Online Banking Accounts Earn More Interest

Banks paid consumers more interest on their personal accounts in the second quarter of 2014 than in the previous quarter — but it’s online-only account holders who reaped the biggest benefits, according to a new report by personal finance site WalletHub.

The survey of some 2,000 accounts at online financial institutions, brick-and-mortar banks and credit unions showed that, on average, interest rates jumped 12.2 percent for checking accounts and 10.78 percent for savings accounts last quarter.     

Online-only personal savings accounts performed the strongest, with a 0.63 percent average interest rate (Wallet Hub calculates the figure by examining rates for account balances ranging from $1,000 to $50,000, and applying a weighted index). The next best option for putting your money to work? Online-only checking accounts, which offered a better interest rate (0.46 percent) than savings accounts parked at a physical branch (0.14 percent).

The lesson, according to WalletHub CEO Odysseas Papadimitriou, is to cut the cord to your local branch, and “go online-only.”  

“A branch savings account is most likely your worst bet, which is counter-intuitive,” he added.

As to why interest rates on personal accounts are trending up, Papadimitriou said that banks are vying for new business among consumers who are “starting to have savings again coming out of the Great Recession.” It may be that banks are also “planning, proactively,” he said, for the Federal Reserve to increase the main interest rate (which is currently near zero), a move that could happen in 2015.

At the same time, financial institutions are working hard to win consumer checking accounts, where they make money on fees. “The competition is so fierce on checking accounts … banks are trying to differentiate themselves” with attractive interest rates, said Papadimitriou, a former senior marketing director at Capital One.

Papadimitriou recommended that consumers explore cost-effective options with credit unions. “National banks charge the highest fees and offer the least amount of features on checking accounts,” the survey found, “while on the opposite end, credit unions continue to be 72 percent cheaper than national banks, offer 120 percent more features and provide 567 percent higher interest rates.”

Discover the Secret to Building Wealth without Quitting Your Day Job.

(ThyBlackMan.com) Anyone who wants to achieve personal wealth has to have a little hustle. Climbing the corporate ladder can help you make all the money you need, but if youre still working on the first few rungs of the ladder, it’s a good idea to look at other ways you can boost your income in additional to relying on your current job. The side job is a perfect way to get your hustle on and make enough money so you can start building your retirement fund the right way. Here are a few great ideas you need to know when youre thinking about getting started with a side business.

Look at What the Costs of Startup Are Going to Be

No matter what the business is, youll need to make some form of an investment to get it off the ground. You have to put some serious thought into how much money you will need for things like supplies, hardware and more, according to Money Crashers. Remember that youll need more than just the initial amount required to start your side business; before you start realizing profitability, youll no doubt need to make additional investments of cash. While you may not need to come up with a full business plan at first, you need to be realistic in what your expenses are going to be until your business becomes self-sufficient. Think about whether you need to buy a barcode printer from a company like Shopify in addition to a cash register, as well as the usual business supplies youll need. The more detailed you can be in anticipating your expenses, the fewer surprises youre going to encounter down the road. If absolutely necessary, you can utilize this information to approach your bank and get the loan you need to start your side business.

Analyze Your Passion for the Side Job

If youre starting a side job, you need to remember that youre still going to be working at your full-time job. This means youll need to have enough energy to work both of the jobs with as much vigor as possible. There are going to be times when youre just tired from your regular job and youre finding it difficult to get the energy to work your side job. If your side job is something youre excited about doing, your passion will carry you through and help to get you off the couch, according to Entrepreneur. Remember that when youre passionate about something it doesn’t seem like work. Instead, it will seem like youre having fun, because you are. As youre considering the jobs you want to do, analyze your passion for each one. If you can come up with any excuses as to why you cannot do the work, that means your passion level is not high enough to justify the investment into the side business. If, instead, you think of a business plan and youre full of ideas on how to overcome minor inconveniences, you’ve landed on something you can actually get involved in.

Utilize the Help of the Small Business Administration

Everyone can use a little help from time to time. Getting help for your side business is something youre going to need right from the beginning. The US Governments Small Business Administration (SBA) has a wealth of knowledge you can draw on to start your own business, as does SCORE, a nonprofit business consulting company. The US Department of Veterans Affairs also offers business help for veterans. Tapping into any of these resources will give you the help you need to understand what is expected of you and how you can accomplish your goals. They can also help you to understand how you can get a loan or minimize your expenses. Depending on who you get involved with, you can even speak directly with someone to get the coaching you need for starting your business without having to pay for it. This is something youll find handy when you need that boost of confidence that you can do it.

Take the First Step

When you’ve analyzed your expenses, invested into your company and you know what youre going to do, it’s time to get started. The first step can always be the most difficult, so push yourself into making that first step by setting a deadline. If youre starting a side business where youre going to sell at outdoor markets, you should make a reservation for booth space at one of the outdoor markets. Mark your calendar and remember your deadline. Don’t push it back or make excuses, just make it happen. You will not be perfect the first time, but youre going to get better as you go along. As youre going through this process, make sure youre still giving your all at your main job, so you don’t give them any reason you let you go, according to Bank Rate. You may even want to put in longer hours at the regular job initially so your regular job sees youre still serious about working there.

Staff Writer; Joe Moore

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NFCC Poll Finds One in Four Respondents Sketchy on Finance Management

Successfully managing our daily lives includes making smart financial decisions, often requiring a fair degree of financial competence. Nevertheless, the National Foundation for Credit Counseling (NFCC) June online poll revealed that the majority of respondents were not fully confident when managing their finances, with more than one in four (26 percent) wishing they didn’t have to deal with their finances at all. Only eight percent, the lowest number of respondents, felt as though they had a good grip on their personal finances.

“Personal finance can be complicated, thus there is no shame in admitting difficulty understanding how to best manage money,” said Gail Cunningham, spokesperson for the NFCC. “However, since there is easily accessible and affordable help available nationwide, it is regrettable that more people don’t take advantage of it.”

Consumers may be hesitant to reach out for help due to misconceptions about financial counseling. Below are some of the false beliefs toward financial counseling that consumers admitted in the NFCC Financial Literacy Survey:

?Financial counseling costs too much. The truth is that through an NFCC member agency counseling is either free or low cost. One of the requirements for membership in the NFCC is that no service will be denied based on an inability to pay. Cost should never be a barrier to finding the financial help needed.

?It would be embarrassing to discuss my situation. NFCC member agencies counsel more than 1.5 million people each year. It is highly likely that the trained and certified financial professional you visit with has encountered a financial problem similar to yours, and may do so every day.

?Credit counseling agencies only offer advice, not real solutions. Although financial education is critical to financial success, when a person has debt beyond what he or she can responsibly manage, a Debt Management Program (DMP) may be appropriate. The DMP allows consumers to continue to service their debt, repaying it in full, but often with a more affordable monthly payment, a lower interest rate, and late fees and over-limit fees stopped or lowered.

?Seeking credit counseling might damage my credit report and score. Credit counseling is not reported to the credit bureau, thus could not have a negative impact on a person’s credit report or score. However, if a person elects to repay their debt through a DMP, the creditor may make a notation on the credit report of participation in the program. Nonetheless, graduates of the DMP often emerge with improved credit scores due to having paid off the debt through consistent monthly payments.

?Debt settlement or bankruptcy seems like better solutions. Both debt settlement and bankruptcy are serious financial decisions which can negatively impact a person’s credit report and score for years. Before opting for either, a person should first rule out all other alternatives.

If you desire to improve your understanding of personal finance, you are not alone. The NFCC Survey revealed that 73 percent of consumers would benefit from answers to everyday financial questions from a professional.

Saunders, Others Note Vanishing of Black Business, Social Fabric "Intentional"

By Barney Blakeney

The revitalization on the Charleston peninsula and Neck Area will inject billions of dollars into the local economy and ultimately create a new community vastly different from the one which exists today. But will Black residents be a part of that new community?

Since 1980 Black population on the peninsula and Neck Area has declined by almost 300 percent. In 1980 Blacks represented about 70 percent of the communitys population. Today they represent only about 25 percent of the population. And as gentrification and redevelopment continues, that number continues to decline.

In recent weeks members of several neighborhood associations have questioned developers about the changes they are bringing to communities. The monthly meeting of the Wagner Terrace Neighborhood Association recently was the venue for such discussion.

Charleston Dist. 6 City Councilman and Wagner Terrace resident William Dudley Gregorie said he invited to the meeting some local developers to discuss ongoing redevelopment from Spring Street north to the Neck Area which impacts the community.

He said the invitation was extended because of the questions many have. Over the past three decades gentrification and redevelopment has displaced tens of thousands of Blacks living in traditional communities where their numbers translated into social, economic and political power.

It has been intentional, Committee On Better Racial Assurance (COBRA) CEO William Saunders said of the erosion of traditional Black communities back in 2010. Citing several Black communities where business and social institutions once flourished, Saunders said casualties of the redevelopment of traditional Black communities have been Black families, businesses and schools.

The Civil Rights Movement empowered Blacks politically ushering in the realistic possibility of self determination.

Saunders and others say a concerted effort was begun to erode that potential. Today, 50 years after the passing of the Civil Rights Act of 1964, Black communities that nurtured social and economic achievement are all but gone, Saunders said.

All thats left now are some of our churches, he said. None of that was accidental. The Black majority in places like Charleston had to be destroyed. Dispersing concentrated Black communities created a disconnect and diluted its political power base, he said.

Wagner Terrace resident Maurice Washington was at the association meeting. He said redevelopment has pluses and minuses. While it increases property values, brings in new businesses, tax revenues and eliminates blight, it also displaces residents. And Tax Increment Financing Districts (TIF districts) created to provide infrastructure for new developments redirects and redistributes taxes from existing communities.

Washington said there should be a broader discussion of redevelopment in the area that addresses the impacts on existing communities. As the Neck Area development and development of the west side Horizon Project commences, discussions should include impacts on Rosemont, Silver Hill and Four Mile/Hibernian and the Gadsden Green public housing complex. Redevelopments impact on low and fixed income families should be part of the discussion, he said.

Gregorie said for him revitalization means jobs. The Horizon Project will bring new high tech jobs and more opportunities for women and minority owned businesses to the community, he said. Residents of existing communities must prepare for those opportunities.

Gregorie said he also is concerned about displacement. To that end, he thinks a discussion about the need for education on wealth building and investment should take place and there must be a priority put on insuring young people in the community are prepared to participate in the new economy.

Peter Boutell, Lending a Hand: Buy a home and sell a home on same day?

It is a common dilemma: Trying to buy a move-up (or move-down) home at the same time you are selling your current home. Most homeowners are not in a position to be buying their move-up home without selling their current home. Buying a home before selling the current home can be like putting the cart before the horse because most homeowners need to use the equity from their current home as the down payment for their new home.

A homebuyer who is able to buy a home without selling their current home must have adequate income to cover up to three or more mortgages. There will probably be a mortgage payment due on the current home until it sells plus there will be one due on the new home and payments may be due on a bridge loan. A bridge loan is a loan secured by the home that is for sale. If the homebuyer does not have adequate assets to cover the down payment of the new home, a bridge loan may be necessary.

While it is possible to offset the mortgage payment on the current home with rental income, the mortgage industry has very strict rules on counting income from a departure property the home that the homebuyers are moving out of in order to move into a new home. In order to count the rental income, the departure home must have a signed lease and the rental deposit monies must already have been received by the homes owner. Furthermore, the departure home must have at least 30 percent equity just 25 percent is required if the purchase loan will be an FHA loan as determined by an appraisal. If a homeowner has significant equity in their home, they are less likely to walk away from their mortgage obligation as they acquire a new mortgage for a new home. If all of these conditions are met, the homeowner may use 75 percent of the rents as income.

In a transaction that closed here just last week, the homebuyers were able to close escrow on their move-up home on the same day that they closed escrow on their new home. The lender for the mortgage on the new home funded the transaction even though the buyer did not yet have the funds from the sale of his home. When the sale of his home closed on Wednesday morning the cash proceeds were wired to the title company handling his purchase. These proceeds together with the lenders funding check enabled the title company to close the purchase transaction on Wednesday afternoon with an e-recording at the Santa Cruz Courthouse. This would be considered a concurrent close and is only possible with a flexible lender.

Local mortgage consultant Peter Boutell has been writing this weekly column for the Sentinel since 1995. Send questions to Peter@SantaCruzHomeFinance.com. Archived columns are available at www.PeterBoutell.com.

Personal Finance: Beware of credit repair scams

It is hard to overestimate the importance of a good credit score. So if your own credit history is less than pristine, it might be easy to fall under the spell of a so-called credit repair agency, especially one that promises to miraculously restore your standing and quickly erase negative information.

As always, if it sounds too good to be true, walk away. In fact, these companies cannot do anything you cannot do for yourself at zero cost, while some of them make questionable or even fraudulent claims that could actually leave your credit score worse off and your wallet considerably lighter.

Before extending credit, lenders typically consult one of three major reporting agencies to review a borrowers previous pattern of interaction with other creditors. Obviously it is imperative that this data be accurate since it can weigh heavily in determining whether you get a loan, a job or an apartment. Since it is so critical to maintain an accurate profile, the Fair Credit Reporting Act stipulates specific actions to take if erroneous or inaccurate information has been reported about you. The procedures for reviewing and correcting your credit report are outlined at www.consumer.ftc.gov.

Legitimate credit repair companies offer to assist you in correcting false or inaccurate records. For a fee typically ranging from $50 to $100 per month plus an initial set-up fee, they will review your history and write on your behalf the necessary letters to redress incorrect items. While this is an expensive alternative to a process you can undertake for free, there are bona fide firms that can assist you in correcting errors.

Unfortunately, scammers abound proffering magical schemes to erase bad credit or even to establish a new credit identity. These claims are not only bogus but violate federal law.

Under the Credit Repair Organization Act, credit record correction firms must abide by certain rules. They may not ask for payment in advance, must provide a fee schedule, allow customers to cancel within 3 days, and estimate the time to complete the job. Any firm promising to remove accurate information, establish a new identity, or to create a new Social Security or EIN number is a con artist and should be reported to your state Attorney General or the FTC forthwith. Bankruptcies, foreclosures and judgments that are accurate cannot be removed from the credit file, and any company promising to do so is in violation of the law.

If you wish to begin repairing a damaged credit history, there are simple steps you can take at no cost. First, obtain a free copy of your credit record at the three agencies by visiting www.annualcreditreport.com. Note that this is the only site authorized by the Federal Government. Avoid sites purporting to offer free reports under the guise of selling credit monitoring or which require a credit card number. Following the procedures outlined at the FTC website, you can then challenge and correct inaccurate information.

If excessive debt is the source of your credit woes, consider consulting a legitimate credit counselor. Contact the National Federation of Credit Counselors at NFCC.org to find an accredited agency in your area. An accredited credit counselor can be a useful source of information and advice on budgeting, borrowing and credit management as well as reliable guidance on improving your credit history the right way.

Dont fall victim to credit repair charlatans. Before engaging a firm, verify its legitimacy with the financial authorities in your state. Or better yet, do it yourself.

Christopher A. Hopkins, CFA, is vice president of Barnett and Co., Investment Counsel.

Yes you can: 5 tips to beef up your savings

Dreams of financial independence often center on fantasies about sudden wealth.

But financial freedom isnt always about possessing great riches. For some, it can be as simple as getting a bit more breathing room from financial constraints like their rent, car payment and other living expenses. Thats a goal most people can work toward by making a concerted effort to regularly set aside a portion of their income.

Although it may feel like well-worn advice, saving is at the core of financial independence and can help you through the loss of a job or a sudden financial hardship. And yet, many people are unable or reluctant to put money away even for emergencies.

Just over one in four Americans dont have any emergency savings, according to a June phone survey commissioned by personal finance portal Bankrate.com. And among those who have money put away, half have saved less than three months expenses.

People are woefully under-saved for both emergencies and retirement, said Greg McBride, senior financial analyst at Bankrate.com. You can raise your income or you can cut your expenses, but either way, emergency savings doesnt happen without discipline.

Here are five steps to help boost your savings:

1. MAKE IT AUTOMATIC

For many, the biggest hurdle is getting into the habit of setting part of every paycheck aside.

If you wait until the end of the month and try to save whats left over, all too often, nothing is left over, McBride said.

So dont leave it up to discretion. Instead, arrange for a portion of your paycheck — some financial experts recommend as much as 10 percent — to be automatically deposited into a savings account.

Although some 85 percent of US employees have their pay deposited directly into a bank account, only 18 percent split part of their income into a savings account, said Katie Bryan, spokeswoman for America Saves, a campaign of the Consumer Federation of America.

2. TACKLE CREDIT CARD DEBT

While many people havent taken steps to save an emergency fund, some are increasingly taking on credit card debt.

Consumer credit card debt grew at an annualized rate of 12.3 percent in April, the fastest pace since November 2001, according to the Federal Reserve.

Carrying balances for months or years on end will just keep you financially shackled and make it tougher to save. We consider paying down debt a saving strategy, said Bryan.

Youll pay down your credit cards faster if you dont hold back any extra income as savings, but Bryan suggests paying off your cards and building up savings at the same time.

Begin by making minimum payments on your cards until you cobble together $500 or $1,000 for unforeseen expenses, such as a car repair. Afterward, focus on paying down the card with the highest interest first.

3. CONSIDER ONLINE BANKS

Savings and money-market accounts offer the fastest way to access cash, a key consideration for your emergency fund. The drawback is that savings accounts at big banks, such as Bank of America or Wells Fargo, generally dont offer enough of a yield to grow your balance meaningfully.

But youll likely find offers of more attractive yields at online banks like Ally Bank and EverBank.

These Internet banks have few or no branches, so they dont have the expenses of brick-and-mortar lenders. But some require minimum balances, especially for their high-yield accounts. And youll have to be OK with only being able to access your cash via ATMs or by setting up wire transfers.

EverBank was offering an annual percentage yield of 1.01 percent on its money-market account recently, according to Bankrate.com. That was the highest APY being offered, though the account requires a minimum deposit of $1,500. Synchrony Banks savings account offered a 0.95 APY, with no minimum to open, but a monthly $5 fee.

For a no-minimum, no monthly-fee savings account, GE Capital Bank was offering a 0.90 APY. By comparison, basic savings accounts at Bank of America and Wells Fargo advertised an APY of 0.01.

Online calculators can help estimate how much your balance will grow, see http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx .

4. START LADDERING CDS

The knock against certificates of deposit is that, over the long term, they rarely keep up with inflation because theyre risk-free. You agree to lock up your money in a CD for a period of time, usually six months, a year or more, and then you get back your original investment plus the promised interest. But if interest rates could surge while your money was in the CD at a lower rate.

Still, CDs can be another way to grow your savings with minimal risk, as long as you keep the CD terms at six months, said Marty Durbin, a certified public accountant and personal finance specialist in Arlington, Texas.

If its a six-month CD, you might get more out of it than you would out of a savings account, Durbin said.

One approach, known as laddering, spreads money across several CDs that mature, or pay off, at different times. If interest rates rise, you will be able to jump to that higher rate when the next CD matures.

For guidance, try this online CD ladder calculator: http://www.bankrate.com/calculators/savings/cd-laddering-calculator.aspx .

5. FEED YOUR 401(k)

The fastest way to save is when someone, like your employer, offers to match a portion of what you set aside.

If your employer offers a 401(k) retirement plan with such a perk, youre leaving money on the table if you dont put in at least the minimum amount to get the full matching funds.

Youre essentially being paid to save there, said Catherine Golladay, vice president of 401(k) participant services at Charles Schwab.

Co-Operative Societies, Invaluable To Financial Freedom – Experts

BENIN CITY – A one day seminar has been organised for members of Co-operative socieities in Edo State.

The seminar organised by Starpearl Consult, Lagos was held in Benin City as part of measures to update their knowledge on current trend in the management of co-operative societies.

In a lecture titled lsquo;Securing Financial Freedom, delivered by Barr. Felix Agbonrofo, he emphasized various principles that must be severally and collectively applied to enhance financial freedom, irrespective of any challenges.

The principles, he said include knowledge and awareness, self belief, courage to take the necessary steps, early savings and investment among others.

Barr. Agbonrofo further stated that faithfulness, diligence, diversification, courage, patience and perseverance are all inevitable sacrifices towards achieving the much sort after financial freedom desire by all.

In another lecture titled: Understanding Co-operative Book Keeping and Financial Statements, was delivered by Mr. Anthony Umorovan. He emphasized the eternal importance of record keeping for the purpose of a successful and accountable enterprise.

Detailed analyses of such important records as cash book, payment voucher, purchase day book, sates day book, journals, trial balance and many more were practically explained during the lecture.

In another lecture, titled: How to Build a Successful Co-operative The Roles of Members and Management Committee, the history and detailed background of Co-operative Societies and other time tested values were professionally treated.

Issues such as equity, active participation of all members of co-operative societies including certain critical values, aspiration, purpose and needs that should be democratically controlled were clinically highlighted.

Barr. Agbonrofo advised all co-operators and participants to always look out for honest, competent as well as charismatic members who are not only disposed to entrepreneurial ideas, but also with the nerve to make the progress and achievement of Co-operative societies very rewarding and more enduring.

Participants present at the seminar included Mrs. Mabel lmoisili, President, Bendel Newspapers Company Limited Multi-Purpose Co-operative Society (BNCLMPCS) and other members of the Management Committee.

American Money: 529s a Higher Education Tool

For many consumer items, especially homes, interest rates remain near historic lows. But for new borrowers of college education loans, who number about 12 million each year, the steady uptick of rates is reason to consider updating your financial strategy.

On July 1, rates on federal student loans rose to 4.6 percent, up from last years 3.86 percent. While that increase will only add about a $138 per year in repayment fees to a typical borrower (rates are locked in for all but new borrowers) it still adds to what has become a mountain of debt for students who need to finance their education. When new graduates collect their diploma and enter the job market that debt can take away from money that could otherwise be invested in important early career wealth-building activities, such as purchasing a home, starting an Individual Retirement Account, or buying a car.

These days about 70 percent of college students take out loans. A typical college graduate leaves school with $25,000 to $30,000 of debt while countless other graduates of law school, business school or medical school rack up bills of $100,000 and higher. Nationally, collective student debt exceeds $1 trillion.

While college loan rates remain a pretty good deal for consumers, minimizing the amount of money you borrow is the best way to avoid a whopping tab when you finish school. One of the most effective savings vehicles is known as a 529 plan. A 529 is an IRA-like education investment account that allows consumers to invest in mutual funds, withdrawing the money later to cover tuition, books and other educational fees. Gains in 529 accounts are tax deferred when used to pay for college education and upon withdrawal they avoid federal taxes entirely. 529s are also easy to manage — you pick a mutual fund (index funds pegged to market performance are a common choice), make regular contributions of any size you wish, and let the money accumulate.

529s are also open to anyone without income restrictions and contribution caps are as high as $300,000 in some states. For two parents who file jointly, there is an annual $28,000 limit on how much money they can put into a 529 for a college-bound child.

In this fast-moving world the value of a college education has never been higher. Most observers would agree that entry into the job market and adopting new skills become much more difficult without the foundation of higher ed. But building financial security also depends on wise use of credit and on building assets from as early an age as possible. Using tools such as 529 accounts to offset the expense of college education is a smart way to fund higher education and to get a leg up on savings.