Thursday, 10 May 2012

American Express Merchant Services

In case you are questioning whether to take American Express cards and establish up American Express merchant account services, take into account the benefits and drawbacks. Today, roughly 10% of US consumers use AmEx, a sizable enough figure for any business owner to contemplate.

Plus points:
Many businesses use AmEx with regard to their staff providing your business the opportunity to get company travelers who prefer to charge their expenses to their AmEx due to the positive aspects (e.g. air miles, cash back, and so on. Some AmEx card holders will not enter a store or use a website that does not exhibit the company logo indicating that they have American Express merchant services put in place. These card holders spend around 20% extra for every purchase compared to those working with a different card type.

The Negatives:
American Express merchant account services fails to always pay the merchant as soon as alternative card types. These accounts possess higher rate components, which suggests businesses spend a little more for every transfer within their AmEx merchant services account.

It is essential that you simply determine the following thoughts and currently being aware about the details of your business design can help you make the most efficient selection whether or not to use these merchant account services.

Must you take each and every form of charge card?

Do you need a new processing account for AmEx merchant account services?

Will you eliminate a number of shoppers if you don't arrange American Express merchant services?

Has it been necessary for the prosperity of your business to set up American Express merchant account services?

To Accept: While choosing whether to establish AmEx merchant account services, you might want to determine whether or not you should recognize each individual kind of card. Is agreeing to AmEx going to affect your bottom-line gains? Can it be seriously worth offending an individual who employs American Express?

To Not Acknowledge: Many individuals who hold an AmEx corporate card, also have various other card companies that they might use if asked to do so. Bear this in mind in the event you truly feel the costs to maintain their merchant services are too high relative to the true fees involving processing various card versions.

The Conclusion: You will most certainly conclude that including additional options to customers is never going to hurt your business. Quite often, the decision to use these merchant services helps your small business develop. Many vendors do not have AmEx merchant services as a result of larger discount price charged in an attempt to spend less, however in actuality, this selection is not always cost-effective. It's reported that the choice to set up American Express merchant services can easily improve business because of the following:

Impulse ordering. The greater number of selections you offer your clients the more likely they are to order. It would definitely end up being a pity for a competitor to take your business simply because they had AmEx and you did not.

You might eliminate a new recurring purchaser. Declining a purchase because it costs slightly more doesn't save you money. The purchaser may no longer buy from you, he may be buying from an opponent who has put in place AmEx.

Greater Spending. Research indicates that these card holders spent 2.6 times as much on retail Internet buying in the past half a year swiping an AmEx Card.

Provided that your profit margins are actually higher than the fees, you should always acknowledge as many forms of payment as you possibly can. New customers will result in your decision to add these merchant account services. AmEx stands out as the third most favored bank card in America. Subject to who your potential customers will be, putting off such a merchant services account might be an inadequate business decision.

Below is a percentage within the type of credit card usage in accordance with the industry. Even though 10% with regard to AmEx inside retail industry is not a large number, 25% in the B2B segment where businesses market within places where there are tons of business people or appeal to other businesses is an important percent.

You don't want to postpone opening an American Express merchant services account if businesses are your principal supply of income want to pay making use of their American Express credit card. It's the same for choosing office products, equipment, computer systems, paper,etc. If you don't have this merchant services, people planning to utilize their AmEx credit card will seek out a company that does.

If you decide to begin this merchant services, you'd first need to fill out an application for a credit card merchant account. Nearly all businesses will discover it cost-effective to receive all major credit cards. Your company doesn't need to needlessly suffer a loss of clients

Contrary to popular belief there are still people who only have an AmEx cards. Declining one of these potential customers because you haven't created an American Express merchant services account is avoidable. Allowing the credit card processor set up your merchant account is free (ordinarily) uncomplicated. The processor you decide on for your Visa and MasterCard merchant account has the option to set up an American Express merchant services and Discover merchant accounts free of cost. These do not charge a fee to get a new merchant account. Your merchant service provider should provide this particular service at no cost. If they have a cost for setting up an AmEx merchant services and/or Discover merchant account, you should request the actual way it benefits your business. At times upfront fees, counterbalance increased fees each month, therefore with regards to the overall arrangement, it might be the better choice.

You could get rid of the service at anytime. There won't be any long term contracts connected with an American Express Merchant Account. This means you don't have anything to lose by simply giving them a shot for a short time to see if there is an interest in American Express. You won't need to publicize that you accept one card or a counterpart. If American Express merchant services premiums are not really something you'd like to promote, just recognize the credit card each time a consumer has no other way of payment to you.

With respect to the marketplace, industry, and placement, several businesses will have a high demand for American Express. Any company supported by the following should really sign up for an American Express merchant services account.

High Travel and leisure Revenues
Management and business Customers
International Prospects

Visit to know more about setting up your American Express Merchant Services at your business.

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Accepting Credit Cards: Myths and Misconceptions

One of the most popular misconceptions about the accepting credit cards is that credit and debit cards offer the same processing fees. Credit cards charge a higher processing fee than debit cards. Merchants should be aware of the rate that they will be charged for credit cards as well as debit cards. These fees are required to be disclosed to a new merchant when they are entering into an agreement with a processing company.

A second common misconception about card acceptance is that only a bank can be a merchant processor. Many businesses will use their brick and mortar bank for accepting card payments. While this can be a convenient arrangement, it typically costs more money than a third party processor. Banks charge a higher processing fee than third party processing companies. Also, card deposits may only clear one business day faster than a third party processing company would be able to deposit them.

A third common myth about accepting card payments is that the minimum amount to charge while avoiding a fee is $25 a month. However, if the company requires a minimum of $25 charged a month that actually means that $25 in fees must be paid in a month. One example would be a business who ends up paying $15 in credit card fees for a given month. They would need to pay $10 to cover the difference between the fees that they paid and the minimum amount of fees.

A fourth common myth about credit card acceptance is that charge backs are common. A charge back is not common if a retailer takes steps to avoid fraudulent or suspicious transactions. Businesses should always verified that a card is signed and ask for identification when a customer is using their cards. Also, businesses should ensure that the card has all of the necessary information. Always require that the card be present in order to complete the transaction. Never take a credit card number over the phone unless it is simply to secure an item until the customer picks it up.

A fifth common misconception about accepting credit cards is that the merchant processing company with the lowest rate is the best choice. Businesses need to understand what services they will use the most. A business that has a large amount of cards should think about utilizing a merchant processor that has a low discount rate. However, a business with a large debit card customer base should focus on a lower rate on debit card acceptance.

Businesses should carefully review their options to find the merchant account processor that is right for their needs. Credit card interchange fees, minimum fees, debit card swipe fees and other charges are variable from processor to processor. Any business who is looking for a merchant processor should verify their fees, review the companies charge back policy, ensure that they are receiving the lowest fees for the card type the majority of their customers present as well as work with a merchant processor who deposits funds quickly. Businesses who are able to find a credit card processing company that meets these steps will be able to function efficiently.

Accepting credit cards with your ecommerce website is significantly easier if you are using the right online merchant account for your small business. The reviews and articles available at can give you the ability to work with the merchant processor that is best suited to your individual needs.

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Wednesday, 9 May 2012

Are You Already a Victim of Credit Card Fraud?

Most people are aware of the convenience that credit cards offer. Unfortunately, these cards and related information can be stolen easily. Identity thieves can buy goods and take out loans using your personal details and your stolen card. You may not even realize it until you get the bill, by which time the damage may run into thousands. Credit fraud affects us all. The cost of card fraud is borne by the issuer who recovers these costs by charging higher fees and interest rates to all their customers. Someone intending to commit this felony only needs your details in order to defraud you. They do not even need your card. Digital transactions and open communication have made all of us vulnerable to credit fraud. The warning signs that should make you suspicious of being a victim of credit fraud include:
A low credit score stops you from getting a new card even though you've never missed a payment;You receive a credit card in the mail that you never applied for;A debt collector demands payment on an overdue account for a card you've never had;A debt collector demands payment for an overdue account for goods you never ordered or received.

By understanding how credit fraud occurs and by taking a few precautions to protect your identity, you can reduce your chances of falling victim to this crime. Thirteen ways in which thieves can get a hold of your credit card and personal details:
Phishing;Site Cloning aka Spoofing aka Pharming;Skimming;Physically Stolen Cards;False Merchant Sites;Card number generators;Dumpster diving;Mail theft;Hacking and wireless hacking;IP Spoofing;Link alteration;Triangulation;Shoulder surfing.

Once your credit card or details have been stolen there are a number of ways in which you can be defrauded. The types of credit fraud that can be perpetrated include:
Application Fraud;Manual or Electronic card Imprints;Card-not-present (CNP) fraud;Counterfeit card fraud;Lost and stolen card fraud;Card identity theft;Mail non-receipt card fraud aka intercept fraud aka never received issue;Assumed Identity;Doctored Cards;Fake Cards;Personal Credit Fraud;Non-Receipt of Goods Purchased;Credit Fraud by Employees;Account Takeover

What should you do if you are a victim of credit fraud?
Call your issuing company;Contact the major credit reporting bureaus;Report the fraud to the local police department;Contact the local Postal Inspector;

How can I reduce the risk of becoming a victim of credit fraud?

Treat your cards and personal information like money - after all, they give would-be thieves access to your money and credit. By exercising some caution and common sense you will save yourself from a major problem and be able to rest easier at nights knowing that your financial health is in good hands - yours.

Don't let your loved one's be a victim of identity theft or credit card fraud.
You can protect them.
Learn how at Credit Card Secrets

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Does Paying Off My Car Loan Help My Credit Score?

Does paying off my car loan help my credit score? I have heard that paying my car off can help raise my score and others have told me that it really doesn't help that much.

The satisfaction of paying off your car loan can create some incredible emotion, but you will not see a direct impact on your actual credit score.

Where you will see the reward is indirectly through your payment history. Since 35 percent of your credit score is derived from your payment history, how diligently you paid your loan on time, means more than paying it off.

A positive payment history tells future lenders that you take your debts seriously and you intend to pay the due amount on time.

Each time someone pays over 30 days late, a negative remark gets added to their credit report. So having made payments on time over the life of the loan is the thing prospective lenders are going to be looking for.

A car loan is called an installment loan, meaning that it is a secured debt to a lender. If you don't make the payments, the borrower has the ability to repossess the car, sell it and try to reclaim some of the money lost should you default.

This compared to credit cards which may be referred to as revolving, or unsecured debt. 10 percent of your credit report comes from the types of credit you have. A possible lender will check to see how you paid on both types of credit.

In the future, potential lenders will look at how you paid the loan off, hopefully in a timely manner, and will be more likely to grant you a loan if you if you have a good credit rating. This would be an indirect positive impact the next time you go for a car loan.

The payment history of your car loan will remain on your credit report for seven years. As time passes, the positive history will slowly decrease its value of importance to future lenders. To the credit bureaus that compile your FICO score looks at the more recent payment history.

Be aware that lenders are not real diligent at reporting a satisfied loan. The banks are more anxious to concentrate on their car loans that are delinquent than reporting yours as paid off. It may take 30-45 before this loan completion shows on your report. It is suggested that you monitor your report to be sure it has been declared satisfied. If not, contact the credit bureaus and ask that they do what is needed to mark this loan as paid in full.

A positive plan of action once you have paid off your car loan is to use that monthly portion of your budget and begin paying off other unsecured debt, especially the high interest credit cards. Paying these debts down with the money you were using for your car payment will have a positive impact on your credit score.

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Buy Here, Pay Here and Build Your Credit

Many people suffer from poor credit, and rebuilding your credit score can be difficult and frustrating. But one possibility of improving your credit that you may not be aware of is buy here, pay here car dealerships. And it's easy!

Buy here, pay here is a type of financing available in the automotive industry. Some dealerships might offer it, but others specialize in it. Instead of getting a car loan from a bank, you can get car financing at a buy here, pay here dealership. So you get the car and the financing for the car from the dealership.

Buy here, pay here is meant for people who have little or no credit. Since poor credit may prevent you from getting a car loan from a bank, a buy here, pay here dealership may arrange the car financing despite your credit score. So if your credit keeps you from getting a car, buy here, pay here could be right for you.

In addition to offering vehicle financing to people with poor credit, certain buy here, pay here dealerships also give you the chance to rebuild your credit score. As long as you consistently make your payments, pay on time, or pay your vehicle off early, you have the opportunity to rebuild your credit. At a buy here, pay here dealership every time you accomplish one of these things, you are proving to the dealership that they can trust you and that you are financially responsible. As a result, they will report your on-time payments to the credit bureaus and your credit may improve. If you make enough on-time payments, your credit could be as good as new!

There is one thing to be cautious of. Not every buy here, pay here dealership reports to credit bureaus. And if the credit bureau doesn't hear that you are responsible, then your credit score may not improve. So it is important to make sure the dealership you are shopping at does not only report people when they've missed payments, but also reports people when they've made their payments on-time. Otherwise, you won't have a shot at better credit.

If you would like a good way to improve your financial situation and escape the stress that goes along with having poor credit, buy a car at a buy here, pay here dealership. Just make sure they report your on-time payments to credit bureaus and you can begin looking forward to a life of better credit.

CarHop has store locations in twelve states across the U.S. and specializes in helping car buyers with poor or no credit get approved for financing to get them driving again fast. Every CarHop vehicle includes an 18-month, 18,000 mile limited warranty at no extra charge. CarHop is now in its 15th year of pursuing its mission of "Helping People Drive®." For more information, please visit

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Benefits of You Having a Great Credit Score

Is it always annoying to you when you go to apply for a phone or a loan and you are bothered to allow them to check your credit score? Do you get a knot in the pit of your stomach at the thought of your credit history deciding your future? Well there is no need to freak out. Taking care of your bills and putting forth the effort in building that great credit score does pay off in the end. If you are having a hard time understanding what all the fuss is about, we have put a list together of things that you benefit from by having a good credit.

Credit Cards. The better your credit score, the more you benefit with your credit cards. More elite cards, lower fees, higher limits, and lower interest rates are just a few of the reasons to make sure your credit is good. Even if your credit was not that great when you first got your card, you can use your new, improved score as a bargaining tool. The companies want to keep your business, so call and see if they can lower your rates or extend your limit. It never hurts to ask.

Loans. There are many types of loans available but for the sake of this article we will focus on home, personal, and car loans. Your credit is a major factor in a bank or financial institution lending you money. When looking at your car, the better your score the lower the rate and the more you can be given. Also with a home loan you will see lenders competing to get your business. The better the score, the more likely you are to get a lone, and then you can choose between the competitors to find the best rates for you. If you have a financial emergency or want to start a business, you are more likely to get a loan if you have great credit.

Renting. If you are renting in an apartment or a property, you need credit. You can find a place with any credit, however the nicer the place the better your score needs to be. So if you do not feel like sacrificing that garden tub and granite counter tops, make sure your credit score is in shape and you will show the renters that you are going to make a great tenant.

It can be a hassle to build good credit, but to get the things that you want it is essential to put in the time and effort to make sure that it happens.

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Tuesday, 8 May 2012

Do You Want To Know How To Get That New Car Financed If You Have Bad Credit?

Getting bad credit car finance is not as difficult as it might seem to you. You have to clear a few things, take a few steps and you will be absolutely ready to get your car financed. There are many institutions which give you this finance, but some will charge a high interest rate. Do not apply to banks that promise these loans because their interest rates are extremely high.

First and foremost, check your credit score. Apply for your credit report and go through your score in great detail. Many a time, the credit bureaus make mistakes in entering data. In this is the case, you will need to wait until these issues are resolved. Credit rating companies such as Experion give out free credit reports every year. So, be sure to order your credit report from them or one of the others because other credit bureaus will charge for the credit reports you order from them. Your credit score does not go down if you want to check your reports. However, it does go down every time the lender or the car company has it checked. Check the FICO or Beacon score in your report to know your real score. As long as it is above 600, it is not that bad. Now that you know your score, wait to raise your score points and then apply for the necessary car financing.

Once your homework about your bank statements and your bad credit is done, you can proceed to buy your car. But before you apply for your auto finance, fix your bad credit. It might take you a few months, but it will be eventually helpful for you in getting your car financed without too much hassle. Another important point is to know the market well before you apply for your car loan. There are websites which provide you with details on the current interest rates and loans. Go through them so that you have an idea about the market rates. This way you make sure that the car companies are not taking you for a ride by charging higher interest rates. Resolve these bad credit issues and then apply for the loan that you want.

Your bank balance should not give the banks or other companies the idea that you will struggle to make the repayments. So, keep enough money in your account at least to make the down payment. Choose a car that you can afford, not a luxurious car you desire but cannot afford to pay for. Besides, when it is time to select your car, do not ever select a car just because you like it before checking its price. The car might be very good, but you have to pay for it. So choose a good car, but one you can afford. If your car loan gets turned down, have a back up plan (such as borrowing from a family member) so that your dream of buying a car is not over.

So now you know that these few steps will enable you obtain bad credit car finance so that you can enjoy that new car you have always wanted.

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Business Credit Cards: Explore Other Options First

Unbeknownst to many, a credit card is actually classified as a small business loan. These cards, which are almost always issued by banks, allow a customer to make purchases without having to use cash out of pocket. The bank then allows the customer to make monthly payments on the balance and for this service the bank charges interest. In essence, a credit card acts and has almost all the same properties of a small business loan.

One of the drawbacks of a credit card versus a small business loan is that typically a small business loan has a lower interest rate than a the card banks issue. This makes an unsecured loan or line of credit more attractive than a credit card, which is why businesses should look into these former options before exploring the latter. Luckily obtaining an unsecured loan or line of credit is not as difficult as many think. A good number of companies that qualify for business credit cards also qualify for small business loans or lines of credit. Also, businesses that are fairly well established and have a solid relationship with a local bank find it easier to receive funding.

Though some financial institutions have experienced trouble of late, there are still many banks that are ready and willing to lend. While the personal credit market is a bit of a disaster right now, if a business knows where to look, finding financing is a real possibility. Fortunately, with the technological innovations over the past fifteen years, borrowers are able to search a great number of websites to find the most attractive lenders. Businesses in the market for a loan should begin the process by thoroughly examining theses sites.

A rule of thumb for businesses that choose to get funding through these high rate cards, is to control spending so the business has enough cash to pay off the balance with in thirty to sixty days. This accomplishes two goals. First, by paying off the balance once a month the business is able to keep their interest expenses down. Secondly, by having a zero balance on the card, the person's credit score tied to the card will continue to improve. Many small businesses will use credit cards to buy inventory they plan on selling within a short period of time. If the business is successful in this practice then they will have cash too pay off the balance before it is due and thereby able to avoid interest payments. Also, by doing this the business will be able to build up its' cash holdings and soon will be able to use this cash to make purchases. This will result in the company being in much better financial position.

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Building A Credit Rating With Your Credit Cards

Using a credit card is probably the simplest and easiest way to build a healthy credit rating. A card comes with many benefits. You are able to make cashless transactions in stores and shops, you are able to shop online and you are able to make online transactions which would otherwise not be possible such as airline ticket booking and making vacation plans. Not to mention the fact that almost all cards give back some sort of reward points for using them. You also often get good deals such as the ability to pay a large transaction with a minimal or 0% interest rate.

However, an ignored aspect of a card is that it helps you build your credit rating. A healthy rating depends upon the positive information that is reported on your credit report. Every time that you use your card and make a payment towards your bill, it is reported to the credit bureau.

The proper way to use your card in order to have the maximum beneficial impact on your rating is to keep the balances low. This is something that is known as the credit utilization ratio and is one of the factors that is taken into consideration by the credit scoring model. If you keep the balance on your credit card below the 30% mark of the credit limit and make sure that you make the payments on time, you will build positive credit history for yourself and for that particular credit account. If you use two or three credit cards, and follow the same principle of keeping the balance below 30% as well as making timely payments then you will have multiple credit accounts on your credit history that will have a positive impact on your credit score.

You may be one of those people who revolve the balances on their card. Revolving a balance means that you do not pay the entire credit card bill in one month but make a partial payment. This will not do your credit rating any harm as long as you pay more than the minimum payment due on the credit card and do not charge it so much the next month that you go over the 30% mark of your credit limit. This does not mean that you can never exceed the 30% of your credit limit but generally speaking try to keep the balances on your card as was possible. At any rate, always avoid maxing out your credit cards.

Also paying off the card in full at the end of the month is a good idea because rotating the balances will cost you extra in terms of finance charges. Never pay less than the minimum amount due on your credit card because that will be constituted as the nonpayment which will be reported to the credit bureaus. A late payment is usually reported to the credit bureau after a period of 60 days. So in case you have forget paying one single credit card bill on time it will probably not get reported. A credit card account is usually reported as delinquent after 180 days of non-payment.

Get more Credit Card Help here.

By Anuje Cross writing for - A resource for Credit Education and Aid

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Best Credit Cards - How to Select One

Best credit cards can be confusing with so many options and choices available for the average consumer.

Credit cards have become a necessity in this day and age, especially with Internet transactions set to eclipse those from the high streets, and for those that can keep up with regular payments on their card, having a credit card can serve as a godsend, as well as a convenience.

The best type of card to obtain is from your bank or building society, where you have a checking or current account and have been a customer for sometime, as these are likely to give you an excellent rate as well as a good promotional period, since banks are always vying for customers with excellent credit ratings, consumers do get a great deal of promotional offers to pick a particular card, promotions that range from points which can be used as air miles, as well as shopping points and vouchers to redeem at a local grocery store, or even money off gas, with each year; and knowing that the promotional rate is about to end, the banks issuing these cards usually have some kind of promotional offer in the pipeline to keep their customers.

The interest rates on these cards are more often better than from banks which you do not have an account as well as prepaid credit cards, which act almost like a debit card, but you can only use the balance on the card.

The good thing about cards from your bank is they normally have a 0% interest period, whereby any purchases made on the card has a 0% interest for a certain time (usually a year to 15 months).

What certain people do to benefit from this interest free period, is after the promotional period is over; to move the balance on the card to another 0% interest card offering another 12 - 15 months 0% interest, and pay the balance transfer fee (which usually has its own promotional rate along with the promotional period for the 0% interest), or if they prefer not paying off the balance of the old credit card, for example if they would like to have the old card as well, move some of the balance of the old card to the new.

As long as you can pay off the balance in full when required, or when the promotional period is over, and surpass the minimum payment each month, a credit card can be a very nice financial alternative to having cash on your person.

For more about the subject visit Credit cards for bad credit

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Monday, 7 May 2012

Advantages of Gas Credit Cards

There are a number of reasons why a household would want to use a credit card that features a number of incentives and rewards that are themed around and about gas (as in gasoline stations for cars). The most obvious and the reason that must come up first in everybody's minds is the point system that these cards often feature.

We all know the point systems of these credit card products fairly well. We use a point system of sorts with our airline credit cards. Those credit cards accrue "miles" per every dollar spent. And we could spend those "miles" (points) at a sort of prize counter, in which we could cash in points for a number of prizes, i.e. tickets.

With gas cards, though, points are geared toward rewards about gas. Obviously, you won't be winning very many airline tickets with a gasoline themed credit card product. Instead, you'll be winning gas. Some cards actually borrow the mile system and use "gallons" instead. Gallons could be "cashed in" at the "prize counter" for things such as free car washes, free sort of trinkets for the car, even free actual gas.

These cards aren't just about the rewards though. For many households, it's a way of controlling an expense. A budget may be set, for example and a line in the budget for gas can be kept on a tight leash by saying, "Okay, you can only buy gas with this credit card and once that limit's reached, that's it. You're over budget." Households that are finding it hard to cost contain their gas consumption (which is usually the case about gas guzzlers such as SUVs) take it a step further, by making sure that the credit card product is actually a secured debt sort of arrangement.

See, with a secured debt arrangement, what happens is that the credit limit is more or less determined and dictated by the size of the cash collateral that's put up by the card holder or account admin. When you get into a secured debt arrangement with a card company, the company will only extend a line of credit for as much as there is cash on deposit to collateralize that debt. The important thing to keep in mind about secured debts is that the collateral that's sent over to them isn't made available to the card holder for use in some slush fund that's opened up for the borrower. No, this is kept aside from the line of credit entirely, as collateral only. Then the line of credit is extended to the borrower and it is indeed a loan, with dues that need to be paid on a regular basis, like any other card.

The secured debt arrangement is ideal for households trying to contain costs, because limits on spending can be controlled a bit easier.

Shawn has extensive experience in the world of credit cards. Follow him at his site Credit Card Offers to read more about the best card offers.

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Curb Your Capitalism - The Federal Open Market Calamity and Dis-Interest Rates

As short-term political motivation sullies the sanctity of central banking, presumptuous open market meddling, unrestrained by the boundaries of logic, makes a ticking time bomb of Federal Funds. It's time we meditate on circumstance, accounting for the rational and the hardly so. Let's see: inflation without spending? A stagnant, yet expanded money supply? At what point did capitalism become so irrational? What brought life to our economic paradox? The distant thunder of a self-imposed inflationary storm demands anticipation; it will not subside with neglect, and survival is a blessing left only for the aware, but it is the keen that will thrive. Stay informed, and stay ahead.

Interested in buying a home? Starting a business? Great, now is the time, but remember, financing structure means everything, and no matter the appeal of perceived financial opportunity, don't be fooled by the money supply's patchwork facelift.

To ye eager borrowers, fix your interest rate for the life of the loan, even if it means settling for higher-than-advertised rates.

To the do-it-yourself, asset managers: fixed-income debt securities (and preferred stock!) will quickly corrupt portfolio value, and if liquidity is a must, fixed income is a must-go.

Skeptics could dismiss these words as an attempt at virtual attention, as no economic prediction justifies proactive portfolio re-assessment (sigh). To this I say: comfort yourself in the warmth of explanatory blog posts and news feeds, but do not justify apathy with paralyzing over-analysis. Without a doubt, U.S. economic forthcomings are riddled with macro-mystery. Nevertheless, SOARING interest rates are a certainty in the coming years. I do not write for the sake of exploring a prediction; my purpose is to warn and advise against potential catastrophe.

Your orders are simple: Buy now, and lock it up. The curious real estate predicament occupying economic brainwaves has an upside... Historically low prices and mortgage interest rates flood the market with opportunity for both bargain-scavengers and property virgins (who can buy). The shortage of qualified buyers makes for a pressure free environment those elite consumers, still able to purchase real assets; however, prices only tell half the story. For too long, housing prices were the standard measure of affordability. Funny, even in the wild post-Clinton years of the 0% down payment, buyers focused on the home price, rather than the mortgage terms. The structure of a loan dictates affordability, not the price, especially, when down payments are inconsequential. Enough already! Interest rates direct real estate traffic; how about this example:

Two friends, Tip and Bop each buy a home, Tip for $500,000 and Bop for$300,000. Tip has an excellent credit score and initially puts 10% down, but immediately borrows back the down payment in the form of a home equity loan, resulting in an effective loan rate of 4.1% on the full $500,000. Bop waits a few months later than Tip, and because of climbing interest rates, little collateral, and a mediocre credit score, Bop winds up with a 8% fixed interest rate on a $300,000 loan. Despite a significant price difference in the homes, Tip pays $2,415 monthly (for a $500k home), and Bop pays $2,201 monthly (for a $300k home). Both effectively spent $0 day 1, but Tip buys (nearly) twice the home for a mere $200 more per month. If Tip purchased Bop's home, his monthly payment would have been $1,449/mo - a 35% discount. Think of it another way: In order for Bop to lower his monthly payment to $1,449 with the same financing structure, he would need to negotiate the sales price from $300,000 down to $200,000.

So, I must ask: why do declining prices appeal to buyers more than declining interest rates? Obviously, this does not apply to those purchasing with cash, but you get the point.

The average price of U.S. homes has dropped 20% since its 2006 peak. While the 30-year fixed rate dropped from a 2006 climax of 6.88% down to 3.95%. So now, look at the $500,000 home in 2006, with a 6.88% interest rate, the monthly payment was $3,286. Let's Factor in the effect of a 20% decrease in price to $400,000; that takes the monthly payment down to $2,629 ($2,293/mo if interest only). Instead let's look at the effect of a 3.95% interest rate on a $500,000 home. With the new interest rate, the monthly payment is $2,372 ($1,645/mo if interest only). Now, we can observe the impact of a decreasing interest rate compared to decreasing prices. I give this example only to show the impact of interest rates, and how delicate your financing structure is to the affordability of your purchase. So, now you might be able to anticipate the effects of increasing interest rates in your financing agreement. Just take a look at the charts below, summarizing this paragraph.

As you can see, the change in interest rate has a much higher effect on the monthly cost than the change in price.

Interest + Principle

2006 Price ($500k)

2011 Price ($400k)

2006 Rate @ 6.88%


$2,629/mo (20% decrease from 2006 cost)

2011 Rate @3.95%

(28% decrease from 2006 cost)

$1,898/mo (42% decrease from 2006 cost)

Interest Only

2006 Price ($500k)

2011 Price ($400k)

2006 Rate @ 6.88%


$2,293/mo (20% decrease from 2006 cost)

2011 Rate @3.95%

$1,645/mo (42.6% decrease from 2006 cost)

$1,316/mo (54.1% decrease from 2006 cost)

The same $500,000 home in 2006 may be purchased now at $400,000 with interest rates down to 3.95%, taking the monthly payment down to $1,898.15! Well, it seems we have a bit more than a 20% discount here, amigo.

Now, why does this matter? Even though prices may continue to drop, interest rates have already bottomed out. The Federal Reserve has already exhausted its ability to create liquidity in this economy, and the Federal Reserve's target Federal Funds rate essentially dictates what the 30 year fixed mortgage rate will amount to. The current Fed. Funds target rate is 0-0.25% - nothing! Since we know the Fed. Open Market Committee has almost no more room to force rates down; we may readily acknowledge, and appreciate, the bottom of Mortgage Interest Rates.

Why is this true? Well here is the extremely abridged version: Fed. Funds rate is driven down when the Fed. Reserve puts money into the economy by purchasing Fed. Agency Securities in exchange for cash. The additional cash creates a surplus over member bank reserves, which the member banks then loan out in the short term to lock in some profit from the otherwise stagnant funds. The Federal Funds Rate is the rate banks borrow overnight from one another (at the Federal Reserve) to meet reserve requirements. So, banks borrow money from others, issue loans with the added $$ (while not dipping below reserve requirements), resell those loans in the secondary loan market at a profit (in this case, usually Fannie Mae and Freddie Mac), and repay the loan the next day.

So what do we know? The rate at which banks access the funds used to supply mortgages cannot go any lower; likewise, you cannot expect mortgage rates to go any lower. Now, combine that thought with the added knowledge that interest rates have a greater effect on the cost of owning a home than do the prices of the home. What do you get? In all likelihood, the effective cost to homebuyers will never be lower than right now, even if prices continue to drop. Waiting for prices to bottom out will cost you money every month for the next thirty years, in the form of higher interest rates. Buyers must strike with low rates; forget the fear of price fluctuation. Take the time to understand how mortgage rates come to be, and learn the variables of influence.

What say you Inflation: You may have realized inflation persists, despite the fact Americans are less able to make purchases. Doesn't make sense, huh. Normally, if there are fewer buyers, prices drop (deflation). However, we're much too unique to conform so easily. The average American spends 12% of her disposable income on energy (oil...), and the oil market is dictated by OPEC (not American, ahhh). Since American's have a relatively inelastic demand for oil (meaning the price can increase without quantity demand going down very much), we painfully endure the arrogance of oil prices. Additionally, American's also spend 12% of disposable income on food - we certainly can't stop eating. For a while, oil prices stayed high because of increased foreign demand (Japan, India for example), but even after that demand decreased, the prices stayed up because the decrease real estate value, turned investor speculation toward commodities, and the strongest commodity at the time was, you guessed it - oil and oil futures. So, commodity speculation kept oil prices high, and American trade (food for oil) kept food prices high, as well as speculation in agro-commodities. So what we have are two products American's cannot part with, food and oil, both maintaining high prices, despite a shortage in American buying power. Americans are paying more money for the same products, while earning less. It all adds up: I had $5 yesterday, and back then, those 5 bucks could get me 5 cartons of milk. Well, I've only got $2 today, and those two bucks only get me one carton of milk! Yikes - I should have been keeping my money in milk and not cash.

The federal reserve sought to combat the disastrous conflict by cutting the Federal Funds Target Rate as low as possible, attempting to increase the purchasing power of a dollar (by making it cheaper to acquire), and thereby encouraging spending and money circulation. Nevertheless, inflation still outpaced Federal Reserve efforts, but don't worry - we still have low interest rates. It is only a matter of time before America can start taking advantage of the low cost of borrowed money, and borrow we will! Because our cost of living is still increasing, America will rely on borrowed money to regain the purchasing power it once had, meaning the demand for borrowed money will be enormous, and once banks manage to make the surplus of cash available to the public, borrowing activities will take off like a slingshot.

So what does this mean to you? Well, when lending goes crazy, America gets the rushing high its looking for, followed by a shrill crash. First, the heightened demand for borrowed money will cause the price of borrowed money to increase (the interest rates), and because America must also compensate for a devalued dollar, the demand for borrowed funds will, by necessity, be exaggerated. Normally, the Federal Reserve would be able to limit dramatic jumps in market interest rates; HOWEVER, the Federal reserve will not be able to taper off this great liquidity surge because it has already purchased Federal Funds to its max extent. This means the U.S. government is, for all intensive purposes, the only player in the Fed. Funds market, and the interest on Agency securities will not be attractive when investment money will be able to achieve much higher interest rates and return in other market sectors. Agency securities just wont have enough bang for the buck, so the Federal Reserve will not ably to sell the securities, on the open market, in an effort to take money out of the money supply.

Interest rates will be free to soar without limitation, and the effects will be catastrophic. Fixed income securities of today will become worthless, as the interest rates will not be attractive. Variable rate loans will bankrupt the borrowers, as loan interest payments will become prohibitively expensive. But don't be fooled by the apparent paradise of spending and money circulation that will precede the time of despair; American's will spend their way into crises, as everything will be based off of debt. And demand, when unchecked, will rise until the world's greatest ponzi scheme self-implodes. You don't have to be a part of it! Secure yourself from now, lock in your rates, and don't worry so much about the potential of lower prices. (yes, I know this doesn't apply to all cash purchases).

If you're interested in and capable of buying a home, do it now, but protect yourself from the inflationary storm on the horizon. Protect your dollar (I could get into how, but I've already said enough), and position yourself for success, no matter what we name our economic turmoil...boom, bust, recession... In America's history, never have the evil economic stars been so aligned. Interestingly enough, America's only hope is to stay in a recessed, stagnant economy until the dollar sufficiently deflates, so the proceeding borrowing frenzy will not be overly exaggerated, in an effort to compensate for a de-valued dollar.

Remember the theme of this message - interest rates have bottomed out, and the inevitable climb will come fast, meaning... NO FLOATING RATES! Forget they exist; I understand them from lender and re-purchaser perspective, but don't let the short-term appeal make you a prisoner in your own home. Thirty-year loans are better than fifteens, especially for those with extra cash to purchase fixed-income investment securities after interest rates climb. You might find high grade preferred stock paying 7-9% annual interest later on, which will net out a positive portfolio cash flow, accommodating for the mortgage payment.

As a final note -you may wonder why this threat, if present, would not be recognized by those in charge of the country's economic well-being - those far more qualified than I. Simple: politics baby! Remember, political motivations are always in the short term. Presidents and congressmen, like all politician, depend on re-election of themselves and of the party, so when America wants economic recovery, elected officials are expected to deliver, now. That just doesn't make much sense - forcing elected officials to compromise the future to earn praise in the present.This one is on you America - it's not like Obama is drinking your milk at night. Well... he might be. Congress oversees the Federal Reserve, and congress lusts over the future of consumption spending - a time where money seemingly surrounds us all, almost as if we were creating it out of thin air. So, how do we get there faster? Easy! Make money out of thin air. Most elected officials will be out of office by the time the easy money makes life hard on America. Just keep that in mind. Now, to conclude. Remember....

Be careful!!! The Federal Reserve has exhausted its open market tools of money-control. Do not underestimate the dangers of a money supply in anarchy. Today's opportunists could become the prey of tomorrows housing market. In short, market interest rates can hardly avoid an upward blast.

Forever yours,

Tony Salloum

Tony is the CFO at, an online property management software company. Rentpost provides the accounting, automation, and user friendliness necessary to drive down overhead in real estate investment (through property management). To experience how Tony and RentPost simplify the worlds of real estate investors, property managers, landlords, and tenants, he invites you to visit

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5 Credit Repair Mistakes to Avoid in Your Financial Life

Consumers should place a much higher priority on their credit score than they may have in years past. The reality on consumer credit ratings is that they are no longer utilized just for getting credit cards or loans anymore. The fact is that people outside of the financial sector consider your credit score for other reasons including getting a job, activating utility services, and renting a place to live. If your credit is not up to par, you can count on having to pay a lot more money than you can reasonably afford.

Many consumers know what it takes to establish a good credit score. On-time, monthly payments for all of your bills is one factor that influences a good credit score. But it is also important for consumers to realize what does not help a credit score. When making the effort to repair credit scores, one must understand the common mistakes being made and work to avoid them in their financial life.

Here is a brief overview of 5 of the common credit repair mistakes people make that end up doing their credit more harm than good:

1. Ignoring the Need for Repair

The most important thing consumers need to consider is whether they are ignoring bad credit. If you haven't ordered and reviewed your credit reports any time recently (or ever), it is important to get into the habit of doing this annually. Each year consumers have the ability to receive a free copy of their credit report. This free report does not contain a credit score but it can still allow consumers a look into their credit activity and see where they stand. For consumers who have no idea where their credit scores range, it is important to order scores and reports immediately and review data for accuracy. Just because you may not have the need for a loan or a credit card in the near future does not mean your credit history should continually be ignored.

2. Canceling Existing Accounts

It may seem somewhat logical to shut down credit accounts that you no longer use or which prove to be a bigger temptation than you can handle. However, closing too many accounts can have a serious negative impact on your credit score. The reason closing credit accounts causes damage is because part of your overall credit score factors in the amount of credit you have compared with how much credit is in use. If you close out accounts but still maintain balances on other accounts, you are affecting your current ratios of credit. The best thing you can do to help yourself without hurting your credit is to leave accounts open but pay off existing balances as soon as possible. Over time you can start closing accounts over a period of a year rather than all at once.

3. Paying Off Other Debts with Your Credit

Consumers who are trying to do right with their credit scores will try to eliminate some old debts by paying off balances in full. However, instead of saving up cash to eliminate these balances, consumers will utilize credit cards. This can create a vicious cycle of debt that is difficult to get from underneath. It is a better idea to budget accordingly in order to have the available cash to pay off debt balances rather than add interest charges on other cards. Balance transfer cards and the like may work as a short-term solution to getting rid of debts but without a reasonable action plan to pay off those credit cards, you are just trapping yourself further in debt.

4. Illegal Credit Repair Schemes

Whether you believe the advertisements of credit repair companies promising to improve your credit overnight or if you are open to using alternative means to repair your credit that are not in line with the law, you are doing your financial status a lot of harm. Put simply, there is no one easy solution to relieving yourself of credit problems. It takes time and a lot of effort to repair your credit but it can be done. Illegal practices such as creating a new credit identity to erase credit mistakes or using a tax identification number to appear in good credit standing will only get you in a bunch of legal troubles. Another common tactic people will try is disputing every entry on their credit report. The consumer credit reporting bureaus have the right to dismiss disputes they feel are frivolous. If you fill out the forms to dispute the correct information contained in the report as a way to clear your bad credit standing, you may accomplish nothing in the way of creating a stronger credit profile.

5. Failure to Follow Through and Follow Up

When you are on the quest for better credit, the only way to be sure that things will get accomplished to give you a better credit score is to follow through with your tasks. Never assume that things out of your control are being handled properly. Take the time to follow up with creditors and the credit reporting agencies to ensure your disputes and concerns are being addressed in a timely manner. As you get farther in the process of rectifying past credit mistakes, be sure the data is being supplied to the consumer reporting bureaus monthly. You may spend months doing the work it takes to bring back a better credit score but you will never be sure that your efforts are having the right impact if you are not following up on the activity.

Steve Dowell is an expert writer on subjects related to credit repair. Read more on his blog at

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