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Bearer bonds, also known as coupon bonds, allow the owner or “bearer” of the coupon to collect interest by presenting the clipped coupon to the issuer’s paying agent. Bearer bonds are extremely rare and were essentially eliminated by the Tax Equity and Fiscal Responsibility Act of 1982. According to the Bureau of the Public Debt, .14% of all outstanding marketable securities are in bearer form. Bearer bonds do not require the issuer’s transfer agent to record the bondholder’s name. Title to the bearer security passes on delivery. Bearer bonds are as liquid as cash and, when they were popular, were often used to shift ownership of corporations so as to minimize tax consequences. It was this attribute that led to their demise in 1982 in the United States.

Positive Attributes

Issuer’s Benefits Bearer bonds require less paperwork on the part of the issuer’s transfer agent than do other, similar securities. Since bondholder names are not recorded, the issuer does not have to send annual or quarterly notices, eliminating costs on the part of the issuer.

Bondholder’s Benefits Coupon bonds allow the owner to remain anonymous. Bearer bonds often pay at a higher interest rate because of the increased risk taken on by the bondholder.

Large investors can purchase vast numbers of corporate of federal bonds without attracting the attention of competitors. Bearer bonds are extremely liquid, and can be exchanged without the intervention of the issuer’s transfer agent. This type of liquidity is advantageous to prospective investors wanting to invest in international bond markets. Bearer bonds are no longer issued in the US; investors may want to consider investing in Eurobonds, which are usually in bearer bond form.

Negative Attributes

Issuer’s Loss Since bearer bonds do not require the issuer’s transfer agent to record the bondholder’s name, there is always a chance that fraudulent certificates will be presented for interest. Bearer bonds should have a unique appearance in comparison to other types of bonds, but should not show the coupon holder’s name.

Bearer bonds are difficult to call. If the issuer would like to pay back its debt early, and refinance at a lower interest rate, it is generally not an easy task to locate bondholders.

Bondholder’s Loss Bearer bonds are difficult to replace. Like cash, if destroyed, lost, or stolen, there is little that can be done to replace certificates. If the certificates are stolen, whoever possesses them can collect the interest from the issuer’s paying agent.

Where to Purchase Bearer Bonds

Bearer bonds have essentially been eliminated by the Tax Equity and Fiscal Responsibility Act of 1982; there are old issues that have yet to mature, but no Read more…

How can interest rate changes affect you?

Dramatically, if you have a variable rate loan. Most homeowner loans and also many unsecured loans have what is known as a variable APR. APR stands for Annual Percentage Rate and is a measure of how much interest you have to pay on your loan each year. The bad news is that it can go up. And if you’ve a 20 year loan for ?25,000 an increase of just 0.5% will cost you over ?1700.

You see, lenders are careful to avoid losing money on their loans and if their APR is lower than the Bank of England rate, the amount you owe on your personal loan is actually decreasing. A variable rate loan will never let that happen, making sure that the rate is always a few percent higher than the Bank of England base rate.

My loan rate just increased. What should I do?

The first rule is not to panic. You aren’t losing a fortune every day, so you needn’t jump to the nearest option, but you do need to do something soon.

First you should look to see if you can find a history of the loan rates with your lender. Some lender’s rates fluctuate more than others, so this might not be immediately dangerous – have a look to see whether the rate has changed in the past and, more importantly, whether it decreased again.

Unfortunately, you’ll probably find that your loan repayments with your current lender are going up for good, in which case you need to start shopping around. As Anna Bowes, an Independent Financial Adviser at Chase de Vere said:

Do not let inertia get the better of you. Your bank or building society is not going to reward you with loyalty. (BBC News)

Try to calculate exactly how much a change of lender might save – or cost – you. If you search for the best loan for you with our comparison service, you should be able to find the best rate for you and see how much you could save.

Once you’ve checked for the saving, you need to keep an eye out for hidden costs. Most personal loans (especially variable rate ones!) charge you an extra month’s interest or some fee for paying out early, so you’ll need to subtract that from your running total. If your change in payments is still worth it, it’s time to switch!

How can I prevent myself from getting burnt?

The safest, although possibly not the cheapest, option is to Read more…

Rolling over an auto title loan could run over your finances.

The additional interest and other fees you pay may quickly double, triple or even quadruple the total costs of your loan if you continually roll it over. What may have started as a loan in the hundreds of dollars could wind up costing you thousands.

If you desperately need the quick cash an auto title loan can provide, there are a few things you can do to help minimize the runaway costs of rolling over your loan if you can’t afford to pay the loan back on the due date.

The first thing you should do is shop around for the best auto title loan rates. Get full disclosure of all fees and the annual percentage rate of any loan in writing. The costs of rolling over the loan should also be disclosed. Both local and online auto title lenders should be able to provide you with a full list of prices along with any associated terms and conditions.

You should also look for lenders that will require you to pay a percentage of the principal with each rollover. It’s an excellent idea to seek out lenders that put a cap on the number of rollovers they allow. If your finances are in bad shape and you have to rollover your loan, paying a portion of the principle will save you a lot of money.

If Read more…

If you find yourself shopping around for an auto loan there is much to consider before you ever sign the dotted line.

The first thing to consider is if you want to pay a down payment on the vehicle. Many lenders today don’t require a down payment but it is still a good idea to pay as much as possible, initially. The more you pay for a down payment, the lower your payments may be on the loan.

If you have a used vehicle you can trade-in, the money you get for the trade-in can be added into the down payment. Don’t expect to make a lot of money on your trade-in unless your car is in absolutely perfect condition. Any cosmetic flaws or mechanical work needing to be done on your old vehicle can significantly lower its potential trade-in value.

The next thing to consider is what your interest rate will be on the loan. If your credit is good you may qualify for a loan within the 4-8 percent range. If you have subprime credit the interest rate on your loan could jump higher than 20 percent. The percentage rate you pay on the loan will play an important factor in how much your monthly loan payment will be.

You also have to consider how long you would like the loan term to last. Many auto loans are usually available with anywhere from 3-6 year terms. The shorter the loan term, the larger the monthly payments will be. On the flip side, the total price you pay for the loan will be cheaper than a loan with a longer term. You’ll pay less in interest on a loan with a shorter term.

Never take out an auto loan with a term that’s longer than the amount of time you plan to keep the vehicle. Otherwise, you’ll end up throwing away money on a vehicle you no longer own. Also, if possible, try Read more…

A large number of individuals have a checking account. There are even some who have more than one. A checking account is similar to a savings account, but the money is usually easier to access. If you do not already have a checking account, it is likely that you may be thinking about getting one. Before you decide to open a checking account, there are a number of important things that you should take into consideration.

Perhaps, the greatest thing to consider is where you will obtain your checking account from. Many choose to do business with a local bank; however, a local bank is not your only option. If you have not already decided on a financial institution to do business with, you may want to examine all of your options. Different banks have different requirements and restrictions on opening a checking account. To find the best bank to do business with, you are encouraged to examine all of these requirements and restrictions.

One requirement that you may find is a savings account. If you are a new customer, many banks will require you to open a savings account, as well as a checking account. If you are obtaining or have obtained a loan from the financial institution in question, you may not be required to open a savings account. As previously mentioned, all banks are likely to have their own requirements.

In addition to a savings account, you may find that you need to have a certain amount of money to be able to open up a savings account. If this requirement is in place, it is often a small amount. Most banks require at least a fifty dollar deposit, but you may be able to find one with a deposit requirement as low as twenty-five dollars. You will also need to determine whether or not you will need to have a set amount of money in your account at all times. For instance, if you were required to open an account with fifty dollars, you may have to have fifty dollars in your account at all times. If you do not have the money, you may be charged a small monthly fee.

While it is important to examine what you will need to have or do to open up a checking account, it is also important to examine any fees that you may be charged. Many banks have a monthly fee. This fee is often referred to Read more…

Financial institutions are located all around the world. If you are looking to open a bank account, whether that bank account is a checking account or a savings account, you have a number of banking options. In fact, you have so many options that choosing the right bank may seem like an overwhelming process. To make that process easier, you will need to know what to look for in a bank.

Location is the key to many. If you are interested in having easy access to a bank, you may want to consider doing business with a local bank or a national bank that has a local office in your area. These banks are ideal for those with checking accounts or debit cards. You may find that using an ATM machine, other than the one provided at your bank, results in extra fees. This is one of the many reasons why banking with a local institution is popular, because you will have easy access to your money.

When finding the perfect bank for you to do business with, it is also important to determine what you want and need from a bank. Whether you are interested in opening a savings account or a checking account, it is important to examine the fees that each bank will charge. If you are interested in opening a savings account for someone under the age of eighteen, you may find that you are able to receive a free account. Adults, on the other hand, are often required to pay a monthly fee or maintain a certain balance in their account.

If you are interested in opening a checking account, there are also a number of fees that you should be on the lookout for. It is possible to obtain a free checking account, but many of these accounts come with specific requirements. You are likely to come across a number of financial institutions that require you to have a set amount of money in your account at all times. It is also possible to find banks that grant you free checking as long as you have your paychecks directly deposited into your account.

There are a large number of banks that will allow you to carry a debit card. These debit cards Read more…

Imagine a world a world in which either all investors have costless access to currently available access about the future , all investors are good analysts , all investors pay close attention to market prices and adjust their holdings appropriately and that all investors pay close attention to market prices and adjust their holdings appropriately.

Do you believe in the Tooth Fairy?

In such a market a security?s price would be a good estimate of its investment value, where investment value would be a good estimate of its investment value, where investment value is the present value is the present value of the security?s future estimated by well informed and capable expert analysts.

An efficient market could be defined as a (perfectly) efficient market would be one in which every security?s price equals its investment value at all times.

In an efficient market, a set of information if fully and immediately reflected in market information. But what information?

For example, a market would be described as having weak-form efficiency if it were impossible to make abnormal profits by using past prices to make to make decisions about when to make abnormal profits to buy and sell securities. This evidence suggests that major security market is weak-form efficient.

In an efficient market, any new information would be immediately and fully reflected in prices. New information is just that: new, meaning a surprise. Since happy surprises are almost as likely as unhappy ones, price changes in an efficient market are about as likely to be positive as well as negative. Whereas a security?s price might be expected to move upward by an amount that provides a reasonable return on capital (when considered in conjunction with dividend payments), anything above or below this would, in such a market, be unpredictable. In a perfectly efficient market, price changes would be random?

Now consider a crazy market, in which the prices never bear any particular relationship to investment value. In such a world, price changes might also appear to be random. However major securities markets throughout the world are certainly not irrational. They might not attain proper efficiency, but they are certainly much closer to it than irrationality. To understand financial markets m it is important to understand perfectly efficient markets.

In an efficient market a securities price will be a good estimate of its Read more…

It’s important to keep in mind that offshore financial centers were originally established by onshore banks and corporations. Why? Because felt hemmed-in by archaic laws, regulations and statutes. For example, Citicorp (the largest American-owned bank in the United States) was one of the first to set-up offshore operations. It wasn’t too long before 64 percent of its net income was being generated by offshore sources.

Some of the pioneering centers have evolved into world-class financial and economic headquarters. Since the early 1970s, these centers have initiated policies deliberately designed to attract international trade by minimizing tax obligations and reducing (or entirely eliminating) other restrictions on business operations. The result is that economic activity within these centers is specifically geared to the special global needs of outside businesses and investors.

Typically, these centers are small states with tiny populations. To date more than 75 of these tax havens exist throughout the world. Each one of them is a unique offshore haven of sorts deliberately intended to attract very particular investors with very specific needs.

For example, a center like Aruba was set up primarily for economic development. Formerly dependent on oil refineries for its revenue, it has now implemented an investment policy that gives it entree to the global economic system. Becoming an offshore money haven was the answer. By “renting” its laws regarding taxation, incorporation and other related legal matters, Aruba has begun a much needed process of economic development and diversification.

Singapore, on the other hand, was designed to serve the Asian dollar market. Today it’s one of the most prosperous money havens in the world on a per capita basis. And Bahrain was developed to process the Middle East’s offshore financial needs, especially Saudi Arabia’s.

All these offshore havens were made possible by the electronic revolution in fund transfer mechanisms which occurred early on in the 1970s. That single technological development made it suddenly possible and affordable to establish banks, corporations and holding companies in relatively remote locations. It also made inter and intra time-zone business a viable alternative to home-based operations. In turn, this gave rise to the creation of international wholesale banking ? where large deposits could be maintained in a variety of Read more…

There?s no room for complacency when it comes to running a business, and running your account is no different. You should check your statements carefully, and have a periodic review of the market to make sure your account is still the best one for your needs.

New accounts and special offers crop up all the time, and it may be worth your while to change banks. You can also point out the competition?s rates when negotiating terms with your own bank ? often these are flexible and a bank may offer you improved rates if you hint that you are considering taking your business elsewhere. Stay on top of bank charges, and if any show on your account that you do not understand, contact the British Bankers? Association for more detailed explanations on charges and interest: www.bba.org.uk

There are ways to minimise charges and run your account as smoothly as possible:

1. Automate Your Account

If you have frequent customers, you could encourage them to make payments by direct debit or standing order. The more electronic payments you have, the fewer charges you will incur. The same goes for your expenses ? try to use automated services for all your regular payments.

2. Bank Online

If your bank account has online facilities, make use of them. It is both more efficient and cost effective. Larger businesses may be offered ?PC banking?, which involves special software being installed on your accounting computer, so that your accounting system is linked directly to your bank.

If you find yourself struggling, for example if cash is short and it?s becoming difficult Read more…

Unauthorised overdraft fees. These are three words that worry every bank customer. An unauthorised overdraft fee is the fee charged by a bank when customers go over their overdraft limit.

These fees can be very steep, with some banks charging high premiums for customers who exceed an agreed overdraft limit by as little as a few pence. A recent consumer report suggests that bank customers paid more than ?4 billion pounds in unauthorised overdraft fees in 2004.

Scale Of Overdraft Fees

The BBC have reported that the seven major banks charge unauthorised overdraft fees of ?25 to ?38 pounds. Interest rates on the unauthorised amount can also be high. While some banks charge under 8% interest, others have interest rates that hover around the 30% level.

The banking industry has been slated for this practice by customers who feel they have been treated unfairly. The Office For Fair Trading has also criticised banks for overcharging customers for unauthorised overdrafts. Late payment fees for credit cards have also been criticised. The OFT suggests that late payment fees for credit cards should be no more than ?12 and should only cover the administration fee.

Getting A Refund

Consumers who feel they have been overcharged by their banks may be able to receive a refund if they go through a time consuming process.

First of all, consumers can use the Data Protection Act to request details of all charges on their account over the past six years. Next, they need to inform the bank that they intend to sue in County Court to get this money refunded.

Are Unauthorised Overdraft Fees Legal?

There is some question as to the legality of unauthorised overdraft charges. Penalty clauses (such as unauthorised overdraft charges) are illegal under breach of contract law. However, banks do have the right to claim damages from customers who breach their contract with the bank. To avoid going to court every time, most banks write these charges into Read more…