Category: Finances

Capitol One Credit Card Offers Premium Credit Services



The Capital One Credit Card Company started back in 1995 and over the past ten years, it has become one of the top credit card companies. They offer their services to Canada, the United Kingdom as well as the United States.

The Capital One credit cards offer a variety of cards; enough to suit anyone’s credit history and credit needs. They have their premium credit offerings for people who have excellent credit and these cards offer some of the most usable rewards in the credit card business.

The Premium Credit Cards

Capitol One credit cards are for people with excellent credit; Excellent credit meaning a person has had credit for least five years and that the credit card has a limit of at least ten thousand dollars. This person has an excellent track record of making their payments on time.

The Capital One credit cards are available from both MasterCard and Visa, which means the customer can choose their credit company along with their benefit package. Some of the benefits including travel reward miles, cash back rewards and a special annual percentage rate.

For People With A Good Start

For people who have good credit, but not excellent, Capital One also have cards for these people too. These cards also have great reward programs and are available from both MasterCard and Visa. These are known as platinum cards, which mean they will have a credit limit of over $5000 and a low annual percentage rate plus no annual fees in most cases. The platinum cards are perfect for people who already own a credit card with a limit of over $5000 and have held good credit for least five years. These cards are a little more forgiving and will allow their holders to have made a late payment or two in their credit history; as long as it wasn’t over two months late.

For Customers Who Need Help Building Credit

Capitol One credit cards will offer cards with smaller spending limits and credit requirements which are easier for people with no credit or who have had problems managing their credit in the past; these cards will often have credit limits under 5,000 dollars.

Because of their limited credit history these cards will charge an annual membership fee, however the customer will still be able to take advantage of rewards programs and build their credit with by making on time payments and gradually getting their credit limit raised as they show their credit worthiness.

Do Preferred Stocks Fit in Your Portfolio?



A preferred stock offering gives a company an alternative to borrowing money from banks or other lending institutions. In most cases, a company may defer or cut dividends as well as go into arrears without much of a penalty or risk to their credit rating. If is for this reason many companies choose this route of financing versus issuing corporate debt.

Preferred stock is considered a hybrid investment since it has both the qualities of a stock as well as a bond. It is considered senior debt (higher ranking) to common stock, but are subordinate (lower ranking) to corporate bonds. In the case of a liquidation event, the shareholders will be first in line to get paid behind bond holders. They are rated by the major credit agencies such as Standard and Poor’s and Moody’s. If you are looking for higher yields than you’ll find at your local bank and believe the economy and the stock market will continue to recover, this might be an investment looking into.

Benefits of preferred stock: Convertible into common stock: Stockholders may have the option of turning their shares into common stock depending on the stock issuance

Preference to dividends: Owners may receive special dividends that common shareholders will not.

Drawbacks: Nonvoting stock: You do not have voting rights

Callable at the option of the corporation. Your stock may be called in by the issuant.

Types:

Convertible Preferred Stock-These are issues that shareholders can exchange for a predetermined number of the company’s common stock. This exchange can occur at any time the investor chooses. Once converted to common stock, it cannot be converted back.

Cumulative preferred stock-If the dividend is not paid, it will accumulate for future payment.

Exchangeable preferred stock-This type of stock carries the option to be exchanged for some other security upon certain conditions.

Monthly income preferred stock-This security is a combination of preferred stock and subordinated debt.

Participating Preferred Stock-These issues offer the holders the opportunity to receive extra dividends if the company achieves some predetermined financial goals. The investors who purchased this type of security receive their regular dividend regardless of how well or how poorly the company performs. This assumes the company does well enough to make the annual dividend payments. Additionally, investors may receive an extra dividend if the company hits predetermined sales/profitability goals.

Perpetual preferred stock-This type of security has no fixed date on which invested capital will be returned to the shareholder. The issuing corporation has a callable option. Most perpetual preferred stock is issued without a set redemption date; however it usually carries a higher premium.

Prior Preferred Stock-Many companies have different classes of preferred stock outstanding at the same time. One of these classes of stock is usually designated to be the one with the highest priority. If the company has only enough money to meet the dividend schedule on one of the preferred issues, it makes the dividend payments on the prior preferred. Therefore, issuances have less credit risk than the other preferred stocks but will usually offers a lower yield; this may be in the form of “Class A”, “Class B” or Class C” shares etc.

Putable preferred stock-These issues have a “put” privilege whereby the holder may, upon certain circumstances, force the issuer to redeem shares.

Straight preferred stocks are issued and pay a set rate of interest to the holder. However, they are subject to be called by the corporation at anytime.

Like a bond, a straight preferred issuance does not participate in any future earnings or dividend growth of the company. Preferred shareholders do not participate in growth of the share price of the company’s common stock.

Almost all preferred shares have a negotiated fixed dividend amount. The dividend is usually specified as a percentage of the par value or fixed amount. Sometimes dividends on preferred stock may be negotiated as floating and it may change according to a pre-determined base interest rate such as LIBOR.

Example: Suppose that an investor paid par ($100) today for a typical straight preferred stock. Such an investment would give a current yield of about 6%. Now suppose that in a few years 10-year Treasuries were to yield 13+% to maturity, as they did in the early 80s; one would expect preferred stock to yield at least 13%. This would knock their market price down to $46, for a 54% loss. (In all probability, they should yield 2% more than the Treasuries-or about 15%. Of course, this would reduce the market price down to about $40, resulting in a 60% loss.

There are a number of different types of preferred stocks and issuers available. If you are looking to spread your risk, there are ETFs (exchange traded funds) as well as mutual funds. Please see Yahoo Finance or http://www.Morningstar.com for a comprehensive list.

Please consult with a financial planner specializing in fixed income investments. if you are looking to investment alternatives, he/she should be able to present a number of options which include municipal bonds, cds as well as money market funds.

Personal Finance – Financial Freedom and the Power of Cash Purchasing



If you’re serious about building financial freedom, one of the most important decisions you can make it to stop using credit for paying expenses and for making purchases. In fact, in the four bucket system for managing your spending, category three is focused on laying up cash reserves for the sake of planning large purchases. Again, here are the four categories in the system:

1. Commit the first 10% or more of your income for investing

2. Commit the second 10% or more of your income for giving

3. Commit the third 10% or more of your income for cash reserves

4. Commit the final 70% or less of your income for paying expenses

In this article, we’ll be talking about how laying up cash reserves can empower you to make better purchases and getting better deals.

The Power of Using Cash Instead of Credit

Did you know that $1 isn’t necessarily $1? It all depends on how the money is being spent and, most importantly, who is doing the spending. For example, when you purchase an item using credit, every dollar that you spend decreases in value due to the need to pay the dollar back PLUS the interest accrued on the money that is being borrowed. Not to mention that if you make a large purchase using credit, merchants are much less likely to agree to give you a better deal if you ask for it.

Cash gives you negotiation power, which instantly makes dollars spent in cold hard cash more valuable than those spent using credit. So how can you use the power of cash to get a better deal on your large ticket purchases in the future?

Building Your Cash Reserves

The best way to get in to the habit of building cash reserves is to plan a purchase right now, determine the amount of money you’ll need, determine a deadline and then start laying aside cash in “payments.” For example, say you decide within six months that you’re going to buy a couch and the couch will cost you about $600. You would then set aside $100 a month for the next six months, and about the fifth month you’d start looking for some deals. This way, if you end up needing less than $600 for the purchase (if you hunt down or negotiate a good deal), you’ll have some extra spending money left over.

So go ahead and start you planning, and prepare to discover the power of using cash instead of credit and how it can help you achieve financial freedom.