What Is The Difference Between Overdraft and Debt?

People get themselves into debt in a variety of ways. Any type of credit that consumers use but do not repay as agreed is considered debt. Credit card balances, loans, and car financing can all be considered debt if they go unpaid. An overdraft is another type of credit that can eventually become debt if a consumer fails to increase the bank account balance to cover the overage. Before making use of an overdraft, consumers should understand what they could be doing to their finances.

Some banks and building societies offer a feature called an overdraft, which is a loan arrangement via which the institution extends credit up to a certain amount against which the account holder can make withdrawals or write checks. It is considered a revolving loan, with interest charged daily on the overdraft balance. Most institutions place a fixed length on overdrafts and if this is exceeded or the negative balance exceeds the permitted amount, additional fees and higher interest rates may be imposed.

An authorized overdraft is pre-arranged with a UK bank or building society. When the authorized overdraft limit is exceeded, the account holder is considered to be overdrawn without authorization. All major UK banks impose unauthorized overdraft fees. However, some provide a buffer zone that will not incur fees. In addition, some banks provide a grace period within which money can be repaid without bank charges from being incurred. For example, an account holder who goes into unauthorized overdraft on  Friday may avoid related charges if the money is repaid by Monday morning.

A bank may be permitted to freeze the account of an individual with an overdraft until the money is repaid. The account holder will not have access to deposits made in the account including salary payments. It can be expensive to establish an overdraft because this may involve a setup charge and a monthly fee for use of the feature. An overdraft can become very expensive if a lot of money is borrowed and is not quickly repaid.

Overdrafts and other money owed to banks or building societies are considered non-priority debts unless the loan is secured by the home. Despite this classification, a financial institution can take the account holder to court to order repayment of what is owed plus additional charges. Consumers who owe money to their banks should establish a personal budget to repay it and discuss repayment with the institution to avoid court proceedings.

When consumers find themselves unable to afford overdraft repayments, they should inform their financial institution. Possible solutions are freezing overdraft  interest and other charges, changing the monthly repayment amount, and extending the repayment period. If an account holder regularly misses repayments without informing the bank, the institution may pursue a County Court Judgment (CCJ).



To prevent an authorized overdraft from becoming a debt issue, account holders must be diligent about repayment. This overage is considered credit and should be treated as such when budgeting expenses each month. The last thing most consumers want is a CCJ that will affect their credit rating for several years.

source: everythingfinanceblog.com

Personal Loans With Bad Credit: The Advantages of Instant Access Financing

Not everyone has the kind of collateral needed to secure a loan approval quickly. Even when an applicant has a good credit history, the challenge of getting approval on an unsecured loan can be quite hard, so when seeking personal loans with bad credit, the difficulty is understandably much greater. But there are loan options available.

The problem with pledging an item as collateral is that, should the loan be defaulted upon, it is lost. And when the item is a family heirloom or a piece of valuable jewelry, losing that collateral for the sake of $3,000 or so can be a bitter pill to swallow. But there are other options when hunting for guaranteed loan approval.

These are basically fast access personal loans that require the minimum time for approval. They are usually referred to as payday loans, but there are large loan options too, providing sums greater than $1,500. But these loans come at a price, and compromises must be accepted before funds can be accessed.

What Creates a Bad Credit Borrower?

Many people are categorized as bad credit borrowers, but while this once occurred as a result of poor money management and unreliable borrowing, the impact of the recent economic crisis has seen many honest borrowers slip down the credit rating table. As a result, there has been a jump in the number of people seeking personal loans with bad credit.

A low credit rating can come as a result of a county court judgment, or a bankruptcy ruling or even with a growing number of loans that have fallen into arrears. Of course, they can all affect the chances of getting guaranteed loan approval, but it is important to understand that they cannot halt the chances of getting approval itself.

The problem is that, when it comes to applying for a personal loan, a higher interest rate is charged, raising the cost of the loan and providing the opportunity for lenders to reject the application. This is where a no credit check loan with same day approval can be so valuable.

Terms To Consider Before Applying

As great as a no credit check loan might seem to someone seeking a personal loan with bad credit, there are negatives to the deal too. The fact that a low score can be ignored and have no bearing on the application process, is a boost but that convenience comes at a cost.

These loans practically offer guaranteed loan approval, but they are also considered the most expensive loans on the market. Because lenders are foregoing a credit check, they are leaving themselves vulnerable to borrowers with very bad track records in repaying loans. So, a higher interest rate is charged to cover their potential losses, sometimes as high as 30%.

What is more, the repayment term is usually very short. A typical payday loan is repaid within 30 days, while larger instant approval personal loans may require between 90 and 180 days.

Find the Best Loan

With these factors to consider, it can be hard to find a loan that is affordable. But there are lenders out there that specialize in lending to bad credit borrowers, mostly to be found on the Internet. Take your time in assessing the deals available there before making a decision on where to apply for a personal loan with bad credit.

When there is pressure to find funds, these fast access loans are definitely the best choice out there, with the much-needed cash accessed as quickly as in just a few hours. With guaranteed loan approval, this means that a lunchtime application can result in the money in the hand before 4 pm, so even financial emergencies can be dealt with very quickly through a personal loan.

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Article Source: http://EzineArticles.com/?expert=Mary_Wise

As Low Rates Depress Savers, Governments Reap Benefits

A consumer complaint is ricocheting around the world: low interest rates are eating away at savings.

Bill Taren, a retiree near Orlando, Fla., discovered in August that his credit union would pay only 0.4 percent annual interest on his saving account, even though inflation averaged 2.8 percent over the last year. So he and his wife decided to just stuff their money in the mattress, he says, because at least there “we can see the cash when we want.”

Jeanne and André Bussière, in Annecy, France, have a stable pension and a bank account that pays 2 percent interest — “almost nothing,” they say — even though the consumer price index rose an average of 2.5 percent over the last year.

Jiang Rong, an information technology professional in Xiamen, China, decided to dive back into the speculative real estate market rather than watch his savings wither at the bank. In China, too, the cost of living is outrunning savings, as local restaurants nearly double their prices.

The fact that interest yields are so low in so many parts of the world is no coincidence. Rates are determined not only by markets, but also by government policy. And right now many governments say they have good reason to keep their own borrowing costs as low as they possibly can. Just last week, the government’s report on job growth in the United States showed continued weakness, and an international forecasting group warned that the European economic powerhouse, Germany, will fall into recession later this year.

Though bad for people trying to live off their savings, low interest rates happen to be quite good for anyone borrowing money, like governments themselves. Over time, interest rates below the inflation rate allow governments to refinance, erode or liquidate their debt, making it easier to live within their budgets without having to resort to more unpalatable spending cuts or tax increases.

Along with keeping rates low, governments are using a variety of tactics to encourage captive audiences, like pension funds and banks, to buy their debt. Consumers, in other words, are subtly subsidizing governments without even knowing it. Economists have compared this phenomenon to a hidden tax on people’s wealth.

“If you ask a central banker is that what you’re doing, and why you’re doing it, they’ll say ‘No, we’re just trying to get the economy going by making it easier for the private sector to borrow,’ ” said Neal Soss, chief economist at Credit Suisse. “But I have a syllogism for you: The government makes the rules. The government needs the money. So why should it surprise if the rules encourage you to lend the government money?”

This is not the first time governments have benefited by depressing interest rates, something economists refer to by the ominous name of “financial repression.”

In the three and a half decades after World War II, interest rates in the developed world were on average below zero after adjusting for inflation, according to Carmen M. Reinhart, a professor at the Kennedy School of Government at Harvard. This helped Europe, the United States and Japan slowly whittle away much of their war debt as their economies grew faster than their debt burden.

“The difference is that the postwar period was one of strong growth, when rebuilding and capital investment was going on across the Continent, and there were strong demographics,” said Stefan Hofrichter, the chief economist at Allianz Global Investors. “But these elements are not necessarily in place today.”

For that reason, economists are less certain that the success of the strategy will be repeated.

Many major economies are already slowing down, if not outright contracting. And the actions taken by governments to keep interest rates low can restrain how much savers have to spend and force fragile banks and pension funds to take on more risk. Ultimately, it could crowd out private borrowing.

Governments have different mechanisms to keep their borrowing costs artificially low.

The Chinese government can just make a call to banks and dictate how much they will lend and at what interest rate.

“By forcing them to lend at low interest rates, China’s central bank is taxing banks at high rates,” said Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics. “They make it up to the banks by dictating that banks pay depositors even lower rates, so consumers are getting taxed too.”

Inflation-adjusted interest rates on one-year deposits have been below zero since late 2003, he said. China tightly controls how much money can leave the country, so individuals cannot seek higher yields elsewhere. As a result, Chinese families have been investing their growing incomes in real estate, which has led to a huge real estate bubble in some Chinese cities.

Democracies use more roundabout techniques.

“They have to work with their captive audiences — the pension funds, domestic insurance policies, banks, any domestic buyers they can find — to force-feed sovereign debt, sometimes under the euphemism of ‘macroprudential regulation,’ ” said Professor Reinhart.

Ireland and France, for example, have required or “encouraged” pension funds to invest in more government debt.

In Spain, fragile banks have been arm-twisted into lending to the government, which forces down the interest rates that the banks can pay to depositors. The Spanish government also capped the amount of cash that could be withdrawn from bank accounts, which prevented people from seeking higher yields elsewhere.

And in the United States, the Federal Reserve is buying up government debt to keep interest rates even lower than what markets would otherwise pay (and rates were low to begin with because investors from all over the world are buying up American debt because it seems relatively safe).

In the nearly four years that the Fed set its benchmark interest rate at zero, the government has saved trillions of dollars in interest payments. If interest rates today were what they were in 2007, the Treasury would be paying about twice as much to service its debt.

Inflation in the United States is very low by historical standards, but interest rates are so paltry that savers are losing money anyway.

“I got hit a couple of years ago pretty badly in the stock market, so now my savings are weighted mostly toward bonds,” said Dorothy L. Brooks, 65, who lives in Garland, Tex., and retired about a decade ago. She recently decided to go back to work as an assistant at a local school. “Now both investments are terrible. And I can’t put my money in a money-market account because that’s crazy. That just pays nothing.”

Of course, any economic policy will produce winners and losers, and it seems unlikely that policy makers are deliberately sacrificing retirees either to stimulate the economy or to grind down government debt. More likely, older Americans and other savers are just unintended casualties of policies aimed at other economic targets, particularly the policy making it easier for consumers and companies to borrow.

“If you care about the distribution effects of these policies, and being fairer to the elderly or other people, that seems to argue for carefully designed fiscal stimulus,” said Robert J. Shiller, an economics professor at Yale. “With fiscal stimulus you have more control over who gets taxed at what rate and so on. At least it’s more transparent anyhow.”

But, he added, “the whole reason we like using monetary policy is that it avoids those very political discussions of who gets taxed.”

source: nytimes.com

Jollibee net income up a third in 2Q

MANILA - Jollibee Foods Corp. on Tuesday told the local bourse that its profit went up by a third in the second quarter.

In a disclosure, JFC said earnings rose 33 percent to P921 million in the April to June period from P693 million in the same period last year.

This pushed the homegrown fast-food giant's net profit attributable to equity holders by 21.2 percent year-on-year to P1.59 billion in the first six months of the year from P1.31 billion in 2011.

System-wide retail sales, a measure of all sales to consumers both from company-owned and franchised stores, climbed 12.1 percent in the second quarter to P22.95 billion from last year’s P20.46 billion.

In the first half, system-wide retail sales expanded by 13.5 percent to P44.50 billion from P39.21 billion in 2011.

Ysmael Baysa, JFC chief financial officer, attributed the strong performance to healthy same-store sales growth in most regions driven by higher transaction count, cost improvements in the Philippines and China, lower financing costs and tax savings.

However, same-store sales growth and higher cost of labor, rent and utilities remain very important challenges in its businesses in China, Baysa added.

source: interaksyon.com

Chinese City in $130billion Economy Stimulus Plan: Paper

BEIJING (Reuters) - The government of Changsha, the capital of central China's Hunan province, has launched an 829 billion yuan ($130 billion) investment stimulus program to bolster the local economy, state media has reported.

The money would be spent on 195 projects, including airport, subway and urban infrastructure facilities, as well as developing energy efficient industries, said a report by the official China News Service on Wednesday.

The government of Changsha, a city known for its machine-making and non-ferrous metal industries, would also speed up financial reform and innovations, said the report, which provided no details about how the program would be financed.

The China News Service paraphrased Chen Runer, the Communist Party secretary of Changsha, saying that economic pressure on the city could not be ignored, despite relatively stable growth in the face of global headwinds, and it was time for initiative.

There was no reference to the program's existence on the government of Changsha's website on Thursday.

Zhang Zhiwei, chief China economist at Nomura in Hong Kong, calculates that the headline number on the stimulus plan is worth 147 percent of Changsha's nominal GDP in 2011, or 1.8 percent of China's national economic output.

Even if spread over five years, Zhang says the implied investment would be equivalent to 46 percent of total annual fixed asset investment in Changsha.

FINANCING QUESTIONS

Skeptics say a program on that scale is implausible and could not be properly financed with China's banks still nursing bad loans worth an estimated 2-3 trillion yuan after local governments racked up debts of 10.7 trillion yuan in the wake of Beijing's nationwide stimulus program unveiled in 2008.

"Indeed financing is a problem, we expect projects to be financed by banks, local government and the central government collectively, but banks will likely be the main source," Zhang said in a note to clients.

The Changsha move comes less that two weeks after China revealed that its economy experienced its slowest three months of growth in more than three years, with the April-June period's 7.6 percent annual expansion only just above Beijing's target rate of 7.5 percent.

China's economy is on track for its slowest full year of growth since 1999, albeit at a rate that economists in a Reuters poll forecast at 8 percent.

The International Monetary Fund said in a report published on Wednesday that it expected China to achieve a soft economic landing and avoid a sharp lurch lower.

To bolster growth, China has been "fine-tuning" policies since autumn and accelerated the pace recently, cutting interest rates twice in June and early July, fast-tracking investment projects and encouraging energy-efficient consumer spending.

Beijing has so far, however, refrained from labeling any of its policy efforts as outright stimulus.

China's Communist Party leadership remains acutely sensitive to the inflationary and speculative forces unleashed by the 2008 program which the government is still struggling to bring back under control, particularly in the real estate sector.

source: nytimes.com

Bankers offer financing advice to business owners

“It felt like a checklist,” said Alicia Almendral, a family physician who has a private practice in the Bronx. “It’s very helpful.”

Almendral was one of several entrepreneurs who were taking note as Citibank executives gave a presentation on “Setting Up Your Business” at the Philippine Center on Fifth Avenue.

Donald DiMartini, Citibank director for small businesses, addressed proprietors by asking them a series of questions: Do you know your message? Do you keep track of your passion? Have you assembled your “kitchen cabinet”? Do you have a contingency plan? He said those who can answer these questions are more likely to know where they are headed and where they plan to take their business.

“Know your message,” advised DiMartini at the June 26 forum organized by ABS-CBN’s The Filipino Channel. It means the owner should be able to explain his business within minutes, especially to a person who is busy and may not have the time to listen. “It’s called the elevator speech,” he said. “You should be able to talk about your business in 20 seconds or less.”

The “kitchen cabinet” is the Holy Trinity of advisers a business owner should have in his team, he said. They usually include an accountant, who will decide the business model; an attorney, who will provide legal counsel; and a banker, who will make sure you know when “somebody out there is looking to compete with you,” he said.

Passion is what sets the business apart from the others, said DiMartini. “Put your passion and ideas into a business plan. Keep a journal. Those ideas will change, keep track of them,” he said.

Another speaker at the forum was Eileen Thornton, business banking director at Citibank. She discussed financing – how to secure it and how to make sure the owner has access to it. It is not enough that money is flowing into a business, she said. A business owner should be able to understand the cash flow cycle; plans for collection and repayment; lines of credit and should have income projections measurable over a period of time.

“These are keys to success,” she said.

Almendral, who has a cosmetic medical clinic managed by her husband Aries, said she found the discussions “beneficial” to startup entrepreneurs or those just thinking of going into business. Even though she has done many of the suggestions, in her mind she was doing a “checklist” of things she has yet to do.

“The forum made complex business aspects simple and straightforward,” she told The FilAm.

Doris Mutuc, East Coast/Canada representative of ABS-CBN International, said many proprietors and executives in the restaurant and retail businesses, financial services and travel agencies attended the forum. Although many of them are quite successful, she said they also wanted to know why “some businesses are thriving and why some fail.”

source: thefilam.net

SSS Eyes More OFW Deals

MANILA, Philippines — The Social Security System (SSS) is set to enter into bilateral agreements within the year with three countries in an effort to protect the welfare of overseas Filipino workers (OFWs) even after the expiration of their contracts.

SSS Senior Vice President Judy Frances A. See said in an interview they are set to start negotiation with Japan, while it is already about to sign an agreement with Portugal. SSS has also ongoing negotiation with Denmark.

“We’re going to negotiate with Japan by the second semester, so we’re expecting a visit from them in the second half,” See said.

The deal with Japan should benefit more OFWs as the increase in the entry of nurses in Japan is part of the Philippines Japan Economic Partnership Agreement entered by both countries in 2006.

“There is also a clamor from our Filipino community in Denmark because without the agreement, the benefits will not be exportable to that country. If we have an agreement, and if they decide to come home, they will have a fallback,” See said.

Foreign countries are traditionally hesitant about entering into this agreement since bilaterals benefit OFWs more than their foreign nationals considering they usually have fewer nationals in the Philippines. But the government is expecting positive responses for this move since OFWs legitimately contribute to the social security system of these countries along with the payments of their employers.

Among countries, SSS has difficulty seeking negotiations with Middle East countries where there are more than one million OFWs.

To date, SSS has existing bilateral agreements with the United Kingdom, Spain, France, Netherlands, Belgium, Canada, the independent province of Quebec, and Switzerland.

The bilateral agreements should have four provisions. These are equality of treatment — whatever treatment to other foreign workers in a country should be accorded to OFWs; export of benefits — a benefit of a Filipino OFW should be remitted to the Philippines once his contract expires; totalization of benefit or a benefit should be granted to an OFW pro rata for the period of time for which he has rendered service even if he has not completed a pre-agreed period of entitlement; and mutual administrative assistance.

Susie Bugante, SSS vice president, said the pension fund has a plan to introduce a new program for returning OFWs particularly to finance livelihood or entrepreneurial program.

“DOLE (Department of Labor and Employment) has brought up a proposal to finance a program for OFWs like the Sulong program that we have had even before,” said Bugante. “We will have more returning OFWs who are bringing home a set of skills that they have used abroad, and we have to support them.”

Sulong or the SME (Small and Medium Enterprise) Unified Lending Opportunities for National Growth is a financing program of SSS and other government financial institutions for SMEs.

SSS has started promoting membership to OFWs specially those that are just under contract as it considers them the most vulnerable to financial difficulties compared to immigrants.

Recently, SSS awarded raffle prizes to nine OFWs as part of its promotion to get more members. Three prizes were allocated for those working in the Asia Pacific, three for the Middle East, and three for the rest of the world.

SSS is targeting a total OFW membership to 500,000 by end this year from the 200,000 at the start of the year.

source: mb.com.ph

SM group yet to commit to NAIA-Entertainment City road project

MANILA, Philippines - Contrary to claims made by the chairman of the state gaming monopoly, the SM group has yet to commit any funding for the planned road linking the Ninoy Aquino International Airport (NAIA) and Pagcor's Entertainment City.

"The project you mentioned is not definite yet. We are equally surprised to hear that the project and the people involved are already committing. I think it is still a work in progress," Harley T. Sy, SM Investments Corp. (SMIC) president, said.

"I'm surprised and as far it is still a work in progress. We encourage it, but the numbers are still moving," he said.

Armin Raquel-Santos, Belle Corp. executive vice president for premium leisure and amusement, said the Philippine Amusement and Gaming Corp. met the four Entertainment City licensees "to see the viability of the expressway."

Other Entertainment City locators are Enrique Razon Jr.'s Bloomberry Investments Holdings Inc., the consortium of Malaysia's Genting Group and Andrew Tan's Alliance Global Group Inc., and Japan’s Universal Entertainment Corp.

"There is no commitment yet because the funding right now is at the design stage," Raquel-Santos said.

On Wednesday, Henry Sy Jr. said the SM group was not directly participating in public-private partnership (PPP) projects since "these projects are much sought after, competition is very intense [and] profit margins might suffer."

His younger brother, Harley, said the SM group' involvement in the PPP projects of the Aquino administration is through banking arm Banco de Oro Unibank, which may provide project financing.

"We have not really looked into the numbers and it is more of we will do what we believe we can do best. We cannot do too many things. We might lose our focus," he said.

Last month, Cristino Naguiat, Pagcor chairman, told members of the Economic Journalists Association of the Philippines that the four licensees of the Entertainment City had committed to finance half of the P12-billion road project.

He had said the Department of Public Works and Highways (DPWH) approached him, seeking the private firms' commitment to co-finance the project.

"I talked to all the proponents and I told them to invest at least more than a billion pesos each. They would fund the project. They requested that their investment would be part of their investment commitment [in Pagcor City]," Naguiat told reporters during a seminar in Clark.

Because of this commitment from the locators, DPWH is taking out the government subsidy, with the contractor providing half of the funding.

The original plan was revised to accommodate the request for the highway to end up at Entertainment City instead of Roxas Boulevard. By diverting the road, travel time from the airport to the gaming and casino complex would be cut down to 16 minutes.

InterAksyon.com is still awaiting response from Pagcor and the other locators as of this posting.

source: interaksyon.com