Monthly Archives: November 2015

Understand Payday Loans Prior To Getting One

Understand Payday Loans Prior To Getting One

Understand Payday Loans Prior To Getting One

If you really need money, try to find all other places to get it before doing this. TV ads show payday loans as being the perfect solution. Does this mean they are the correct choice for your needs? Such lenders can be helpful in a crisis, but care must be taken. The included tips will help you deal with payday loans.

Usually, you are required to have a valid checking account in order to secure a payday loan. This is because lenders most commonly require you to authorize direct payment from your checking account the day the loan is due. As soon as a paycheck is deposited, the debit will occur.

Realize that you are giving the payday loan access to your personal banking information. That is great when you see the loan deposit! However, they will also be making withdrawals from your account. Make sure you feel comfortable with a company having that kind of access to your bank account. Know to expect that they will use that access. Continue reading

Contracts for Difference Explained

What is a CFD?

A CFD (Contract for Difference) is a financial derivative that allows traders to profit, or incur losses, relative to the price movements of an underlying financial security. The Contract for Difference is an arrangement for one party to pay the difference in value from when the contract was opened to when it was closed. CFDs are offered on 1,000s of markets, including commodities, currencies, indices and shares.

History of CFDs

CFDs are a relatively new financial product. Devised in London in the 1990s, they were first used by hedge funds looking to short sell and place larger trades than they could on the underlying market. CFDs offered the perfect opportunity to trade with leverage and go short on 1,000s of financial markets whilst avoiding UK Stamp Duty.

The tech boom of the late 1990s provided a wealth of new markets ideally suited to CFDs, and CFD trading has now spread to other major financial centres. Approximately a third of the total volume traded on the London Stock Exchange is CFD related.

How does CFD trading work?

CFD trading enables speculation on market movements without owning the underlying asset. Contracts are bought instead of shares, with an agreement to swap the difference in value at the closing of the contract.

Example CFD trade:

A short trade is opened in expectation that the price of the UK100 index is going to fall. For instance, the UK 100 is currently trading with a bid-offer spread of 6,300.1 – 6,300.9. A trader decides to ‘go short’ 10 CFDs (with a pip location of 0.1 and a value per pip of £1) with a total value of £630,010 ((10/0.1) x 6,300.1).

As anticipated by the trader the market falls and at a quote of 6,290.4 – 6,291.2 the trader decides to close the contract at a price of 6,291.2. The difference between the opening value of the trade (£630,010) and the closing level of the trade (£629,120) is £890.

Opening Leg:  £6,300.1

Closing Leg: £6,291.2

Difference:  £8.90

No. of Contracts: 10 (Pip location 0.1, Pip value GBP 1)

Profit on Trade: £8.90 x (10 / 0.1) = £890

A long trade is opened in anticipation of the market rising. For example, a trader believes that the value of the US Tech 100 is going to appreciate. The index is currently quoted at a bid-offer spread of 4,300.2-4,300.6, so the trader goes long with 10 CFDs entering a contract (with a pip location of 0.1 and a value per pip of $1) with a total notional value of $430,060 (10/0.1 x $4,300.6).

 

Against the trader’s expectations, the US Tech 100 falls and at a price of 4,280.2 – 4,280.6 the trader closes the trade, selling 10 CFDs at 4,280.2. The difference between the opening value of the trade ($430,060) and the closing level of the trade ($428,020) is $2,040.

Opening Leg: $4,300.6

Closing Leg: $4,280.2

Difference: $20.40

No. of Contracts: 10 (Pip location 0.1, Pip value USD 1)

Loss on Trade: $20.40 x (10 / 0.1) = $2,040

Margin trading

A key difference between a CFD and traditional forms of trading is that it is a leveraged product. This means that only a small percentage of the total exposure to a trade needs to be deposited up-front.

In the above example the margin requirement to place a trade on the US Tech 100 is 1%. The total nominal value of the trade is $430,060, yet with margin trading only $4,300.60 needs to be deposited with a broker to open the trade.

This level of gearing means that CFDs offer the potential for significantly larger profits than standard forms of trading. However, it also increases the risk of incurring losses in excess of your deposits.

What are the benefits of CFDs?

Exempt from UK stamp duty: Because the underlying asset is never purchased or sold, CFDs are free from UK stamp duty.

Go long or go short: Unlike trading shares CFDs allow you to profit, or incur losses, when the market is falling.

Deductible against UK Capital Gains Tax: Losses from CFD trading can be offset against UK Capital Gains Tax liabilities. Conversely, profits are liable to UK CGT. Tax laws are subject to change and depend on individual circumstances, please seek individual advice.

Hedging: Traders can potentially offset any losses to their share portfolio by short selling the same security with CFD trades.

Leverage: CFD trading is leveraged which means that only a small amount of the total trade value needs to be deposited. This also means that losses may exceed deposits.

What are the costs of CFD Trading?

Spread: In both of the above examples the trader incurred the cost of spread. Whether the trade had resulted in a profit or a loss, this spread cost would remain the same. The tighter the spread, all things being equal, the lower the cost of trading.

Commission: Certain CFD trades are subject to commission.  This will vary depending upon the market and currency traded.

Overnight financing: Overnight positions are often subject to financing charges. These are typically set around 2.5% + LIBOR for long positions, and LIBOR – 2.5% for short positions.  This is in effect the charge for leveraging the position.

Expiry

The majority of CFD trades do not have a set expiry date, position can be closed when a trader wants. However, there are some forward and futures contracts that expire at a set date. These contracts can still be exited early if the trader so wishes.

CFD positions that are left open overnight are known as ‘rolling’, and are subject to overnight financing charges.

Risk Warning: Financial spread bets and CFD trades are leveraged products. Losses may exceed deposits.

Core Spreads – financial spread bet and CFD provider

Is A Payday Loan Right For You? Read This To See

Is A Payday Loan Right For You? Read This To See

Is A Payday Loan Right For You? Read This To See

Are you struggling for money? Are your bills piling up to an unmanageable amount? You may be thinking about getting a payday loan for some help. While it might be a good option at the moment, you really should educate yourself first. Keep reading to find out what these companies have to offer.

Always know that the money that you borrow from a payday loan is going to be paid back directly out of your paycheck. You need to plan for this. If you do not, when the end of your pay period comes around, you will find that you do not have enough money to pay your other bills.

Depending on state, payday loan companies either have exceptions to usury laws carved out just for them, or flout usury laws through creative loan structuring. Sometimes, this involves leveling fees on a customer that essentially equate to interest rates. This can increase interest rates up to 10 times more than the interest rates of conventional loans. Continue reading

Advice For Those Consumers Contemplating A Bankruptcy Filing

Advice For Those Consumers Contemplating A Bankruptcy Filing

Advice For Those Consumers Contemplating A Bankruptcy Filing

As sad as it may be, more and more people have been filing for bankruptcy. But, before deciding to take this big step, it is important that you are educated on bankruptcy, and what it entails. The following article is going to give you that education so you make the best bankruptcy choices.

After filing for bankruptcy, check your credit report to make sure that it was reported the way that it should have been. You want to make sure that any debts that were part of your bankruptcy are now labeled “BK” so creditors know you no longer owe that money.

Do not pay your taxes with credit cards that will be canceled when you file for bankruptcy. Most places will not consider the debt dischargeable, meaning you will have to pay the IRS a lot of money. Keep in mind that if the tax debt is eligible to be discharged, then the credit card debt is also dischargeable. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway. Continue reading

Bankruptcy Tips For Helping You Survive Successfully

Bankruptcy Tips For Helping You Survive Successfully

Bankruptcy Tips For Helping You Survive Successfully

With the economic crisis striking several years back, the trickle down has affected us all. We realize that things are only costing more and bills are still piling up. As a result, we are left with limited options, and some of us are even thinking of filing for bankruptcy. However, we do not have to take that route. Read on to learn why.

If you are being faced with home foreclosure, wage garnishments or other situations that make it necessary to file for bankruptcy quickly, you may want to explore an emergency filing. Regular bankruptcy filings entail approximately 50 pages of paperwork and one to two weeks for an attorney to pull everything together. In an emergency filing, your attorney can file just the first 2 necessary pages and keep creditors from continuing foreclosure or garnishment proceedings. The rest of the work will be completed afterward. Continue reading