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The Facts about Payday Loans for College Students

The college experience is, for many, the first time that a person strikes out on their own and achieves a greater measure of independence. Oftentimes, though, students are not prepared for what it means to be somewhat “financially independent” when they are also just getting started and trying to earn a degree. There is no doubt that many college students, even those who come from well-to-do families, often find themselves broke and in desperate need of cash. This all begets the question of whether or not payday loans for college students are a good financial alternative.

People who are strapped for cash often find that payday lenders are their only alternative when they need to get funds for emergency expenses. There are tens of thousands of lower income, working class households in this country that depend on the services that payday lending companies provide. It should come as no surprise, then, that college students are seeking out payday advance loans at a higher rate these days. Many college students are on their own, as it were, and they oftentimes cannot turn to their parents for any extra cash. Mom and dad are probably already paying a lot for their offspring’s college education. And with so many college students being young and not having a proven track record with credit, college students often have very low credit scores.

A low credit score can immediately disqualify a borrower from getting loan approval from banks or credit unions. This does not, however, negate the fact that students need to have access to cash to get by from one week to another. There is food to by, expenses to pay and a whole host of other financial obligations that college students have to deal with; just like the rest of us. But is seeking a payday loan the best path for college students to take when they need access to fast money for emergency expenses?

The Right Kind of Payday Loan Applicant

Everyone really has to make their own choice about whether or not they should get a payday advance loan. But there are some criteria that student applicants should be aware of if they are planning on getting a payday loan. Here are some of the things that students should consider before they apply for a payday cash advance loan:

  • Is the student borrower employed? Payday lenders only provide loans to people who are employed and brining in a regular income. Because payday loans are typically paid back from the pay check of an applicant, there is no use in students without jobs applying for these types of loans.
  • Does the student have a checking account? Payday lending companies typically use either a postdated check or an automatic withdrawal from a borrower’s bank account. Any student who wishes to get a payday loan should make sure that they have a valid bank account.
  • Is the financial need relatively inexpensive? Payday lenders typically provide loans that run between $100 and $1000. In other words, payday loans shouldn’t be used to pay back student loans or to take care of larger debts. Typically, these types of loans are used to help pay for things like car repairs, emergency medical bills or simply to give the borrower enough cash on hand to get by until they get paid at work again.

Students should consider all of the information that we just shared to determine if they can/should get a payday loan. Payday loans do help young people to understand how important it is to pay back debts on time, and when used responsibly they can be a great financial help for working students who need fast cash for expenses.

Most Debt Collection Cases Reportedly Closed Amicably

The Consumer Financial Protection Bureau – CFPB for short – documented some very interesting information in their recent semi-annual report to Congress. It turns out, according to exhaustive research done at the CFPB, that the majority of consumers did not dispute debt collection company responses. The CFPB received roughly 85,000 debt collection complaints since the summer of 2013. This information was also included in their recent report that is required as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The most recent semi-annual report was the seventh posted by the Consumer Financial Protection Bureau. And like the sixth report that came out at the end of 2014, the CFPB noted that, “ “As we continue to emerge from the continuing effects of the devastating financial crisis of 2008, we find that debt collection is central and cuts across virtually all credit products: credit cards, mortgages, student loans, payday loans and other consumer loans. Currently, about 30 million consumers – nearly one out of every ten Americans – are subject to debt collection, for amounts that average about $1,500 each.”

The CFPB report went on to say, “Many companies in this industry play by the rules, but others cut corners and seek to gain an advantage by ignoring the rules,” according to the report. “These bad actors are a detriment to every company that is faithfully following the law, and their actions harm consumers.”

Of all the complaints that were filed to the CFPB, 34 percent were complaints about debt collection actions. This report happened to track complaints that were logged between April of 2014 and March of 2015. The addition of debt collection complaints began in July of 2014, by allowing consumers to post complaints in the CFPB’s complaint database.

The most common complaints about debt collection practices were focused on continual efforts by collectors to collect on debts that consumers did now owe on. These types of complaints accounted for about 38 percent of all the debt collection complaints that the Bureau has received. Other cases involved consumer complaints about information being provided to credit reporting bureaus. These complaints indicate that people only learn about accounts that have gone on to debt collection companies after they check their credit reports.

There were also quite a few complaints about the tactics that some debt collection agencies use. 19 percent of the logged complaints included information that indicated these agencies call too frequently or at bad times of the day. Additionally, calls made to places of employment seem to be a major source of contention amongst people who have filed complaints to the CFPB’s database.

Beginning on the first of June, 2015, the Consumer Financial Protection Bureau has already received well over 600,000 complaints. The most common topics of these complaints are issues with mortgage loans and debt collection practices/agencies. It will be interesting to see how all of the different categories shake out in the next semi-annual report that the CFPB provides to Congress. We can expect to see that report some time in December. It is a positive trend to see that people are actually taking action and reporting their complaints to the CFPB. While the Bureau certainly isn’t the ideal body to police most financial industries, the reports to Congress may help with some much-needed financial service reforms in the future. The data provided so far really does show that as much as people complain about debt collection companies, they still go out of their way to handle these issues in an amicable manner.

Even Wealthy People Can Have Bad Credit

While it is not all that difficult to imagine lower income people with low credit scores that is not always the case. There are plenty of people who don’t make a lot of money who happen to have good credit scores. In a like manner, you might not think that wealthy people would have any worries when it comes to their credit ratings. It turns out, though, that this is not true. There are plenty of very wealthy people in this country who have issues with their credit scores. It is at the point right now where even the rich need to be concerned about their credit scores, just like everybody else.

The recent economic problems that have taken place all around the world have put a lot of emphasis on credit scores, which, when they are on the lower end of the spectrum can limit a person’s access to obtaining loans, getting decent insurance rates and even getting hired for a new position. Many wealthy folks have actually hurt their credit scores without being aware of it. By making late payments, charging too much on credit cards and not using credit enough because of their higher income levels.

The bottom line is that being wealthy does not always mean that someone is necessarily wise when it comes to credit. Contrary to popular belief, a person’s savings and income don’t factor into their credit scores.

A financial advisor named Jeremy Portnoff said, Regardless of their finances, age, gender or ethnicity, people don’t have an understanding of how credit works. They should be aware of their scores, especially in this environment.” Mr. Portnoff went on to describe a client of his, who had more than a million dollars in assets, but still had a poor credit score. This person avoided borrowing money, rented his house and never used credit cards. These factors all worked together to create a sub par credit score and may hinder the person from getting a mortgage in the near future. Like many other people, this guy grew up with the belief that all credit was negative.

The credit crisis has made people of all economic classes more susceptible to lower credit scores. Everybody needs to have a good to excellent credit score to receive loans and to ultimately keep borrowing costs down for the entire country. Scott A. Beaudin, a financial advisor explained it like this, “We think the limit is at least 760 to qualify for the best rates.” Some people just don’t know how to build their credit scores, and many more don’t know how to keep their credit scores high over the long run. This is true for people who are rich just as it is true for middle and lower income households.

When the time comes to get a mortgage or to buy insurance, lower credit scores can be extremely harmful to wealthy people. If you have more assets, you have more of a need to insure them. But if your credit score is not up to snuff, the insurance companies will rake you over the coals when it comes to insurance premiums. No matter how much money you make, it is never a good thing to pay more for insuring your property than you ought to.

Credit scores generally range from about 300 points to 850 points. The sad fact of the matter is that most people don’t even have a clue about what their credit scores are until they apply for a loan. There is no excuse to be out of the loop when it comes to your credit score, as everyone is entitled to obtaining at least one free copy a year according to federal law.

The Average Credit Card Debt in America

All of the new and upcoming technological advances in the financial industry have gone a long way toward changing our society into more of a cash-less society. The bottom line is that many consumers are turning away from using cash and using credit or prepaid debit cards to make purchases. Even minor things, like getting coffee every morning, are winding up on some peoples’ credit cards, and the result is consumer debt accruing like never before.

iStock_000014696238XSmall-300x225Credit Card Debt is on the Rise

The United States is just starting to get back to a place of relative financial stability. After the last Great Recession, you would have thought that people would have learned their lessons about avoiding debt when it is at all possible. That doesn’t appear to be happening, though, as credit card use is rebounding, with the Federal Reserve announcing that Americans owe in excess of $880 billion dollars in revolving credit as of this past October.

All that debt is great news for the big credit card companies, but it’s not necessarily good news for the average consumer. As those big credit card companies continue to rack up profits like never before, all of that excess debt can leave the average person scrambling to make payments on time and can actually lead to people suffering from lower credit scores than they ought to have.

How do you compare?

A recent study by Credit Karma revealed that about half of its 30 million online members have credit card balances that equal 40 percent or more of their credit limit. That is not good news, since the big credit bureaus are known to penalize consumers when their credit card balances go above 30 percent of the credit card limit.

So what are the penalties that get handed out? Lower Credit Scores! And once someone has a lower credit score, higher interest rates are soon to follow. Those higher interest rates can wind up costing the average consumer thousands of dollars over the years. Even worse is the fact that lower credit scores can lead to people getting denied mortgage loans, auto loans and even jobs or better insurance rates.

How much of an impact can a lower credit score have on your finances in the future? Let’s say you were borrowing around 165 grand to buy a house. With a 4.5 percent interest rate you would wind up paying over 130K over the life of a traditional 30 year mortgage. But if you had a lower credit score that resulted in you paying 5 percent interest instead you’d wind up paying over 150K on the same loan. Just a half point difference means that you’d wind up paying nearly $18,000 dollars more than you would have if your credit score was higher…

That extra almost $18,000 could have been invested in your savings for retirement, used to purchase a new vehicle or even used as college tuition for your kids, instead of getting that extra money, though, too many Americans are simply racking up the credit card debt like never before…

Here’s what everyone needs to do if possible. Pay off high interest credit cards as quickly as possible or negotiate with the credit card companies to get lower interest rates. And never, ever allow your credit card debt to exceed 30 percent of your credit limit on any card. Finally, pay cash or use prepaid debit cards to pay for things instead of putting them on the credit card. Small purchases add up to bigger payments and more debt that most of us simply don’t have the financial wherewithal to deal with over the long haul.

How to Save Money on your Cell Phone Plan

 

When it comes to saving money cell phone contracts are not usually your best option. It may seem like you get a good price on your phone when you sign up for a two year agreement, but you wind up paying more than the cost of the phone over those twenty four months. It only makes sense, then, that prepaid or pay as you go phone plans are beginning to become more popular.

Prepaid cell phone plans are more flexible and affordable than the traditional cell phone agreements that the big carriers like to sign their customers up for. Even if you use a lot of data or talk for hours on end every month, chances are that you can save quite a bit of money on your cell phone plan by switching to a prepaid service.

Here’s a quick rundown on how cell phone service usually works for folks in the U.S. You get a new phone that is “free” or “almost free” by signing up for a two year coverage contract. Over those two years the monthly costs of your coverage plan wind up being a heck of a lot more than that shiny new phone would have been if you would have purchased it outright. Think about purchasing a big ticket item on your credit card and then making minimum payments on your card every month. That’s pretty much how the typical two year contract winds up gouging you out of cash over the long haul.

Thankfully, though, two year contracts are not your only option for getting quality cell phone coverage. You can now get prepaid cell phone service that does not force you to sign up for a long term agreement. If you don’t use your phone all that much, you can just pay for the hours you use and avoid those out of control cell phone bills every month. And if you do use your phone a lot, there’s a good chance you can still get a cheaper plan by switching to prepaid cell phone services.

Prepaid is not for everyone, though. If you simply must have the latest, most expensive cell phone every year or two and spend a lot of time chewing up data on your 4G plan, then a prepaid plan probably isn’t your best bet. However, if you can go without upgrading your phone every 12 months, you may save a huge amount of money by moving over to a prepaid mobile plan.

When you sign up for a prepaid cell phone plan you will usually have the option to purchase a phone from the carrier. Flip phones are dirt cheap right now and the slower Android phones don’t cost that much either. If you can get by with basic functionality, then opt for one of the cheaper models. And if you already have a cell phone, many of the carriers will allow you to bring your existing cell phone with you when you purchase their prepaid wireless services. If you can’t go without the latest/greatest smart phone, though, be prepared to pony up well over $500 to get the latest models from Apple or Samsung.

Regardless of the actual phone and service plan that you choose, you have more options today – and chances to save money – than ever before. Check out the prepaid plans that are offered by most carriers and you may be shocked when you learn how much money you can save by switching over from the typical two year plan to a more flexible and much more affordable pay as you go cell phone plan for all of your on the go communications and internet browsing.

Are Mobile Payment Processors the Banking Breakthrough of the Future?

In the technology world just about everyone knows that Apple leads the way and other companies soon hop on the trail that this technology giant has forged. It turns out that it isn’t just technology analysts that are staying up-to-date with the latest news from Apple, as financial industry analysts are also paying quite a bit of attention to the company too. This only makes sense, since Apple’s Apple Pay mobile payment technology has been getting a lot of press lately.

Some analysts believe that the technology could play a major role in reshaping the ever-growing mobile payment market in the months and years to come. After all, Apple shattered sales records by moving more than 10 million of its most recent iPhone model, so they know a thing or two about supplying the products and services that people demand these days.

Chris Caso, an analyst from Susquehanna said, “Apple Pay is going to be a hit. The Apple Pay mechanism is much easier than the prior attempt by Google with the Google Wallet.” Caso went on to say that he thinks Apple AAPL, 0.55% has addressed concerns about privacy by implementing a “tokenization” technology to Apple Pay that will prevent peoples’ credit card information from being stored on the systems that merchants use to process online payments.

The use of traditional credit cards has proved to be an obstacle to the mobile payment industry for years now. The process of removing a credit card to swipe at traditional points of service is not hard, so people have not been clamoring to jump on board with digital payment methods.

Caso, however, believes that Apple Pay will have distinct advantages that traditional credit cards cannot provide. The use of Apple Pay, when integrated with mobile apps from vendors, will provide distinct benefits to customers. People will be able to instantly accrue and use rewards points and other incentives that are tied directly into making payment with Apple Pay and merchant applications. In other words, merchants and vendors will continue to offer incentives to entice consumers to pay for goods and services using their smart phones.

Apple is doing all that it can to make sure that the big banks, like Chase, Bank of America and Wells Fargo, along with retailers, like McDonald’s, Whole Foods and Nike are on board to support the transition to more consumers using Apple Pay. The company has even worked out partnership deals with the big credit card companies, like Visa, MasterCard and American Express. These partnership deals allow end users to seamlessly tie their existing credit card accounts with their Apple Pay accounts for a more rewarding mobile pay experience.

The fact that the iPhone offers superior digital fingerprint technology adds another layer to the Apple Pay big picture that will make it easier, and more secure for people to transition from using their traditional wallets and move forward into the financial future by using their mobile devices to make quick payments at retail locations.

Of course, Apple does expect the final result of Apple Pay to be higher profits in the very near future. Revenue gains could reach around $89 million in transaction fees by the end of the next fiscal year. Some analysts believe that as impressive as that figure is, that by the end of 2016 those fees could peak out at over $300 million, as more retailers get on board and begin using Apple Pay. It is high time that mobile payment processing finally came into its own, and Apple Pay may very well be the technology that allows that to happen.

Identity Theft More Prevalent in 2013

Your identity should be just that, yours. You should not have to worry about someone trying to steal it, but that is the world that we live in. In 2013 we heard stories of identity theft, data hacking, and data theft more than we had heard in a single year leading up to it. This just shows us how bad things are getting when it comes to identity theft, and why it is more important now than ever before to protect our identities.
In the year 2012 the total direct and indirect monetary loses added up to $24.7 billion dollars. In that same year, seven percent of those who were the age 16 and over had their identity compromised at least once. Now try to think back to 2012, do you remember hearing about identity theft and data theft and hacking as you did last year?
In 2013 we heard stories about these terrifying happenings all the time. The news shows covered them, the newspapers covered them, no matter where you turned you would hear a story about someone hacking or stealing for information and identities. This is scary, it should scare everyone!
Not everyone will become a victim of identity theft in their lifetime, or when they are dead for that matter, but you should still go about your life as if you are a target. You should do everything possible to protect your identity from someone getting ahold of it as it can ruin your life should they get their hands on your information. Unfortunately as hard as you try, you may not be able to completely protect yourself from everything.
The Federal Trade Commission has provided various tips on what to do should your identity be compromised. With the statistics on identity theft that have been released about 2012, and as bad as it was in 2013, it would do everyone good to read these tips and come up with a plan should their identity become compromised.
Do not use that as an excuse to not continue to try and protect yourself. Identitytheft.org has plenty of tips and tricks that you may or may not now about protecting your identity. It seems as though the trend in identity theft is that the thieves are working harder and harder every year to get to your information so you must work harder and harder every year to protect your information.
2012 was bad, 2013 seemed to be worse, only time will tell us what 2014 will bring us in the way of identity theft and data hacking and theft. In the year 2013 identity theft become more prevalent than it was the year before, which was a bad year in itself. Never stop working at protecting your identity; once it has been compromised your life will never be the same. You will be struggling to get back what you had before you had your information stolen. So remember, identity theft was more widespread in 2013, and we do not know what 2014 will bring.

Financial Tips for Teens

Whether they realize it or not most teens need help with their financial future. Too many of them feel that they are too young to deal with it now, and that they can worry about it later in life. If they can get a start on saving money and learning how to be smart financially it will really pay off for them in the future.

The first thing teens need to do is to realize that they need to start saving now even if it is just a small amount at a time, every bit adds up. The younger they start the better off they will be. Even if they do not have a bank account yet, for whatever reason, they can still save money. They can put it into a jar and then when they do get a savings account, they can put it all in right away. Starting young is the best thing you can do for savings, especially if you have a bank account, the interest will add up quickly.

The next thing that teens need to do is to understand credit cards and how they work. They should understand why it is a good idea to stay away from them. They should also know how to use them properly if they do have one for emergencies. Too often a teen will get a credit card and not have been educated enough about it and use it too much. This leaves them with debt before they really get started with their life.

Every teen should be taught how to create a budget, how to review it, and how to revise it. They should also understand the importance of not only knowing how to do this, but why it is so important to have one. The younger they can get started working with a budget the easier it will be when they become adults. Using a budget will be like second nature to them.

Financial education is an important thing for all teens. They should look for ways that they can learn more about the world of finance so that they are better prepared for their future. There are many banks and credit unions that will teach teens about finances. Take advantage of the places that are willing to educate the teens, the sooner they learn about this stuff the better off they will be down the road.

You can never say what the future holds. You do not know what the economy will be like in ten years, five years, or even next year. It is better to educate teens while they are still young so they are able to handle whatever happens. Investing in their financial education is an investment in their future.

The FDIC’s Unbanked and Underbanked Survey

Just last month the FDIC released a new survey about the homes in the United States that were considered underbanked and unbanked in the year 2011. This survey shows how many homes were considered to be underbanked and how many homes were considered to be unbanked. The point of the survey is for policymakers to gather data to support evidence that they use in policy making.

The FDIC’s survey shows that in the year 2011 about ten million household were without a checking account and a savings account. This works out to be about 8.2 percent of the households in America today. This survey also showed that 20.1 percent of the homes in this country have a bank account of sometime but choose to use other financial institutions than their banks. These are the underbanked of the country.

Experts agree that the results of this survey show that banks have more work to do to get customers back and to bring new ones to their institution. This also shows that there is a real demand for check cashing services. These non-bank financial institutions are meeting the needs of people where banks are falling short.

Where the banks are charging fees that are getting higher and higher by the year, and more and more are popping up, check cashing services have straight forward flat fees that make it much easier for the consumer to understand and follow. Banks are adding fees to services that were previously free; they are upping the fees on the services that have fees already.

When all is said and done, check cashing companies are not hiding fees and charging their customers fees that they are unaware of and do not understand. With payday companies you are given the fees upfront. There is nothing that is hidden from the customer, they know the amount that they will get, the exact amount that they will have to pay back, and when exactly they have to pay it back.

It is easy for one to see when they look at the FDIC’s latest survey that banks do have quite a bit of competition now. They have their work cut out for them if they plan on keeping the customers they have, bring back the ones that they lost, and to bring in new customers. Payday lenders are not going to give up easily though. Customers have decided they like what check advance loan companies have to offer and are not looking to turn away from that.

We can learn a lot from the FDIC’s survey. More importantly banks can learn a lot from the survey. This shows the changes that have taken place in the banking industry and what changes may come. If you compare the surveys that the FDIC has put out it will show trends in the underbanked and unbanked. Looking at these trends from the past can help to predict the trends of the future.