credit score myth is that you should never close a credit account. This is a myth because it is not always the case. There are times when this is what you want to do. Typically if you want to get a loan in the near future you do not want to close a credit account. However, if you have plenty of credit accounts, and you see no need for a loan in your future there is nothing wrong with closing one.

Credit Rating

Credit Rating (Photo credit: Match Financial)

Having tons of credit cards means you will not be able to get a loan is one myth that people think is true. At one point in time it was somewhat true. The fear was that you would go out and run up huge bills on those credit cards only to default and wind up in over your head. What has been noticed however, is that those who have been able to handle many credit cards for some time without issue will not just go out overnight and max out all of their cards. They have shown their responsibility by not keeping them maxed out, thus they are more trustworthy than once thought.

Another myth is that you do not need to worry about your credit score. This one is absolutely crazy! Of course you need to worry about your credit score! You credit score will determine what your loan rates will be or even if you can get a loan. Your credit score is very important and you need to pay attention to it. Remember the higher your credit score the better off you will be.

One rather strange myth is that you have to be in debt to have a good credit score. This is so not true. The thought behind this is that if you have a debt and are making your payments on time every month your credit score will go up. While that is true, you do not have to be in debt to have a good credit score. Say you have a credit card and make a purchase with it and then immediately pay it off. You do not have debt but it did help you build up your credit score.

Do not believe all that you hear when it comes to your credit. If you are unsure of something do your own research. You have the ability to find out for yourself if something is a myth or if it is a fact. The more you learn the better you will be able to separate credit score fact from fiction.

Emergency

Emergency (Photo credit: Tax Credits)

Not everyone thinks about what would happen financially if an emergency were to happen. Often most people end up in a financial emergency when another emergency happens. They do not have the money to take care of whatever they are going through. Ask yourself, are you prepared?

If you do not want to end up in a financial emergency when you are in another emergency there are things that you can do. You probably already have a retirement savings account and a general savings account, but you should open another savings account. This account will be your emergency fund.

You do not have to stress yourself out trying to make sure that you build your emergency fund as fast as you can. You really only need to add what you can to your emergency fund. You still have a budget to stick to, but this should be added to it.

Everyone will have their own amount that they will need as a minimum in their emergency fund. It will depend of various things such as if you are single or married, if you have children and if so how many, how many bills you have, and so on. You need to sit down and figure it all out. Generally experts say take that amount and have a minimum of six to 12 months worth of income that will cover that amount in your emergency fund. Of course it does not hurt anything to have more than you need in this account.

Always remember that this account is for emergencies only. Do not use it for any other reason. Do not rationalize something as an emergency in order to use this money. This money is to be used for real emergencies only, this is important. If you do ever take money out of this account, even if it is because of an emergency, you should replace it as fast as you can.

It is a good idea to sit down with a pen and paper and make a list of what you consider a real emergency. If you have a list of what you will allow yourself to use your emergency fund for, you will be less likely to try and use that money for other things. This is not money to use because you want to go out and are short on cash, or because you forgot to budget for a haircut. This is for true emergencies only so that is what should be on your list.

Having an emergency fund will help you make it through any emergency, without having to go through a financial emergency on top of it. This is something not many people have thought about, but is really important to have. It is one of those things where it is better to have it and not need it than to need it and not have it, so go set up an emergency fund today.

« Previous PageNext Page »