AEA Progresses But Have Problems with Bad Debt

Based on the call report of the credit union during the first quarter of this year, there are a few flickers of progress for AEA. The call report was put online this week in the website of National Credit Union Administration.

However, it is still struggling with bad debt and its net worth to total assets ration is still supported by a $20 million worth of cash infusion which NCUA gave to AEA during December.

According to NCUA public affairs specialist John Zimmerman, the credit union was supported by giving additional capital through a deposit, also known as subordinated debt. Consequently, AEA’s net worth to total assets ratio for quarter four 2011 was 2.69 percent.

At the end of March, AEA’s ratio was up to positive 2.85 percent. One year earlier, their ratio was minus 7.77 percent.

Moreover, AEA’s profit for quarter one 2012 was $839,000. That is in line with the profit-making trend observed during 2011, with a $6.2 million ending cumulative profit.

During quarter one 2012, AEA reported shares and deposits up by $11 million. But the membership is decreasing from 46,015 members one year earlier to 41,750 members this year.

Zimmerman added that AEA constantly developed its performance for quarter one and AEA is developing its net worth as well. For the month of March, it reported $7 million of net worth, which is an increase from $6.1 million during December. On the other hand, the credit union had minus $18.6 million net worth during March of last year.

AEA might be converting delinquent loans to foreclosures since there was a decline in the number of delinquent loans but an increase in the number of foreclosures.

During December, AEA had $8.9 million loans overdue by 12 months or more, but it was down to $2.4 million during March. In contrast, AEA’s foreclosed and repossessed assets reached $7.8 million during quarter one 2012, which is up from $2.1 million foreclosures in 2011.

How to Fix Your Credit Card Debt

According to Hamm, one very effective technique to get out of credit card debt is to call your credit card company and negotiate for a lower interest.

Most people are burdened by the worsening debt because of credit card use. Credit card can be acquired easily at first and can also easily trap you to spend more without proper thought. Impulsive buying and poor choices can lead you to so much debt before seeing your first bill.

Eventually you will find it difficult to pay your card debt and you might even be shocked at the first sight of the minimum payment required. This is the start of you financial struggle.

I can relate to this struggle because I have been into it before. I kept adding debt until I reached a point that seemed to be impossible to fix and it was so painful.

One of the steps that I took was to call up the credit card companies and told them my real situation and then start negotiating.

Let me share with you how I did it. But first let me warn you not to use this tactic if you depend on your credit card in bringing food to your table because it might just backfire on you. The credit card company might close your card. However, if you are in a situation where you do not depend so much on your credit card, then this technique might be of help to fix your credit card debt. Through negotiation you can convince the credit card company to lower the interest charged to your account which can help you to save a lot of money in the long term.

For example, if you have a credit card debt of $10,000 payable in 8 years at 19.9percent interest rate, the total amount of interest you will be paying for that period is approximately $10,055. If that interest rate is reduced to 9.9 percent, the total amount of interest for the period is $4,516 thus a saving of $5,500.

How to do the negotiation? The first step is to call the company and explain your situation and your appeal to stretch your payment and to reduce the interest. If the person you are talking to will not accept your proposal talk to the person higher or the supervisor. The secret is not to get angry. The response maybe “no” but eventually you will be passed to somebody who can decide on your case. But remember to engage in this tactic only if you do not rely on your card because the bank might cancel your card or reduce your limit but you still owe them money. If you can handle your situation without your card then go for this tactic and it can help you save a lot of money.

Debts Beyond The Grave

Investigations by the United States’ authorities have found out something disturbing, nothing can make you safe from identity thieves, not even death. According to recent data, the new stolen IDs used the personal information and SS numbers of over 2 million people who have already passed away. These thieves use the identities to get credit cards and cell phone services.

Moreover, not all the perpetrators were intending to use the identity of a dead person, in fact, 1.6 million of the SSN they had no idea belonged to a deceased citizen. They only intended to use the numbers to create a phony name and a fake identity to manipulate dealers.

Every year crooks would use 2.5 million fake identities they have stolen from deceased victims. Investigations are able to match these stolen identities to about 100 million transactions from January to March of last year.

Dr. Stephen Coggeshall, ID Analytics chief technology officer says that these cases pose a large problem for organizations and businesses and most especially for the remaining family members of these deceased that would inherit the account and the liability. He further states that it is important that the living relatives should monitor the accounts of their dead loved ones, in case they were being used by these identity crooks.

According to data, these cases would happen at least 2,000 times in a day; criminals would purchase online and use a fake ID belonging to someone who has already passed away. The ID Analytics’ ID Network is now being used by authorities to be able to identify whether someone is using a dead person’s name to transact loans, credit card, cell phone purchases, rents and other financial businesses.

So far, about 800,000 of the identities have been identified to have been used knowingly by crooks.

The Power of Debt

The recession suffered by the United States has left many businesses declaring bankruptcy, led to companies closing, people losing jobs and some being forced to being overwhelmed with debt.

A person being engulfed by debt would very well blame everyone and everything in his surroundings for his struggling situation. Being overwhelmed by debt has a chain effect in a person’s financial situation. He gets bad credit, he has to sell his assets, pawn his car, and his family might start bickering about money, and so on.

The damage has already been done and there is no use to continue pointing fingers to whoever should be blamed for the predicament that the country is facing financially. The best thing to do is to move on, and to try anew in rebuilding your life. But this is the difficult part.

Though the knowledge you need to get back up on your feet is easy to comprehend, they are hard to follow because they need consistency and self-discipline. The basic building block of being successful is knowing how to use debt to your advantage.

Getting a loan or borrowing money can get you a large liability you have to give back in the future; you can become lucrative if you know how to handle it to your advantage. You have to think like a businessman. When a company is going to borrow money, the big question they ask themselves is if the loan will gain them more money in the future.

When you borrow money you should ask yourself is what you are going to do with the money will benefit you and gain you more money, or will it do more harm than good?

Investing for college is one very good reason for loaning. Whenever you want to get a car, you should first weigh whether it is going to benefit you more than it will cost you to purchase the item.

But according to experts the best things you should invest in are schooling and a good household. It is best to think twice when you want to loan for a car or for health related circumstances.

Good management of your liabilities is the best way to start in your road to financial recovery, while smart borrowing is the key for a good and worry-free life.

Good Credit is Better Than Having Cash

Between cash and credit, having good credit is better than having lots of cash. This is because your own credit history is checked prior to notifying the client of your buying power.

If you have no credit or bad credit, then, as a prospective buyer, the total cash you may loan and the kind of mortgage you may obtain might be restricted. Also, you might be charged a higher interest rate than that of someone with good credit history.

The three major credit reporting agencies are TransUnion, Experian, and Equifax. Lenders report loans to either or all of these three every month. If the borrower has on time payments, it may be good for the credit history, but if the borrower has overdue payments, then it may be bad for the credit history.

The three credit reporting agencies have different scoring systems but they all end up with three-digit credit score. It is better if the credit score is higher and your score should be in the middle of 700 and with restricted credit lines.

It is not necessary to have a lot of credit cards because two to three cards can already increase your credit score. Having lots of open credit lines will also mean having a greater possibility of late payments, and remember that a single overdue payment can already radically decrease your credit score.

The following are some tips for you to follow to have high credit scores or to increase your present credit scores. First, you should never have late payments. Next, pay the credit cards with higher interest rates as soon as possible. Credit cards with higher interest rates will you have higher costs every month. Lastly, discard all you credit cards except two to three credit cards with low interest rate. Close the accounts of credit cards with high interest rates. Don’t worry if you have a balance, because you can still use it in the future.