There are ways to save serious instant cash on leisure activities, like checking out books from a library instead of buying them at a bookstore. Image from Wikimedia Commons.

There are a lot of ways to save instant cash by cutting corners on leisure activities. Believe it or not, there are ways to still have fun and not have to sacrifice much at all. One just has to be creative and know a little.

Ways to cut leisure expenses and save some serious cash

Leisure activities are a necessary expense in order for people to stay mentally healthy. For instance, a lot of people love movies. It’s a time honored tradition, and a lot of instant cash gets spent at theaters every year. However, that doesn’t mean paying full price. For instance:

• Matinees at theaters are usually 25 percent cheaper or more
• Most cities have discount theaters that show films that have been out for awhile at half the cost or less
• Only go to the theaters if it counts – limit your trips to just a few special films and wait for the rest to come out on DVD
• Check out free streaming movies Netflix and other services

Get a library card

Libraries are increasingly neglected resources. Most are funded publicly, and a library card is worth it. Late fees won’t make a person run for a loan until payday. Checking out a book from the library means not having to pay Barnes and Noble a lot of money, and because most public libraries have DVD selections, you may even be able to avoid paying for rental. There are public libraries in nearly every town in America from Alabama to Alaska.

Learn to cut corners

There is no reason to pay full price for anything there is an alternative to if quality is not compromised. Just because a movie or book is a little older doesn’t mean it is no good. Cutting corners when it comes to leisure activities without sacrificing is entirely possible and can mean some serious spare change in the pocket.

The Treasury is trying out a pilot program; tax refunds will be offered on a prepaid Visa debit card. Image: MoneyBlogNewz/Flickr.com/CC-BY

The Treasury is trying out a pilot program to save a little fast cash on disbursing tax refunds this year. People who don’t elect direct deposit could receive a prepaid debit card in lieu of a traditional paper check. They will also be able to hold onto and keep using the card.

New way for the Treasury to save a little fast cash

The United States Treasury has announced a pilot program for tax season that concerns how people receive tax refunds, according to CNN. When people file income tax returns, they can elect to receive a direct deposit of their funds or choose a paper check that they’ll receive in the mail . This year, those who don’t choose direct deposit of fast cash for their tax refund or don’t have a bank account could be alerted to the a new option. More than 600,000 taxpayers who make $35,000 or less annually will be informed that they could receive their refund on a prepaid MyAccountCard from Visa if they choose.

The tax refund card

People who chose the debit card option will have their tax refunds deposited into an account, and receive a prepaid debit card by mail. Taxpayers who want to can hang onto the funds as savings in case they need a loan until payday or until they finally book a trip out to Mississippi to visit relatives. The cards are being issued by Bonneville Bank, and the Treasury will be working with the GreenDot company on the pilot program. People can keep reloading and using the card as long as they wish.

Terms of the card

The tax refund card will be just like any other preloaded debit card. There will likely be an annual service fee and various fees for withdrawing money and so forth. The program could save the government a lot of money. Each direct deposit costs the government a dime, but each paper check costs about a $1.

Source

CNN

A minimum wage in seven states gets low income workers a little more pay day cash, but it's only pennies more an hour. Image: MoneyBlogNews/Flickr.com/CC-BY

A small hike in the minimum wage in several states is going to provide some workers with a little extra pay day cash. Minimum wage differs between states, as some peg the minimum wage to inflation. There are seven states raising the minimum wage.

Minimum wage going up in seven states

Seven states are raising the minimum wage by varying amounts, which means a little more pay day cash will be going to workers in those income brackets, according to USA Today. An estimated 650,000 people will get a raise of anywhere from 9 to 12 cents per hour, depending on which state they live in. Colorado, for instance, is getting an 11 cents an hour raise to $7.36 an hour. Washington state is raising the minimum wage by 17 cents, allowing the Evergreen state to maintain the highest minimum wage in the nation at $8.67 per hour, but that hardly keeps anyone from needing a loan until payday, as the raises are all due to higher prices of consumer goods.

Minimum wages vary

All states vary in how the minimum wage is set, though most use the federal minimum wage. Some states, such as Alabama or Mississippi, have no minimum wage laws. Ten states peg the minimum wage to cost of living, and seven states have seen a sufficient rise in consumer price indexes to raise it. Colorado, Arizona, Washington, Montana, Ohio, Oregon and Vermont have all legislated a little more quick cash for the lowest paid workers, though the raises are not by very much. The raises won’t mean that workers will suddenly never need installment loans ever again, but they will get a little more help.

Every little bit helps

Those who have to make a living on minimum wage do not have an easy time of things, and even a tiny increase can be a benefit. Minimum wages have been controversial for some time, and many have argued for either a radical increase or getting rid of it altogether.

Sources

USA Today

Minimum Wage in the U.S.

Shoppers may have to part with less pay day cash to stock up under the tree this year. Image from Wikimedia Commons.

Shoppers may end up having to part with less pay day cash during holiday shopping this year. Consumer items that are common gifts are priced drastically lower than they have been in decades. The news may not be fantastic for retailers if sales are sluggish, though.

Gift items going for least amount of pay day cash in decades

Shoppers may have to part with less pay day cash to stuff stockings this year. The average prices on consumer goods that typically fly off shelves during the holiday shopping season are at the lowest levels in decades, according to CNN. The price of small appliances, like toasters and coffee makers has dropped 30 percent since 1998. Television sets have dropped more than 90 percent since 1980, and stereo equipment has dropped 50 percent in price since that time. The benefit for consumers that they “get to buy more crap,” as John Norris, a wealth management director in Birmingham, Alabama, puts it. Typically, a good shopping spree results in a lot of people needing installment loans to cover the tab, but that may not be the case this year.

Discounts at register pick up the pace

Retailers are offering more discounts than ever, despite the fact that shoppers were buying more this year, according to USA Today. The gains in holiday sales, especially around Black Friday, have been slight, but gains were realized nevertheless. Consumers have been shopping more, but not using credit cards to excess and running for a loan until payday in January. Retailers are willing to keep offering sales and discounts to get people into the stores to spend some instant cash.

Every little bit helps

Though economic conditions are such that people are not spending wildly like in past years, they are willing to spend a bit on gifts for the holidays. Whether it is a little something for themselves, or a loved one, the confidence among the public to shop again is an encouraging sign.

Sources

CNN

USA Today

Consumers are getting fed up with having to give the bank a cash advance to use their own money. Image from Wikimedia Commons.

Americans are getting fed up with having to give a cash advance to banks to use their own money. In order to get a quick payday out of customers, major banks are stepping up account fees, ATM and overdraft fees. Account holders are not amused.

Anger over giving a cash advance to banks grows

Most American consumers don’t think it’s fair that a person should have to give a money to a bank to use their own payday cash, according to ABC. The Office of the Comptroller estimates that there will be 80,000 or more complaints by consumers about their financial institution by the end of the year. That would make it the highest level of dissatisfaction with banks since consumer dissatisfaction with banks began being monitored 15 years ago. New regulations were passed last year that helped, but it hasn’t stopped banks from trying to find new ways to extract instant cash from their customers.

Frustration over overdrafts

The bulk of consumers’ ire is about overdraft fees. A practice among some large banks is to clear large transactions first. This way, if multiple overdrafts occur due to a few small purchases, those fees stack up.  Say a person pays their power bill, buys a pack of gum, a coffee and a sandwich over the course of one day with their debit card, but only has enough money to cover the power bill. The bank will clear the largest purchase first. That way, the smaller purchases made when the account was in overdraft can all result in the most fees possible. This practice makes a lot of quick payday cash for banks.

Interest rate can be astounding

Overdraft fees can be viewed as sort of a loan until payday, as the customer is technically borrowing money and paying a fee for it. That said, a $35 fee on a $1 overdraft, is 3,500 percent in simple interest. That works out to 1,277,500 percent APR.

Sources

ABC

Recent college graduates have higher unemployment than average, and have less of a pay day to look forward to than ever. Image from Wikimedia Commons.

One of the hardest hit groups in the job market are recent college graduates. The unemployment rate for the recently graduated is 50 percent higher than the national average. A lot of people have a smaller and less likely pay day if they can get one after graduating.

Fewer pay day opportunities for recent grads

Recent college graduates have one of the highest unemployment rates in the nation. Currently, Americans aged 20 to 24 have an unemployment rate of 15 percent, according to USA Today, making it hard to get a decent pay day for people who have worked hard to make better opportunities available to them. That’s 50 percent higher than the national average, which is just under 10 percent. Many recent graduates have to resort to taking internships, or have to start far lower on the ladder, and take far less payday cash for their effort, as a result. A college education is supposed to be a great investment, and eventually it does pay off, but an average student debt load of $24,000 or more can make things very difficult. With a debt load like that, it’s no wonder people sometimes need a loan until payday.

All hope is not lost

However, there are things that recent graduates can do to bolster their chances at earning a position of gainful employment. For instance, taking some time to edit one’s resume so it emphasizes the unique strengths a person has will always help. Also, 70 percent of employment opportunities come from networking, so using the contacts that one has is an absolute must. After all, fraternities and sororities aren’t just about guzzling Four Loko. Going to the student employment office and job fairs is a good idea, too.

Harder to make the American Dream reality

It is becoming a harder proposition for people to attain the American Dream. More Americans are getting saddled with more and more debt just to make a decent living these days, and it’s no wonder people are having to run for payday loans.

Sources

USA Today

You can get a cash advance on checking or a credit card, but you may be better off with a payday loan. Image from Wikimedia Commons.

Fees for a cash advance from a credit card or on a line of credit are rising. After the passage of the CARD Act, companies that offer loan credit through credit cards have to find ways to boost their bottom line. If it keeps up, consumers may be better off with a payday loan.

Cash advance fees are going up

The most common method of getting instant cash from credit is to go to a bank, in case you run into overdraft or need a loan until payday. A person simply draws out a certain amount of instant cash from their line of credit into their checking account, and then the balance is paid off the second the next deposit into said account is received. Bank of America and Wells Fargo charge about $2 per every $20 loaned, or about $10 per every $100. Another way to do it is to get a cash advance from a credit card. Essentially, a person withdraws money from their line of credit on the card, and has to pay a fee on top of the monthly interest. Those fees, according to Bankrate, have been increasing since the passage of the CARD Act of 2009.

Then there is a payday loan

Granted, the fees have only gone up 1 percent in that time. However, when that balance, along with that fee, is added to a balance, the interest on it can add up over a long time if it isn’t paid off. Lines of credit – like credit cards – are revolving, or in other words a person has to make payments. In essence, credit cards are revolving installment loans with a plastic card tied to them. Checking advances, like payday loans can be, have to be paid off with the next deposit.

The risk

The only thing is that a payday loan lender has more flexibility with payment plans. A bank will simply take the amount owed from a cash advance, and not offer a payment plan. A payday loan store can offer a little more flexibility. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Dealing with credit cards and other debt can be like running up a down escalator, and more people are paying them off than ever. Image from Wikimedia Commons.

Americans are paying off debt in greater frequency, as the popularity of open-ended credit loans is declining. The near collapse of the credit market has led to more people questioning the value of debt. More people want their payday cash going to their own pockets, not to banks and loan lenders.

Credit card delinquencies decline

For the past year or so, more people have been paying down their debt on credit cards and open-end credit loans, as fewer people feel comfortable saddled with large debts. Bank of America, the largest consumer bank in the U.S., has reported that charge-offs from credit card delinquencies has dropped from 13 percent to just under 10 percent since the beginning of the year, according to ABC. JP Morgan Chase had charge-offs drop from 7.78 percent to 7 percent between September and October alone. Charge-offs for Discover dropped to 6.83 percent from 7.15 percent in the same time period. More people are paying off debts, as having to keep making installment loan payments is never pleasant, and more people would prefer to keep their payday cash for themselves.

Open end credit can be the most harmful

Credit and finance loans extended by more traditional or mainstream loan lenders can actually be the most harmful. Though interest rates may seem lower than on a cash advance or a payday loan, making minimum payments for years can, in fact, be worse than the fee on an occasional payday advance. Also, since the typical payday loan is only for a few hundred, rather than than a few thousand dollars, the risk of ruin and bankruptcy is less. Interestingly enough, annual interest rates on loans that mature in two weeks are hundreds of percentage points lower than overdraft fees.

No one likes debt

More people are realizing the nightmare that debt is, and many Americans are taking steps to get out of it. Debt was something most people used to avoid, and there is a good reason for it. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Unless one wants small loans, the credit market's incredibly high credit rating requirements leave many grasping at straws when they need financing. Image from Wikimedia Commons.

Demand for bank loans for housing is very low, even though rates are at the lowest in decades. It’s great for those with perfect credit scores, but small loans until payday may be the only credit available for a lot of people for some time.

Demand for mortgage loans drops

The bottom fell out of the real estate market, and it has been scrambling to get back to health ever since. There were some signs of life following the homeowner tax credit, but since it expired, demand for bank loans has stayed low. In fact, according to USA Today, the percentage of Americans counted as homeowners is at the lowest level in more than a decade. The 66.9 percent of Americans that own their homes, or have secured financing through a loan lender to buy a home, has not changed all summer, indicating that people either don’t want, or can’t get a loan to buy a house. It is no surprise that the only people who can get financing have near perfect credit.

Small loans might be all that is left

Small loans like payday loans or cash advances may be the only source of credit left for many people. It’s a growing segment. The payday lending industry began sometime in the late 1980s, and by the early 2000s, had more locations open than McDonald’s or Starbucks. Credit is something that will always be in demand, including a loan until payday, even if states are starting to regulate payday loans out of business.

Recovery will take some time

The only credit segment in the economy that is still booming is for small loans for people with bad credit. Payday lenders only started because mainstream finance wouldn’t touch the people they sought to extend a hand to. It may take awhile before things are back to normal. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Ignoring mainstream consumer debt while criticizing payday loans as a debt trap is like killing the anchovies to save the sharks. Image from Wikimedia Commons.

Even with a down credit market, consumer debt levels make a payday loan debt trap seem like small potatoes. Most studies of the payday lending industry indicate that all payday lenders in America do less than $50 billion a year in business. There is 20 times that amount in outstanding debt on credit cards. Consumer debt, which people are encouraged to take on, is more of a debt trap than any payday loan could be.

$11 trillion debt trap is not from payday loans

According to Fortune, the mortgage industry does far more in business than payday loan lenders do. In fact, there is $10.6 trillion in outstanding mortgage debt. Mortgages, if they are configured with prepayment penalties, are meant to keep people paying.Credit cards are, too. There’s about $822 billion in debt on credit cards. Aside from mortgage loans and credit cards, installment loan debt, or debt from student loans, auto loans, and so forth, totals $1.6 trillion. Even more astounding is that these figures are a reduction from previous years.

The payday loan industry could not compete if it wanted to

The payday loan industry is 20 times smaller than the credit card industry.  The sum total of the all cash advances and payday loans lent out is less than $50 billion per year. Furthermore, most studies of profitability of the short term loan industry indicate profits at the largest of payday lenders are 10 percent or less. With such small margins for profit, according to the research that has been done, there is no way that any loan until payday is nearly as bad as critics contend.

Small fish in a huge pond

Payday loans are such a small portion of the overall credit market, that it seems ridiculous to single them out compared to other sources of debt. However, payday lenders don’t have the benefit of multi-billion dollar ad campaigns. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

A person needs a payday to get a payday loan. Image from Wikimedia Commons.

The idea that payday loan lenders want to loan to anyone and everyone to get them hooked is ridiculous. Critics of the industry like to make claims about an awful debt trap and of predatory lending. The story goes that anyone with a pulse can get a loan of they ask. It isn’t true, and if any loan lender did business that way it would soon be out of business.

Pay day is the operative phrase in payday loan

A person has to have upcoming payday cash to get a payday loan. It’s as if the phrase “payday” somehow goes unnoticed, and that is not exactly the best way to build an argument. In order to get a payday advance, a person needs an upcoming payday; it is that simple. There are some glaring contradictions to claims about payday loan lenders, first being that they will let anyone borrow money, regardless of ability to repay. Nothing could be further from the truth. Not only do lenders pay strict attention to ability to repay, but if they ignored it they would soon be bankrupt and looking for a loan until payday themselves.

Ability to repay is the first criterion

The absolute first criterion among payday loan lenders for loaning money to someone is whether they can pay the loan back. Not only that, but the size of a loan is often pegged to income. The claim that lenders disregard income level and just loan to everyone is preposterous. Study of the payday loan industry reveals that profit margins are incredibly tight, leaving little room for error. One study found that a lender has to successfully lend and fully collect six loans to come up with enough money to lend one single small loan.

Only one industry was able to disregard income

There was only one industry that was able to disregard ability to repay, at least for awhile. Pressure on Congress got banks pressured into lending mortgages to people that couldn’t afford them, which led the subprime mortgage crisis, as risky mortgages had to be insured against. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

A credit card ban would be more beneficial than a payday loan ban. Image from Wikimedia Commons.

More than one social crusader has called for a payday loan ban. They paint a scenario in which people get hooked into a horrible loan until payday because they are desperate. Then an awful spiral of debt begins, and eventually the person is left penniless. The problem is that the reason a person had to borrow money in the first place is never addressed. If people were that concerned with burdens on the middle class, a ban on credit cards would be better.

A payday loan is borrowed for a reason

No one gets a payday loan for fun. The decision is never arbitrary. That supply and demand are involved often is left out of arguments over payday lending. A person needs to borrow money, so that person goes to a payday loan lender. The most common reason, according to most studies, is an unexpected expense that has to be covered. A power bill needs to get paid or a payment made on time, and a person can’t cover it. Some wonder whether a person would be better off using a cash advance from their credit cards instead of borrowing money from a payday lender.

Credit usage among payday borrowers

People who borrow payday loans often use other forms of credit as well. A 2009 study of payday loan demand showed 91.6 percent of payday customers used other forms of credit. Borrowers are also found to have income ranges normally between$25,000 to $49,000 per year. People in the middle class, in this age of stagnating wages, often have to rely on credit cards to maintain their lifestyles. Minimum credit card payments can lock a person in for decades without touching the principle on a card.

Why credit cards are less frequent targets

One of the principle differences between the credit card industry and the payday loan industry is that credit cards are seen as an “institution.” Many people have the idea that an institution is good just because it is an institution. That is rarely the case, and a lot of people wouldn’t need a loan until payday if they hadn’t already been stretched thin by credit card payments. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

Banks and credit unions don't offer a loan until payday like a payday loan lender, because they can't. Image from Wikimedia Commons.

There is a good reason a traditional bank or credit union doesn’t offer a loan until payday to customers. Many people have wondered why it is that a small loan for a short period of time is solely the province of payday lenders. Banks and credit unions steer clear of the practice. There are good reasons why payday loans will never be offered by traditional institutions.

Typical institutions do not offer a loan until payday

A lot of people have observed that while you can visit any payday loan store for a loan until payday, a similar loan is not available at a bank or credit union. It turns out there are some very good reasons for that. Firstly, banks and credit unions have to shield themselves against risk. Most people who use payday loans when they need to borrow money do repay them, but the limited documentation needed is less than the average bank or credit union is willing to accept. Part of bank underwriting criteria is normally to perform a check of credit scores, which a person who needs quick cash doesn’t have the time to wait for.

Studies prove they can’t

Banks and credit unions cannot afford to offer a loan until payday, the way a cash advance or payday loan lender does. It isn’t profitable enough for them, and a bank’s first priority is usually the shareholders. A study by Victor Stango revealed that not only were credit unions not able to offer lower prices on payday products and break even or profit, they were also hampered by not having hours or locations as convenient as payday lenders. The same study revealed only 6 percent of National Credit Union Association members offered a similar product.

Reformers should not hold their breath

It is not likely that banks or credit unions will offer a loan until payday anytime soon. They have status as institutions, which leads many to think they are safe. However, the credit cards and overdraft policies many have makes them anything but. You can read more in the Payday Loan Facts and Statistics Report on Personal Money Market.

To keep people safe from real gangsters, it's best to keep loan credit like payday loans legal. Image from Wikimedia Commons.

Loan credit that is considered subprime is something that will always exist. The mortgage crisis over the last few years brought the term “subprime” into the national lexicon, and it applies to borrowing money from a loan lender without the credit scores that a top notch, or prime, lender would lend to. Bad credit loans come in many forms, such as a payday loan, a home loan or a car loan.

Loan credit did not always depend on scores

Loan credit, or credit of some sort, has existed for a lot longer than the current system of finance. Often enough, what was needed to secure credit was the promise of a future pay day. For instance, the organization that later became Bank of America gained great success by offering quick and easy loans, secured only by a promise to repay, after the 1906 earthquake and subsequent fire that ravaged San Francisco. Credit cards didn’t exist until the latter half of the 20th century, but people still occasionally needed a loan until payday.

Real loan sharks

Today, people who have stable income and a bank account can get a payday loan if they need one. As long as a person is responsible when he or she borrows money from payday loan lenders, there is no danger. However, prior to the early 20th century, it was a different story. Back then, if people needed money, they had to go to an underground lender, or “salary buyer.” Essentially, a person would borrow a portion of his next paycheck, which had to be turned over to the salary buyer. However, salary buyers could charge whatever they wanted and extract payment any way they wanted.

Supply and demand are real

As result of public outrage at underground lenders like “salary buyers,” states passed small loan laws, which raised usury rates. That way, people could have a supply for demands that were met legally and safely. Banning payday loans will keep real loan sharks in business. You can read more in the Payday Loan Facts and Statistics report on Personal Money Market.

Something like short term loans lending has gone on since before the Parthenon was built. Image from Wikimedia Commons.

Despite objections from critics, short term loans have been part of human society for a long time. Short term loan lenders have always existed. They aren’t likely to be going anywhere, either. There have been many calls made for usury caps, just like in the good old days. The thing is that the good old days are an idea of a time and place that never really existed. People will always need a loan until payday, and they will always be able to get one.

Advance cash in the ancient world

The history of short term loan lending is longer than some think. Short term loans were lent against a future payday of sorts, often a harvest or lot of manufactured goods for sale. For instance, a barley farmer would borrow money for seed and repay the lender either with a portion of the harvest, or part of the proceeds of the sale of that season’s crop plus interest. The Code of Hammurabi, among the earliest law codes, had provisions concerning the lending of emergency money, debt payment and collection practices. So did the Twelve Tables of Rome.

The heady days of usury caps

In the early days of the United States, each state had a usury cap. Usually it was set below 10 percent. However, similar services to payday loan lenders existed then. In the 19th century, small, short term credit against future earnings was borrowed from underground private lenders or small loan companies, beginning in large urban and industrial cities. The borrowers were usually the lower middle class and would pay the loans until payday back over a few months. As these loans could not be made under the usury caps of most states, they were unregulated and illegal.

Regulation made satisfying demand illegal

In order to meet demand, people had to borrow from illegal lenders. In order to make meeting demand safe and legal, states began passing laws raising the cap for small loans. Demand is what drives payday lending. People will always need it, and will always get it You can read more in the payday lending facts and statistics report on Personal Money Market.

Payday lenders don't deserve to be labeled "sharks." Image from Wikimedia Commons.

Over the past few years, the term “predatory lending” has been brought up a lot, and the term is often leveled at payday lenders. The payday lending industry has been called just about every name in the book. These accusations are inaccurate. Furthermore, it isn’t fair to level these terms at the typical short term loan lender. In fact, it is hard to call any lending institution a “predatory lender.” The reason is that no one really knows what that phrase means.

Predatory lending didn’t exist until 1994

In the wake of the mortgage crisis, there has been great outrage at “predatory lending,” a buzzword of the last two decades. According to Adair Morse and others who have studied whether payday lending is predatory, the term was first coined in 1994, and rarely used until at least 2000, and didn’t gain prominence in the national lexicon until after 2005. The phrase, like others, are conjecture at best. A small loan lender is no more a predatory lender than a mortgage company.

The spread of buzzwords

There is a social phenomenon known as “buzzwords.” Some of them are tied to legitimate concepts, but any buzzword should be viewed with a skeptical eye. Many of them have differing meanings and fuzzy logic. The term “predatory lending” would presume that a loan was lent to a person who was desperate, couldn’t understand the terms, or couldn’t really pay it back. Since the typical payday advance lender explains terms well, and can’t afford to lend to people who can’t pay the loan back, that standard can’t really be applied. However, that is only a subjective definition. Someone else could think something else entirely.

Who is really predatory

Think of the debt burdens many think of as “good.” A new car costs almost $20,000. A new house costs over $150,000. These debts can lock a person into a lifetime of payments only to never realize the benefits of ownership. That sounds far more predatory than a loan until payday. You can read more in the payday loan facts and statistics report on Personal Money Market.

A GM IPO has just been filed, and the installment loans from the Treasury will get a huge payment toward them. Image from Wikimedia Commons.

General Motors has finally put in the papers for what has been anticipated for weeks. A GM IPO has just been filed, although exact details are not known yet. So far, what is for sure is that GM will be offering preferred shares, but how many shares is unclear. This will bring the company a good amount of debt settlement relief, as it might pay off a good chunk of its debt to the U.S. Treasury. It will get the company closer to independence, and maybe get it some big time cash quick.

GM IPO to begin soon

General Motors filed for a GM IPO today. According to the New York Times, it could be quite the pay day for an IPO. The company will be offering preferred shares. However, GM hasn’t announced the total number of shares the company will be selling. Chairman and CEO Ed Whitacre announced he will retire completely from GM by the end of the year; he’d previously said he’d retire once the company was back on track. An initial sale of shares will probably liquidate a lot of debt.

Clearing of debt a major bonus

Among the many benefits of this sale of shares, and re-listing of General Motors, will be paying off a large part of the installment loans from the Treasury. According to CNN Money, the Treasury has agreed to sell some of the government’s stake in General Motors. Currently, the U.S. Government holds 60.83 percent of GM shares, and the Canadian government holds a further 11.67 percent. GM has paid the Treasury back about $7 billion so far.

Getting back into the black

General Motors, with this Initial Public Offering, will get at least part way to paying the debt the company owes to the U.S. government. GM is posting profits again, so it isn’t as if GM will need another loan until payday from the taxpayers again. The IPO would have to clear about $67 billion for taxpayers to break even on the auto bailout.

Further Reading

New York Times

CNN Money

Mortgage closing costs are getting expensive for people looking to pay off mortgages or sell their homes. Image from Wikimedia Commons.

One of the costs of a mortgage loan is the closing costs, or the fee you pay when you finally pay your mortgage off or sell your home. The costs can be considerable, and the average closing cost nationally is several times more than the average payday loan. The average amount of a closing cost has risen nationally, although not universally. New regulations are in place, and with the turmoil of the real estate industry, it will be hard to tell when it has recovered.

States with high closing costs

According to Bankrate, the most expensive state in the union for closing costs is New York. The closing costs for paying off a mortgage in New York would have a king hurting for a cash advance. The average New York closing costs for a $200,000 mortgage is $5,623. It’s too bad there isn’t  closing cost modification to go with mortgage loan modification. Considering how strapped many people are these days, that sum will send most out to get a personal loan, as not everyone has that much instant cash socked away for a rainy day. Texas, Utah, California and Alaska were the five most expensive states to close a mortgage in.

Closing costs rise nationwide

Closing costs for mortgage loans rose 36.6 percent overall. Lender costs rose 22.8 percent, and third party fees went up 47.2 percent. Last year, the average cost was $2,739 and that rose to $3,741. That’s an increase of more than $1,000, which is about three times the typical loan until payday. Since the housing market is depressed, funding for a mortgage loan is harder to secure. There are also more rules governing many aspects of consumer finance.

Costs to lenders rising also

Part of the increased rates is the fact that costs have gone up for lenders as well. A mortgage lender now has to provide a good faith estimate of the closing costs, and penalties are assessed as of this year if the estimates come in under the actual costs. The Federal Reserve also banned bonus incentives for loan brokers who sell customers on higher rates than they might normally pay, according to the Los Angeles Times. However, if turning a profit depends entirely on bilking the consumer, then change is needed to a business.

Further Reading

Bankrate survey of closing costs

Los Angeles Times

A guaranteed loan is good to keep you from bouncing checks. Image from Wikimedia Commons.

The functions of personal finance and high corporate finance are different, but believe it or not, the two are not completely dissimilar. The companies which need some guaranteed loans at some time, or at least a line of credit in case they need a short term loan are some of the biggest names out there. The Ford Motor Co. needed guaranteed loans from the government. Ford is getting out of debt in double quick time. Meanwhile, Freddie Mac and Fannie Mae need more guaranteed loans to stay afloat.

Guaranteed loans for Ford

During the worst of the recession, the Ford Motor Co. borrowed $23.5 billion to stay afloat and keep Ford from having to file bankruptcy and ask for bailout money. During the car bailout, Ford didn’t need any auto loans, but merely asked for lines of credit as a contingency. It turned out not that asking for emergency loans from the government at that moment panned out. While Chrysler and General Motors were figuring things out, Ford’s sales went up 22 percent, according to the Wall Street Journal. Sometimes just knowing you can borrow can give a boost of confidence; some people like knowing they can get a loan until payday if they really need it.

More guarantees needed for mortgage giants

Meanwhile, Fannie Mae and Freddie Mac need more guaranteed loans from the government in order to stay solvent. According to ABC, Freddie has lost about $6 billion for the second quarter of this year alone. The money hemorrhaging firm is asking for another $1.8 billion from taxpayers.The twin mortgage giants are struggling, and both have less than two years to get their affairs in order. That’s when Treasury Secretary Tim Geithner isn’t going to cut any more checks.

Fortune 500 companies have credit scores too

One of the motivations for Ford is that the credit rating for the agency improves as they pay off debt. Just like paying off a credit card improves your credit score, it works for big companies too.

Further Reading

Wall Street Journal

ABC

Credit companies will still have you fork over the cash for a cash advance. Image from Wikimedia Commons.

After the CARD Act, or the so-called Credit Card Holder Bill of Rights, passed Congress, credit card companies started to think of new ways to increase revenue. Credit card companies now are figuring out ways to legally charge more for using the credit they extend. There are greater interest rates being assessed. Late payment penalties and charges for credit card cash advances are also increasing.

Credit card companies legally charging more

When regulative or restrictive legislation is passed, the industry being regulated or restricted will find new ways to improve business legally. Credit card companies are finding ways to not break the laws of the CARD Act, but still make the bottom line. According to the Wall Street Journal, card issuers disclose to customers that interest rates will increase because of late payments, but they do not have to disclose the amount of the increase. Credit card cash advances have gone up to 24 percent interest for bank cards and credit union cards are up to 16 percent.

Credit unions have lower fees

A recent study found that most fees or charges associated with credit cards were lower on credit union issued cards. The average bank issued card carries a late fee of $39 and the average credit union late fee is $25.  Card issuers also didn’t halt annual fees. Only 1 percent fewer cards had an annual fee from 2009. However, annual fees average $59 for bank issued cards and $25 on cards from credit unions. According to Newsweek, the average APR charged on credit cards overall has risen more than 1.5 percent in the last year. Free checking accounts might also become a thing of the past as well.

The mad dash for customer cash

Credit card companies are looking to bolster their bottom line, and with new laws on how they can charge you, are starting to raise their rates. It might soon be that more people are getting payday loans rather than use their cards, unless payday lenders are regulated out of business by the new Bureau of Consumer Financial Protection.

Further Reading

Wall Street Journal

Newsweek