Entries from June 2012 ↓

Savings Accounts Explained

Whilst having a savings account is a great idea, there are so many different varieties of account available and choosing the right one can be puzzling. However, there will be a few factors that will have some impact on which type of account you choose including whether you want to have instant access to the cash or if you are prepared to have it locked away for a certain period. To get you started, here is a brief guide to the various accounts on offer.

Regular Account

The essence of a regular savings account is that they require you to pay in a certain amount each and every month. However, there may be a restriction on how much this can be. Therefore, whilst the interest rates may be relatively attractive, if you are planning on investing large amounts into an account, a regular savings account is not ideal. In addition, a regular savings account will generally restrict the number of withdrawals each year.

Instant Access Account

If you prefer to have an account that allows you instant access to your savings, you should opt for an account that does just that and open an instant access savings account. This type of account will not only allow you to draw out money when you want but, more often than not, it will also make this a relatively easy task.

Most accounts will provide you with a plastic card, which whilst not allowing you to purchase goods with it, will allow you to withdraw cash from ATMs. In addition, many will allow you to make over the counter withdrawals or to transfer the money to another account online, free of charge. However, with some accounts, transfers may take two or three days to clear whilst others may limit the number of withdrawals you can make each year.

Cash ISAs

Cash ISAs, or Individual Savings Accounts, are ideal for anyone who is a UK taxpayer. This is because this type of account offers tax-free interest. This could make a huge difference because, in general, you can expect to lose between 20 and 40% of your savings in tax with an account that doesn’t include this aspect.

Whilst the interest rates may not appear so attractive at first sight, the fact that they are tax-free means you could end up with more interest earned in the long run. To check whether you will end up better off with an ISA, compare their before tax interest rate with the ‘after tax’ interest rate of a standard account. It should be noted, however, that at present, you can put no more than £5,640 a year into an ISA account.

Notice Savings Account

Quite simply, this account works just as it sounds. In other words, in order to withdraw money, you will have to give your bank notice. This can be anything between 30 and 90 days, so if you feel you may need the money in an emergency this is not the account for you. Furthermore, in general, this type of account no longer offers a higher rate of interest.

Fixed-Rate Bonds

With these bonds, whilst you will generally earn higher interest, your money will essentially be tied up for the entire period of the bond. This can be between one and five years. The longer period you opt for, the higher rates you will get. This is ideal for anyone who is confident they will not need the money in an emergency but risky for others as any decision to withdraw will incur a pretty hefty fine.

This guest post was written by Francesca, who lives in the UK and has an interest in personal finance and money matters. She writes for IVA experts.

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Safety Technology Can Mean Savings on Insurance Premiums

Car insurance premiums are affected by a number of factors, but one thing that is often overlooked by consumers is the safety features on their vehicle. Safety features can reduce the likelihood of accident, injury, or theft. Therefore, they can also reduce your insurance premiums as they will reduce the chances that the insurance company will pay out a claim. Insurance agents should be made aware of any such features on a vehicle so that they can quote the lowest rates possible.

Side Airbags

Side airbags can minimize the likelihood of injury in the event of an accident. A claim made for an injury to the driver or a passenger will affect the bodily injury portion of the vehicle coverage. Side airbags has become more standard in newer vehicles over recent years. Studies have shown that side air bags can make an accident 70 percent less likely to be fatal.

Anti-Theft Devices and Car Alarms

Anti-theft devices and car alarms make it more difficult for someone to break into the vehicle. In the United States, a vehicle is broken into every 26 seconds. Statistics will report that over 70 percent of these that are cars that have no type of anti-theft device or car alarm to deter the predator. While these items don’t make it impossible for the vehicle to be a victim of this crime, it does make it more difficult.

Tracking Devices

A tracking device on a car will make it easier to recover in the event that the vehicle is stolen. Many vehicles are equipped with GPS devices that can tell authorities the location of the car. These devices include a transmitter that is attached to the vehicle that is activated once a theft is reported. There are many systems and devices currently on the market including On Star and LoJack.

Anti-Lock Brakes

Anti-lock brakes are a safety feature that makes it less likely to be involved in an accident. Anti-lock brakes automatically pump the brakes in wet, slick, and hazardous driving conditions which will reduce the chances that the brakes will lock up and the driver will lose control of the vehicle.

Electronic Stability Control

Electronic stability control is a computerized system that monitors the vehicles’ response to the driver’s input. This system will make the necessary adjustments to the car when the sensors are triggered. Statistics have shown that accidents that involve a car equipped with an electronic stability control system are 50 percent less likely to be fatal.

The amount that each of these safety features will actually decrease car insurance premiums will vary from policy to policy. However, they each make claims less likely and reduce the financial risk that the insurance company faces and that is passed along to the customer in reduced premiums. It is always in the best interest of the policy holder to seek out ways to save, and several of these features are standard on some vehicles.

Alan Reed is a freelance writer for www.carinsurance.org.uk, a website that can help you find affordable car insurance to match the safety features on your car.

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How You Can Improve Your Credit Score with a Bank Account

Many people have had financial problems recently, largely due to the current dire state of the economy and this has left many with poor credit scores. However, there are a few ways of improving this frustrating state of affairs. Opening a new basic bank account can often be one of them.

Basic bank accounts were introduced in 2003 by the government in order that everyone could have some kind of account. Because these days most companies prefer to pay salaries straight into employees’ bank accounts, not having one can be a problem. While as you might expect basic bank accounts are just that – basic – they can offer many of the functions and benefits you get with a standard current account.

Who Can Get One?

Unlike standard current accounts, a bank account in its basic form can be obtained by anyone. In fact, you don’t even need to be on the electoral roll. Essentially, they are suited to those who have never had a current account before and who are not looking for overdraft facilities. However, they are perhaps most important to anyone who is having trouble securing a standard current account due to bankruptcy or low credit scores.

The Benefits

While no overdraft option is available with a basic bank account, they have many other benefits. One of them is that you can pay all your bills on time by setting up direct debits. Not only will this afford you peace of mind, but it may also lead to a better deal as many companies such as electricity and gas suppliers offer lower rates if you pay by direct debit.

In addition, you can not only have your salary paid straight into the account but also any benefits such as pensions, tax credits and income support. Getting access to the money is no problem either because with a basic bank account you get a debit card that allows you to withdraw cash from an ATM. There are a few more benefits that are available from certain providers:

– Free monthly service charge (generally for the first 6 months)

– Guaranteed acceptance regardless of credit score

– Options to manage the account online

– Cash rewards of at least £5 per month

– No charges for missed direct debits or standing orders

– Free ATM withdrawals (UK only)

– Free purchase protection

– Cashback each time you spend on your card

However, perhaps the best benefit of getting a basic bank account is that you can start establishing a good banking history or regain one if you have had financial problems in the past. Obtaining a basic bank account and managing it properly for a year or two will get anyone with bad financial history back on the road to recovery. You will find that your poor credit rating will soon start to slowly creep up, allowing you the option of applying for a standard current account.

Sam is a journalist who writes about various personal-finance issues for MoneySupermarket.com and a number of other web sites and blogs.

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How to Make and Stick to a Budget

Few things are easier to do than spend money. Who doesn’t know the feeling of looking over their accounts at the end of the month and thinking, but where has all my money gone? Between the endless unexpected expenses and the ever-mounting trivial purchases, we never seem to save as much money as we plan, and we are always spending more than we realize. This, of course, is what makes strict and diligent budgeting so important, and yet at the same time so difficult.

So for all of you out there struggling to fill up that piggy bank, but who never seem to make much progress, here are some tips for helping you successfully make and stick to a budget.

Stop Treating Yourself

This one goes at the top of the list because it is by far the most important, despite being a little obvious. ‘Treating yourself,’ as I term it, is the easiest way to destroy a budget. It’s that feeling of entitlement we always get after overcoming one of life’s little obstacles. Perhaps you’ve just worked a particularly long day at the office, helped your neighbor with her groceries, or finally managed to wake up without hitting the snooze button ten times. Often, no excuse is too trivial. Our natural tendency is to think, oh, well I owe myself this one little indulgence, and then make an unnecessary expenditure.

Recognize the urge, suppress it, and appreciate your achievements for what they are without feeling obliged to undermine yourself by buying an unneeded ‘reward.’ Even if you’re just spending a small amount each time, it soon adds up.

Keep a Written Account of Spending

It is easy to look at your online statement every month, see how much money you spent, and realize that it was too much. But nothing will open your eyes to your spendthrift ways like actually writing down the amount of money you use each day. So every night when you get home, sit down and list out every purchase you made. There are also lots of technological solutions to this problem, with an array of budgeting and spending apps available for all modern phones, tablets and computers. Total your expenses. Feel guilty. Spend less tomorrow.

Keep Separate Accounts

It helps to have a number of accounts: checking, savings, and a long-term savings like an IRA or a money market account. Every time you get paid, set aside the money you will need for living expenses during that pay period (plus a little extra for the inevitable unexpected expenses), and put it into your checking. Then divide the rest into your savings accounts. Absolutely refuse to transfer any extra money into checking before your next paycheck. Whenever you run a surplus, keep the money there as a cushion for next time. Try to steadily increase all the account, but under no circumstances allow your savings accounts to diminish.

Make Your Budget Realistically

This means taking the time to determine how much you actually have been spending in previous months (not just what you think you should spend in the future). Make the budget reasonable based on your habits, but also keep in mind that the key to successful budgeting is changing your spending habits. If you are violating your savings goals every month because of an unrealistic target, you are much less likely to take your budget seriously.

As we all know, saving isn’t easy. But with a bit of self-restraint and the diligence to always keep your goals in mind, anyone can stick to a budget without too much pain. The trick is to hold yourself accountable, and to always be intimately aware of where your money goes, and why.

Got some money saved up and looking to invest? Try online forex trading from IronFX.

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Why You Should Consider a Debt Consolidation Loan

If you are like most Americans, then you may have a hefty amount of debt. With the recent economic fall, a lot of people relied on credit cards in order to pay for necessities and bills, but now they are left with high interest rates and virtually no way of repaying the debt in full for years to come. This is where debt consolidation loans step in because the loans allow individuals and families to get back on track with their finances so that they lessen their debt and avoid filing for bankruptcy.

What Is a Debt Consolidation Loan?

When making a money management plan, the term “debt consolidation loan” will be common. This form of debt repayment allows individuals and families to put together their debts, so to speak. There are many companies that specialize in this field and each one offer different terms and rates. A debt consolidation loan will usually come in the amount of the total amount of debt you currently have. From there, you will only have one payment each month instead of several that went to various creditors/bills. It is an easy and organized solution when debt is out of control and you need to handle it quickly and efficiently.

The Pros & Cons of a Debt Consolidation Loan

For every person and situation, the pros and cons of obtaining a debt consolidation loan will vary. No matter the case though, a decision to consolidate your debt should be a serious matter. Discuss it with a financial expert so that you fully understand what you are doing.

Pros:

  • Avoid paying high interest on several accounts
  • Decrease in late fees & extra charges
  • Instant gratification

Cons:

  • Above normal interest rate for the loan
  • Quick-fix
  • Take longer to pay off debts (depending on term)

A debt consolidation loan is an option for those who want to become financially responsible because it is easy to fall back into debt when choosing to consolidate debt. It is often referred to as a quick fix because you are given money at this very moment to help you pay off balances and so forth; however, it is completely up to you whether you would like it to be a quick fix or a long-term solution.

Is a Debt Consolidation Loan the Best Solution For You?

In order for you to determine whether or not a debt consolidation loan is a good debt repayment method to use, you need to have a serious discussion with yourself about your finances. What caused you to go into debt in the first place? Do you rely on your credit cards at the moment to help pay for necessities and bills? You will have to be completely honest with yourself before making such a huge decision because you are essentially adding another debt to the overflowing pot you already have.

Debt consolidation loans have helped many overcome their debt and showed them how to properly manage their money. Do extensive research and learn more about debt consolidation loans through professional means, such as a banker, or try reaching out to family and friends to see what their experiences have been like. Make a change today and tell yourself that you will no longer be burdened by the debt you have.

Nick Thomas explains how debt consolidation loan helps you avoid unnecessary charges through his website debtconsolidation.com.au.

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