Monthly Archives: March 2012

Credit Crisis or Not - Card Cos to Succeed

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The first Diners Club credit card was unveiled back in February 1950. The Diners Club card, used mainly for travel and entertainment purposes, became the first credit card for widespread use and eventually changed the way consumers make purchases. Sixty years later, what is the state and the future of the credit card industry?

Despite the ‘credit crisis’ of 2008, not much has been said about credit card companies and their role as capital providers to individuals and households. Banks were the culprits, but also the victims of the largest drop in stock market indices in decades. Yet, the stock price performance of credit card companies which are publicly traded (Amex, Mastercard and Visa) has been impressive.

Since April 2008, with the S&P 500 index losing almost 33% on a cumulative basis, all three companies have out-performed the market.

The market performance of credit card companies is not surprising. While the reduction of interest rates due to the recession has allowed financial institutions to lower their borrowing costs and therefore emerge almost harmless from the crisis, individual consumers and households seem to have not enjoyed such a favourable environment. Indeed, Visa’s net operating income in FY09 was $2 billion, up 13% from the previous year.

A credit card company is only a network of processing services, by which issuers and acquirers transfer payment from the cardholder to the merchant. In the process, merchants pay fees for the payment processing, and cardholders pay interest on their credit card balances. This is a very profitable business model, but it would be a mistake to assume that credit card companies issue credit cards. Nor do they determine the rates they charge to customers, or the fees that merchants pay to acquirers.

Visa, Mastercard and AMEX make money from fees that issuers and acquirers pay. Such a profit generating system translates into an atypical balance sheet structure. Mastercard, for instance, is a $6.4 billion company (at the end of 2008), of which $4.3 billion are cash and other liquid assets, $700 million are intangibles, and $500 million are deferred income taxes. On the liabilities side, the company has virtually no debt, and it is financed mostly by current liabilities, and $2 billion in equity. Visa is even impressive, with $20 billion in intangibles out of a total size of $32 billion, of which $8 billion are liquid assets.

Who wouldn’t want to invest in companies like these? They are swimming in cash, are extremely profitable and can sail through a financial crisis by transferring their interest rate risk to customers, issuers and acquirers. Since its IPO in 2005, the cumulative return on Mastercard stock has been more than 500%, which is equivalent to a 38% annual return.

But, unfortunately if there is something that credit card products do not need, it is investors. They are rich, do not need to finance heavy capital investments. It turns out, however, that Mastercard did go public, as did Visa, in 2008. Their reasons were non-financial. Mastercard had a severe problem of image.

Mastercard solved its problems by going public, earning a great reputation through its after-market performance and by putting most of the money raised in the IPO in a foundation. Visa had to create an escrow account that would cover litigation (some $3 billion) started against the company by Discover and Amex, among others. Their public offerings were among the most successful of the recent years.

What would happen though if, as some commentators say, the next financial crisis is a personal credit crisis? First of all, such a crisis seems now further away than ever. With low-interest rates and social pressure, a household credit crisis would be the last event that any government could now afford.

Additionally, I hope this article clarifies that it would not be the credit card companies that would suffer the most — they are cash shielded, do not get directly impacted by the default of the final customer and are owned by banks, which are by far healthier than two years ago. There is little reason to doubt that the first credit card launched 60 years ago will not continue to thrive and be a part of our every day lives for the decades ahead

Is it Time to Invest in SEO?

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If you have a business website, you really can’t afford not to take advantage of SEO. But at what point in the life of your website should you do it? There are a few ways to determine if it’s the right time to invest in a few good SEO packages.

SEO is a long-term, on-going process. Unlike other forms of advertising, you may not see immediate results. This can be hard to think about when considering SEO Pricing. Many people are used to putting a good bit of money into a form of advertising and seeing profits (or not seeing profits) within a short period of time.

Before you even consider SEO, there are three things you need to have. The first is a good, quality website that works. The second is a quality product or service that people want. The third is a way to measure how many people are visiting your website, so you can eventually see if the numbers are increasing.

You can do your own SEO or you can hire someone to do it for you. Hiring someone is more expensive, but less time-consuming. If you choose to hire a consultant, your consultant’s SEO packages should include link strategy, market analysis, and keyword research. The agency you hire should also be able to make suggestions about your website’s architecture, address code elements, and make recommendations about your content.

If you choose to hire people to put all of that consulting to good use, you will need someone to develop your website, someone to do the creative work, someone to write your content, and someone who can make sure your marketing is right on target.

Once you have done all this, you can decide if it’s time to invest in actual SEO packages. Before you launch your website is always a good time to choose SEO. If you’re thinking about paying for searches, the time might be right. Also, if you’ve invested in everything else, SEO just makes sense. Just make sure you aren’t giving up other forms of marketing in favor of SEO when the time isn’t quite right.

You may need to ask yourself a few questions before making your final decision. Can you afford to use SEO? It could be six months before you see any type of results. While it’s important to compare SEO pricing, it can be difficult to invest any amount without immediate results. Would the investment be worthwhile? Are there other changes you can make that would help get quicker results? Do you have realistic expectations about the SEO timeframe?

SEO can be a great thing with a little effort and a realistic look at how it works. The key is to be prepared and understand how this new form of marketing.

Government Mortgage Assistance: Beneficial For Homeowners And Lenders

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Government Mortgage Assistance programs have been introduced by the Obama administration to help homeowners to avoid foreclosures if they are unable to pay back their home loans due to recession. This is specially designed to help people modify their existing loans and refinance their homes.

Benefits

These programs are equally beneficial for both homeowners and lenders. If you are facing problems in repaying your monthly mortgage amount for the reason of being out of job, or having a cut down in your salary due to recession, then you can work with your lender to get the terms changed under this program. The mortgage duration can be increased, and the amount to be paid as monthly installment can be decreased. This way you’ll be able to save your house from foreclosure. But, your decreased payment will continue till next five years. After that, it will increase up to the same amount.

Government Mortgage Assistance programs are beneficial to lenders also. They don’t have to go through the hectic foreclosure process. Not only this, they also qualify for incentive payments for each loan they modify.

These programs also assist those people who can pay their monthly mortgage installments, but are unable to refinance their homes. If the value of your home has gone down and you’re facing problems in refinancing your home, try to get help under mortgage refinance option.

How To Avail?

This is specially designed for those people who don’t have equity, or have negative equity for to get their loans refinanced. But, you can’t avail this facility if your home value has gone exceptionally low.

Those who want to avail this option should have at least 20 percent equity, and your loan should be owned by either Freddie Mac or Fannie Mae. The eligibility criteria to qualify the refinancing option are that you must be paying your monthly mortgage payments continuously, and your mortgage shouldn’t be more than $417,000. If you’re residing in a city with higher real estate value, you are eligible for refinancing option even if your mortgage exceeds $417,000.

The above two options are available only if you are able to show that you are facing hardships in repaying the loan. The other assurance which is required to avail these facilities is that you will be able to earn your livelihood within next two years and start paying the installments.

The Government Mortgage Assistance programs also assist first time home buyers, renters, and those who can’t afford quality housing. A 30-year fixed mortgage loan is provided to them at a flat interest rate lower than the current market rate. To get help under this option, you need to show that you are able to repay monthly mortgage installments.

These programs have come up as a relief to homeowners as well as lenders. Lenders are paid incentives to modify each loan. If they make the home loan available to the borrowers at a lower interest rate than the market rates, they are eligible to get incentives under this scheme.

Government Mortgage Assistance programs have helped a million of families in protecting their houses from being foreclosed. They offer a variety of programs that are helpful for every buyer and lender.

Tips For Those Who Intend to Invest in NSE And BSE Market

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Today, everyone wants to make some extra money. And, when there are a lot of opportunities, right at your doorstep, it becomes even more alluring. The best thing is that you don’t need to invest huge amounts of money; you just need to be well informed. Out of all the money making opportunities available, the stock market is the best. And while it is pretty unpredictable, it has, in recent times, given its investors various reasons to celebrate. Therefore, prudence suggests that now is the perfect time to invest in the NSE and BSE market.

However, there are some tips that one needs to follow before investing in the stock market. The first and the most important tip, is to follow affairs of NSE and BSE market and monitor the updates regularly. Not only will this provide you with a better understanding of the market and its changing trends, it will also help you understand the crucial aspects such as which sector is delivering positive results, which companies are basking in gains etc. All this becomes easy, as you can have a quick view of the live stock market, at the click of a mouse.

The smartest move is to gather as much information as you can about the stock that you are planning to buy. The most crucial information that one must extract is the changes in the movement of stock prices, according to the market trends, over a certain period of time. One should also conduct intensive research about the past and present performance of the company. Further, one should track the growth record of the company based on the pictures presented by BSE live, share market live and various other factors.

Now, the most crucial tip is not to panic over small losses, as profit-loss is the part and parcel of the stock market game. The wise thing to do is to understand the very core of the market and its functioning by observing the performance of NSE and BSE market regularly. Slowly and steadily, experience will teach you maintain balance between profit and losses and also make profitable deals out of them, more often than not.

So, the crux of this game is that if you are a smart and well-informed investor, you can mint a great deal of money from stock market trading.

Accounting Forms Meaning And Essence

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Accounting forms are a combination of several accounting records of various business transactions. Proper accounting system is extremely important for any business organization whether it’s large corporate or small partnership. Accounting includes certain forms like Journal, ledger accounts, trial balance, spreadsheet records and records of various expenses and balance sheet. Actual financial condition of any business is shown with details provided by these accounting forms. Accounting forms are required to keep accounting system error free. It is very important for a businessman to know the actual net profit and financial condition of the business and this is only possible if accounting forms are accurate.

Types of the Accounting forms

These accounting forms contain detailed record of various financial activities. It contains details of all the transactions done in a financial year. Following are some accounting forms:

  • Cash Log Form: Keeping accurate record of the cash is most important for any business organization. These forms are kept to know the amount of cash received and paid. Since cash is required for every financial activity, cash log forms are very useful.
  • Journal Forms: Journal statements are prepared in order to know the relative details of financial transactions. These are known as journal forms.
  • Business Invoice Forms: Another kind of accounting form is business invoice form. These forms are given to almost every party a business deal with. Let it be customers, vendors, creditor even debtors.
  • Purchase and Sales order forms: This is a special kind of accounting form, prepared to track down the details of purchase orders made by the business to other parties. Whereas sales order forms are required to keep the records of sales made by the business. These forms are important since it is the basis of business. Business is all about purchase and sales.

Conclusion of Accounting Forms

Some large organizations where quantity of inventory used is huge maintain inventory turnover ratio forms. These forms are helpful to know the exact cost of inventory. Ever since the invention of double entry system need of documentation has immerged and this leads to keeping records of accounting forms. Accounting forms are so vital for any business organization. Accurate accounting forms are the proof of true financial condition of business. After the industrial development with the ever increasing size of business crossing the boundaries of countries keeping record of every aspect has become a necessity and accounting forms let the businessman track accurate details of financial condition.

Auto Insurance Quote - What You Don’t Know Will Hurt You

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When it comes to getting affordable auto insurance quote, ignorance is not bliss. One of the simple reasons why most first time car insurance holders find they have been cheated after taking the policy is the fact that they often fail to learn all they can about what it takes to obtain a good vehicle insurance plan. If you have ever paid higher premiums than you could afford, then you are in a better position to appreciate the title of this article.

The truth about the way we live presently is that the less you know of a service like auto insurance package or packages the more advantage that will be taken of you. One of the best ways to avoid hurting yourself when considering vehicle insurance coverage is to learn all you can about the service. This article promises to provide you with the basic information you need and if you will religiously stick to the tips there in, then there is no reason why you should not get the best auto insurance quote. This means you will not only be satisfied with what you end up with, you will have saved your financial plan from being jeopardized.

The good thing about car insurance coverage is that there are lots of insurance companies providing the service. What this implies is that you can obtain affordable vehicle insurance at competitive prices. But you can not accomplish this feat without carrying out certain actions. The major step or action you require to achieve this is through auto insurance quote comparison. This is one of the most essential things you need to do in order to avoid hurting your finance.

Additionally, it goes without any misgivings that the best way to obtain cheap auto insurance quote is to evaluate several car insurance estimates available. There are lots of them and if there is anything the Internet had made easier it is the art of comparison shopping. So all you need is to put in some time carryout your comparison with care and ease. And before you know it you will be the better for it. The truth is that until you do this; the probability that you might end up paying more on your auto insurance policy is high.

Aside from conducting auto insurance quote, you will need to demand or bargain for discount with your insurance provider. Make no mistake about this, every policy holder deserves discount and until you are ready to demand or negotiate for it; most insurance firms will let it ride. If you are not bothered, then why should they, after all they are out to make money. You don’t have to blame it on any body if you fail to bargain with your insurance provider for discount. But note that there are certain criteria you must meet in order to enjoy the benefits that come with having discount. So pick the insurance agent on this so you can be fully aware of your rights.

Finally, you may not approve of this point, but the basic fact is that raising the level of your deductible will stand you in good stead. Hold on a moment, I will explain. You probably know that deductible is the amount a customer pays out for a claim before his or her auto insurance provider pays them in the event of a claim. Now, if you decide to increase your deductible it means, you stand a higher chance of paying reduced premiums on the coverage. Although, this may appear to you a bit expensive an option, but consider the heavy burden that will be taken off your shoulders, when compared to the amount you have to pay as premiums every now and then.