The Handy Investing Answer Book. Paul A Tucci

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СКАЧАТЬ resale value at some future time. Additionally, if you take on low-interest debt for such valuable activities, you free up your cash reserves to do other things such as investing. In the case of mortgage loans, the interest you pay on that loan is deductible against your reported income when you file your tax return each year.

      What are the next steps to increase my available funds so that I may invest?

      You should pay off all higher-interest rate debts first, since those debts use so much of your income. You should stop using credit cards in favor of cash, and be sure to pay off the balance of what you used on a credit card in full each month, so that you do not take on any more debt. And never pay only the minimum amount that credit cards request, as this will keep you in the debt cycle for a very long time.

      How can I calculate how much credit card debt I can afford?

      The easiest answer to this is zero. Credit cards should not be used as a way to finance purchasing anything, because the interest rate and finance charges are too high ever to justify it. If you were to use a card to buy an expensive TV, it will end up costing you twice the original price if you use a credit card and pay the monthly minimum payment and “finance” the purchase. Credit cards should only be used to make purchases for an amount you can pay off entirely each month.

      How long does it take to resolve a credit card issue?

      According to a survey by Javelin Strategy & Research, the average time to resolve a credit card fraud issue dropped 30% to 21 hours.

      What are the best credit cards?

      According to a 2010 J.D. Power survey of card holders, the best cards in terms of overall customer satisfaction are: American Express, Discover, U.S. Bank, Wells Fargo, Chase, Barclaycard, Bank of America, Capital One, Citi, and HSBC.

If I have a balance of only $1,000 on my credit card, with a 15% interest rate, and I only make the minimum payment of $15 each month, how long will it take me to pay off the balance, and how much will it really cost me in the end?

      By paying only the minimum due on a credit card balance in the example above, it would take about 12 years to pay it off, and end up costing you more than $2,000.

      What are the first steps to eliminate credit card debt?

      The first step to eliminate credit card debt is to destroy your card. This will prevent you from adding further debt onto the card.

      What are additional steps that I can take?.

      The next step is to analyze how much you can afford to pay each month, and make it a priority to pay both the monthly payment and a part of the balance each month so that you may reduce the balance that is accruing interest and fees as fast as possible. Never believe that you can get out of debt by paying the minimum monthly payment on your credit card.

      What is the average amount of credit card debt for a typical American family?

      Approximately $15,788.

      How many credit cards exist in the United States?

      There are 609.8 million cards being used in the United States.

      What is the average number of cards owned by each person?

      The average number of cards that people carry is 3.5.

      How many credit cards should I have?

      You probably should have not more than two cards, in case you absolutely need to use one, and have one as a backup in case your primary card does not work.

      When in deep credit card debt, the first step to take is to cut your cards so you won’t use them anymore.

      Why use credit cards?

      Credit cards give you access to cash immediately so that you may pay for many different expenses, from food to utility bills, without having to carry large amounts of cash. Consumers only have to write one check each month to cover many monthly expenses. Some credit cards allow consumers to earn points for using the card, which are later redeemable for products or services.

      What is the first rule of using credit cards?

      Do not use a credit card unless you can pay off the balance in full each month.

      Why pay off the balance each month?

      You want to pay off your balance each month to avoid paying interest on your balance, which can be exorbitant, depending on your credit history and interest rate calculation.

      What does my credit history have to do with my credit card interest rate?

      Card issuers look at your credit history to see what kind of risk you might be to them, what chance you will default, and how much debt you can handle. Depending on this, the card issuers decide on an interest rate that will cover the costs of defaulting accounts, fraud, and profit, and this number is the rate that they then charge the consumer.

      So if I have a great credit rating, I might get a card with better terms?

      Yes, if you are less of a credit risk, have a higher steady income, and own other assets, you will likely be approved for a lower-interest-rate credit card.

MORTGAGES

      What is a “mortgage”?

      A mortgage is the amount of money loaned from a bank for the agreed-upon price of a house that is financed by the bank in the form of a loan to the buyer, less down payment and closing costs at the closing of the transaction.

      What about interest rates and their effect on housing prices?

      The higher the interest rate for a mortgage, the more the demand for mortgages is suppressed, since buying a house becomes more unaffordable to many potential buyers. As interest rates or the price of money decreases, the more demand there is from buyers, and this makes prices more buoyant over time.

      How low are today’s mortgage interest rates?

      Interest rates on loans for houses are lower than nearly any time in the past 50 years. They may go even lower before we see a bottom in the interest rates for mortgage loans.

      Why are there fewer potential buyers for houses today?

There are fewer potential buyers for houses because many fear employment loss, an inability to obtain a loan, an inability to manage current expenses, and expectations that prices will further decline. Potential buyers would rather wait out a decline in price than jump in now. Sellers are holding out for the best price because they need to pay off their mortgages, and pull as much value from their house as possible in order to buy another house.

      While mortgage rates have risen slightly in 2014, they are still around 4.5% for a 30-year fixed mortgage, which is a great deal for investors and home buyers.

      What does the term “underwater on a mortgage” mean?

      When you are “underwater on a mortgage,” СКАЧАТЬ