Prepaid Card Use Is On The Rise [Infographic]

For most people the checking and savings accounts that the banking industry provides for us is sufficient. But for a small and ever growing percentage of Americans it doesn't work. For people with a steady income and an ability to maintain a subjective balance, the banking system provides a decent product. For some it just doesn't work. Enter prepaid cards.

Prepaid cards allow the unbanked to have a way to participate in the banking systems requirement for plastic cards. It also allows people to have an amount of money saved that is easy to access through ATM's. While there are still banks that provide a free checking accounts, if you follow their rules, the prepaid card user enjoys no such thing. The unbanked is subject to a slew of fees, which are mostly excessive.

The infographic below demonstrates the statistics of a growing use of prepaid cards.

Infographic courtesy of  caxtonfx.com

Debt Relief Options in Canada

Many consumers have spent time in recent weeks and months researching different debt relief options available to them in Canada. Credit card debt is among the biggest challenges people face with their budgets today. High account balances create high monthly payments. This is coupled with high interest rates, which make those high monthly payments fairly ineffective at reducing debt balances quickly. Different debt programs are available to help consumers more quickly eliminate debt. However, before choosing a debt program, consumers should take time to explore these options in detail.

Two Main Types of Relief Options
There are two main types of debt programs available to assist consumers with their financial situation today. These include debt consolidation loans and debt settlement. Through a consolidation loan, all credit card debt is refinanced into a single loan. No debt is eliminated through the refinance process, but the new loan is structured to provide faster repayment results. Credit cards are difficult to pay off because they typically have a high interest rate as well as a revolving term. Most consolidations loans have a lower interest rate and a fixed term, which allows account balances to be paid off within a few years. The other option to consider is debt settlement. This solution can create an immediate reduction in debt balances. Through this process, a consumer first must provide a lump sum of cash to be used as a negotiation tool. A professional debt negotiator contacts creditors to request a reduction in account balances, and the lump sum of cash is used as an incentive for them to agree to a balance reduction. If they agree to reduce the balance, they will receive a portion of that lump sum for immediate repayment of some of the debt.

Which Relief Option Is Best?
The two options are quite different, but both can have significant and beneficial results on a consumer's financial situation. Consolidation loans may require a consumer to have good credit scores initially, so this may be more suitable for a consumer who has managed to pay most bills on time despite struggling with debt. Debt settlement, on the other hand, does not require a consumer to have a certain credit score. It is more suitable for those whose credit has already been affected by their debt situation. Further, a lump sum of cash is necessary for this strategy to be successful, so a consumer will need access to cash either through equity in a home, by saving for it or through another option. There is no solution that is best for everyone, so a consumer will need to review the options and choose the solution that is right for him or her.

Estimating the Results
Consumers can utilize a debt calculator to estimate monthly payments with each solution. This can help a consumer to determine which relief option is more affordable. Further, these calculators can help a consumer to determine the results of each program and see how quickly debt may be paid off. Using a calculator can help a consumer to determine which solution may be best. 

It can be difficult for a consumer to pay high account balances off on his or her own. These different relief options are available to make repaying debt and becoming debt free a faster and easier goal to accomplish.

How Credit Cards Cost Us More Money

 (Photo credit: Wikipedia)

Some of us grew up in the days before credit cards were terribly prevalent. Forty years ago, you might have had a department store credit card, or perhaps a credit card for a gas station. Visa and MasterCard were around, but they didn’t have the kind of widespread acceptance they do today.

While the days of cash may be dwindling, some new research is shedding light on just how this shift has affected consumers. The method we choose to use for payment has a significant impact on what we choose to buy. Some new research from Professors Promothesh Chatterjee and Randall Rose of University of Kansas and University of South Carolina respectively suggests that this impact is significant, and even affects how we remember a purchase after the fact.

Cash means a focus on cost

In the study, customers who were primed to use cash for a given purchase came out as much more concerned about cost than they were concerned about benefits. For example, here are some of the observations in the study

• Cash customers responded more quickly to cost-related words.
• Cash customers had greater recall of cost-related aspects after the fact.
• Cash customers exhibited recall problems with benefit-related words.
• Cash customers often choose less expensive products, even those with inferior benefits.
• Cash customers were more likely to identify a wide range of cost factors beyond just price, such as installation or delivery costs, warranty costs, and even delivery time.
• Cash customers experienced more of the pain of payment. Every time a transaction takes place, money goes away while the consumer watches.

As you might expect, the opposite is often true when it comes to those customers who use credit cards.

Credit cards mean a focus on benefits

Those customers who were primed to use credit cards weren’t nearly as focused on costs as cash customers. Here are some observations from the study about credit card customers:

• Credit card customers responded more quickly to benefit-related words.
• Credit card customers had greater recall of cost-related aspects after the fact.
• Credit card customers exhibited recall problems with cost-related words.
• Credit card customers often chose indulgent or high-image products.
• Credit card customers made more cost errors than cash customers.
• Credit card customers experienced less pain of payment, because the process of consumption is decoupled from the payment process.

What this means, at least in part, is that customers using credit cards came out of the study as being much less concerned with cost than they were with what the given product could do for them.

Choosing the right payment method at the register

What does this mean for older Americans? Really, it reinforces something we probably already know: using credit cards can cost us more money. This is true not only because of the interest or fees we often face with credit cards, but because of the way paying with a credit card affects our choices as consumers.

If you want to make smart financial choices, let payment method be a factor in how you shop.

David Rodwell is an experienced writer who covers everything from business to personal finance. Check out his site CreditCardProcessing.net for similar articles.

When Mutual Fund Management Changes Is It Time To Sell?

Asset Allocation on Wikibook (Photo credit: Wikipedia)

Mutual funds come in many different types and styles. With over 5,000 different mutual funds out there, knowing the right one to choose is difficult. When you finally make the choice of a mutual fund you have the concern of when will be a time to sell it. What percentage of decline are able to endure. On the upside, when do you sell it to take profits. It's can be confusing.

Recently, Howard B. Schow, 84, a well-regarded manager of Vanguard mutual funds such as the $30.1-billion Vanguard Primecap, died of natural causes April 8 at Huntington Hospital in Pasadena. Schow's years at Vanguard started when he landed the contract with Vanguard to run its new Primecap fund. Schow was at Vanguard and work along side Jack Bogle for many years.

Schow's management style cited the importance of patience to go along with savvy stock picking. "We don't go for 20% or 30% gains," Schow said. "We go for triples, quadruples, octuples. But that takes years." "A lot of doing well is drudgery," he added. These quotes come from a rare 1994 interview with Forbes magazine, the publicity-averse Schow cited the importance of patience to go along with savvy stock picking.

Now that Schow's influence on the company is gone, how will this affect the performance of the mutual fund if any. Should the investor jump ship or hang in there and see what happens?

According to Forbes.com, there are eight reasons to dump a mutual fund. Forbes advice is that there does come a time when selling is a good idea because even though buy and hold is recommended, it's not forever.

Portfolio Rebalancing.
In your mutual fund portfolio you have an asset allocation that conforms to your risk tolerance and long term investing plans. Some mutual funds do better than others and gain a disproportional percentage of the portfolio. Selling off the gainers and rebalancing the entire portfolio, through purchases and sales, puts your investments back into the asset allocation that your plan calls for.

Mutual Fund Changes.
Here is where Howard B. Schow's passing on can be a reason to sell the investment. Will his investment style continue on now that he is gone? He has been a manager for so long and his day to day influence even to the end could possibly influence the fund for years to come. But eventually his successors will flex their muscles and run things the way the want to, it's inevitable.

Investor Growth.
A novice investor usually starts out investing in mutual funds. They feel other forms of investing like stocks, bonds, real estate, and collectibles is to complicated while mutual funds are relatively simple. As the investor increases in experience, there is an urge to try out other types of investing.

Life Cycle Changes.
While in the accumulation phase, the investors prefers stocks as a big part of the portfolio. But as the investor's needs change they may want less volatility so they move away from equities. The investing goals may change causing a shift out of the market to more fixed and safer investments. Moving to safer products or college savings plans does restructure the portfolio.

Mistakes.
Sometimes you just pick the wrong mutual fund. You may find that the fund is too volatile for their tastes. You could also have too many investments for one type of asset allocation and you want to adjust to simplify your portfolio.

Something Better Comes Along.
This doesn't refer to chasing the high flyer's or fad mutual funds. If you can find an investment that is doing something in a way that is better than what you have now, maybe you should consider moving to it. Finding mutual funds that are doing what you need to have done in the style you need it done in a way that will increase your return and save you money .

Tax Reduction.
Mutual funds held in taxable accounts, might be down substantially from their purchase price. They can be sold to realize capital losses that are used to offset taxable capital gains and thus lower taxes.

Keep in mind the sales charges, short term trading fees and taxes when you want to sell. If any of these factors don't apply then all the better reason to sell.