You Can Get Bad Debt Through Credit Card Over Spending

Decades ago, personal loans and financial loan from banks were not very popular in the industrial market, thus consumers buy their commodities with cash, and debts were not a major problem for individuals as well.

Today, the situation has changed tremendously. Consumers tend to buy everything with their credit cards and they rarely pay or carry cash with them. This often leads to overspending, and overspending leads to over commitment, which leads to bad credit.

Over the years, the rate of borrowing of individual families has increased to 12.5 as of the month of December last year; this is alarming because if nothing is done about it, it will be a sure blow to the United States’ economy. The government has already tried to control the situation by imposing the Guidelines to Responsible Lending last September of 2010.

Banks are starting to make a business out of customers by making personal loans easier to apply for. They have come up with many marketing strategies to encourage customers to borrow from them; the most recent is a preapproved loan which would entitle someone to a personal loan without the need to sign any documents.

Good debts can get you interest revenues from the loans you have, however if you are not going to plan on these debts, they might back fire and turn into bad debts. The lending market is still healthy for now, and financial institutions are still providing loans for people even if the Bank Negara is ruling against it.

Here are some situations that you must be careful not to over-commit because the repayment of your loan might become a huge problem.

First, if you have lost your job and you have too many liabilities to pay and no means to pay them until you get a new job, then you are in trouble. To save yourself from this situation you should make sure you have saved money to sustain you in case of emergencies.

Second, if you your debts become more expensive. According to statistics by the Negara Bank, the basic household expenses have grown to 88.6 per cent from 1993 to 2010. It is in our nature to spend more when we have more money, thus in order to prevent trouble we must learn to be conscious in our spending all the time regardless with how much money we are carrying.

Payday Loan Debtors are the New Target of Scams

Caution is what the Connecticut Department of Banking requires from their clients today. There is a new group that are targeting debtors and threatening them of being imprisoned unless they pay their payday loans.

According to the bank’s commissioner, Howard Pitkin, these scammers get their information from the clients online. They would call the debtors at home or on their work, or when matters come worse, they even call their relatives or friends to as for the “payment” of their loan. These people threaten the clients of sending officers to arrest them for not paying their contracts, and they could be very intimidating.

The office of Mr. Pitkin has been receiving complaints from customers about these scammers for about six months now, and the number of complaints can now reach about 40 in a month.

The collectors would claim that they had bought off the loan of the payday client from the agency, but this is of course never proven in any of the documents. Some of the clients who have paid their debts full continue to be harassed by these hooligans.

These scams have been affecting the lives of many innocent people, for instance, there was one problem when a person almost lost his job because the scammers kept calling their office and harassing the company employees. Another time, a lady was so restless with the threatening call she received she decided to come and turn herself in to the authorities.

If you are currently experiencing these problems of receiving anonymous threats and calls, and the collector will not seem to leaving you alone, or if you have been a victim of these people then call the Bank of Department’s Consumer Affairs Division. Their numbers are 860-240-8170 or you can call toll-free at 800-731-8225.

If you are having difficulties in buying food or other necessities, you can get in touch with charitable institutional programs by dialing 211 in the information line of the United Way.

US Home Value Continue to Fall

The financial net worth of homes and of individuals in the United States has decreased dramatically to $ 66,740 in 2010 from the $102,844 from 2005. The Census Bureau has recently realized the crisis that is currently facing the nation, according to their findings: there has been a 35% decrease in the net worth during the years between 2005 and 2010.

These findings also pose as warning to the financial status of many US citizens for their total capitals have fallen. The cause of this decline is not a mystery at all to the agency. These causes are the tremendous economic depression that occurred in the nation in 2008, and rapid increase in the total number of households in the nation.

The prices of houses have declined in the market and this triggering economic turmoil such as problems in banks to massive unemployment of citizens. In fact, the cost of owning a house is cheaper compared to debt in mortgages and loans; the value of stocks and other assets have also fallen behind housing.

The census of the government was able to measure the problem in numbers; however there is another report from the Federal Reserve whose findings are opposed to the data they gathered. The data exists for about a year and a half now, but they include the problems that are hovering over the investors and consumers.

According to CoreLogic, 11 million of the mortgages and that is equivalent to twenty three percent of the loans in homes in America are charged with fees above the real value of the house. The value of stocks however, has been a little better compared to how it was in 2010.

The Survey of Consumer Finances which is released by the Federal Reserve in three year intervals contains the latest analysis of the finances of families in the country.

Low Interest Rates are Not Good for the Future

If you are baffled with just how exactly interest rates relate with bonds and loans then you should not fret, MBAs are just as on the dark as you are in the matter.

The MBA are baffled right now with the issues in installment loan, and most especially the role of interest rates in the lives of the people and the economy. Interest rates have fallen so low during the recession that many individuals had failed to see how largely the country has fallen into debt.

It is a rule of thumb that lower interest rates mean cheaper loans. However, this requires knowledge from consumers about the operation of financial markets in order that they could comprehend the hazards of increasing national debt to the future of the economy of the country.

For example, when the government has more expenses compared to its revenues, it has to borrow money to balance out the loss. In order to do this, it would sell its bonds in to other financial intermediaries. When someone buys the bonds, the money earned would be now part of the U.S. Treasury and is used to pay for the debt of the government.

When economy is bullish like the recent situation in the US today, the savings would be higher compared to the investment opportunities in the financial market. The only positive news about the borrowing cost of the nation is that since the recession in 2008, there is a deficit of over $ 5 trillion and almost all of it will be soon be part of the Treasury bond of private individuals and banks in the United States and all around the world.

During the period of election, this problem will be left with economists, however it will remain as a hidden information from the public.

Equifax Partners with LendingMetrics

Equifax, one of the three credit reporting agencies, is now in a long-term partnership with LendingMetrics, which is the payday and lending data authority, in order to assist lenders in payday lending matters. The partnership happens at an important time for the payday lending industry since on July 25, 2012, the Code of Practice will be implemented.

Last September 2011, the Dynamic Application Search (DAS) tool was introduced by LendingMetrics that will help payday lenders to disclose data so as to responsibly increase credit. DAS is being used by approximately two-thirds of the payday market and it offers real time loan application and performance data to assist payday lenders distinguish consumers who might be trying to get several loans at a time. Moreover, it also recognizes real time fraud.

At present, Equifax will present lenders with a whole resolution for evaluating the risk of a payday loan applicant, assisting them to complete the most recent OFT and BIS regulatory requirements, and also fighting bank account and ID fraud.

In addition, Equifax will be giving access to its consumer credit data. The Insight payment performance data will be accessed by payday lenders and the lenders’ payment performance data will also be accessed by Equifax, which is in compliance with the SCOR reciprocity regulation. Moreover, users of LendingMetrics can use the anti-money laundering identity check of Equifax and their Bank Check Advanced to verify that the bank account used is really owned by the applicant.

The latest Code of Practice obliges that proper affordability checks are done by lenders prior to approval of loans or permitting customers to delay paying off the money, also known as a roll over. As a result of the partnership, Equifax and LendingMetrics provide a collective solution that assists payday lenders meet their obligations.

According to David Wylie, the Managing Director of LendingMetrics, their partnership agreement with Equifax will give payday lenders assistance as the sector grows.