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3 Ways to Finance an Engagement Ring

The average engagement ring ran $5,598 in 2013, according to the TheKnot.com. That’s no small chunk of change. While it’s ideal to save enough to pay cash for a ring, there may be times you just can’t — or won’t — wait.

What are the best ways to finance an engagement ring? Here are three, along with the pros and cons of each.

1. Loans From Friends & Family

Grayson Bell was a college student when he decided to propose to his girlfriend (now wife). But with a part-time job as his only source of income, paying cash for a nice ring was out of the question. While discussing the dilemma with his mother, she offered to loan him the money. It turned out to be a smart move. “She had contacts at a prestigious jewelry market in another state,” he recalls. “She was able to get a ring at 60% off the appraised value. It was a great deal and a custom ring specifically designed for my wife.”

Bell and his mother set up a formal arrangement from the beginning, “We created a contract with payment terms, due dates, and when the loan needed to be paid off. I had to pay her back monthly and at least the minimum payment we agreed to. If I missed a payment or it was late, there was interest applied. It was much like a bank loan.”

Bell is a personal finance blogger now, and shares how he dug out of $50,000 in credit debt on his website. But at the time he was just a student who needed to find a way to finance his engagement ring. “All in all, the experience was a good one,” he says. “Looking back now, I realize I should have waited to just save up for the ring, but in my college years, I wasn’t thinking about that or my financial future. I paid off my loan on time and thanked my mother for what she did.”

The advantage of one of these loans is that they can carry an interest rate as low as 0%, and can be very flexible. They don’t appear on credit reports, which can be a plus (or minus — if you need the credit reference to build credit).

The downside? If you can’t make payments there’s likely to be a rift between you and the lender that could strain the relationship with someone you love.

2. In-Store Financing

Most major jewelers offer financing plans, some of which feature 0% interest for a limited period of time. For example, Jared offers interest-free financing for 12 months, or 12 months at 0% followed by low-rate financing for six months. Kay Jewelers offers 12 months interest-free. Blue Nile offers no-interest financing for six and 12 months, or equal payments for 24, 36 or 48 months at 9.9% (the time period depends on the amount financed). Zales offers 0% interest for six, 12 or 18 months, again, depending on the amount charged.

All of these offers require opening a new retail credit card. This new account could affect your credit scores, especially if the line of credit they give you is not significantly more than the amount you charge. That’s because credit scoring models compare your available credit to your balances to get your “debt usage ratio.” If your balances total more than 20% to 25% of your available credit on any individual credit card (or on all of them together), your credit scores may suffer. In other words, if they approve you for a $5,000 line of credit and you spend that much on a ring, your account will be maxed out from the beginning — and that can hurt your scores.

The other big “gotcha” to watch out for is that under some of these plans you may lose the interest-free financing and be charged interest from the date of purchase (often at a high interest rate) if you fail to pay the balance in full by the time the promotional period ends.

3. Personal Loans

A personal loan can be an alternative to opening a new credit card. While you won’t get interest-free financing that way, you may qualify for a loan with a low fixed rate lasting for anywhere from 12 to 48 months. The advantage to this type of financing is that you’ll have a fixed monthly payment, and know exactly how much you need to pay each month until the loan is paid off. In other words, there is no risk that you will see your rate skyrocket if you fail to pay off the balance when the promotional rate expires.

As with all types of engagement ring financing, there are a few things to watch out for, though. Your interest rate will depend in large part on your credit scores; the better your credit, the lower your interest rate. If your credit isn’t strong, you may wind up with a higher rate. (Think of interest as the opposite of a discount on the ring. Instead of paying less, you pay more.) You can check your credit scores for free on Credit.com to see where you stand.

Here are a couple of examples of how much interest can cost you over the term of the loan:

$5,000 loan at 10% for 3 years

Total cost: $5,808.24Payment: $161.34

$5,000 loan at 12% for 5 years

Total cost: $6,673.20Payment: $111.22

(Curious how your debt stacks up? You can see how much it will cost to pay off your credit card debt using the free credit card calculator at Credit.com.)

Borrow Smart

Whichever method you choose to finance an engagement ring, review your credit reports and scores before you apply for the loan. And be sure to read the fine print so you understand the terms of the loan. Paying more than you expected is stressful, and you’ll have enough stress planning — and paying for — your wedding!

More from Credit.com
Do You Need a Wedding Loan?What Happens to Your Credit When You Get Married?Credit Card Options for CouplesFinanceCreditengagement ringcredit reports […]

Should you give strangers your money on LendingClub?

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Websites that play matchmaker for people who want to borrow money and those who have spare cash to lend, offer investors an enticing deal: Sweet returns and the chance to hand-pick who you trust to pay you back.

And returns that can reach higher than 10% sound attractive at a time when interest rates on traditional savings accounts are meager. But investors should know that high returns — even in an online marketplace where overhead costs of lending are lower — imply higher risk.

LendingClub Corp. LC, +5.38% , an online loan company that has facilitated more than $6.2 billion in loans since 2007, went public Thursday. Its shares jumped from an initial public offering price of $15 a share to $24.75 at opening. Borrowers can apply to match up with lenders for personal loans for up to $35,000 or business loans capped at $300,000. The company rates borrowers with grades A through G, and says the average borrower has a FICO score of 699. The lower the grade, the more interest the borrower pays.

Online marketplace lending, through companies like LendingClub and its competitor Prosper, is expected to grow into a $1 trillion industry by 2025, according to the San Francisco-based venture capital firm Foundation Capital.

LendingClub borrowers can apply for credit through the company for various reasons: to help pay down credit card debt by taking out a loan with a lower interest rate, to pay medical bills, finance a car, purchase inventory for a business or even fund a vacation. The company says the average default rate has remained between 2% to 4% since 2009, higher than the average annual default rate of 1.06% for U.S. consumers, according to the S&P/Experian Consumer Credit Default Indices.

“No individual is going to be able to become adept at evaluating risk from borrowers on this type of loan,” says William Jordan, president of William Jordan Investments, a wealth management firm based in southern Orange County, Calif. For example, does a borrower who needs to pay off medical bills have a condition that could exacerbate and create more health-related expenses, affecting his or her ability to repay the loan? And can you trust someone who is borrowing money just to fund a vacation to be responsible enough to pay off your loan?

LendingClub requires investors to put a minimum of $25 in each fund they select. The company’s chief executive and founder Renaud Laplanche says that threshold encourages lower-risk investors to diversify their investments across different borrowers.

“While it’s illiquid, it’s also pretty short-term and high cash-flow,” Laplanche says. And if a borrower is diligent, “you also get paid every month.”

People who opt to assume the risk of lending to strangers should follow a few rules, says Peter Renton, who runs the website LendAcademy.com, where he writes about how to navigate peer-to-peer lending. An investor who puts $5,000 into peer-to-peer loans should spread the money out as widely as possible, given the $25 baseline. Also, put money in the best-rated funds if you can’t stand the thought of a stranger burning cash you’ll never see again, he says. And know that when a loan is 150 days past due and there’s no reasonable expectation of repayment, LendingClub says it may sell it to a third-party collection agency in an attempt to collect remaining payments, though recoveries are “infrequent,” according to the company’s website.

Chuck Jaffe’s Lump of Coal awards

(3:18)

Marketwatch’s Chuck Jaffe hands out his annual Lump of Coal awards. Is your favorite fund manager on the list?

About 70% of LendingClub investors are individuals, and the remaining 30% are institutional (for example, hedge funds, endowments and wealth management firms). For individual investors getting started, Jordan, the wealth manager, says even a portfolio that includes several types of peer-to-peer loans still amounts to an “unsecured consumer loan.”

“Someone coming to LendingClub with $1,000 or $5,000 or $10,000, I would say they should not be investing on a platform such as LendingClub,” he says. “They’re probably a newer investor. They don’t have that much experience. They certainly don’t have that much money.”

[…]

Sound Advice In Terms Of Pay Day Loans | Healthy Life

Get instant $ 300 www.mycashnow.com Tulsa, OK low apr instant paid 10 electronically deposit. You can also apply urgent $ 1000 cashland payday loans Colorado Springs Colorado low interest .

Online payday loans provide those short of money the ways to cover essential expenses and emergency outlays in times of fiscal misery. They must basically be put into nonetheless, in case a client boasts a good deal of knowledge relating to their particular conditions. Make use of the recommendations in this article, and you will know whether you have a good deal before you, or in case you are about to belong to a dangerous trap.

If you are planning on taking out a payday loan, be sure that the company you employ is reliable. There are many organizations around which can be rip-off performers. You ought to prevent them at all costs. Unless you get good testimonials regarding the organization online, do not rely on them.

See the small print just before getting any lending options.

Ask just what the interest of the payday advance is going to be. This is significant, since this is the exact amount you will need to pay out along with the amount of money you are borrowing. You could possibly even desire to look around and get the best interest rate it is possible to. The less rate you discover, the less your full payment will likely be.

There are many different businesses that supply pay day loans. If you believe you should utilize this sort of services, investigate the firm prior to taking out your personal loan. Ensure that other customers have been pleased. Performing a basic on the internet search, and reading testimonials of the loan company.

Should you be in the process of securing a payday advance, be certain to browse the contract cautiously, seeking any secret costs or essential shell out-back again information. Do not sign the deal till you fully understand everything. Look for red flags, such as huge costs should you go every day or maybe more on the loan’s thanks time. You could find yourself having to pay way over the first amount borrowed.

Just before a cash advance, it is essential that you discover of your various kinds of available so that you know, that are the best for you. Particular pay day loans have diverse plans or needs than others, so appear on the Internet to figure out what one is right for you.

If you find on your own in the situation with a number of payday cash loans, do not try and consolidate them into a greater loan. If you cannot pay back smaller loans, you will not be able to pay the larger one particular. Search for ways to repay the loans at lower rates of interest, to get out from the cycle of payday advance debt.

Only obtain the money that you simply absolutely need. For example, in case you are having difficulties to pay off your bills, than the cash is clearly required. Nonetheless, you ought to never ever obtain dollars for splurging functions, like eating dinner out. The high interest rates you will need to pay in the foreseeable future, is definitely not well worth having dollars now.

Maintain your vision on the charge to obtain money using a payday advance. Though there is lots of push made available to the high cost of these loans, occasionally you actually just need the money. Online payday loans happen to be in small amounts, generally which range form $100 to $1,500. The interest and costs that you simply shell out, should you pay the bank loan inside of fourteen days, is generally from $15 to $30 for every single $100 you need to use. Job this volume into the finances for your next paycheck, if you fail to afford to pay for it, you can not pay for to take out a pay day loan.

Make certain you get a cash advance directly. A lot of people have the oversight of trying to get a payday loan using a dealer. These individuals usually do not recognize that payday loan brokers typically charge extortionate fees, and forget to reveal the complete terms of a payday loan to debtors.

Tend not to obtain a financial loan for virtually any over you can afford to repay in your next shell out period. This is a good strategy to help you pay your loan in full. You do not want to pay in installments since the attention is indeed substantial it forces you to need to pay much more than you borrowed.

Be sure to keep a near eye on your credit score. Try to verify it at the very least annual. There could be problems that, can seriously damage your credit rating. Experiencing less-than-perfect credit will badly impact your interest rates in your payday loan. The more effective your credit history, the lower your interest.

As was explained previous in the following paragraphs, pay day loans supply you with a method to get money easily. Prior to taking out a pay day loan, carefully overview anything you learned from reading this write-up. The tips, and advice that you have go through may help make certain you don’t make any payday advance mistakes.

[…]

Payday loans shaken up by competition regulator | Business | The …

Payday lenders will be forced to give details of their products on price comparison websites to help potential borrowers shop around under new competition rules for the sector.

The Competition and Markets Authority (CMA) said payday lenders’ customers find it hard to get clear information on the cost of borrowing. Letting them compare deals online will increase competition and make it easier for new lenders to offer better prices, the CMA said.

The regulator will also require payday lenders to be clearer about their fees and charges, make it easier for borrowers to shop around without hurting their credit record, improve data sharing between lenders and oblige them to give borrowers a summary of charges.

The proposals follow a price cap announced in July by the Financial Conduct Authority (FCA) that limits repayments to no more than double the sum borrowed. The CMA said it wanted to make sure the cap did not stifle competition by setting a going rate for all lenders.

The FCA estimated that payday lenders issued 10m loans worth £2.5bn last year. The sector grew rapidly during the recession, but politicians and campaigners have attacked lenders for preying on vulnerable customers and charging high interest rates that risk their borrowing getting out of control.

Wonga, the biggest online payday lender, was ordered last week to write off £220m of loans to 375,000 people that it admitted should never have been granted. The advertising watchdog has also banned Wonga from using an advert that fails to mention its 5,853% annual interest rate.

Simon Polito, the chair of the CMA’s payday lending investigation group, said: “Greater price competition will make a real difference to the 1.8 million payday customers in the UK. At the moment there is little transparency on the cost of loans and partly as a result, borrowers don’t generally shop around and competition on price is weak.

“Lower prices from greater competition would be particularly welcome in this market. If you need to take out a payday loan because money is tight, you certainly don’t want to pay more than is necessary. Given that most customers take out several loans in a year, the total cost of paying too much for payday loans can build up over time.”

The CMA also recommended that lead generator websites selling potential borrowers’ details to lenders should be clearer about their activities. Many borrowers think the sites are lenders rather than middle-men and do not understand that they sell customers’ details to lenders for fees.

[…]

How do Philadelphia Payday Loans Work? | Global Alliance for …

Chances are you have heard about Philadelphia payday loans. You see commercials for them or local advertisements. You may see walk in locations in your town. There are ads for them all over the internet too. Some people assume that they won’t qualify for a Philadelphia payday loan so they never try. The title can be misleading as many of the lenders offer funds to anyone over 18 as long as they have steady income.
This can be from a job or it can be from other benefits such as retirement or child support. The amount of money that you make per month doesn’t have to be high either. It all depends on the particular lender. Some of them have stricter requirements than others. The goal of these lenders though is to help people in need to borrow money quickly.
The application process is very fast. There is never a credit check, so you just supply your pertinent details. This includes your name, address, and income. You may have to provide a photo ID for verification purposes. You can request a certain amount on the loan application or just see what you qualify for. It is wise to know how much you need, and to never accept an offer for more. You have to pay interest on what you borrow so be wise about it.
Once the Philadelphia loan application has been reviewed, they can tell you how much you qualify for. If you are at a walk in location, they can complete the documents and you walk out with your money. This is often in the form of cash or you can get a check that you take to your local bank. If you apply online, they can send you a check. The most common method though is for them to deposit the funds directly into your checking account through ACH.
Just like any other loan out there, you do have to pay back the money that you borrow. With Philadelphia payday loans, you need to understand that repayment before you apply. Since there is no credit check, the interest rate is the same across the board for each applicant with that particular lender.
You may have to pay back the entire Philadelphia loan the next time you get paid. However, if that will create an ongoing hardship for your budget, then you need to look at other options. There are payday loans out there that provide you with the chance to pay back that money in installments. Keep in mind that the longer it takes you to pay and the lower the payments, the more you will pay overall for interest.
If you don’t have any credit, it can be hard to get a bank loan without a co-signer or collateral. If you have poor credit then it is almost impossible to get lenders to help you. Going to friends or family members for a loan can be stressful and embarrassing. Payday loans can be a short term option to help you get money quickly and without hassles. In many instances, you can get the funds the same day that you apply for Philadelphia payday loans.

This entry was posted in Uncategorized on by . […]

Pay cash for home, get quick cash-out refi

As homebuyers plunk down all cash to win houses, some of them might wonder how quickly they can convert that equity back into Benjamins. The answer? They can get a cash-out refinance almost immediately, thanks to a little-known Fannie Mae program.

Pay cash, then get immediate cash-out refi

The delayed financing program allows all-cash homebuyers to refinance and take equity out as soon as they close on the home purchase. Before mid-2011, when the program went into effect, homebuyers had to wait at least six months before tapping home equity.

View Today’s Best Refi Rates — Lower Your Monthly Payments!

That’s good news for homebuyers in all-cash sales, which were a third of all purchases in the first quarter of 2014, up from the previous two years, according to the National Association of Realtors. And those are not all investors either, says the NAR. Many are retiring baby boomers trading down to more manageable homes and pocketing the difference when they do it. The delayed financing program gives them the option to take home even more cash while enjoying historically low interest rates on a conventional home loan.

5 things about the delayed financing program

It lets you buy a home with cash, then do a cash-out refinance immediately.You have to show where the cash came from to buy the house.The purchase must be an arm’s-length transaction.You can get more cash if it’s a primary residence, and less if it’s a second residence or investment home.Many sellers favor cash offers, so the program bestows an advantage in hot markets.

“I’m seeing it more and more in the areas where the property market is really heating up,” says David Cary, a mortgage broker for C2 Financial Corp. who works in the California market. “It’s made a big difference to clients I work with because they don’t want all their money tied up in real estate, even for a short time.”

Delayed Refinancing 101

Despite no wait time, the program comes with rules:

The sale must be arm’s length, meaning no parents selling to their children or business partners transacting with each other, Cary says.Homebuyers must prove where all the cash came from to buy the house, something that isn’t necessary during a regular refinance, says Pava Leyrer, director of training and implementation at Northern Mortgage Services in Grandville, Michigan.If the home was bought using money from a home equity line of credit on another house, the money from the cash-out refinance must first be used to pay down the HELOC debt.Gift funds used to buy the house cannot be paid back with the cash-out proceeds.There also cannot be any lien or loan financed directly against the property, such as a HELOC, Leyrer says.

Top 10 lenders January-March 2014

Ten lenders accounted for well over half of mortgage dollar volume in the first quarter of 2014. The traditional “big four” lenders are listed in boldface.

Wells Fargo18.6%Chase9.5%Quicken Loans5.6%Bank of America5.4%PHH Mortgage3.7%U.S. Bank Home Mortgage3.4%CitiMortgage Inc.3.2%PennyMac2.6%Flagstar2.4%Nationstar Mortgage2.4%

Source: MortgageStats.com

Limits on money amounts

The program can be used for primary residences, second homes or investment properties up to the local conforming loan standards (typically $417,000).

But the amount of equity that can be pulled out depends on what the house will be used for, says Scott Sheldon, a senior loan officer for Sonoma County Mortgages in Santa Rosa, California.

The details:

Owners of primary residences can borrow up to 70 percent of the home’s value.Investment properties and second homes are limited to 60 percent or less.

Borrowers also cannot have more than 10 financed properties to qualify for the delayed refinancing program, Sheldon says.

Why people use the delayed financing program

There are several reasons that homebuyers may use the delayed financing program instead of waiting the six months to tap equity:

[…]

Reduce student loan debt with refinance?

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Dear Dr. Don,
At 26 years old, I’m graduating next semester with a bachelor’s degree. I’m three years into my career with a good job. My wife and I own a home with substantial equity. We have no credit cards or debt other than student loans.

Regarding the latter, I have about $50,000 in student loan debt. Most of the debt — $30,000 — involves Stafford loans in my name carrying a rate of 6.8 percent after graduation. The remaining $20,000 is tied to PLUS loans at 7.9 percent. While these are technically loans made to my mother, I make the payments. Unfortunately, I don’t get the tax benefits.

Our mortgage is about 70 percent loan-to-value with payments amounting to 20 percent of take-home pay. We are three years into a 30-year mortgage at 3.75 percent. The house is worth about $150,000. We purchased the home as a foreclosure in a premium area and have extensively remodeled it.

One issue with the current mortgage is that we will pay $100 a month for the next three years for private mortgage insurance since the equity in the property came from remodeling it. We plan to keep the loan term at 30 years for flexibility and to allow for aggressive retirement savings of $450 a month, but are open to suggestions.

Assuming I can still get 3.75 percent, I am wondering if it makes sense to use some equity to pay down the PLUS loans, taking advantage of the lower interest rate and tax benefits.

Any advice would be greatly appreciated!

Thank you,
— Eric Equity

Dear Eric,
You’re in good financial shape for someone just graduating from college.

The goal is to minimize your total after-tax expenses on the mortgage and student loan debt. At issue here is choosing the right way to restructure the loans. If your appraisal is realistic, then cash-out refinancing should relieve you of the PMI payments.

That saves you more than $3,000 over the next three years. When involving a refinance, lenders are cautious about how much cash you can take out. You’ll also have to pay closing costs.

As I write this, Bankrate’s national average for a 30-year fixed-rate mortgage is 4.28 percent. Whether you can replace your existing mortgage with added debt less expensive than what you got with your student loan could be a challenge.

A home equity line of credit typically has lower closing costs, but will carry a higher interest rate compared with a mortgage. You also won’t be able to avoid PMI on the existing mortgage.

The following is an estimate of the pretax expense associated with the two scenarios. They are a cash-out refinancing versus sticking with your existing loan and taking out the home equity line of credit. It assumes you can replicate your existing mortgage rate in a cash-out refinancing. I don’t think that is likely.

Cash-out refi vs. combining HELOC with existing mortgage

Loan amount$122,000$122,000Loan term (months)360Interest rate3.75%Payment$565.00$712.44Total interest expense$81,400.37$65,714.34Closing costs$2,400.00$750.00PMI expense$3,600.00Total pretax expense$83,800.37$70,064.34

This gives you an idea of the numbers for your review. Part of the reason I prefer combining a HELOC with your existing loan assumes you pay off the home equity line in 10 years. That’s a reasonable assumption since the PLUS loans you’re making payments on now should have a term of 10 years. Good luck!

[…]

Make Your Life Smoother With The Payday Loans Online …

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Due to the ease of getting payday loans online, most people today prefer to go the online way. This is because these loans will be issued at the right time so as to cope up with emergency situations like urgent rent, bill payments or most importantly health problems. Furthermore, in online application for payday advance, you as an applicant don’t need to worry about your bad credit history or poor credit card rating. This is because your credit history is not an eligibility requirement for this loan application and the fact that these loans are small loans with less risk.

Although these loans are generally of high interest rates, they have a number of advantages that outweighs these interest rates. First of all, obtaining online cash advances is quite an easy task provided you meet certain initial eligibility requirements. Another advantage of going for online loans is that they are short term loans for low amount. Online loans are more or less the same to personal loans but only differ in the sense that these loans are of lower amount taken at very short term periods.

[…]

American Apparel lender demands $10M loan payment after CEO’s exit

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American Apparel is suddenly facing a cash crunch.

A key lender to the embattled clothing company on Thursday demanded repayment of a $10 million loan, threatening a liquidity crisis for the retailer on the heels of its ouster of CEO Dov Charney, The Post has learned.

Lion Capital, a UK-based investment firm that has been friendly to Charney, denied a waiver on the default triggered by the executive’s dismissal, forcing American Apparel to raise funds to pay it off — either by issuing new debt or additional equity in the company, sources said.

American Apparel’s debt structure has cross-default provisions that also will trigger a default on the company’s $30 million credit line with Capital One, potentially creating a cascading effect that could force a bankruptcy if it can’t line up funds.

“They’re either going to have to add debt at punishing rates, or raise more equity and further dilute shareholders or go bankrupt,” according to a source briefed on the situation.

The Los Angeles sportswear manufacturer and retailer could also be a takeover target — its shares have soared nearly 41 percent in the last two trading days, closing Thursday at 74.4 cents a share.

American Apparel couldn’t immediately be reached for comment Thursday. Lion officials declined to comment.

Lion has given American Apparel until July 4 to repay the loan, sources said.

Other lenders, including Cerberus Capital Management, have expressed interest in refinancing the debt, several sources noted.

An American Apparel store on the Lower East Side of ManhattanPhoto: Stefan Jeremiah

This week, American Apparel confirmed it has hired investment bank Peter J. Solomon to raise money in case Lion decided to call in its loan.

Co-Chairman Allan Mayer, who led last week’s coup against Charney following the company’s annual meeting, said late Thursday that the company is still in talks with Lion about the status of the loan, declining to comment further.

Insiders said Lion CEO Lyndon Lea became frustrated in recent days after American Apparel’s board appeared to stonewall him in response to questions about the internal investigation that spurred Charney’s dismissal.

In a June 18 termination letter to Charney, the board cited “willful misconduct,” including allegations that he allowed an employee to create a blog with naked pictures of Irene Morales, a former employee who had filed a sex harassment suit accusing Charney of making her his “sex slave.”

In addition to denying American Apparel a waiver on its debt, a source said Lion has been advised by its lawyers to temporarily forgo its right to take two board seats because of provisions triggered by Charney’s ouster.

The concern, according to the source, is legal liability for board members engaged in an arbitration dispute with Charney, who is alleging he is entitled to as much as $25 million in severance.

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[…]

My Day Without Banks

Our first problem was that we couldn’t cash a check.

Our small group had come to a supermarket in west Los Angeles to cash a $15 personal check that we needed to help pay for several financial transactions we had set out to accomplish. But we couldn’t take the first step because the store, it turned out, wouldn’t cash an out-of-state check. So we were stalled at the starting line.

That was a revealing early moment in a financial scavenger hunt across Los Angeles last week that I joined along with several dozen participants from the financial industry, non-profit groups, and advocacy organizations. The field trip, called FinX, was organized by the Center for Financial Services Innovation, a group that works to expand access to the financial system. The goal was to expose us, if only briefly, to the daily experiences of the roughly 35 million American households who conduct much of their financial lives outside of the traditional banking system, according to federal figures.

Here are some of the lessons that the group took from our dip into this murky world. It’s expensive to be poor. It’s also very time-consuming. And there isn’t much guidance to help you make good decisions, more effectively manage your money, or begin building a positive credit history.

But participants also concluded that many of the front-line workers who interact with customers are friendly and helpful. And that the archipelago of check-cashing storefronts, supermarket and dime-store money transfer counters, and payday and title loan lenders add up to an alternative financial system that can ultimately meet the needs of some families living at the margin, even if they involve costs in time and money that more affluent families might consider unacceptable. “The message is that it’s nuanced,” said Jennifer Tescher, president and CEO of the CFSI, which organized the outing as part of a conference it co-sponsored here last week on innovation in reaching underserved families. “It’s complicated. We need to throw away our perceived ideas about what the consumer needs.”

The group I joined included three young people from different corners of the industry: Ranjit, the manager of strategy and development for a leading microfinance lender; Katherine, a senior policy analyst for a DC-based group that advocates for greater financial access, and Rodolfo, who works at a venture capital firm that invests in financial services start-ups. Each of them was razor-sharp and expert on the big trends of technology, demography and business opportunity reshaping the financial system. Yet we sometimes found ourselves baffled by the trade-offs of time, cost and convenience that we faced.

The CFSI provided each group with two checks: a payroll check for $105 and a personal check for another $15. Using only the proceeds (and none of our own money), we were required to complete a series of financial transactions, including executing a money transfer, buying a money order to pay a bill, obtaining and loading a prepaid debit card, and inquiring into payday and title loans. And we were supposed to visit a pawnshop.

As compared to consumers who can only afford public transportation, we had a big advantage in that a car and driver were assigned to get us around. But we were provided only the most general guidance about the kind of places where we might complete the assigned transactions. We were told to search out the specifics through our smart phones, which research shows to be the principal way many lower-income families interact with the Internet.

We stumbled out of the gate. When we brought the $15 check, made out to Ranjit, to the financial counter at a supermarket on bustling Pico Blvd. they told us it would be $2 to cash it, but free if we bought something in the store. So we headed over to find our prepaid debit card.

When we returned to the counter, though, the clerk took a closer look at the check. And then announced that she could not cash it, even with a purchase. “We don’t cash out of state checks,” she said. “So,” Ranjit told the rest of us, as he turned around to return the prepaid card, “we don’t have any money to buy this.”

The clerk told us to try a commercial bank two blocks east. We walked out to the street and didn’t see a bank in sight. So we piled back upstairs to the car and drove down Pico until we found one. Once we arrived, Katherine successfully cashed the $105 payroll check made out to her-but for a $6 fee. Even so, the bank wouldn’t let her complete any of the other tasks on our list, she explained as she rejoined the group, “because I’m not an account holder.”

For our $15 check, we stopped next at a check cashing storefront squeezed next to a liquor store in a Venice strip mall. The room was stark: no chairs, no desks, glaring fluorescent lights, and a single clerk behind a plexiglass window. It vaguely suggested a police station. When Ranjit went to the counter, the clerk informed him that it would cost $5.99 to cash the $15 check. He also needed to fill out an extensive questionnaire of personal information. (“I was surprised,” he said later, “by the amount they wanted to know.”)

The clerk raised her eyebrows at the check’s amount and asked Ranjit if he might prefer to take out a payday loan the next time he came in. The maximum payday loan, she explained, was $255-which required a repayment of $299.98 within two weeks. We passed on the loan, but bought a money order, and picked up a prepaid card, checking off another two items from our list.

Next we stopped at a 7-11 in another strip mall to check another box: adding another $10 to the card. That was easy enough, and when we stepped out into the mid-day sunshine, Ranjit asked Katherine if she would hold his leftover cash. “That’s a really interesting gender dynamic, given that’s how many low income families operate,” she said with a smile. “The money is in the woman’s hands.”

We took the money across the street, to yet another check cashing storefront in yet another strip mall. The window was covered with banners advertising “Easy Title Loans,” “More Cash/Lower Payments” and “Bad Credit OK.” Katherine went to the counter to finish another task: executing a money transfer to another team member that we could pick up somewhere else.

While she was there, working through another sheaf of paperwork, Rodolfo reflected on the interest rates listed for payday and title loans. All were very costly, he said, yet might still make sense for the people standing in line around us. (While Katherine was completing the money transfer, one woman was told she couldn’t get another payday loan until next week.) “It’s hard to compare because we have alternatives, but the set of alternatives for low-income families are different,” he said. Though a payday loan is expensive, he suggested, it might be cheaper than, say, paying to have a utility turned back on after it’s disconnected because you didn’t pay a bill in time. Besides, he continued, if regulation too severely limits what lenders like this can offer, the next option for some borrowers might be loan sharks who not only charge more, and operate with no oversight at all, but create other risks (like violence). “Depending on what the alternative is,” he said, gesturing toward the loan rates listed on the wall, “you can argue that it’s cheap or expensive.”

Katherine returned singing the praises of the man who had carefully walked her through the money transfer. “He was great,” she said. The rest of the trip passed quickly. We stopped in at a title loan store that was suspicious of us because other groups on the field trip had already come through. Then we went to a pawn shop where Katherine discovered she could walk out with some excellent jewelry for a song-but was offered only $100 for her engagement ring. A final stop at an “88 cent store” where Rodolfo seamlessly picked up the money transfer Katherine had purchased-and we were back at the hotel only a few minutes after the deadline.

In all, we had made eight stops in less than three hours. We had acquired $120 in cash, through the two checks, and spent $21.83 in fees across all our transactions-nearly one-fifth of our total resources. We received some very courteous personal service designed to help us complete the immediate transaction we were attempting, but utterly no advice on how to more effectively manage our financial lives. We were required to provide extensive personal information but didn’t get much insight back about the details of the products we were purchasing; the entire experience felt a little like looking through a one-way glass. (Or, as Ranjit put it, there was an “information asymmetry.”) Nothing we did improved our credit score, or even helped us to establish one. Nowhere were we offered an opportunity to save. If there were new apps or other technology that might have made our transactions easier and smoother, no one pointed us toward it.

And yet, our group finally concluded, for its own limited purposes, it all sort of…kind of…worked. The alternative financial system that we briefly visited, with all the advantages of education, expertise and experience that we carried (not to mention a driver) felt like a car that was held together with duct tape and spent too much time in the shop, but still mostly got you around. It might not work smoothly, and it might cost a lot to operate, but the various pieces of the system did allow low-income families to balance their income against their expenses, meet shortfalls (at high cost) and move money around without interacting with conventional banks. Katherine summarized the group’s feelings when she said: “It’s hard to justify a lot of the extra costs but there are some ways it is more convenient and meets people’s needs better.”

When we were done, the question I found myself asking wasn’t whether the system functioned-but whether it was the best we could do for families who are already operating with so little margin for error. “The challenge we are focused on,” Tescher told me after I returned, “isn’t whether you have a bank account; it’s whether you are managing your finances day-to-day in a way that provides security and opportunity.” We didn’t encounter much of either during our brief immersion into the hazy archipelago of alternative finance.

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