Interest Bearing Checking Accounts
People who sign up for interest bearing checking accounts usually do so because it makes them feel like they are putting their money to work. These types of accounts do exactly what the name implies; they accrue interest on whatever the available balance is. At first glance, choosing such an option seems to be the obvious choice because everyone wants an opportunity to earn money without having to do anything but use a checking account. As a word of caution, however, a person should make sure he knows all the facts and does thorough research on the benefits and the pitfalls before committing to the idea. While interest bearing checking accounts certainly do have pluses in their favor, sometimes an individual would do better to stay with a traditional personal bank account.
Naturally, people are intrigued by the idea of interest bearing checking accounts, but often, many do not understand that outside factors can directly affect the money sitting in the bank. The biggest factor that can change rates and percentages is the economy. During times of recession or depression, the percentage rates that banks offer is dramatically lower than previous times. By the same token, during booming periods of growth, a person may be able to secure higher than normal rates. While knowing from one year to the next what the rate may be is impossible, preparing for the eventuality that these percentages will change is, for the consumer, a smart way to be aware of what could happen to his money.
Usually, interest bearing checking accounts require that the holder maintain a minimum monthly balance. These minimum amounts will vary depending on what bank a person decides to store his money with; naturally, some will be higher than others, sometimes even drastically so. Before opening an account, a person needs to evaluate his usual pattern of deposits and withdrawals. If he finds that his balance fluctuates wildly, due to deposited paychecks or having bills withdrawn frequently, it might be in his best interest to pursue a different banking option. If the balance dips below the minimum required, then the holder accrues maintenance fees. If enough fees are incurred throughout the lifetime of the individual, these extra charges may very well negate whatever interest has been earned from the principal amount. Admittedly, many, who have no wish other than to stash a large sum of cash in the bank, may be unconcerned and undeterred by this.
Just as with minimum balances, another area where interest bearing checking accounts tend to differ from traditional ones is in the amount required as an initial deposit. These amounts can vary, of course, between banks but are most certainly higher than a standard checking account. And unfortunately, there is a correlation between the percentage rates and the required initial deposit. While interest bearing checking accounts are seeing much lower interest rates than in previous years, they are also seeing a rise in the amount of the initial deposit. Both of these factors, coupled together, are making some leery of entering into such a commitment at this time. Many do not have large sums of readily available cash, and for those who do, quite a few are loathe to go through the extra trouble if the payoff is not substantial enough.
For those who do decide to go ahead with opening interest bearing checking accounts, there is an interesting option to think about. They no longer have to go to the corner bank in order to conduct their business because now web-based banks are offering the same service with the ease of Internet technology. While some may be unnerved by the fact that they cannot see an actual teller across the desk from them while conducting business, all sources seem to indicate that these banks are perfectly secure, and are perhaps even more so than traditional ones. Not only is the money that is deposited still insured by the FDIC, but extra encryption also prevents hackers and thieves from accessing private and personal information. The added security is extremely desirable in an age where identity theft is rampant and so potentially destructive. Another one of the benefits of going with an online-only bank is that interest rates tend to be higher for these particular accounts, meaning a person will have more success, even in a downturned economy. If people decide to open accounts that accrue interest through the Internet, however, they still need to use good judgment and compare different web banks' offers, deciding which one will best fit their needs.
There are many different ways for a person to put his money to work. A person can open a money market account, put money into a CD, or invest in the stock market. These are all great ways to see a return on one's money. Many choose to open interest bearing checking accounts because doing so meets their financial needs and brings the promise of extra cash. It is important to remember, however, that this particular kind of "investing," unlike other forms, is unlikely to ever make an average citizen a millionaire. A person should "Labour not to be rich: cease from thine own wisdom" (Proverbs 23:4). This is the best way to avoid disappointment, because profits, if there are any, will most likely be modest. However, should a person decide that this is the option for him, he will still have the conveniences of regular checking, and the added bonus of free money.
Interest Only Loan RateAn interest only loan rate may be appealing when shopping various mortgage options and when comparing percentage rates. Paying only the interest for the first five years of a mortgage can sound like an attractive offer, but these controversial loans are not for everyone. However, consumers continue to be mesmerized by the idea of paying lower monthly home payments and saving, or spending, the difference. Experts in real estate markets and financial fields caution against the tempting interest only loan rates payment plans. There are just a few specific cases where this type of lien and repayment system would be beneficial to home owners. Before deciding on what type of mortgage would be best in any individual situation, all buyers and investors should completely understand the terms of the different mortgage options available today.
When mortgage lien options are being considered, it is, of course, a good idea to compare interest rates. The payable percentage charged to any lien is based on several factors. The economy, bond sales, and the prime interest rate are all indicators for the current percentages charged. The percentage charged for any loan is first driven by bonds markets or the over-all economy pictures. Then, points can be added for various reasons including credit report scores and the different loan types. Usually, interest only loan rates are a higher percentage than conventional fixed and balloon loans.
With interest only loan rate mortgages, the borrower will pay just the monthly percentage charge fee attached to the lien. This transaction is generally extended for a set term, such as five years. Once the term has ended, payments including the principle begin, which increases the amount of the payment substantially. There can be different terms and conditions associated with these types of home liens, and the interest only loan rate can also be adjustable, fluctuating with the market every six months. While initially this lien seems to be just too good to be true, there are pitfalls and financial dangers for the future. Even when the interest only loan rate is competitive, the compounding principle can make later payments out of financial reach. Once the principal is being paid against, borrowers will have to pay to catch up on reducing the debt before the terms of the whole lien are completed.
In the few cases where this type of home lien is beneficial, buyers and investors have ample finances that can be provided in the future. In other words, they are not really gambling that there will be money available for the large payment down the road or for refinancing. Investors may find the interest only program workable. Some investors will invest the difference between the percentage charge and the principle to increase earnings potential during the five year period. Also, those that invest and turn properties quickly may find this lien class an asset.
Personal finances are truly the considering factor for determining what a home lien package should look like. There are careers that start at a certain pay level and build, such as with sales. When a family moves and the income provider is just getting started with a new territory, their initial income may be lower in the first year or two, with the promise of an increased salary. This may be a situation where the family can consider and research interest only loan rates. It is also important for individual financial pictures to mirror the current housing market trends and strategies. If home prices are falling, going the conventional borrowing route for a mortgage could be the best of options.
Mortgage markets have changed greatly over the last few years, and now credit determines much of what terms are offered with each mortgage. Actually, deciding on what mortgage package is best for personal situations can be difficult, confusing at least. God promises to take care of His own, and we are to keep our eyes on the wonderful gifts of eternity and we are not to get over concerned about earthly treasures. "Yea, the sparrow hath found an house, and the swallow a nest for herself, where she may lay her young, even thine alters, O Lord of hosts, my King and my God. Blessed are they that dwell in thy house: they will be still praising thee. Selah." (Psalm 84:3-4) God will provide the ultimate home for His children. We can take great rest in that truth.
To find more information about interest only loan rates, consumers can research online or speak with a trusted mortgage broker. There is no shame in asking questions. The market changes so radically, keeping up with what lending products are available and how they are packaged is something only professionals can keep up with. Getting knowledge will lead to the wisdom needed to make the right financial choices for you and your family.