Preferred Financial Services

What are the key measures of financial health? Is it how much money you make? Is it how much money you spend? Or is it a combination of the two things? While attempting to get at your financial health, you can’t measure just income or expenses you have to measure them both as they relate to one another.

Loan officers or mortgage brokers commonly refer to your debt to income ratio or DTI. Credit card companies and counselors also talk about debt to income ratio which begs the question what is it? And why is it so important?

In short your debt to income ratio compares how much you make to how much you owe. The purpose of the calculation is for lenders to be able to determine how much more debt you can take on without overextending yourself. To do the math, take all of your fixed monthly expenses and divide the total by your gross monthly income. Why is this information important to lenders?

Lenders want to figure out what type of risk they are taking when they are lending you money, your risk factor to the banks is manifested in your interest rate if they approve you for a loan; the higher the rate the more risk the bank assumes it is taking when it is lending you money. Mitigating risk is important for banks, but understanding how you should be managing your finances is critical to you… Here are some general guidelines:

Your DTI should be under 36% when shopping for a mortgage
Your total housing expenses should be less than 29%
FHA & VA loans allow up to 40% when evaluating loans

Paying off your debt is always a good idea. If you’ve found yourself in a position where your debt has started to get out of control look into your options…. Ultimately, you’re looking for the best debt elimination tool that you can find. Eliminating credit card debt should almost always be your top priority. There are lots of services that offer you the ability to resolve your debts effectively.

Debt consolidation services like consumer credit counseling may work for some people, while debt settlement may work best for others. Consumer finance is complicated; there are lots of questions you need to ask. Preferred Financial Services offers a debt settlement service that helps reduce your debt quickly and effectively. Keep all options open and above all keep your eye on the amount of debt you are taking on.

Share on Facebook

Credit Card Debt Help preferred financial, preferred financial services

If you’ve ever wondered why finance charges on a credit card accrue so quickly, look no further than your card holder agreement. Credit card companies have come up with a series of elaborate ways to bill finance charges adding to their bottom lines, while taking away from yours. The double billing cycle method is one of six complex ways credit card companies tabulate interest.

Double cycle billing is a method of calculating finance charges based on the average balance owed over the past two billing cycles. Credit card companies use this method of billing to increase revenues billed to card holders that pay off their balances quickly, but has been scrutinized as a result of fees billed on balances that may have been already paid off.

The Math:

Standard interest rate calculation:
Average daily balance * Annual Percentage Rate * Days in Billing Cycle/Days in year

$1,000 * .135 * 25/365 = $9.24

Double Cycle Billing:
Two-cycle average daily balance * Annual Percentage Rate * Days in Billing Cycle/Days in year

$1,500 * .135 * 25/365 = $13.87

The example is based on a cardholder with a $1,000 balance currently due, that held a $1,500 balance but made a $500 payment. In this case the credit card company made an additional 50% in interest for the period even though a third of the balance had already been paid. The disadvantage to consumers is obvious; even if you already paid your bill they are still billing you interest as if you still owe them.

The Impact:

If you follow the math you’ll notice that tabulating interest in this manner puts consumers at a significant disadvantage. The math detailed in the example above speaks for itself, paying interest on money borrowed that is already paid seems intrinsically wrong. That being said the impact on cardholders that carry similar balances on a month to month basis isn’t very significant, the greatest impact is felt by consumers that pay their debts off aggressively. The double cycle bill method looks as if it was designed to get greater interest payments from those consumers looking to eliminate their debt quickly.

Overall this billing scheme puts consumers behind the eight ball when it comes to reducing or eliminating their debts. Credit card companies under this billing structure have an advantage that consumers may not be able to overcome, putting them in a position where they are consistently getting behind with their credit card debts.

Information on ‘Double Cycle Billing’ is available on the Federal Reserve’s website: www.federalreserve.gov, there you’ll find a complete overview of consumer debt trends and an overview of new credit card rules and how they may apply to you. For more help on understanding your creditors or eliminating your credit card debt, feel free to contact Preferred Financial Services.

Share on Facebook

Credit Card Debt Help debt reduction, preferred financial, preferred financial services

ANDOVER, Massachusetts, U.S.A. – Preferred Financial Services of Andover, Massachusetts has been accredited by the U.S. Organization for Bankruptcy Alternatives. Lingering economic problems across the U.S. have forced many of our citizens into dire economic straits, and many who have defaulted on their credit card payments are beginning to look towards bankruptcy protection as their only alternative. However, bankruptcy and its lingering effects can affect an individual’s credit record adversely for many years to come. The good news is there are less drastic alternatives including debt consolidation and debt reduction assistance, but choosing an accredited firm to help in these matters is critical.

Debt consolidation is a process where an individual works with a credit counseling firm to reorganize their various unsecured debts (most often credit cards) into a single, lump sum debt with a more favorable interest rate than the high interest rates charged by the card issuers. Note, however, that while this tactic is helpful in reducing the total monthly payments due to a lower interest rate, the total amount of debt is not reduced. This often means that it can take upwards of 20 years to pay off the total debt.

Debt reduction firms such as Preferred Financial Services, on the other hand, reduce the total amount of debt owed to the credit card companies by negotiating settlements with those firms on the client’s behalf. Consumers that have defaulted on their credit card payments who enroll in a program with a reputable and accredited debt reduction firm benefit from negotiated settlements that often result in a reduction of 50% or more of what was originally owed. This effectively cuts the total balance by half or more, significantly reduces monthly debt payments, and helps reduce the time to reconcile the debt by many years.

However, consumers need to be aware that many ‘fly-by-night’ debt reduction firms have popped up on the scene. To avoid getting tied-up with one of these unscrupulous firms, consumers should work only with firms that are accredited by the United States Organizations for Bankruptcy Alternatives (U.S.O.B.A.). Preferred Financial Services (www.PFShelp.com) is one of a small handful of firms that have received this accreditation. To become accredited by this body, each organization is required to pass an annual, on-premises audit conducted by the U.S.O.B.A. Having a U.S.O.B.A. accreditation provides assurance that the firm adheres to the highest industry standards and has compliance with each state’s rules and regulations.

Anyone who has defaulted on their unsecured credit card debt and believes that bankruptcy is the only solution should seriously consider contacting a U.S.O.B. A. accredited firm.

About Preferred Financial Services:

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has some of the most experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt in 2009 for just over $6.4 million, for a savings of about 60% – and over 2,900 accounts were settled on behalf of their clients.

For more information, visit: www.PFShelp.com

Share on Facebook

PFS News debt reduction, pfs, preferred financial, preferred financial services, usoba