Monthly Archives: November 2009

Student Loans for College – 10 Things You Should Know About Student Loans

Student loans mean a lot for college students because their future depends on the money that will be given to them. Going to college is getting more and more expensive every school year which is why student loans are important to students and parents as well. So, if you are thinking about college or student loans in particular, here are some tips and guidelines that would put your college life in perspective.

1. Collect figures

Collect figures mean that you should now look at how much money is needed in order to pay for your education. This means that you should have at least an idea how much is the cost of the tuition and fees of your desired course. Aside from that, you should be able to have an estimate of other expenses like travel costs, college text books, room and board, college tuition, personal expenses, and other things. Continue reading →

Value of Money

Measuring the exact value of money

Syed Zahid Ahmad

Often it is said that money value is declining, but we have yet to find any statistical report over it. The Reserve Bank of India (RBI) as monetary regulator in India monitors different monetary ratios like 1) GDP/Broad Money, 2) GDP/Narrow Money and 3) GDP/Currency with public etc. to evaluate the impact of money on income velocity. But still after 75 years of monetary regulations, RBI is not in a position to tell us exact figure of decline in money value because its approach misses some important factors like growth of credit and accrued interest etc. in broad and narrow money. Actually RBI does not use the concept of gross and net liquidity to measure the value of money at a given point of time.   

The value of all commodities and services could be measured in terms of money, but money cannot be measured through itself. Since money is used to measure and exchange the goods and services produced in any economy, it is better to evaluate money value in proportion of Gross Domestic Products (GDP). The value of GDP at Market Prices in proportion of Broad Money may reveal lowest value of Money whereas Value of GDP at Market Prices in proportion to currency with the public reveals the highest money value. It would be confusing to denote different money value at a time, so it is desirable to find actual money value at a given point of time.   

Considerably it is the liquid of money which allows economic transaction in any economy. Since the actual liquidity in the market differs from Narrow Money (M1) and Broad Money (M3), we need to evaluate actual liquidity in the market which enables sale of GDP at market prices. So, it is better to compare the components of M1 and M3 with respect to actual liquidity. Only then we would be able to understand what RBI is missing to evaluate the actual money value. 

The Narrow Money (M1) constitutes of three factors a) Currency with the public, b) Deposits (other than Banker’s deposits) with RBI and c) Demand Deposits; whereas the Broad Money (M3) is equal to Narrow money plus Time Deposits. Since Time deposits pull liquidity from the market and discourages economic transactions, RBI in general considers Narrow Money as total liquidity in the market. 

But there are other factors considerably increasing the liquidity in the market which are not considered by RBI in calculating Narrow or Broad Money. The first is Bank Credits which as proportion to Narrow Money has increased by 194.41% during 59 years (from 27.07% in 1950-51 to 221.48% in 2008-09). Similarly bank credit as percentage of GDP at Market Prices has increased by 46.73% during this period, as it was just 5.42% in 1950-51 which increased to 52.15% in 2008-09. 

The second factor is the accrued interest over Time Deposits which may be used by the depositors periodically or after maturity. Considerably annual interest on Time deposits as percentage of Narrow Money was just 0.98% in 1950-51 which was found 22.41% in 2008-09. This as percentage of GDP at Market Prices has also increased by 5.08% during 59 years (from 0.20% in 1950-51 to 5.28% in 2008-09). Thus bank credits and interest on time deposits when added to narrow money increases gross and net liquidity above and above the narrow and broad money in the economy. 

So if we really want to evaluate actual liquidity in the market, we need to add these two components into the narrow money. To know about net liquidity in the market we have to add Bank Credits into Narrow Money and to get gross liquidity, we have to add accrued interest on time deposits into net liquidity. 

The amount of Gross and Net liquidity reflects the gross and net purchasing capacity of consumers. So, to evaluate the exact money value at a given point of time, we need to divide the value of GDP at Market Prices with Gross Liquidity or Net liquidity. The outcome will be actual value of money. After analyzing the available data for last 59 years (1950-51 to 2008-09), we have found that the value of money declines considerably if we divide GDP at Market Prices with Gross Liquidity, or Net Liquidity or even with Broad Money. This decline moderates if we divide GDP at Market Prices with Narrow money. Contrary to these evaluations, if we divide GDP at Market with Currency with public, the value of money is found to be increasing. Who will accept this analysis that value of money has increased during 1950-51 to 2008-09? Better we should consider the value derived by dividing GDP at Market Prices with Gross Liquidity as real value of money which has considerably declined by 2.66 points (from 3.9 points in 1950-51 to 1.2 points in 2008-09).        

If we use this mechanism of evaluating the currency value, we may go on evaluating currencies of different countries. The respective points of currencies in different countries may allow us fix actual rate of currency exchange instead of taking purchasing power parity, SDR or US Dollars as base to calculate currency exchange rates. The value of currency in different countries by dividing their GDP with their gross liquidity may help us evaluate exact currency value of different countries, which may be compared among nations to fix exchange rate of currencies at international level. Let’s hope the monetary regulators at international level will start behaving rationally and do justice in protecting values of their currencies and adopt fair currency exchange rates for different countries.

Syed Zahid Ahmad

Article Source:http://www.articlesbase.com/banking-articles/value-of-money-1451257.html

How To Get A Personal Loan

You have need of some money but are not sure the best way to go to get it. With so many different options, you know that there must be a good way to do it, but you aren’t sure which one is best. Here are some of the options that are available to you to help you get the right personal loan.

Payday Loan

Probably the fastest way to get money is to get a payday loan. These are very easy to apply for and can get the money put into your checking account within 24 hours or less. Some of them are very fast, if you need the money in a real hurry. These generally will make available up to $1,000, and some may even go higher than that. Typically, though, the interest is high – around 30%, and you need to pay it back within two weeks. There are options to double the time period, but you also will double the interest.

Secured Loan

This type of personal loan will provide you with the largest kind you can get. It can be used for any purpose that you want. Since it is secured, it means that you will need to offer some kind of collateral against the loan. This means either a car or a house, which are the most common. Putting security on a personal loan will also enable you, if your credit is good, to be able to get the best loan possible, as well as good terms for repayment.

For the larger secured loan, in most cases, you are talking about getting a home equity loan. This is based on the equity on your home and will give you the best rates all around. If you are looking for a way to consolidate your debts, then this is the way you want to go. It will provide you with the best interest rates and will enable you to pay off your bills. Continue reading →

How To Get a Bad Credit Personal Loan

A bad credit personal loan is still a possible – and some will say viable – option. Don’t let a bad credit report prevent you from applying for emergency cash.

While a bad credit personal loan is a good reason for your lender to examine your situation with a fine-toothed comb, do not despair. If lender “A” rejects your application, you move on to lender “B”. A bad credit personal loan is not a social stigma. These types of loans change hands everyday. And people do manage to repair their bad credit, so they eventually qualify for a bad credit personal loan, warts and all.

You and I know that there are thousands, if not millions, of bad credit personal loan lenders out there. In fact, most of these people thrive on the phenomenon of bad credit. Without bad credit, they could be packing their bags and looking for more lucrative ways to make money.

You see, you may not be aware of this but a bad credit personal credit can still generate substantial revenues for the lender. Don’t ever doubt this – or else why do they stay in business? What these lenders like to see on their desks is a higher number of personal loan applications from people with bad credit.

Bankers and lenders have several strategies to turn a bad credit personal loan into a cash cow. They’ve studied the human factor, they know the dynamics of lending and banking, and they have the means to get their money back. There are mechanisms in place – supported by legislation – to ensure that they do get their money back.

A bad credit personal loan will require a lot of supporting documents. Your credit report card, for one, a list of all your assets and liabilities, proof of revenue, and whether or not this is your first bank personal loan for bad credit. It does not end there. Continue reading →

Ready, Set, In Compliance

The Federal Reserve Bank recently updated its Cash Services Operating Circular 2. This update applies to all retail and commercial banks. What does the new compliance information mean? Are you compliant? In this article, we’ll summarize the important changes so you can ensure your cash deposits are in compliance.

<b>Cash Deposits</b>
Under the new compliance, all currency deposits that use clear plastic bags must:

• Have a tamper-evident seal.
• Have a bag thickness of at least 5-mil.
• Be clear enough so that the contents may be easily seen.
• Not contain more than 16 bundles.

Bank notes must be bundled and marked according to the following criteria.

• A bundle consists of 1,000 notes of the same denomination in ten equal straps of 100 notes each.
• For note denominations $1s through $20s, a deposit must contain full bundles of 1,000 notes in 10 straps of the same denomination.
• For note denominations of $50s or $100s, a deposit can be made in the standard strap of 100 notes or in the full bundle.
• Each 100 notes must have only one strap around it.
• Straps must be color-coded, along with the edges, to conform to existing standards of the American Bankers Association (ABA).
• Use white rather than brown or beige straps to provide higher color contrast.
• Use a large and easy-to-read font on the stamp that you use to mark the currency straps.

<b>Coin Handling</b>
The new compliance measures also carry over to coin handling. Coin deposits may be made in either traditional standard canvas bags with seals or plastic bags.

If using plastic bags, they must meet the following requirements:

• Must possess a tamper-evident seal.
• Must be produced with a reinforced handle that is able to withstand a hang test with a 100+ lb. load.
• The plastic film that makes up the bag must have a minimum thickness of 6.5-mil to ensure the durability of the bag.
• The size must approximate that of the standard canvas bag.
• Contents must be clearly visible through the packaging material.
• Each bag must have a label on the opposite side of handle showing denomination, dollar amount, depositor’s name and the routing number.

If using canvas bags to make coin deposits, the bag must meet the following requirements:

• Each canvas bag must have a color-coded tag.
• The tag must contain denomination, dollar amount, depositor’s institution name and routing number.
• Coin must be sorted and bagged by denomination.

The Federal Reserve Bank may refuse a deposit if the integrity of a bag, plastic or canvas, appears to have been compromised or if a seal does not effectively deter access to the bag’s content.

Don’t wait to act until one of your deposits is rejected. These new compliance guidelines are simple to enact and may only require a small change in the types of plastic and canvas bags currently being used. Act today to ensure you meet the latest regulations of the Federal Reserve Bank.

Corte Swearingen is the Director of Marketing for Block and Company, a manufacturer and distributor of money handling equipment and supplies. Block and Company keeps up on the latest compliance issues and trends in order to help customers make their operations more efficient. See Block’s offering of compliant plastic and cloth money bags.

Article Source:http://www.articlesbase.com/banking-articles/ready-set-in-compliance-1429405.html

How to Get a Personal Loan Regardless of Your Credit

Secured or Unsecured Personal loans are the fastest way to obtain that extra money that you need, but there are many things you’ll want to consider before making the decision of applying for a personal loan. Personal loans can be secured or unsecured. Secured personal loans require an asset in order to be put as collateral. This guarantee assures the lender that if you fail to meet the monthly payments he will be able to collect his money from the amount obtained from the sell of your property. Consequently, due to the reduced risk, you’ll be able to get a higher amount at lower rates with longer repayment periods.

Unsecured loans do not require collateral but, on the other hand and due to the higher risk involved for the lender, the interest rates are higher, the loan amounts smaller and the repayment period length shorter. This is due to the fact that there is no asset guaranteeing the loan, and thus, the lender is taking a bigger risk so he needs to cover himself from such a risk by increasing the interest rate charged and reducing his exposure by lowering the loan amount and shortening the loan’s length.

There are some tips that you should take into account before applying for a loan, these are essential if you want your lending experience to be safe and sound. Follow them carefully and you’ll be able to get approved without hassles for the best deal available on a personal loan.

Amount of money to request

You should not apply for a loan amount higher than your financial needs, you may be tempted to increase the amount due to accessory and unnecessary desires but you should refrain from doing so as it will compromise your ability to repay. Even if your income would allow higher sums, make sure the loan amount is small enough so the monthly payments won’t leave you without extra cash by the end of the month.

Amount of monthly payments

Monthly payments should not exceed 10% of your overall monthly income. You must also consider which of your monthly expenditures are necessary and which you might be able to sacrifice if your income is reduced.

Urgency

Make sure that your need for cash is critical; otherwise consider trying to save money so you don’t need to apply for large amounts. Maybe you could even save enough to request only a small personal loan. Continue reading →