Tag Archives: parents
The Pros And Cons Of Prepaid Credit Cards (Page 1 of 3)
Observers in the lending industry have estimated that there may be at least 50 million Americans who are not able to qualify for credit. These consumers are usually young, often members of the minority groups and unbankedÂ…and they are faced with the long-standing dilemma of credit: how can I build my credit record if no one will give me any credit at all?
One of the answers offered by credit card companies is a variety of prepaid credit cards, designed for use by specific segments in the market. The prepaid credit cards are meant for that significant portion of the population that cannot meet the qualification criteria for regular credit cards, or who qualified before but have since lost their credit due to repeated defaults and other reasons.
Advantages of Prepaid Credit Cards For those who do not have enough credit history or have had it blemished, prepaid credit cards are an effective way to build or slowly rebuild credit. That may not happen immediately, but it is something to work on over time. The banks that issue prepaid credit cards are also prepared to extend normal credit the moment you are able to show that you have become a worthy credit risk.
For the moment, you may have to make do with prepaid credit cards. You can use prepaid credit cards as you would any other regular credit card to purchase airline tickets, reserve hotel rooms, or order items online.
Prepaid Credit Card for Students
There is a special prepaid Visa credit card for students, which offers a lot of convenience not only for the students but also for their parents. These reloadable prepaid credit cards offer parents several options on how to reload. Parents can add money to reloadable prepaid credit cards by depositing money, by arranging an automatic transfer of funds from their account (a deposit account or their own credit card account), or by online transfer. Using the prepaid Visa credit card is no different from giving the regular allowance to their child, only they do so by electronic means and there is no more cash that changes hands.
The big advantage of the prepaid Visa credit card is that the student is limited to spend only as much money as there is in the card. The parent is thus able to control to some extent the spending behavior of their child. They can use the prepaid credit card anywhere that the credit card brand is accepted.
Prepaid Credit Cards as Gift Certificates Some prepaid credit cards function like gift certificates. You buy the prepaid credit card for a certain amount, and your recipient can purchase items with it at any of the brick-and-mortar stores or online merchants, and also for mail order items, that accept the particular credit card brand. Your recipient can use the prepaid credit card only up to the amount of money that you loaded on it. This particular version of prepaid credit cards is non-reloadable.
Like any gift certificate, recipients of prepaid credit cards can buy whatever it is they want at any time they want. Unlike a gift certificate that, when it gets lost is lost forever to the recipient, prepaid credit cards may be replaced if it gets lost or is stolen.
How Parents Can Find The Best Secured Loans Deal To Help Their Children Get A Home Loan
With the property market heating up, there has never been more pressure for first time homebuyers to purchase their own homes. Interest rates are at record lows and competition between buyers is driving up property values. As such, people who have never had a home before should seriously consider buying now. For many first time homebuyers, however, buying a home is difficult, especially if they don’t have a very large deposit to put towards their home loans. Not surprisingly many parents are choosing to help their children buy a home through a number of different ways. Many parents are in a good position to help their children with their first home, but deciding what form that help takes can be difficult. This article will look at what parents can do in order to get their children on the property market sooner rather than later.
Lend Money
The simplest way parents can help out their children is simply by lending them money. This form of lending would usually take the form of a personal agreement between the parents and their children, so it is entirely up to both parties to negotiate a repayment schedule and interest rates. Because the size of a deposit has such a big impact on the interest rates homebuyers will pay for their mortgage, a little boost at the beginning can lead to big savings over time. Although government schemes like Help to Buy have made it much easier for homebuyers to put up deposits of just 5% and still get approved, it is important to realize that these small deposit mortgages will still suffer from some of the highest interest rates on the market. Of course, for personal lending to really be a help, the parents would have to charge less interest than what banks and other lenders currently offer for similar sums.
Using an Existing Home as Collateral
If parents don’t have the money sitting in their bank accounts to simply lend to their children, they can still raise funds in other ways. Since many parents will have a great deal of equity in their homes, getting approved for the best secured loans deal should be fairly easy so long as other factors, like income and credit histories, are taken into account. With this type of lending, the parents would use their own home as collateral when they borrow money from a bank or building society. Because the home acts as a guarantee that the money will be repaid, lenders are likely to offer much lower interest rates due to the lower risk they are taking upon themselves. Parents could then use the money they raise in this fashion to help their children either raise a deposit or to simply help make monthly mortgage payments. However, parents need to be aware that this route is risky as they could have their own home repossessed if they default.
Joint Mortgage
Another way parents can use the equity in their own property to help their children buy their first home is by applying for a joint mortgage with the children. Joint mortgages are usually easier to get since the financial status and credit history of both the parent and the child will be taken into consideration. Therefore, the mortgage is much more likely to be repaid so the bank looks at these arrangements as being far less risky to its own business. As such, joint mortgages usually come with better interest rates than traditional mortgages, especially if the parent uses his own property as collateral. With a joint mortgage, however, both the parent and child will have ownership in the new property, meaning both members are responsible for repayment. Again, if an existing home is put up as collateral then the parent risks that home being repossessed if he and the child cannot keep up with the mortgage payments.
Getting onto the property ladder is notoriously difficult, which is why so many parents are choosing to help their children raise the necessary funds for a mortgage deposit. Parents can help in a number of ways, through a personal loan or by using their own homes as collateral, but whichever route they choose they must make sure they are agreeing to terms that will place both themselves and their children in a strong financial position in the years to come.