Saturday, December 20, 2008

Finance - Debt management includes watching out for hidden bank fees

Debt management includes watching out for hidden bank fees by Talbert Williams

Debt management includes watching out for hidden bank fees

Way back in the 1970's, using a bank was downright difficult. Banks kept strange hours; many were typically open only from 9 AM to 2 PM on weekdays, making it impossible for the average
customer to actually set foot in the place. Of course, virtually any financial transaction required interaction with a teller, and that, combined with the odd hours, made it really hard to do
business with a bank. On the other hand, fees were minimal, and transactions were straightforward. How times have changed.

Today, it's much easier to do business with a financial institution. Most are open six days a week and often are open throughout the work day. Automatic teller machines are everywhere, and you can often do business with your bank without even going near it. Unfortunately, doing so is more expensive than ever, and consumers should be aware of the numerous hidden
fees that banks charge for their services. Those who tend to have debt and money management problems should be careful, as the fees can be astronomical for those who are careless or
financially irresponsible.

It's great to use an automatic teller machine (ATM) instead of the bank. They're everywhere, they're always open, and they're easy to use. Watch out for the fees, however. If you use an ATM that is owned by a bank other than your own, you could end up being charged a fee by both banks. A $40 withdrawal from another bank's ATM could cost you a $2 fee from your institution and a $2 fee from the one that owns the ATM.

That's a 10% fee for the convenience of using another bank's system. Another fee associated with the ATM is the fee that some banks charge to transact with a teller. That's right. Banks are
so confident in their ATM system that they now expect you to use them instead of using a real human being. If you hand your deposit to a teller instead of using the ATM, you could be
charged $3-4 for the privilege.

Consumers who use a debit card, and that's just about everyone, should watch out for overdraft fees. A debit card looks like a credit card, but functions like a check, taking money out of
your account immediately. Many firms now include automatic overdraft protection on their accounts, and they will allow you to use your debit card or checking account to spend more than
you have in your account. That's a nice thing to do, but they typically charge $25 or so for this "convenience."

If you merely spent $10 more than you had in your account, the $25 fee amounts to a 250% interest rate on the short-term loan of $10. You may not even know if this is happening; your bank will not notify you when you make your purchase that you are overdrawing your account. This is quite a profitable venture for the banking industry, which took in some $10 billion in
overdraft fees in 2004.

Some banks are heavily promoting online bill payments, citing convenience. That's true, but you may be charged for the service. One major firm charges $6.95 per month for online bill
payment, and that fee applies even if you pay just one bill! It takes eighteen 37¢ stamps to make up for that fee; if you are paying fewer bills you should mail them instead.

Many of these fees are not prominently disclosed, so be sure that you read your bank statement carefully. Otherwise, you could easily end up paying $50-75 per month in service fees.

Article Source: Debt management includes watching out for hidden bank fees

Finance - Cheap Personal Loans

Cheap Personal Loans by Paul Davies

If you are looking for cheap personal loans then you'll probably find that secured loans from the internets top lenders will have the lowest interest rates available. The reason for this is that
when you use your home as security or collateral for cheap personal loans then the lending company is taking a lower risk lending you the money. You are taking a greater risk because if
you should fail to keep up with the agreed repayments and do not pay back the loan then you are putting your home in danger of repossession. Secured loans are approved faster but can take a
little longer to process, but this is well worth the wait when you are saving though a lower interest rate.

Cheap personal loans which are unsecured do not need to have your home as insurance against the loan and because the lending company is taking a greater perceived risk, you will probably
pay higher interest rates. Although you are taking less of a risk by not having your home as security for the loan, it is important that you make sure that you keep up with the
repayments as lenders can initiate court proceedings against you and your property if you fail to pay back the loan as agreed. An advantage of unsecured cheap personal loans is that they are
usually processed faster than secured loans so you could have the money you want sooner.

Cheap personal loans are available in varying amounts and repayment terms, depending on what the loan is needed for and your personal circumstances and requirements. Whether you want
the loan to pay for a new car, a holiday, tuition fees or to pay off outstanding debts, you will be charged an interest fee by the lender called the APR or Annual Percentage Rate. The exact
percentage you are charged will depend on the type of loan you take, secured or unsecured, the amount you wish to borrow, the length of time you need to pay back the loan and your personal
circumstances and credit history.

Comparing the APRs of cheap personal loans from different lending companies is a good way to find out which loans are the most competitive. Getting familiar with the way in which lenders
refer to interest rates will help you to make a good comparison. When a typical interest rate is quoted this is simply the average interest rate that over 50% of successful applicants
have been given and does not mean that this is the rate that you will get. If a lender quotes a set rate then this is the rate that will be offered to successful applicants regardless of
their credit status, amount of the loan or term of the loan. You may also want to take note of fixed interest rates (stay the same until the loan is paid off) and variable interest rates
(can change through the term of the loan depending on fluctuations in the bank base rate).

A further factor to consider when looking at cheap personal loans is whether or not you think you will want to pay back the loan before the agreed end date. Some lending companies charge a
redemption penalty or early settlement fee which can be up to two months interest. Since this could add a significant amount to the total cost of the loan, you may want to consider taking a
loan with a slightly higher APR but with no redemption penalty.

Article Source: Cheap Personal Loans

Tuesday, December 16, 2008

Business - Flipping Real Estate Can be Risky Business

Flipping Real Estate Can be Risky Business by Mike Colpitts

The art of flipping property may seem like the road to quick riches, but it's anything other than that for the majority of investors. Only a small percentage of people who buy real estate
to flip it actually make a quick profit, according to a new survey.

Flipping property is the business of buying real estate, making repairs to it or playing a rapidly appreciating real estate market to make a quick profit.

Flipping real estate may be part art, part business. But in a survey of 500 of the Nation's wealthiest real estate investors only 10.4% made a profit. The survey was conducted by Real
Estate Add, an information driven real estate website.

Nearly half of all investors surveyed ended up holding on to their property for more than a year after the original purchase. Some 52% said they broke even and had to hold on to the property
for much longer than they originally intended. The remaining nearly 38% suffered a loss.

Rick and Mary Coughlin of Santa Rosa, California purchased a 3-bedroom, two-bath home, which needed repairs. The Coughlins went about getting contractors estimates for the work before
purchasing the home. Estimates ranged from $18,000 to $31,000.

The Coughlins purchased the home, which was built in the mid-1970's, budgeting $40,000 for the work with the idea that they would do a lot of the repairs themselves. However, they
encountered problems when they opened up one of the bathroom floors to find dry-rot that far exceeded their expectations.

The couple did most of the work to the home themselves, but still retained a contractor to do some of the repairs, including the bathroom, kitchen floor, kitchen counters and replacing a
wall in the livingroom.

"We had made pretty good money flipping property up until that home," said Rick. "But the profits on five other homes were going down the drain on this one. It took us five months and
three contractors to get the job done, and then by the time we sold it the place was eating us alive."

The Coughlins had a mortgage with taxes and insurance on the home of nearly $2,900 a month. Mary would paint the inside evenings after work. Rick spent evenings and mornings at the
place between work hours. The stress of turning a profit on the home seemed near impossible.

The Coughlins were successful flipping five homes before this one, making nearly $300,000 in profit over three years. But this home turned into a nightmare. One of the bedroom floors caved in when Mary was moving furniture and had to be replaced by a contractor at a cost of $17,423.00, including walls that needed to be replaced as a result of damage to the room.

The bathroom turned into a $21,000.00 project and the Coughlin's luck seemed to have run out. Including contractors fees and building supplies, the Coughlins spent $107,000. Once they sold
the house seven months after buying it in a hot California real estate market the Coughlin's were pleased to be free of the mortgage.

After all expenses and payments the Coughlins figure they were lucky, spending $131.000.00. This was their sixth flip so they had experienced success before and they were banking on these
funds to help pay off a second mortgage on their primary residence. Instead, the Coughlins suffered a loss of nearly $90,000. The home sold for $624,000.

Nearly a year after the sale on the home, Rick said that was his last flip. "You don't realize how risky it is until you hit the wrong house," he said. "We were lucky to sell that place."

The Coughlins are typical of real estate investors who take the risk to quick riches. Rick and his wife have since bought a rental home they intend to hold on to for at least 10 years to
make a substantial long term profit. Overtime pay has helped them to pay-off the second on their principal residence.

Rick's best advice to others considering a flip is to purchase property in an area where the prices are lower and hold on to "a lot of the cash."

Article Source: Flipping Real Estate Can be Risky Business