Federal Prime Interest Rate

The Federal prime interest rate is used by major banks for their creditworthy customers on various types of loans. The prime rate is based upon the federal funds rate set by a committee that meets several times a year. The Federal Reserve prime rate stays the same unless the majority of the largest banks change their rates or the Fed Reserve board (Fed) changes it when economic conditions warrant a change. This standard is used to calculate percentages on credit cards, home equity lines of credit, auto loans, and other types of loans. The Federal Reserve board has the job of trying to maintain a stable economy and keep the financial system strong to try and avoid inflation. The secret toward success with anything includes acknowledging the Lord in everything. "And all these blessings shall come on thee, and overtake thee, if thou shalt hearken unto the voice of the LORD thy God" (Deuteronomy 28:2).

The prime rate affects short-term loans such as credit cards or home equity lines of credit. Banks that issue credit cards to consumers try to protect their own interest by not offering accounts with lower interest than the Federal prime interest rate. A credit cardholder can find out if the percentage on his or her account will be affected when the standard set through the Federal Reserve Board changes by looking at the cardholder agreement. Most banks or financial institutions add a certain percentage to the standard rate set by the Fed to come up with the percentage of interest set on the cardholder's account.

The standard percentage set by the Fed can have an affect on investments. This can largely be seen in investments with certificates of deposit and with bank savings accounts. A lower standard percentage issued by the Fed usually means that a certificate of deposit will not be worth as much and it can also mean that percentages on a savings account will go down. Many of the banks and financial institutions that offer consumers a way to save will change their interest based upon fluctuations in the Federal prime interest rate. The fluctuations are not normally a large amount and can be in the consumer's favor if the standard percentage goes up as interest earned. When the changes in the percentage increase then investments can increase as well.

When the standard percentage set by the Fed increases then consumer spending will go down. Businesses are less likely to grow due to fewer sales from consumer spending. Increases in the standard percentage can even lead to unemployment and slow economic growth. Some of the considerations or economic indicators of upcoming increases in the standard percentage are housing, employment levels, and growth in the money supply. When the economy is suffering and consumers are not spending this may prompt a lower Federal Reserve prime rate.

A lower standard percentage encourages consumers to spend more. Lower percentages on mortgage loans, car loans, and even credit cards will help to speed up consumer spending and help the economy to grow. A lower standard percentage encourages people to buy a home or refinance the one they have. When there is a large amount financed then even the smallest changes on the interest can make a significant difference. This difference for a homeowner would also mean paying off the mortgage much sooner. New mortgages mean more money for banks and causes growth because it increases building. An increase in building means more jobs and more consumers to put money back into the economy.

Small business loans and consumer loans are often priced according to the Federal prime interest rate. Customers with very high credit scores are good candidates to receive the lowest interest on loans. The standard percentage set by the major banks and the Reserve serves as a starting point for short term loans such as credit cards and auto loans. For customers who are considered a risk, banks and other loan institutions may start with the standard percentage but then add on a substantial amount of interest to more than cover losses. The finance charges associated with credit cards can vary depending upon the payment history of the customer. If a customer is late in making a payment a bank may be able to raise their finance charges considerably.

When the economy seems to be growing too fast the Fed will raise the Federal Reserve prime rate to avoid inflation. Inflation causes the prices of goods and services to increase. When this happens the value of the dollar goes down. Eventually inflation can cause an economy to stall. The value of the dollar can affect foreign investments and the sell of products to other countries. The Fed tries to maintain a balance in the economy where there is slow growth by controlling the standard percentage rate that can be charged on loans.

Inflation is measured by the Gross Domestic Product and the Consumer Pricing Index. The Gross Domestic Product measures goods and services within a year's time. This does not take into consideration financial transactions or used products that are sold. The Consumer Pricing Index is used to try and guess the measure of inflation and is used in figuring product increases from one year to the next. When the Fed meets to consider the Federal Reserve prime rate they use the numbers from the Gross National Product as one way to measure the economic outlook.

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Federal Reserve Interest Rates

Lowering and raising federal reserve interest rates can have a far reaching impact on the nations economy. The Federal Reserve Banking System, aka The Fed, is the central bank of the United States and one of the most powerful independent entities in the government. Charged with the responsibility of monitoring and managing the purse strings of America, the Feds raise and lower the federal funds rate, the rate banks charge each other in order to borrow money and maintain sufficient cash reservoirs at the Fed. U.S. banks are required by law to keep sufficient funds in store at the nations central bank to prevent running out of money and depleting the countrys financial resources. In 1907, America endured a severe financial crisis which caused depositors to panic and withdraw funds en masse. Banks failed and the national economy almost folded.

The Federal Reserve Act of 1913 addressed the issue of bank runs, or panics, by establishing the Federal Reserve Banking System and mandating that banking institutions keep excess currency at The Fed. Just sixteen years later, the stock market crash of 1929, labeled, Black Tuesday, put the Act of 1913 to the test. The stock market crash set off a panic as wealthy investors lost fortunes overnight and the country was plunged into the Great Depression. Those who placed confidence in monetary possessions found themselves struggling to survive; but, I Timothy 6:17 admonishes us to, "Charge them that be rich in this world, that they be not high-minded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy."

The Fed is supervised by Congress and consists of a hierarchy of a central bank, a 7-member Board of Governors, twelve regional federal reserve banks with 25 branches, 900 state member banks, and 5,000 bank holding companies. The central bank processes the nations financial transactions in excess of trillions of dollars, buys and sells government securities, and distributes U.S. currency to financial institutions across America. The central bank also manages federal income tax deposits and payouts held by the U.S. Treasury. Central bank functions also include furnishing the nation with coins and paper currency through the U.S. Treasurys Bureau of the Mint. The 12 regional banks issue non-transferable shares to state member banks, which pay shareholder banks an annual rate of 6 percent. The Fed requires member banks to hold cash on account at the central bank in return for dividends. However, net profits are then deposited back into the U.S. Treasury, totaling over $30 billion dollars annually.

Banks who realize a deficit of cash or accounts must borrow money from the Fed. When the Feds lower the federal reserve discount rate, the percentage levied on loans commercial banks are charged to borrow from the 12 regional banks, financial institutions are more able to lend money to businesses and consumers, invest in more stocks, bonds, and other ventures; and pay account holders higher interest rates for savings. One of the key functions of the central bank is to avoid bank runs and ensure national financial stability by lowering and raising federal reserve interest rates, which enables banks to lend each other money and avoid central bank deficiencies. When the Fed charges member banks less interest on borrowed monies, this lower federal reserve discount rate enables banks to pass along savings to private and commercial depositors by charging lower prime and subprime interest on consumer and commercial loans.

The United States money market is like a game of dominos; one economic sector directly or indirectly affects another. A lower federal reserve discount rate has a positive impact on banking institutions' ability to lend or borrow money. The recent housing slump and higher interest rates have caused many banks to tighten up on lending policies, lending money only to the most credit worthy consumers. Many homeowners who were able to get home loans with Adjustable Rate Mortgages (ARMs) faced default and foreclosure when these rates skyrocketed. Many would-be homebuyers shied away from taking on high-interest home loans. Consequently, banks and builders were left with an excess inventory of new homes on the market with no buyers. Sales of older homes also plummeted as sellers failed to sell houses whose current values were less than balances owed on high-interest, long-term mortgages.

The Fed is responsible for regulating long-term financing charges, stimulating employment, stabilizing price structures, and ensuring consumer credit protection. To relieve U.S. banks from the heavy burden of delinquent and foreclosed home mortgages, the Fed recently loaned member banks 2 billion dollars and have lowered federal reserve interest rates several times. Theoretically the $2-billion loan was to put more money in banks' coffers; while lowering interest rates allows more consumers to obtain financing at a lesser cost. Lower interest rates encourage consumers and businesses to loosen the tight grip on cash and begin to spend more money, especially on big ticket items. When consumers can get auto loans, credit cards, and home mortgages at lower rates, they tend to borrow and spend more money. Increased consumer spending releases more cash into the market, stimulating the economy.

Liquid assets flowing from banks and lending institutions to consumers causes manufacturers of goods and providers of services to profit. In turn, as commercial enterprises realize higher net profits, more jobs are created and unemployment plummets. Employed people with access to stable income spend more money, establish more credit, and are able to better qualify for loan financing. Banks loan money at low interest rates, realizing profits through increased lending to reliable borrowers. Greater profitability for banks, coupled with a lower a federal reserve discount rate, helps relieve financial institutions from inter-bank borrowing to make up for deficiencies at the Fed. As the financial manager of the United States of America, the Federal Reserve Banking System has the grave responsibility of regulating federal reserve interest rates for the welfare of the American people.

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Definition Of Subprime Lending

The proper definition of subprime lending has several aspects. Federal banking agencies define a subprime loan as one which is made to a borrower with a weak credit history or less of a capacity to repay. There is no single subprime mortgage lenders list which categorizes specific lenders. In fact, such lending is not confined to mortgages. For example, several other areas of the industry are involved with credit cards and car loans, or with certain investment properties.

In a general sense, though, the definition of subprime lending is lending at a higher interest rate to a customer who for some reason is not able to qualify for a prime rate loan. This is often associated with a person who has a poor credit rating, or who has outspent their credit card limit. However, it also encompasses those who have not acquired a sufficient credit history. Perhaps an individual has low income or a poor debt-to-income ratio. A loan may be large compared to the property which secures it (high loan-to-value ratio). The increased risk associated with such loans in each of the above scenarios means that the cost of borrowing is greater for the lender, and is passed down to the client in the form of higher interest rates.

Another part of the popularly understood definition of subprime lending has a more sinister aspect. Because customers involved in such lending are often in urgent need of additional funds, they may believe that they do not have the time to search for the best deals on their loans. Maybe they do not even know how to go about doing so. This is unfortunate, considering that it is not difficult to locate a subprime mortgage lenders list and find a responsible lender by using an Internet search. These customers are especially targeted by scam artists who seek to capitalize upon the borrower's desperation.

By manipulating loans with high interest rates, 'interest-only' requirements, sudden balloon payments or hidden costs, these criminals seek to use the client's situation for their own financial gain. Choices of products offered may be limited, and the loans structured in such a way that a customer who does not have an understanding of financial matters may be tricked into accepting a loan which the lender knows is inappropriate and doomed to result in failure. These types of lenders are characterized as predatory. They certainly provide a modern example of the ones in Amos 2:6-7, who ...sold the righteous for silver, and the poor for a pair of shoes; That pant after the dust of the earth on the head of the poor, and turn aside the way of the meek... Some lenders have also been accused of discrimination with regard to the assignment of mortgages or other loans on the basis of race.

Painting all subprime lenders with this brush would be a matter of throwing out the baby with the bath water. Proponents of such lending believe that the industry is providing a service to people who would otherwise be excluded from the market entirely. These proponents would argue that predatory lenders do not fit the true definition of subprime lending. They would say that such predators are not just the black sheep of the subprime lending family, but wolves, and should be prosecuted and excluded from any subprime mortgage lenders list. One problem with this proposal is that it is sometimes difficult to prove the motivations behind actions, especially in a legal sense. Where is the line between a 'black sheep' (who may need to be corrected and yet has hope of restoration), and a wolf who needs to be punished and driven away?

Federal banking agencies view predatory lending as an aspect of subprime lending which tends toward abusive practices. Predatory loans seem designed to transfer wealth from the borrower to the lender, without giving anything in return. Thus, the originators of these loans make their decision based on the borrower's assets rather than whether he or she can repay the money. Deception is also used to obscure the full terms of the loan from those who are not knowledgeable about financial matters. Furthermore, the predatory loan dealer may try to convince the borrower to refinance over and over again, in order to collect additional fees.

The Community Reinvestment Act (CRA) attempts to provide some guidance as to the definition of subprime lending as it relates to banking practices. Three purposes of the Act are to encourage banks to make more loans in their communities (particularly to persons at lower income levels), to make sure that these loans meet the credit needs of the community (best possible terms and affordable credit), and to practice sound banking procedures as they do so. The CRA issues four levels of ratings for financial institutions: 'outstanding', 'satisfactory', 'needs to improve' and 'substantial noncompliance'. There is some differences in requirements for banks with different levels of assets.

Predatory lending obviously violates most of the above conditions, and banks or other financial institutions which evidence such behavior are assigned a lower rating. Lenders without such predatory behavior may still have problems in certain areas, such as guarding against racial discrimination or the tendency to push subprime instead of prime-rated loans. At times there is a rather mixed bag of results, for these same subprime lenders can help a bank meet its responsibility to provide services for lower income customers. Most recommend keeping better oversight of lenders, while recognizing the need to halt the activities of predatory lenders. Some websites are available which provide lists of available lenders in the prime rate market, as well as a subprime mortgage lenders list. These sites can offer substantial amounts of information on hundreds of lenders, as well as the services they provide. Information, whether from ratings by federal banking agencies or on private websites, may prove to be the most significant weapon for consumers to use in fighting against improper lending practices.

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Compare Credit Card Interest Rates

To compare credit card interest rates, the debtor's credit score must be high and remain consistent so that they will be eligible for credit cards with low interest rates. For example: if a debtor has a credit score over 700, and their current credit card is offering a 15% interest rate, they should search out lower interest cards. These companies may advertise a 9.9% rate, but if the small print is read, it will also state intervals of raised rates, such as 12%, 14%, 18%, and 22%. The 9.9% interest rate is reserved for those with a credit score close to 800. These are the super high credit scores, that most people do not posses. The next credit interest rate is 12%, and 14%. Depending where the creditor draws the line, the person with a 700 credit score will most likely receive either rate. Both rates are lower when the debtor decides to compare credit card interest rates to the one they already posses. They may want to open an account with the lower rate credit card, and transfer the balance.

Many cards will allow a very low (1.5%) or 0% interest rate on balance transfers when opening a new account. Instead of closing the old account, it is important that the debtor leave it open, but don't use it, and keep its balance at zero. The open, but not used, credit card account has a limit that will help improve the credit score, when applying for loans or other types of credit. 30% of a credit reporting score is based on the debt to credit limit ratio. To effectively compare credit card interest rates, a debtor will need to know their debt to credit ratio. This means that if a debtor has a $10,000 credit limit combining all cards, and $2,000 in debt or balances combined, they would have a 20% debt to credit ratio. This is an acceptable ratio for being offered credit cards with low interest rates. If the debtor closes one of their credit accounts with a $5000 limit, they now have a combined $5000 credit limit with $2,000 in balances. To compare credit card interest rates when their debt to credit ratio has increased to 40% without adding any more debt can be fruitless. This is detrimental to the credit score, and finding credit cards with low interest rates will be hard.

Ideally, a debtor will want to stay below a 25% debt to credit ratio. Fortunately, if the debtor goes above the acceptable ratio, they can always strategically pay down their debt, and the credit score will be raised within 30 days, making them eligible for credit cards with low interest rates. The key to strategically lowering the debt is to make sure that each card individually has a 25% or lower debt to credit ratio. For example: on a $1000 limit card, do not have a balance higher than $250; on a $500 limit card, do not have a balance higher than $125; and on a $5000 limit card, do not have a balance higher than $1250. Even if the combined limits and combined balances total a less than 25% ratio, the ratio is applied to each card individually and the cards combined, so transfer those balances and spread out the debt. Other options are to get a consolidation loan with fixed payments and clear all the debt from the credit cards (but don't close the accounts). A consolidation loan (as long as it has a fixed payment schedule) is considered an installment loan, and is not included on the revolving line of credit debt to credit limit ratios.

Too many installment loans can be detrimental as well. As long as only house, car, and student loan installment loans are present...adding one more is okay. Any more than that and the credit score may begin to lower because of too many fixed monthly payments. Receiving credit cards with low interest rates is a good idea if the debtor plans on using them. While credit should not be used unless the debtor intends to pay it back the following month, our society has become dependent on the very nature of credit itself. Most people do not pay outright for their homes, cars, education, or traveling. It would be impossible for most people to own a home, car, or get an education without the use of credit. Since using credit is intertwined, not only in our economy, but in the necessities of life, caution should be taken when choosing a creditor or lender. The ultimate goal really should be to pay off our debt, not accumulate more. "Owe no man anything." (Romans 13:8)

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Best Refinance Mortgage Interest Rate

The best refinance mortgage interest rate online programs are best defined by their purpose, which is to obtain a new loan to repay an existing loan. The best will always be better than the original loan rates unless the current interest rate index has dramatically increased or the homeowner's credit has severely fallen or there is no equity at all in the home. The reason that homeowners can find the best refinance mortgage interest rates is the ease with which to compare companies nationwide through the Internet. As long as the brokerage is certified and licensed to sell in the customer's home state, it can be included as a potential contender for receiving the home owner's business.

Some offers come from companies who want to take over the interest payments that are now being paid to the primary loan holder. In order to receive the best refinance mortgage interest rates, they must offer lower rates and a lower monthly payment than the homeowner is currently using. Whenever there is a decline in federal interest rates, many property owners will seek out the services of a refinance brokerage. If rates continue to decline over a period of years, homeowners will refinance their mortgages multiple times. In fact, in the year 1997, refinancing accounted for over 40 percent of all loan origination in the United States. The benefits of refinancing differ for each borrower. Of course, the best refinance mortgage interest rate online is the most popular consideration.

Other benefits include the costs of negotiating the new loan (new closing costs and discount points), the effect of tax laws on the borrower, and possible new lender requirements such as an adjustable rate instead of a fixed rate loan. There are no definitive standards for refinancing and costs can vary substantially between lenders. The first place to search for a loan with the best refinance mortgage interest rates is with the existing loan holder. If interest rates are down, more often than not a mortgage company will offer the best deals to keep their clients. They know that the homeowner will probably get another loan somewhere else and they must be competitive in this market.

Many times a website will allow a homeowner to search multiple lenders to achieve the best refinance mortgage interest rate online that is offered. A guideline for refinancing is that the rate reduction should be 2 percent or more. However, rate reduction alone will not save money if the costs (closing and points) exceed the savings. A more practical approach is to add the costs of refinancing, and then compare that with the savings to see how many months it will take to recover the costs. For example: A property financed at 10% on a 30 year fixed rate loan is compared with an 8% fixed rate loan. At 10%, $120,000, 30 years = monthly payment of $1053.10. At 8%, $120,000, 30 years = $880.55. That is a total savings of $172.55 per month. If the costs paid for the best refinance mortgage interest rate online are $6300, then that cost is divided by $172.55 which equals 36.51 months just to break even. The savings do not begin until after the 36.5 months.

There are many mortgage brokerages offering a flat and low refinancing fee to make the process of refinancing much easier for homeowners. The biggest moneymaker in the mortgage refinancing business is the commission the brokerage receives, not the official fees associated with the origination of a new loan. Many times a mortgage brokerage commission fee is equal to 1%-2% of the loan amount. For the above example, the mortgage broker's fee would have been $1200-$2400 of the closing costs. Up front commissions and fees can vary by lender and an easy comparison should be made before signing a new loan agreement with one. Comparison shopping is always wise when dealing with companies that claim they have the best refinance mortgage interest rates.

Tax laws treat refinancing differently from a new loan in terms of deductibility of a discount. Even though a discount may be paid in cash for refinancing, the IRS ruled that a discount must be amortized over the life of the loan. This differs from a discount paid by the buyer at the time of purchase on the house, which may be deducted in the year paid, the same as interest. Another tax question that should be considered when searching for the best refinance mortgage interest rates concerns the value of deducting interest on a home loan. The benefit differs with the taxpayer's tax bracket. Thus, a taxpayer in a higher bracket would have greater possible deductions and would need a lower refinance rate to achieve the same benefit as a person in a lower bracket. Using wisdom and understanding in the decisions made concerning the best refinance mortgage interest rate online is the key. "Through wisdom a house is builded; and by understanding it is established" (Proverbs 24:3). The first person to consult when considering financial decisions is God and His Word.

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Best Certificate Of Deposit Rates

The best CD interest rate for any investor can be locked in when the purchase of a CD is made from a bank, credit union or online banking source. In order to secure the best certificate of deposit interest rates available, shopping around is definitely a good strategy. Many investors who are valued customers may choose to buy this from their bank. Often, a 'valued customer purchase' for a CD can offer much better rates than the other available options.

If someone is looking for more choices for the best CD interest rate for the money, it is possible to explore several online banking companies that can offer good CD interest rates because they have less overhead than their hometown counterparts. While many forms of investing for the future are not so lucrative, buying a certificate of deposit can be one of the most secure and protected measures for saving money and receiving interest. This is very much the same as putting the money in a savings account except that the consumer may typically receive a higher interest rate for the investment with the best certificate of deposit interest rates.

Lending institutions can offer the good rates because they are assured for the most part, that the money will remain in their account for a specified amount of time. Lending sources can move an individuals investment around for their own money making projects during the maturation time specified for the CD. A consumer can receive the best CD interest rate for a certificate of deposit that is purchased with the longest maturation time since the lending source is relatively sure of its placement in their program for that length of time. It is a win-win situation for lending institutions and consumers alike because the best certificate of deposit interest rates are awarded for lengthier savings terms. There is still the option of withdrawing before the specified maturation time, but the individual will most likely pay a penalty. This is reasonable in light of the fact that banks and other sources offer the best rates for CDs that remain the longest and allow them to make money.

It is suggested that investing in a CD is perhaps the best overall savings strategy for the typical consumer. This investment will not only offer some of the best certificate of deposit interest rates that are far more than a typical savings account, but also a CD provides assurance of least default more than many other types of investments. In order to assure this, the consumer must make certain that the bank or lending institution is insured by the FDIC. Most will have this posted somewhere within their service listings.

If the consumer is not sure about the lending insurance provided, they should always ask before investing money. This is true even if the offer seems to be the best around. Many people choose to purchase their CD through a credit union. Credit unions are not insured by the FDIC, but usually are insured by the NCUA and provide typically just as much assurance of safety for an investment. Even though most reputable lending sources are insured, the individual must always be aware that there are risks associated with any investment, but purchasing a CD is one of the lowest risk levels for investing cash.

Understanding policies is vital before choosing any lender or offer. These policies will include early withdrawal, what happens in case of a crash in the lending source and exactly what the maturation date is. A consumer may have purchased a CD with the best CD interest rate around, but if the individual is not wise concerning the maturation and reinvestment strategy, they may not use the investment as wisely as possible. The best rates are generally given to those who invest for the longest period of time, but knowing what to do with the matured certificate of deposit is of importance. Some consumers choose to receive the interest at the end of the maturation period and others may choose to reinvest it in another CD at the time. Understanding the best options, for the consumers money, will help the initial investment go further. An investor can receive good advice for further investing a maturing certificate of deposit through financial counseling and other financial management organizations.

There are many sources that can provide assistance with investments. Hometown banks, credit unions, brokerage firms and online banks offer varying terms and interest rates. On today's financial market, a consumer may find the best CD interest rate with an online bank that offers competitive rates and easy service. No matter what company or institution is chosen, comparing is always the key in finding the best certificate of deposit interest rates for the money. "My God shall supply all your need according to his riches in glory by Christ Jesus." (Philippians 4:19)

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Credit Card Interest Rates

Credit card interest rates can be expensive for those who are part of the major portion of Americans who owe an average of $7,000 to $8,000 in debt to creditors. A good rate should generally fall below 13%. Any that is higher than 12% is too high. Many consumers typically pay between 13% and 22% with some as high as a whopping 35%. A wise consumer will, out of necessity, find a way to lower rates, pay off balances or change creditors in order to have the benefits of usage without the penalties of astronomical percentages.

Creditors are the only businesses that have not received controls on raising interest at their discretion. Most consumers are surprised to learn that most creditors operate out of South Dakota and Delaware because the usury laws were changed in those states to accommodate a no-cap policy. Creditors operating out of those states can raise rates anytime and to whatever percentage cardholders can be prodded to pay. This usury law was put into effect in the 1980's and has continued to allow creditors free reign with the consumer's credit card interest rate.

For any reason, creditors can raise their rates under consumers' noses until cardholders contact them for an explanation. Most consumers are unaware that companies are well within their rights to raise interest any time cardholders are seen as a risk to their investment. Consumers may wonder why the percentage has suddenly gotten higher even though they signed a contract with the company and agreed on an advertised rate. Most agreements have a clause within the contract that states that the company can raise the credit card interest rate anytime they believe that the consumer is a risk to paying off the account.

Risks that can raise the percentage can be anything from a one day late payment on the electric bill to a late payment on the mortgage. Even though these bills have absolutely nothing to do with credit card payments, creditors can access credit reports anytime and check for any late payments. Even if the cardholder has never, ever had a late payment for anything, but just this once, the creditor can raise the percentage. So cardholders shouldn't assume that original credit card interest rates that were agreed to will hold.

The percentages can also be raised for absolutely no reason by creditors if they only provide consumers with a 15-day notice before processing the higher rate. Cardholders may have signed a contract and agreed to pay 7% on the card. If the creditor decides to raise the credit card interest rate 6 months later, they can according to the notice provided within the contract. Most of these notices state that the company can raise rates for any reason providing they give a 15 day notice. So consumers should always read the fine print on any agreement before signing.

Another way in which consumers can be charged without being aware is through penalty fees for late payments. Creditors have no limit to the amount they may charge for late fees even if consumers are late even one time on a payment. A cardholder may be used to the typical $10 charge on a late payment, but should be prepared to possibly pay much more. There are any number of ways that cardholders can lose money through hidden fees and the unrestricted financial policies of most creditors.

It is important to know that creditors periodically check consumer reports as do other financial institutions. Those who have found that their credit card interest rates have risen lately, but haven't been late with payments, may assume that there is another area in which they've made a late payment. Deteriorating credit is a cyclical process and one company will determine their interest rates from the consumer's dealings with another company.

Cardholders need to be aware of the cascading effect of late payments and minimum balance payments. This can raise credit card interest rates as well as other rates and cause an overall increase in outgoing monthly payments. Consumers must be knowledgeable about all the contracts they sign and about all policies that govern creditors in order to wisely manage their money. "For wisdom is better than rubies; and all the things that may be desired are not to be compared to it." (Proverbs 8:11)

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Certificate Of Deposit Interest Rates

Certificate of deposit interest rates often vary, but remain a good way to make some money with a small investment. CD interest rates will vary depending on the amount of money that is invested. While most CDs require the person to invest at least $500, the maximum amount that can be invested will change from one financial institute to another. The returns will also vary by the terms or period of time the CD is being invested. An individual can choose to keep a CD for a few days and up to five years. Also, percentages will vary based on the company or financial institute that is chosen to handle the investment. Some banks or financial institutes are more competitive and will provide higher returns for customers. Other banks, especially in smaller towns, do not have to worry as much about competition and may provide lower ones on CDs.

Receiving the best percentage will often depend on the amount of money that is invested. There are many different amounts that investors can choose to invest. The lowest that most financial institutes will allow is $500. The maximum amount that can be invested may change from one financial institute to another. Some may allow larger investments with a maximum investment of $250,000. Many other institutes, especially smaller banks and companies may only be able to offer a maximum investment opportunity of $100,000. There are many options for people with certificate of deposit interest rates, especially when the range of investment can fall between $500 and $250,000. Usually, banks offer higher certificate of deposit interest for the higher investments. This is common through most financial institutes that provide certificates of deposit for customers to invest in.

The amount of time of the investment can also change the certificate of deposit interest rates. There are many different periods of time that individuals can choose to invest in a CD. For an individual who wants to make a quick, but small return on their investment, CDs can be purchased for a few days time. Many financial institutes allow consumers to purchase them for a week. The maximum amount of time to hold a CD varies from one financial institute to another. Many will offer a maximum period of five years. Depending on the time chosen, CD percentage rates will vary. The shorter period of time will usually offer much lower returns. For longer periods of investment, higher percentage rates will often be provided to the investor. For an individual putting in the maximum amount of money for the maximum amount of time, there will often be great returns for the investment. On the other side of the spectrum, the individual who deposits the minimum amount of money for the minimum period will probably receive very low rates. At this point, there is probably no reason to invest $500 in a CD for a week. The return on the investment would not be enough to cover the cost of gas for the individual to drive from home to the bank.

For an individual to receive the best CD interest rates, competition may become a factor. In smaller towns, there may be only one or a few financial institutes that can provide CDs for investment opportunities. In this situation, there is very little competition that would require the institute to offer competitive rates for investors. In contrast, larger cities with many financial institutes will have much greater competition, making it necessary for the institutes in larger cities to offer competitive certificate of deposit interest rates for customers pursuing this type of investment. It is very important to take this information into consideration before pursuing an investment in a CD. For someone who lives in a small town but may be able to invest at a larger bank either by traveling a short distance or using Internet banking, it may be worth the effort to pursue these institutes as opposed to the local bank that offers a very low interest rate for CD investments.

There are many factors that go into receiving the best and highest interest rates. The amount of money that is available for investment can change the CD interest rates that an individual may receive. Individuals can usually invest between $500 and $250,000. The higher amounts will often receive much higher interest rates. The amount of time for the investment will also change the rates. Individuals can choose between one week and several years for investments on CDs. The longer period of investment will often mean the higher rate of interest on the certificate of deposit. Another important feature that can change the available CD interest rates is competition. When competition is available, especially with a number of institutes in the same vicinity or city that can offer CD investments, it is much easier to receive a higher and more competitive interest rate on CDs. Investing in CDs can be a great way to receive a return on investment with very little risk. "But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day." (Deuteronomy 8:18)

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College Savings Account

A college savings account is a guaranteed investment, which can give students access to educational funds without tapping into Mom and Dad's cash or credit cards. In addition to tuition, room and board, and books, students need to pay for transportation, clothing, on- or off-campus housing and utilities, and food, lots of food! While some students rely heavily on high-interest credit cards to finance a four-year education, a college savings account usually requires low minimum balances, no added interest, and very few fees. Instead of paying with plastic to the tune of 18% and 24%, collegians can easily budget and save some cold hard cash. Typical with most campus savings packages are the freebies: no-fee ATM cards and usage, companion checking, and free 24/7 online access. Students can also start building credit-worthiness with banks and financial institutions through establishing and maintaining a college savings account over a period of time. Initially, deposits may have to come courtesy of "dear old Dad," but once cash begins to accumulate, funds are there for unexpected expenses and emergencies.

College costs; and the sooner parents start saving, the easier it will be to finance a four-year degree. Gone are the days when families relied on spare change stashed in a cookie jar to help fund Junior's education. Today's sophisticated students are high maintenance; and the skyrocketing costs of higher education require some savvy financial planning. In uncertain economic times, it takes faith and common sense to save for the future; but God promises to bless those who fear, or reverence, Him: "He will bless them that fear the Lord, both small and great. The Lord shall increase you more and more, you and your children" Psalms 114:13-14. Families need not go bankrupt or take out a second mortgage to pay for school. A Coverdell College Savings Account (ESA) is a vehicle to help families accumulate tax-free funds for elementary, secondary, and advanced education. Parents, grandparents, and benevolent aunts and uncles can contribute up to a combined total of $2,000 per year until a student/beneficiary reaches 18 years of age.

Corporations can make contributions to the ESA without meeting income requirements. But the maximum adjusted gross income (MAGI) must be less than $110,000 for an individual contributor filing single; or less than $220,000 for married couples filing jointly. Coverdell contributions are not tax-deductible, but are exempt from federal and state taxes until withdrawn by the student/beneficiary. Of course, early withdrawal is subject to a 10% penalty and income tax may be incurred if monies are spent for non-educational purposes. Contributing parents can also transfer, or rollover, assets from one sibling/beneficiary to another if monies in excess of qualified higher education expenses remain in the ESA. However, rollovers must be made within 60 days to avoid penalties or income taxes. Qualified higher education expenses include the usual tuition and books, room and board, and perks like personal computers and Internet service if used for educational purposes. Miscellaneous expenses, such as clothing; airline tickets; and non-educational recreational costs are not permissible.

Rather than opening a basic college savings account, undergrads may opt for a money market fund for short-term savings. Money market funds are low-risk securities, such as Certificates of Deposits (CDs), U.S. Treasury notes, and mutual funds. With the exception of CDs, money can be withdrawn without a penalty. And because funds invested in debt securities are backed by the government, money markets are considered a safe investment for students and non-students alike, and offer relatively high yields. Families planning for higher education may also consider a 529 college savings plan. Administered by state governments and higher education institutions, 529 plans invest tax-free contributions in mutual funds with hundreds of investment options. Unlike a Coverdell student savings account, contributors have no income limits and plans can be opened for as little as $25. The maximum contribution per student/beneficiary far exceeds the maximum Coverdell allowance, topping at $300,000.

Saving money for school is one thing, but when it comes to spending it, collegians wrote the book. Banks and financial institutions know that young adults are big spenders and they usually make opening student checking accounts simple. Typically, accounts require no minimum balance, offer free ATM check cards and usage, and provide free online checking, online bill paying, and direct deposit. Overdraft protection can usually be included for an additional monthly fee, a great feature for undergrads who may sometimes forget basic math! Most checking accounts are linked to interest-bearing savings and offer debit/credit cards to make cashless purchases on and off campus. As with any financial transaction, students should be aware of keeping accurate balances and watch for identity thieves. Campuses are breeding grounds for criminals seeking to take advantage of youngsters with access to cash. Numbers of student checking accounts and savings deposits, receipts, and statements should be kept under lock and key. Social security numbers and banking information should never be shared with friends or classmates.

No matter what method families choose to save, students should be aware that higher education costs and bears a tremendous responsibility. Parents can help young adults learn and apply financial management skills and develop a greater sense of responsibility by entrusting them with college savings and/or student checking accounts. Certain plans allow undergrads to experiment with investments, such as money markets, securities and Treasury bills. Parents and college-age children should consult with local bankers or lending institutions to find out which plans offer the most benefits. A combination of several options may meet fluctuating needs, as scholars progress through advanced degree programs. While student checking accounts teach young adults how to budget and manage personal finances, federal and state tax-deferred plans make higher education accessible to many families who otherwise would have to incur indebtedness to educate their offspring.

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Credit Card Balance Transfer Offers

Credit card balance transfer offers can provide a useful way to pay down a debt, but only when the right company is chosen and the rules are followed accurately. The fine print for these offers may put a person in worse financial condition then they started in. In addition, even offers that start at 0% may not stay there or required a minimum amount of payments per month to avoid monthly charges. Customer service representatives for these companies will not outright tell a person how much it will cost to transfer because they want the business. It is up to the consumer to read the terms before transferring funds. In some cases a small loan from a bank or credit union may be a better option.

Evaluating all options for cost and benefit both financially and reputation of credit will determine the best choice for a specific situation. Some people simply need short-term help, therefore the 0% for 3 months type of offers may provide enough aid to pay off debt. However, at the end of the 3 month period a consumer may find themselves paying as much as 25% every month. In addition, even if the consumer pays off the debt in the appropriate amount of time, they may get charged for not putting anything new on the card after the payoff is complete. In this case a small loan from a bank or credit union may be a better option, however it is still important to check into service charges as well as early payoff. The best balance transfer credit card will not have any penalties either financially or in regards to financial reputation. However, a company would not make any money unless they charge for something.

When reading the terms for any credit card application it is important to never assume any terms of service such as when the terms say APR good until April. This statement can mean many different things including charges made until April 1st, April 31st, and billing mailed on those dates that indicates purchases made the whole month before. So basically the range of dates can span from March 1st to April 31st. In addition, make sure it is clear how many charges must occur in a billing period in order to avoid minimum penalties. Even though a person may have the greatest plan and intentions in using the best balance transfer credit card, unexpected circumstances in life happen resulting in missed payments. The consequences to this problem may include significant past due charges as well as a hiked interest rate and scar on personal financial report. Watch out for universal default as well. This means even if a problem occurs only with one card a general scar on the personal financial report will occur discouraging any future lenders.

Planning for a successful financial future is just as important as carefully fixing past mistakes. As unpleasant of a task as it is, reflect on the situations that created the current situation. This may include unforeseeable circumstances, however a savings account may have alleviated unmanageable debt. If a pattern is found concerning low cash flow during high need times, then a strict budget may be useful. This is especially true for people that do not receive a consistent paycheck, which may require a record of yearly income in order to accurately record an average income to develop a budget around. Credit card balance transfer offers are tempting, however simply rearranging finances and avoiding overdraft fees as well as late charges may solve the problem. What appears as the best balance transfer credit card for one person is not always the solution for everyone. Basically, the best choice is determined by the reason for the original debt. The answer leads to better knowledge concerning weaknesses to stay away from and strengthen to take advantage of.

Whatever the amount or the reason for needing this type of assistance, staying on track is necessary for success. This includes a budget, payment calendar, and accountability partner. Even if a person believes they follow by a budget or manage their money responsibly, the hard fact is that some event created unmanageable debt. Many easy to use computer programs offer budget planning as well as bill paying options. Choosing to use cash instead of debit card may be harder, however there are no overdraft fees with cash. Setting up a separate account for bills paid through electronic bill pay may offer some protection for those items requiring bank assistance. For wisdom [is] a defence, [and] money [is] a defence: but the excellency of knowledge [is, that] wisdom giveth life to them that have it. (Ecclesiastes 7:12)

Minimizing amounts paid out on the best balance transfer credit card will free up money to pay debt and minimize new problems. Remembering that credit card balance transfer offers are targeted toward irresponsible spenders increases the awareness of scams and policy stated under the fine print. Getting help from friends and family concerning accountability for spending and ideas on how to save increase a persons chances of successful financial endeavors. Creditors and customer service representatives for these companies are certainly not going to encourage paying off debts. Credit card balance transfer offers are marketed toward people who continually get themselves further and further into financial trouble because that is how these companies make their money, however if a financial plan is executed correctly using their teaser rates responsibly the benefit is to the consumer.

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Current Home Loan Interest Rates

Current mortgage interest rates are ever changing, depending on whether it is a buyer's market or a seller's market. The housing market is analyzed everyday to determine if the current home loan interest rates are up or down from the day before. The market is just one factor that determines the charges. They also depend on the type of loan as well as an individual's credit history. Before purchasing a house, an important factor is to look at the today's rates because the borrower will want to get locked in at a good rate. Also, one should take time to get one's credit history in order before buying a house. By researching the current home loan interest rates and getting many quotes, one shouldn't have any trouble obtaining the best up-to-date rate for a house note. There are laws today that protect the buyer from interest that is usurious. The rules for lending were clearly set out in the Old Testament: "If thou lend money to any of my people that is poor by thee, thou shalt not be to him as a usurer, neither shalt thou lay upon him usury." (Exodus 22:25)

Even if a person is currently a homeowner, taking advantage of current home loan interest rates may be possible. Fortunately, people who already own homes can take advantage of the present lower interest by refinancing. Since rates are always changing, the homeowner may be trapped in a mortgage note at a high interest. A fixed rate note from ten years ago could be considerably higher than the present lower interest. This means a lot of money is being spent on interest unnecessarily. Taking the time to refinance could save a bundle, but the effort has to be worthwhile. Getting some quotes and compare the quotes with the up-to-date amount of debt should be done first. After doing the math, if a person isn't sure if he could benefit from refinancing, talk to a professional broker. They will look over the present indebtedness to see how worthwhile the effort would be to get refinanced and if refinancing would incur a penalty.

When looking for a first home loan, the first place to check is one's own bank. Many national banks offer mortgage loans at the current home loan interest rates. Working with the individual's bank gives that person the upper hand because the bank is familiar with its customers, and they are familiar with them. The bank knows how the borrower handles money and if he is reliable. So there is a mutual sense of comfort in talking to a bank representative. If possible, the loan applicant should plan a face-to-face meeting to discuss the possibility of taking out a mortgage note. It will be necessary to find out their present lower rates and get a quote on how much the new rate would be. Despite the fact that the bank knows an individual, that entity could still refuse to grant a house note. They can also only offer rates higher than the present rate because of poor credit or an unreliable banking history.

If a person's bank denies or only offers high rates, the individual should look for other lending companies. Listings can be found in the local yellow pages and business listings under "Mortgages." Most often, it is best to look for a nationally known, federally insured lender, but some smaller lenders are safe to work with. By asking family and friends if they recommend any of the small lenders in town one can often get good leads. Get a quote from those which are most recommended. Before working with the lender the company should be checked out. Find out if they have any complaints with the Better Business Bureau. It's also important that they be state licensed and registered. The company should be established and have a good reputation in the community. A person can usually find some branches of national lenders in your yellow pages. These are good options as well for the current mortgage interest rates. An individual should take the time to get a quote from these companies over the phone or visit the national website for the company.

The very best place to get the current home loan interest rates for a new mortgage or for refinancing is on the Internet. Numerous lenders can be found online by simply searching on your favorite major search engine. Visit these lenders' websites to get a quote on their present rate. Doing research to become familiar with real estate terms and jargon will give the potential borrower an edge. When a person is seeking quotes, the lenders will most likely require an online form with all of pertinent information, including what type of note is being sought. Make sure that the site is secure before offering up any sensitive information. After filling out the online form, the lender will respond immediately by call or email with their current mortgage interest rates.

Some people just don't have a lot of time to devote to researching quotes and current mortgage interest rates. For these people, it may be better to use a quote rate website. These websites will allow you to fill out a simple form and get quotes from numerous lenders in an instant. The other option is hiring a broker. A broker will seek out the best deal for the new house purchase and walk the buyer through the entire process. No matter how a person decides to go about getting current home loan rates, it is necessary to be sure that the lender you finally choose is known and reputable. A buyer will be paying this note for years to come, and the relationship between buyer and lender should be a good one.

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Commercial Loan Interest Rates

Commercial mortgage interest rates are affected by several factors that one may or may not be able to adjust in order to receive the best percentage. If people have a good credit history, a reasonably profitable business report and some business assets, they will have little trouble in securing needed funds. Since these borrowed funds are approved by a lending institution with the property itself as the collateral, a person's ability to pay off the payment plan is the most important concern for lending companies. If someone needs funding to purchase an existing building, office, shop or real estate for a corporate development or perhaps they need to update their present business, they will need to check around with several sources for competitive percentages within this financial arena.

The lending company has rights to the property as collateral for their loan to a client since a commercial mortgage is used to purchase properties or lands for business purposes. If a client defaults at any time on the monthly payments, the lending company can take full possession of the building or property to sale in order to receive payment for their help. The commercial loan interest rate on any of these mortgages is usually lower than a typical business one that is unsecured. Most lending sources that offer low rates do so in light of the fact that this type of property usually holds higher value than other types of real estate.

If funds being borrowed is defaulted, companies that provided these programs are relatively assured that the business will receive all of their money back. Mortgages with a good commercial loan interest rate are offered by a wide array of lending companies that specialize in these types of monies and can be approved for as little as several months or up to 25+ years. They are available in more flexible amounts than are many other business funds extended by banks. Many banks have a minimum amount that may be borrowed for these types of programs making it difficult for some businesses to find the right funding they need.

Sometimes banks that offer this funding can pressure a borrower to apply for more than is actually needed in funds just to meet their minimum requirement. Companies that specialize in commercial mortgage loans offer more flexible amounts and as well as good commercial mortgage interest rates to those who qualify. These can be quite reasonable for borrowers if a business owner can show that he or she can make required payments. In order to qualify for a better commercial loan interest rate, a borrower will generally need to supply business records for the previous 3 or more years.

Financial reports, profit/loss statements, other financial agreements, inventory records and other information generally will be needed so that the lending company can analyze a person's financial capabilities. If considering someone a good risk, they will more likely receive lower commercial mortgage interest rates. This information will also be helpful in determining whether one receives a fixed or variable commercial loan interest rate at the time of approval. Of course the amount of money needed will also determine what type of rates others are offered as well.

Even though it is always helpful to have as many assets as possible when approaching any lending company for funding, keep in mind that these loans are different in that the business property being purchases will be the collateral for the needed funding. Since the bank has access to the property if a person defaults, they will lose the property and it will be sold to pay off the borrowed funds. People can also receive help with discounted percentages in some cases for necessary equipment and other additional property or buildings that enhance their present business.

Any high cost real estate or property that is needed for business can be considered for this type of mortgage. These loans are considered one of the best and more affordable ways to receive necessary capital to fund a business venture. With its flexible loan amounts, business property for collateral feature, and its possibility for low commercial mortgage interest rates, this type of loan can help many business owners have ready capital and flexible repayment terms that they can manage.

Commercial mortgages can cover most business real estate needs any business owner may have including land, building and renovation projects. Keep in mind that one will generally receive the best interest rates and terms from a company that specializes in commercial mortgages. If someone needs more information regarding the option of a commercial loan that can lock them in to a low, commercial loan interest rate, there are many online sources that offer free consultations. "But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you." (Matthew 6:33)

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Bank Savings Interest Rate

In the U.S., the bank savings interest rate is the amount of interest banks pay depositors in exchange for lending them money. The rate fluctuates with the federal funds rate which the Federal Reserve Banking System, or the Fed, establishes for member institutions. The federal funds rate is the interest member institutions charge one another for 24-hour loans to correct federal funds deficiencies. The Federal Reserve requires banks to keep a certain amount of cash reserves on account at the Fed as insurance against panic runs. Banks routinely borrow reserve funds from each other at the end of the day to make up deficits caused by withdrawals and other transactions. The federal funds rate determines the bank savings interest rate financial institutions can afford to pay depositors. Lower federal funds rates translate into lower expenses for member banks. The less interest on borrowed funds member institutions have to pay one another, the more they can make available to pay depositors.

The money market is essentially a system of financial activity transacted in a global economy. Money literally makes the world go around; and financing the world's goods and services determines the rate at which domestic and foreign banks can borrow or lend funds. A bank money market rate, determined daily by fluctuating interest imposed between financial institutions globally, is the amount of interest banks pay depositors on funds deposited into a bank money market account. Banks, credit unions, and other financial institutions which issue money market accounts (MMAs) use depositor funds to invest and diversify portfolio holdings at home and abroad. Simply put, when banks make money from investments, depositors earn more interest. The bank money market rate goes up or down depending on earnings from investments.

Depositors seeking to earn a higher bank savings interest rate would do well to consider opening a bank money market account. Not to be confused with a money market mutual fund, which collectively invests shareholder funds to gain added returns; an MMA pays interest on depositor funds double the earnings of a regular passbook savings account, from 2% to an average of 4%. At an average of one percent, regular passbooks just can't compete with the high yield bank money market rate. But the advantage to passbook savings is the high liquidity of funds. Depositors can withdraw money on demand without paying penalties, there are no maturity dates, and usually no minimum balances are required. A regular passbook with low bank interest savings rate can also be linked to an existing checking account to afford overdraft protection. For depositors who require quick, fast, and in a hurry access to ready cash, low- or no-earning savings make plenty of sense. But for those savers who want to ensure funds are available, not just for easy access, but for future financial security, other options exist.

Although low-interest savings accounts are still essentially wise and prudent choices, deposits don't work nearly as hard as those invested in a bank money market account. But earning nearly double the interest also doubles the risk. Deposited funds, while FDIC-insured, are tied to the global stock market and can fluctuate on a daily basis. In the case of a catastrophic financial event or panic, the Federal Deposit Insurance Corporation promises to replace depositor funds up to $100,000. As a hedge against potential financial loss, many wise MMA holders diversify portfolio holdings by combining the high yield MMA with long-term savings vehicles: Certificates of Deposit (CDs), Individual Retirement Accounts (IRAs), Roth IRAs, and employer supported 401ks. Diversification is always a wise choice for those who don't want to put all their nest eggs into one proverbial financial basket. Of course, the only true security against catastrophes of any sort is having one's confidence firmly placed in God. "Though an host should encamp against me, my heart shall not fear: though war should rise against me, in this will I be confident For in the time of trouble He shall hide me in His pavilion: in the secret of His tabernacle shall He hide me; He shall set me up upon a rock." (Psalms 27:3,5)

A high-yield bank savings interest rate, coupled with FDIC backing, makes MMAs solid investments, even in the face of a sagging economy and increasing unemployment woes. MMAs are also highly liquid and the potential added earnings can give depositors a good return on relatively minimal initial deposits. In addition to higher earnings, bank MMAs also offer check writing privileges and debit cards, which make cash as readily accessible as a low-interest passbook savings. Because financial institutions invest depositor funds, restrictions on withdrawals may be imposed and higher balances may be required. High yield bank money market accounts can be opened and managed online, 24 hours a day and seven days a week.

To find higher savings yields, depositors can go online to financial analysis websites, log onto banking institution and credit union sites, or make a personal visit to local branches. Rates are reported daily, weekly and monthly; and depositors can easily make comparisons before determining which bank savings interest rate suits particular financial needs. As the bank money market rate continues to increase, depositors may find regular passbook savings accounts a thing of the past. Savers will cease to be content to deposit funds, only to have them earn the least amount of interest. No one can afford not to have hard earned cash work as hard for them as they do for it.

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Adjustable Rate Home Mortgage

When shopping for an adjustable rate home mortgage, a borrower should continue asking questions until he or she fully understands the mortgage process and the particulars which apply to one's own loan. Often, buyers are intimidated by their lack of knowledge about this complex process. Unfortunately, zealous salespeople can sometimes steer customers into accepting loans which they do not understand. Worse, these financial agreements may not represent what is best for the buyer's situation. However, with a bit of research before signing, a buyer can approach lenders with confidence and emerge with the best of adjustable rate home loans.

Attitude is important when beginning the mortgage process. Remember, lending institutions need business every bit as much as the borrower needs a loan, so do not be apologetic about questioning the terms of a mortgage, as though one was needlessly taking up the lender's time or questioning the lender's integrity by requesting more information. If lenders are unwilling or unable to provide such information, perhaps it is time to look elsewhere. Deciding upon a mortgage is probably one of the most important financial decisions one is going to make. So go ahead and ask questions. A buyer has the right to know.

As to the complexity of the process of shopping for an adjustable rate home mortgage, it is true that there are many areas which need to be addressed. Before approaching a lender, it would be wise to be familiar with the terms involved in selecting a loan. At first this may seem like an insurmountable mountain of information. Yet it is necessary so that one can approach a lender with confidence. Also, things are not as horribly difficult as one may fear. Although there are a multitude of configurations in adjustable rate home loans, they usually deal with a limited number of key concepts. Once these are understood, the whole process becomes a lot easier to comprehend. As further encouragement, consider this passage from Proverbs 25:2 -- It is the glory of God to conceal a thing: but the honour of kings is to search out a matter.

Do some reading on the subject of home mortgages. An Internet search on this subject will yield plenty of articles about the adjustable rate home mortgage versus other loan products. As this material is digested, it may be helpful to take advantage of glossaries on the subject in order to understand concepts that are being discussed. These can add greatly to one's understanding of the articles' information. As this process continues, eventually the borrower becomes familiar with mysterious yet pervasive terms like rates, indexes, margins, caps, amortization and recasting. Such articles will also warn the inexperienced borrower about areas to consider before applying for adjustable rate home loans and offer hints to make the entire process more productive. The Federal Reserve even offers a mortgage checklist to use while comparing various mortgages. This is filled with many important areas to consider regarding each loan offering. The Federal Reserve also offers an on line publication specifically about the subject of adjustable home mortgages. All this information is available without spending a dime.

There are certain areas to especially note during the process of researching a loan. Interest rate is important, of course. Fixed mortgages will offer predictability in an uncertain environment. Adjustable home mortgages offer lower interest initially, which may allow one to qualify for a larger loan amount. If interest rates drop, the borrower might end up ahead of the game. However, if interest rates increase, the payment may soon adjust to an amount which may be out of the borrower's reach. Changes in interest rates or the housing market in general may leave borrowers owing more than they borrowed or stuck with a house which can not be easily resold in time to avoid higher monthly payments. This could lead to foreclosure. Caps (limits)are available on adjustable rate home loans to eliminate some of this uncertainty, but it would be wise to consider the effects of possible payment changes before they occur.

In an adjustable rate home mortgage, the interest is linked to a specific index. Often, these indexes are 1, 3, or 5 year Treasury securities, but they may be other economic indicators as well. Although the borrower can not demand that the lender use a certain index, he or she can note the performance of various indexes and choose a lender who uses the index that seems to have the most stable history. A margin is added to cover the lender's costs and add a bit of profit for his trouble. The margin is added to the index rate to determine the interest rate the borrower will be required to pay on the loan.

Pay attention to the adjustment period of the loan. The rate is reset (recast) after this period. On a 2/28 adjustable rate mortgage (ARM), the rate is fixed for the first two years, then adjusts periodically so that the loan will be fully amortized (paid off) over the following 28 years. Watch out for a drawback which can occur with some types of ARMs -- negative amortization. Certain payment options that an ARM offers may result in a monthly payment which does not cover the interest which is being added to the loan balance. Therefore, the balance is actually growing rather than decreasing each month. There is a certain percentage after which this is no longer acceptable (perhaps 110% or 125% of the loan amount). At this point the payment is reset to whatever amount will result in the loan being paid off in the years remaining on the loan agreement. This can result in significantly larger monthly payments, which the borrower may not be able to afford. Hopefully this last item underlines the point of this article: be sure to research and understand adjustable rate home loans before signing on the dotted line.

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Best Personal Loan Interest Rates

Comparing personal loan interest rates will help those in need of extra cash or a line of credit find the competitive loans that are available throughout the finance market. Everyone experiences times of financial hardships. There can be unexpected expenses, unexpected loss of income, or simple additional costs involved with day to day living. For reasons like these, the personal finance loan was created. These types of liens have become very popular with the consumer, and make up about one-fifth of installment liens, that are not mortgages, across the nation. Many financial institutions have taken notice of the market demand and are putting together creative finance packages to offer consumers. Competition allows consumers to comparison-shop and find the best personal loan interest rates offered by several different sources.

A personal loan is generally a short-term, small cash loan or credit advancement from a banking institution. This financial transaction is unsecured, meaning that there is no collateral placed as a guarantee of payment. The cash or credit is extended based on customer's credit history. These loans can cost consumers much less in interest rates than the alternative, the credit card. Banks do not increase profit margins by much when extending the personal lien, and have come up with several creative credit card solutions. However, consumers are savvy, and this type of lien continues to be the choice when it comes to borrowing quick cash. Historically, consumers view credit cards as open, constant availability. But when specifically borrowing for a certain amount, the consumers sees this as a short term pay-off. There are two completely different thoughts associated with the two types of credit. And, credit cards do not usually offer fixed terms, but fluctuate with the market. But, the biggest advantage with individual short term extensions of cash is without a doubt, the great personal loan interest rates received.

Although there is a national credit crisis in America today, consumers still view lines of credit and cash extensions from banking institutions as the solution for cash shortages. Perhaps there is a new college student needing books or boarding fees. A much needed income for the family may have been terminated. There could be illness, disability, or past medical bills that need to be paid off. Or, perhaps for some, this is a good time to purchase an item that will bring the family pleasure, such as a boat or vacation home. Whatever the reason, Americans tend to continue the thought of buy now, pay later, and many of them are drowning in debt. So, before taking on additional debt, consumers should seriously consider what the money extended will be used for and what the lowest sum possible could be.

There are a few steps to consider before securing an unsecured lien. First and foremost, predetermine what the bottom line is. How little cash will it take to achieve the purpose of the loan? Often, bankers and financial officers are paid on commission, so the larger the transaction, the more income that is generated for them, personally. Also, banks do not make much profit on small, short-term financial transactions, so it increases their profits to give consumers larger sums. Next, consumers will want to let the bank or financial institution working with know that they are comparison-shopping for the best personal loan interest rates available. There is great competition in financial markets today. The Internet has opened the doors of competitive rates and now, more than ever before, the consumer is actually treated like a valued customer. Consumers need to use this new competitive environment to their best advantage.

Credit unions will often have the best personal loan interest rates and also extend smaller sums of cash. Checking out the local credit union will be worth the time. Also, there are many banks that have customers services online through a website. Using the Internet will afford consumers easy access to personal loan interest rates and a variety of terms and conditions. Once consumers reach the point of a final decisions and have found the best personal loan interest rates for their specific needs, it will be time to read the fine print and to look for any hidden charges. Understanding the complete terms and costs of any financial agreement is crucial.

Consumers will want to make sure that they truly are making a wise choice when it comes to borrowing money. Borrowing cash is very easy in this society, and it is big business for banks and other financial agencies. But, staying in a state of debt is staying in a state of financial imprisonment, and this is not God's desire for the lives of His children. His Word tells us that, "The rich ruleth over the poor, and the borrower is servant to the lender." (Proverbs 22:7) These are the practical consequences associated with borrowing money. It simply ties us to those that are lenders. Even when there are great personal loan interest rates on the market, carefully consider the over-all costs involved with borrowing. Will a monthly payment take away the ability to be spontaneous, or give generously when the need arises? When shopping for the best personal loan interest rates, keep a future financial freedom dream in mind!

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Fannie Mae Home Loans

Freddie Mac interest rates are among the most competitive in the industry. So families longing to finally realize the American dream of home ownership, take heart! Not too long ago, interest rates were well over 6% and now, Freddie Mac interest rates have declined to a new low. Due to the recent housing slump, coupled with the low interest rates, this means that it is a buyer's market for first time purchasers. Don't let that ideal house get away! The path to the American dream begins with self-education on the various types of loans, mortgages, how credit works, and finding the best interest rates. Where is this information found?

Freddie Mac has all the tools first time buyers need to begin educating themselves about how credit works, how to avoid predatory lenders, and discovering the step-by-step procedure to procure that first loan. There are several resources providing educational information on how to maintain, protect and build good credit. One particular tool provides consumers with the step-by-step process to owning a home, and even how to decide where to live. Finally, there is a resource which teaches consumers how to avoid and recognize predatory lenders and lending. The Bible teaches it is not wise to extract excessive interest or "usury" from those who cannot afford much. In Leviticus Chapter 25, verse 36 it says "Take no usury or interest from him; but fear your God, that your brother may live with you." Once the education process has been completed, then the next step is to find those perfect Freddie Mac interest rates, and move on to the next step - finding the perfect property!

Fannie Mae is a sister company to Freddie Mac, and provides information about all kinds of properties for almost any type of home buyer - they'll even help those who want to simply rent for now. Just as an extra layer of protection, Fannie Mae home loans work to ensure that predatory lenders will not work with the borrower - so the consumer can rest easier knowing the company is looking out for the client's interests. Keep in mind though, that Fannie Mae home loans are not offered directly to buyers, but rather through lending institutions such as banks. Since the sister institutions are government sponsored corporations, the Federal Government backs all securities, providing a steady flow of funds, and quickly. In fact, once all of the information has been obtained from the consumer, it only takes approximately 15 seconds to get a loan approved. Now that is good news!

What if a consumer is interested in finding bank-owned and lower-income housing? No problem! The Fannie Mae loan company provides an extensive database of these types of properties available to suit the needs of most home buyers. Decide what kind of house features are most desirable, and start hunting. Also, don't assume that Freddie Mac interest rates are the same all over the country - they're not. Real estate prices and rates vary in many parts of the country - some areas are priced higher, some lower. For example, the east and west coast are known for expensive real estate. Buyers may find that lenders are more creative in providing various types of loans in these areas than in a more conservative part of the country, such as the mid-west.

Now that all the information is ready and the property has been found, what next? Finding a reputable lender the consumer feels comfortable working with is the next step. Start by visiting the local bank, checking with other neighborhood banks, and perhaps getting friends and family to recommend lenders with whom they have dealt in the past. After doing the required due diligence, the consumer will be rewarded with a lender who fits their needs. If more help is needed, Fannie Mae home loans has lists of lenders where the borrower can begin the search for that perfect lender.

Some might say "my income is too low to ever think I could own my own house". Wrong! Borrowers with almost any income can feel confident that a mortgage can be obtained to meet their needs. Mac and Mae specialize in assisting low to mid-income earners in their quest for the American dream. Due to Freddie Mac's competitive rates, millions of families have been given the opportunity of ownership through Fannie Mae home loans. Also, because of the company's many investments, they are able to provide consumers with a savings of 0.5% on mortgage rates, which is then passed on to borrowers in the form of lower mortgage payments. This makes working with them very attractive. They have been very instrumental in assisting lower income families in becoming home owners for the first time.

Freddie Mac and Fannie Mae home loans even invests in local community revitalization projects, making neighborhoods a more pleasant place to live, and raising the quality of life for everyone. No matter where the consumer might decide to live, chances are that Mac and Mae have the right resources for the consumer of any income level to utilize, so they can begin the journey down the road to home ownership. So whats left to do? Why not type out that list of friends and family to invite to that home warming party the week after move-in? Then, begin that exciting decorating project to turn that new house into a cozy home!

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5 Year Adjustable Rate Mortgage

Adjustable rate mortgage loans involve a changing interest rate periodically based upon the criteria set forth in the contract. Normally variable interest continues to climb each time it changes. This is often done to allow the buyer to start off with lower interest and a lower monthly payment. Buyers are often unhappy when their payment periodically increases and often seek to refinance with a fixed rate because a rising payment may be difficult to make. A 5 year adjustable rate mortgage loan is done to ensure the lender obtains a steady amount of funding. Other types of loans include graduated payments, interest only, fixed rate, negative amortization, and balloon payment. Buying a home can be very stressful but when a person places his or her trust in the Lord, He will give peace and will help in making the difficult decisions. "Thou wilt keep him in perfect peace, whose mind is stayed on Thee: because he trusteth in thee" (Isaiah 26:3).

Each type of loan has basic features associated with it. Adjustable rate mortgage loans have beginning interest for a certain period of time. The amount of the interest resets according to the schedule set forth in the contract. Limits are usually set on how much the interest can increase each time and the time period set for the changes is also limited. Some contracts allow for the adjustable rate mortgage (ARM) to be converted to a fixed option at certain times. However, prepayment penalties may apply when an ARM is paid off early and may be a significant amount. Prepayment penalties are usually based upon a percentage of the total loan amount.

A graduated payment mortgage (GPM) has low monthly payments that gradually increase over time. People who usually decide on a GPM are ones that have a good idea that their income will increase as the payments do. Young people are often very confident that the outcome with a GPM is going to be positive but buyers may overestimate their individual earning potential and find themselves in a difficult situation in the future. A 5 year adjustable rate mortgage is similar to a GPM only the adjustments on the interest occur over a 5 year period and they are usually based upon the federal prime rate so they can vary more dramatically in comparison.

Interest only loans allow the buyer to pay only the interest for a certain amount of time so the principal balance remains the same. This allows the buyer to have very low monthly payments during this time. Adjustable rate mortgage loans do not have high interest in the beginning compared with an interest only loan. Lenders see interest only as a higher risk because buyers become discouraged from not building any equity in their home so they may find that refinancing is difficult. The benefit of an interest only option would be that the buyer can save the cash saved from having to pay on the principal and use it for other investments.

A fixed interest option means that interest stays the same over the life of the contract. The monthly payment is configured using the amount of interest and the length of the contract to come to a fixed payment amount each month that eventually ends in zero with the last payment made. Terms can begin at 15 years but the average time period for the contract is a 30 year option. A person may have an option of a shorter term or a longer term period. Fixed interest options are usually more expensive in the long run compared with a 5 year adjustable rate mortgage. Many people prefer having a fixed monthly payment so they know what to expect to have to pay each month. Fixed rate options do not usually have a prepay penalty associated with them.

Negative amortization usually occurs in loans where the payment amount is not enough to cover the interest. The unpaid accrued interest is added to the outstanding principal balance so that the balance increases by the amount of the interest each month. Adjustable rate mortgage loans may have a negative amortization for a certain period of time. One of the negative aspects of negative amortization options is that the payments can vary dramatically from one month to the next. Eventually the buyer will have to make full repayment according to the original agreement of the contract.

A balloon payment mortgage has a large payment due at the end of the loan period. The difference between a balloon payment option and a 5 year adjustable rate mortgage is that refinancing may be required at the end of the contract or period because the buyer can not make the payment. A balloon payment mortgage is used more for commercial real estate than for residential real estate. Many buyers use a balloon payment option because they plan on refinancing or selling their property before the large payment is due.

Variable interest mortgages are the most popular for homebuyers who know they are going to be moving within several years. These usually offer a lower fixed rate of interest for the first several years and then after that the interest will fluctuate affecting the amount of the payment. The longest amount of time that a variable interest option can be written is for ten years. These types of options are great for people who have jobs where they move often.

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A banks prime interest rate is the percentage charged to a loan by lenders to the customers that prove to be the least financial risk. In other words, a prime interest rate is the lowest possible number published and all banking and lending institutions start the interest, charged to a loan, at this numerical percentage point. Knowing this number at any particular time is helpful when a consumer is shopping for loans for various purposes, including home mortgages. Many financial investors make decisions about when to buy or sell or save based on the national interest rate and what the bank rate will be doing in the future. Economic trends affect these numbers and the Federal Funds rates are determined by the open markets.

The Federal Funds Rates are used in determining the prime interest rate for any lending market. The Federal Open Market Committee will use the Federal Funds Rates to move this number. These fluctuating markets can have affects on what interest is gained through savings programs, such as CDs, Money Market Accounts, savings accounts, and more, as well as affecting the amount of interest charged to a loan by banking or lending institution. Changes in the banks prime interest rate can also have influence on the stock market with trading, ultimately affecting an entire economic culture at any given time. The Federal Government closely watches the economy and adjusts the rates to offer the economy stability in volatile markets.

These rates and numbers will be used for a variety of financial transactions. The prime interest rate will determine what consumers pay for most of the money they borrow. Bank numbers will be used to guide rates for most credit card debt, new mortgages, home equity loans and various lines of credit. The prime rates can also determine what amount a consumer is charged for auto loans and personal loans, as well. When purchasing a small business or when applying for a business loan to develop business further, those seeking small business loans will find that their loans are also indexed to the banks prime interest rate. Most all loans, except for loans designed for high-risk borrowers, are indexed to the prime rate, which does not change at regular or scheduled intervals.

To get the best or lowest possible amounts on any loan that a consumer may be seeking, there are a few suggestions to be kept in mind. First, having a good credit history will pay off time and again, as loans are needed for various reasons. Banking and lending institutions will always review one or more personal credit reports when considering an applicant for a loan. Mortgage companies and other lenders carefully review credit reports and credit scores to determine if a consumer is worth the risk of a prime rate. Consumers or borrowers who have low credit scores or who have poor payment histories will be charged a higher amount. These higher rates are charged to anyone determined to be a credit risk, with the lender making more money initially with each payment. Only those with healthy credit reports and solid credit history receive the banks prime interest rate.

Consumers possessing a good personal credit report and looking for a good deal on a loan for business, homes, or cars may want to conduct a little comparison-shopping to find the best rate possible. Comparison-shopping proves time and again to be the number one way to getting the best deals, and this includes the best deals on rates as well. Never assume that a credit score automatically guarantees the lowest possible rates. Consumers should know the current prime interest rate published before comparison-shopping. Knowing this information can give a borrower the knowledge to effectively negotiate terms and conditions with lenders.

A great place to begin comparison shopping for the banks prime interest rate is online through the Internet. The Internet is exploding with lending agencies that compete against one another for business, and if the consumer has a healthy credit score, they will be pleasantly surprised at how accommodating the current lending market can be. The vast competition throughout the Internet has changed the face of the lending industry, and now consumers have more negotiation power than ever. Before contacting various lending agencies, consumers will want to know their own credit score and review their credit report, finding any discrepancies before submitting an application to a lending institution.

Taking the time to review a personal credit report, finding information on the available rates, and comparison shopping for the lowest rates offered on loans can make a difference in an over-all financial picture. Getting information is getting wisdom before making commitments with lenders. The Bible teaches Christians to seek out those who are wise when making decisions. While researching a prime interest rate and getting credit history together, the consumer must be sure and speak with financial advisors about current trends and where the markets are headed. "Apply thine heart to instruction, and thine ears to the words of knowledge." (Proverbs 23:11)

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Collateralized Debt Obligation

What is the relationship between collateralized debt obligation and sub prime mortgage loans? Although it is true that the two are intertwined, the apocalyptic economic scenarios which dominate the headlines today may be somewhat overstated. Some people seem ready to throw in their investment towels, resigned to inevitable and cascading losses. No person can predict the future, of course, but perhaps a closer look is warranted before giving way to hysteria or rushing to liquidate assets.

First of all, a general understanding of sub prime mortgages is necessary. Sub prime lending involves financing loans to those who may have trouble meeting conventional loan requirements. Some may have a low credit score, or excessive debt. Others may have even more serious credit issues, like foreclosures and bankruptcy, on their records. Sub prime mortgage loans are available for these types of borrowers, but due to the increased risk involved in these loans, higher interest rates or additional fees may be imposed. Also, there may be stricter requirements in the loan to value ratio. In other words, one may get less loan money in return for the value of the property held as collateral. Surprisingly, the requirements for income documentation may actually be less stringent for these loans than for a conventional loan. Some borrowers with income which is difficult to document may find it necessary to pursue one of these loans, even if their credit is good.

Next, a brief overview of collateralized debt obligation would be helpful. Collateralized debt obligations (CDOs) were first issued in the 1980's, and became a growing sector of the securities market. These investments are put together in a wide variety of ways and are made up of different assets, but the principles behind a CDO remain essentially the same. Assets (such as mortgage-backed securities, high yield business loans, etc.) are held as collateral in a special purpose vehicle (SPV) and the cash flow from the investment is distributed to the investor. The SPV issues different classes of bonds and equity. There are several tiers(tranches) of investors, ranging from senior tiers which are designed to have little risk, to the lower rungs, which have a far greater potential of loss. The returns on the investment are designed to correspond to the level of risk; lower tiers receive higher rates of return to compensate for the risk involved. The senior tranche receives less return, yet is paid first from the cash flow.

The collateralized debt obligation is different from a regular mortgage or mortgage-backed security because investment is actually made in this cash flow rather than in the asset itself. There are different levels of risk and reward, yet the same portfolio of securities generates the cash flow. In a sense, then, the investor is relying on (or investing in) their belief in the system or mathematical model which is behind the construction of the various tranches. One factor in the growth of CDOs was the development of the Gaussian copula model by banker David Li in 2000. He came up with a computerized model to determine whether a given group of companies would default on bond debt one after the other. Interestingly, the model is based on a concept known as the 'broken heart'. Actuaries noticed that at times there is a correlation between a death of a spouse and his/her partner, where a person is more likely to die soon after the death of a beloved spouse. Mr. Li saw default as the 'death' of a company, and used these principles to come up with a model which made pricing collaterallized debt obligations faster and easier. Li's model used copulas, particularly one named after Carl F. Gauss, a 19th century German statistician. Copulas are mathematical models which predict the likelihood of events occurring when these events are interrelated.

Using this Gaussian copula model, investors can estimate risk and return, and devise strategies accordingly. If there is a high default correlation (high likelihood that all the companies in a particular sector will have losses at once), the difference between returns for risky vs. conservative investments might be small. However, if the pool of bonds had a low risk of default (low risk of the companies suffering losses all at once) the spread could be wider. Huge amounts of money are invested using this model or its variations. Even though this system has resulted in market growth, it is not foolproof. Investors who use such models without fully understanding them may think that they have taken sufficient precautions against loss when actually the system guarantees nothing. Not only are such investors suffering loss, but also there may be collateral damage to other markets which can trigger a loss avalanche.

How does this all relate to sub prime mortgage loans? Well, such sub prime mortgage debt is often a significant part of the investments bundled together in a collateralized debt obligation. Some large investment firms had great fortunes tied up in securites based on sub prime mortgage loans. In fact, one well known firm's recent collapse (even after assistance was given by the Federal Reserve) seemed due to the sub prime mortgage loan crisis which devalued its assets. Some believe that the government should not be involved at all in giving assistance in such matters, while others want the government to purchase foreclosed properties in order to stop falling housing prices. Others warn of upcoming waves of foreclosures and look for interest rate cuts. The government points to the many people already assisted by current programs and awaits the impact of billions of tax rebates due in upcoming months upon the economy. The uncertainty of future events provides a bleak background against which the light of God's Word in I Timothy 6:17 shines even more brightly: Charge them that are rich in this world, that they be not highminded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy... That is a model which will never fail.

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