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You never thought that your home can be worth anything except for living purposes. Yes, a real estate broker would have offered a large sum on this house.

But you never planned to sell the house because of an emotional attachment with it. One of the prime customer bases for home equity loan crops from this kind of people. These are people who have been living in the house for years, or it might be their first home. Having seen the joys and sorrows in the home together slowly converted the house from a brick and mortar structure to ones prized home. You get the necessary cash through the sale of house. But, you lose your home for ever. If you are looking for a middle path whereby you can evade losing on your home and get the cash at the same time, then you would surely like the deal offered by home equity loans. Under a home equity loan, the loan provider agrees to lend to the borrower against his home. This amount will be returned with a certain interest after a certain time period. This arrangement suits the residents of the UK the most. Every month the borrower makes a small payment towards the amortisation of the amount lent. It is the borrower who decides the monthly repayments. The logic behind this discretion lies in the inequality in the income levels of borrowers. While a monthly repayment of ₤1000 will suit some borrowers, other may not be able to make such high payments through their monthly salary, which has to pay off the other routine expenses too. How does the loan provider ensure that he will safely receive the amount at the end of the term of home equity loan? It is by retaining the property papers with him. A borrower will not be able to sell home in the absence of the property papers. With the property papers in their possession, the loan provider is the legal owner of the house. But, the loan provider does not exercise this right plus visa chase travel card according to an agreement with the borrower. The agreement is for the return of home equity loan at the end of a stated term with an interest calculated according to a certain rate of interest. During the period of the loan, it is not the home but the equity inherent in it that is being consumed. This explains the reason why the borrower of home equity loan continues living in the house even after pledging it. Home equity loans get the name from the equity consumption in the process. Equity is the value that one gets on selling home. For the calculations of equity, the valuer will undertake a survey to check the amount that will be received on selling it. Deductions for the mortgages already held against home will be made to get an exact figure for home equity. It is a percentage of the plus travel chase visa card home equity that is convertible into cash. The percentage hovers around 80-125% for borrowers with a good credit history. The borrowers who do not have as good a credit history and have undergone bankruptcy any time in the past years are sure to get a much lower equity conversion rate. When changed into currency, the equity in home will fetch anywhere between ₤5000- ₤500000. Home equity loan is a secured loan. All secured loans are cheaper in terms of the rate of interest. Those secured loans, where home guarantees repayment are the cheapest. Sometimes, borrowers can hope to get an APR equivalent to that of mortgage. Some borrowers never relax on the APR front. Their worst fears are of the times when interest rates would rise unexpectedly. Rate locks on home equity loans have been especially designed for this kind of borrowers. A rate lock stabilises the APR at a particular level. However, borrowers who do not want to lose on the further fall in interest rate would continue using the variable rate method. Is the equity in home completely consumed in the process? This is the question that most people ask while drawing home equity loans. Equity is only consumed temporarily. As the borrower makes repayments towards the home equity loan, equity in home gets replenished - readying the home for a new home equity loan.2

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DID YOU KNOW?

Most consumers know that your credit score affects the credit card rates that you are eligible for. What you may not know is that if your credit score is lowered, then the interest rates on existing credit card debt could increase significantly. How? Universal Default.

It’s not a phrase that most are familiar with, and it’s certainly not one that’s used in day-to-day conversation. And although you may not even know what it means, it is very possible that you could learn about universal default any day now—the hard way.

Buried in the fine print of the credit card terms and agreements, a universal default clause generally states that if you default (are late paying your bills) to the credit card issuer or any other lender the interest rate on the credit card could be raised. Banks that utilize the universal default clause periodically check credit reports of their cardholders. If a credit score is lowered for any reason—late payments, high debts on loans, etc.—then the universal default can be activated. Yes, even if you have a perfect bill-paying record with the card issuer.

According to Linda Sherry of Consumer Action, more banks than ever use universal default policies to increase interest rates based on their customer’s credit performance with other creditors. “Banks seem to be saying that if there is even a shadow of a doubt that a cardholder might not pay, they are going to get a premium on their money while they still can.”

“We (Consumer Action) believe the real purpose of these policies is to maximize revenue at the expense of those who are least able to afford it.”

Taking a closer look

According to Linda, more issuers than ever use universal default polices to increase interest rates based on their customer’s credit performance with other creditors. A study by Consumer Action illustrates a higher use of universal default than ever before. Out of 45 banks issuing 144 credit cards, 44% of those banks use a universal default clause. This is up from 39% in 2003.

“Your credit card company might use the fact that your mortgage payment was delayed to justify a rate increase,” notes Sherry. “While your card company has always checked your credit on a regular basis, it’s now coming down hard when it senses a negative change in your credit.”

Sherry continues, “What is usually not mentioned, but is eye-opening indeed, is that banks are not issuing these new rates on new charges only—the entire balance is subject to the higher rates.”

Gerri Detweiler, founder of DebtConsolidationRx.com, agrees. Universal default has become one of the leading reasons that she gets calls from consumers these days. “While universal default has been around for years, more banks are using it and its use has gained momentum over the last five years.”

“The current legislation regarding bankruptcy could significantly worsen the impact of universal default for cardholders should it pass,” Detweiler continues. “Consumers want to pay back their debts, but when their interest rate is so high, their efforts seem fruitless.”

Why do banks utilize the universal default clause?

In its groundbreaking program Secret History of the Credit Card, PBS’ Frontline posed this question to credit card executives. According to their interviews, executives relayed that “the bank is not being unreasonable in raising rates when it has reason to believe that the risk of being repaid by the customer has increased.” In other words, they are protecting their interests by balancing their risk—which means higher interest rates for “high-risk” borrowers. One troubling aspect is that the rules that determine what “high-risk” is seem awfully subjective.

What seems blatantly wrong with this scenario is the bank’s ability to change its terms on money that’s already been borrowed. For example, say you recently purchased a product using your credit card at an APR of 8.9%. Several months down the road you’re informed that for whatever reason, your rate is now 27.99%. This new rate isn’t just applied to new purchases. It’s applied to the balance that you already carry on the card! Although seemingly a breech of contract, banks have disclosed their ability/intent to raise rates under certain circumstances so it’s perfectly legal.

Many card holders don’t know about the existence of the universal default until they’re notified about a change in interest rates—or many times until after it’s already been changed. One victim of universal default who preferred to remain anonymous was confused when she noticed a significantly higher interest rate on one of her credit card statements. “I called the bank but I received no additional information or help beyond being informed that my rate was raised.”

Another unsuspecting consumer, Mary Ann, was surprised when she read her credit card statement one month to find that the APR had been raised from 8.99% to 18.49%. When she called the company, she was informed that her credit record revealed a high debt-to-income ratio, thus the bank had declared that her risk as a borrower had risen.

“I consider myself to be very capable with my finances,” says Mary Ann, “but I’ve had a few years where I ran up more debt than usual, including a home equity loan. I made all of my payments on time, but evidently my new debt affected what used to be a stellar credit record. It’s frustrating.”

Soon after, another credit card bill arrived from Chase with a new interest rate of 27.4%--up from 8.9%. Another unpleasant surprise for Mary Ann, who said “In all the years that I held this card, I never made a late payment.”

Universal default strikes again! :0(

What your options are

Since most experts concur that it’s nearly impossible to talk your way out of a universal default once it has been activated (although it wouldn't hurt to try), it’s important to avoid having it triggered. How can you protect yourself against universal default? The two keys are to pay your bills on time and to avoid becoming what the banks consider a credit risk.

  • Always make your payments on time. If possible, pay bills when you receive them instead of when they are due. Online bill paying is becoming an increasingly popular option for many consumers. Also consider using automatic or electronic reminders to help organize your bill paying. If necessary, try contacting your various card companies and ask to have your due dates changed so that they fall at a time of the month that coincides with your cash flow.
  • Monitor your credit on a regular basis. Consumer advocates suggest that you check you credit reports at least once a year and checking your reports twice a year is not a bad idea. Similarly, you need to regularly check your credit score and educate yourself about the factors involved in credit scoring. Improving your credit score can help you avoid universal default and may result in significant interest savings, not only on your credit cards, but on other loans as well. Please visit the Credit Information section of CardRatings.com for more details about credit reports and credit scoring.
  • Understand your card terms. First, make sure that your current credit balance is at a low rate. If your credit score is above 700, then you should be able to qualify for a good rate (a rate below 10% is considered attractive in today’s market). Now that you are aware of universal default, re-read the terms of your credit cards looking specifically for a universal default clause tucked away somewhere. Since you usually can’t talk your way out of universal default once it’s been triggered, you should avoid holding a card that utilizes it. If you carry a balance on a card that utilizes universal default, you might consider transferring that balance to one that doesn’t. Says Detweiler, “if universal default has been activated on one card, a domino effect can result with your other cards following suit.” After that happens, you may have trouble getting a low-rate balance transfer offer.
  • Read your mail. We’ve become so accustomed to receiving credit card offers in the mail that many times they head straight to the shredder without being read. From now on, give those envelopes a precursory glance to make sure it’s not one of your issuers relaying a change in terms. According to Mary Ann, she may have missed mail notification from one of her banks regarding universal default for this very reason. While this would not have prevented universal default from being activated, she would have been prepared for it and ready to strategize an action plan.
  • Being aware of what triggers universal default can definitely help prevent you from becoming another statistic. If you do become a victim, then consider utilizing a non-profit credit counseling service to help you deal with you debt situation. You can find out more information about such services and other related resources by visiting the Debt Relief section of CardRatings.com. Finally, please consider posting a negative review about your card's universal default clause in our popular consumer reviews section. Hopefully card issuers will consider changing their tactics if enough disgruntled consumers express their disgust. Good luck!

    If you've been considering investing in bonds, then you probably know that the best way to get the most out of bonds is to buy them early for a low price. Unfortunately, it can sometimes be quite difficult to find bonds early… and even when you do they're not always in the price range that you're looking for.

    Luckily, it is possible to find low cost bonds without spending all of your free time searching for them; it's simply a matter of knowing how to look, knowing what to look for, and knowing when to find a little bit of help in your search.

    Below you'll find tips and information on how to maximize the effectiveness of your search and track down the low cost bonds that you're hoping to find.

    Defining “Low Cost”

    One of the first things that you should do when beginning your search for low cost bonds is to determine exactly what you consider a “low cost” bond to be. You should settle on somewhat of a fluid definition, enabling you to take the cost of the bond in context with the time remaining until maturity and the potential that the bond has for growth.

    Make sure that any of the bonds that you might consider purchasing are well within your means to afford them, and be willing to consider at least a few bonds that are pricier than some of the others if they are potentially high-yielding bonds early in their lifespan.

    Using the Internet to Enhance Your Search

    When searching for your bonds, you should consult the financial sections of newspapers and other financial publications as well as leading financial news and trading websites online. Newspapers and print publications can give you an idea of what bonds are available for purchase and how much their value is as of publication, whereas the financial and trading websites can give you up to date information on the current costs of the bonds as well as their history and links to any related news.

    This will help you to determine if the potential yield of the bond is worth the money that it will take for you to make your initial investment.

    Search Smarter, Not Harder

    As you continue your search, make sure that you don't forget to take advantage of some of the advanced features of leading market brokerage websites. Many modern sites enable you to do specific searches for bonds within a certain price range or that have a certain amount of time remaining until their maturity.

    By utilizing these specialized search features, you can find bond investment opportunities that you might otherwise have overlooked… and because you can set the price range that you're searching in, you can be relatively certain that whatever results come up will be within the limits of your low cost parameters.

    Seeking Professional Help

    If you're still not finding the low cost bonds that you want, you might want to consider finding and consulting a market analyst to assist you. These analysts are experts in locating stocks and bonds with the best potential, and they can advise you on some of the best investments that you can make so that you'll be able to get the most out of your purchase.

    Keep in mind that market analysts are paid for what they do, so you'll have to spend a little bit of money to retain their services… in general, though, the results that you get from hiring an analyst far outweigh their initial costs.

    You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

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