Tag Archives: savings
Fixed Rate Bonds vs. ISA's (Page 1 of 2)
It is difficult to know where to put your money these days to get the best returns, especially with the way the economy has suffered over recent months, pushing the Bank of England to make a string of cuts to its Base rate which have in turn been passed on to savers rates.
With the Base rate now down to the lowest level ever recorded, rates on normal savings accounts have been slashed, which has limited our saving options.
The two obvious choices in today’s savings market are Fixed Term Bonds, and Individual Savings Accounts (ISA). Although both types of savings accounts have their similarities, there are several advantages and disadvantages to each and it is this topic of discussion that this article will be focussing on.
Fixed Term Bonds
Fixed Term Bonds provide a rate that is fixed throughout the duration of the bond, giving savers a predictable income with no surprises. Once you have chosen a fixed term account, you are able to calculate exactly how much interest you will earn, minus the tax, to give you your end balance.
Most Fixed Term Bonds offer very high deposit limits, generally between £500,000 to £2 million, but some, such as ICICI, will let you invest as much as you like. You must deposit the full amount upon opening the account and cannot add to this once active.
There are no limits to how many fixed term bond accounts you can open within any one year, so unlike ISA accounts, if you decide to close your account for any reason, you can still invest any amount elsewhere at any time.
Fixed Term Bonds generally offer the highest saving rates available, but these tend to be on shorter-term bonds, as they carry less risk to significant rate cuts leading to banks and building societies paying you over the odds in interest for long periods of time.
‘What goes up must come down’
If you are extremely lucky and do your research, you could open a fixed term bond before rates significantly fall, allowing you to earn well above savings rates offered to new and variable rate customers. If you cast your mind back to October last year, when the Base rate stood at 5%, you would be very happy with yourself if you were earning this kind of rate on your savings today, with the Base rate now at 0.5%.
A big element to a fixed term bond account is the “fixed term”. You must be realistic with your finances and only go for this option if you can afford to lock your money away for some time. If you find that you need to withdraw any amount from your account, the bond will close and in most cases you will lose any interest to accumulated to date.
As well as the possibility of rates falling during the life of your bond, you could see the opposite effect, with rates significantly rising, leaving you locked in at a low rate. It is always a good idea to look at recent trends in Base rate changes to enable you to make an educated prediction on the direction it’s headed. Many economists believe that rates will continue to fall during 2009, going as low as 0%.
The Truth About Credit Cards For People With Bad Credit (Page 1 of 2)
When it comes to credit cards for people with bad credit, there are dozens to choose from. However, that doesn’t mean they are all good credit cards to have. While some bad credit credit cards really do work towards improving a person’s credit, others do nothing but fleece the pockets of those who need a second chance.
Here are seven things to look for when dealing with credit cards for people with bad credit.
1. Fees, Fees and More Fees
It is true that credit cards for people with bad credit almost always have an annual fee attached to them. That being said, a few of the questionable bad credit credit cards charge much more than just an annual fee.
One of the popular credit cards for people with bad credit advertises a $48 annual fee. Not bad, right? It wouldn’t be — if that’s where the fees ended. Unfortunately, this card also charges a processing fee of $29, a one-time program fee of $95 and a participation fee of $6 each month.
That’s a whopping total of $178 being charged to your card before you even get it in your hands. Considering most applicants only qualify for a credit limit of $250, that leaves you with an available credit line of just $72. Not exactly the credit card you were hoping for, is it?
Do yourself a favor… When dealing with credit cards for people with bad credit, make sure you understand all of the fees involved and don’t just judge a card by the annual fee or the interest rate.
2. The Facts About Secured Credit Cards
When looking for credit cards for people with bad credit, there are two categories of cards you will be looking at. These categories are called secured credit cards and unsecured credit cards.
With a secured credit card, you have to secure your line of credit with a savings account. Sometimes your credit limit will be equal to your savings account and sometimes it can be more. It really depends on the specific credit card and your personal situation.
Now understand that when you place a deposit for a secured credit card, it goes into a savings account. This is much different from a prepaid credit card. A prepaid credit card will require a deposit as well, but it works more like an ATM card than a credit card and it doesn’t get reported to the credit agencies.
Because people looking for credit cards for people with bad credit usually want to improve their credit rating, it’s important that you find a true secured card and not a prepaid card. Otherwise, you’re not doing your credit rating any good.
3. Cash Up Front Is a Con
We’ve discussed that credit cards for people with bad credit often charge fees. This doesn’t, however, mean that it is acceptable for them to ask you to pay for these fees up front before they issue you a card.
If a credit card company wants you to send them money before they send you a credit card, run in the other direction. Nine times out of ten, it’s a scam. You’ll never get the card and you’ll be out your hard-earned money.