APR vs. Interest Rate: Does the Difference Matter When It Comes to Your Credit Card?

One of the most confusing concepts regarding credit of any kind is the difference between APR and interest rate. Most people use these terms interchangeably, but technically they mean different things. So does the difference matter when it comes to your credit card?

Let’s first sort out the technical differences of the terms when it comes to credit in general.

Nominal interest rate

The interest rate is the actual interest you pay on a given credit balance, expressed in percentage terms. This is sometimes referred to as the “nominal interest rate.”

So if you go to the bank and take out a mortgage loan, and you only consider the actual interest you are paying on that mortgage, that’s the nominal interest rate. If you are paying 5% per year on a $100,000, 50-month term loan, you would pay $5,000 in interest.

APR

APR stands for Annual Percentage Rate. The Truth in Lending Act, as well as Regulation Z and a host of individual state laws, requires that all loans be expressed as APR. That’s because APR will also factor in all fees, closing costs and anything else associated with the loan.

Let’s go back to that mortgage. Suppose there were $5,000 in fees on top of that $100,000 mortgage, bringing the total amount you are actually financing to $105,000. Let’s say that $5,000 in fees is spread across the 50-month loan equally. That would mean you would pay an extra $100 per month, for a total of $5,100.

Your APR would be 5.1%.

Why APR?

Regulations require that APR be disclosed to us borrowers so that we can make an apples-to-apples comparison on loans. That way, since different lenders offer different interest rates and fees on loans, we can boil it all down to a single number to see what the best APR is.

Now, let’s look at APR vs. interest rate and see if the difference matters for your credit card.

How it works for credit cards

The same concepts apply, but the names are different. “Nominal interest rate” in the world of credit cards is called “nominal APR.” “APR” is referred to as “effective APR,” and, like other loans, it includes fees.

However, when it comes to credit cards, there generally are few or no fees. In fact, if your credit card is charging you fees other than an annual fee for having the card, you probably have a lousy deal.

Fees?

The only other fees generally seen are late fees or over-the-limit fees. These may not even show up as effective APR rates. They may simply get tacked on to whatever minimum payment you have that month. Some cards may fold these fees into your nominal APR, which will create a very slightly higher effective APR.

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Housing Woes Hobble Most Americans as Rich Get Richer, Fed Report Shows

As the rich got richer and the poor slid further down the wealth ranks over the past three years, declining home values kept America’s middle-income families from advancing alongside their wealthiest neighbors, according to a just-released Federal Reserve study. On a brighter note, indebted U.S. consumers pared what they owe.

Based on homeowner responses, the average value of residential property dropped 6% from 2010 to last year, while a national residential real estate price index failed to outpace inflation, rising 2% annually, the Fed said, citing its triennial survey of consumer finances. For most families, much of the change in wealth during the past decade stemmed from booms and busts in asset prices, including housing.

“The bust, in particular, had a disproportionate effect on families in the middle of the net worth distribution, whose wealth portfolio is dominated by housing,” Fed economists said in the study. In terms of incomes, families in the midrange “have failed to recover the losses experienced between 2007 and 2010,” they said.

Not so for the wealthiest Americans.

“Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013,” the economists wrote.

Income gain

Among the top 10%, average income jumped 10% while most households reported little change or slight declines and the bottom 10% saw an 8% drop. By comparison, the Fed said the share of all U.S. household income collected by the top 3% of families surged to 30.5% last year from 27.7% in 2010.

And so they grew richer. While the net worth of the top 10% in earnings rose 2% on average, the highest-ranked 3% saw their share of all household wealth climb to 54.4%. For the rest, their slice of the pie fell to 24.7%, led by a 21% drop among the poorest 10%.

For most of the families in between, home values have traditionally been the key to accumulating household wealth. Yet with prices sagging, at least until the past year or so, the rate of home ownership dropped to 65.2%, the lowest level in a generation, according to the Fed. It said the average household wealth derived from housing sank 3.1% from 2010 to $159,400 last year. That’s an almost 28% plunge from $221,000 in 2007. The bottom half of the home-owning public was hardest hit by these declines, the Fed said.

So it’s hardly any mystery why many younger Americans have shied from becoming homeowners, despite historically low mortgage rates. The market bust that led to the Great Recession showed just how risky that asset class can be as millions lost their investment to foreclosure or saw the value of their property drop below what they owed on the mortgage.

Debt mix

While the indebted households reduced what they owed by an average of 13%, much of that came from lower rates of homeownership. By last year, the percentage of households with debt tied to their primary residence slumped to 42.9% from 47% in 2010, while the proportion with education loans increased to 20% and the average amount owed climbed 5% to $28,900 on average. The Fed said the balance outstanding was concentrated in households led by someone under 40 years old.

Consumers with credit card debt sharply reduced the burden, cutting the average owed 25% to $5,700 last year. The Fed said the portion of families carrying balances slipped to 38.1% and the overall debt-to-income ratio for U.S. households fell to 104.6% from 124.7% in 2010.

Measures of debt distress also showed signs of improvement, as the percentage of borrowers with a payment-to-income ratio of over 40% slumped to 8.2%, its lowest level since at least 2001. Those described as credit constrained either because they had been turned down for a loan or didn’t apply because they feared being rejected also declined slightly.

The proportion of households that were late on debt payments also slid. But the number of consumers who took out payday loans – very short-term debt characterized by high fees and astronomical annual interest rates – rose to 4.2% from 3.9%.

So even as home prices rebound in many areas and jobs become more abundant, the economy still hasn’t lifted the fortunes of most Americans, just the wealthiest.

Federal Reserve image via Shutterstock

Source Article :http://bit.ly/1rBz8EZ

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Housing Woes Hobble Most Americans as Rich Get Richer, Fed Report Shows

As the rich got richer and the poor slid further down the wealth ranks over the past three years, declining home values kept America’s middle-income families from advancing alongside their wealthiest neighbors, according to a just-released Federal Reserve study. On a brighter note, indebted U.S. consumers pared what they owe.

Based on homeowner responses, the average value of residential property dropped 6% from 2010 to last year, while a national residential real estate price index failed to outpace inflation, rising 2% annually, the Fed said, citing its triennial survey of consumer finances. For most families, much of the change in wealth during the past decade stemmed from booms and busts in asset prices, including housing.

“The bust, in particular, had a disproportionate effect on families in the middle of the net worth distribution, whose wealth portfolio is dominated by housing,” Fed economists said in the study. In terms of incomes, families in the midrange “have failed to recover the losses experienced between 2007 and 2010,” they said.

Not so for the wealthiest Americans.

“Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013,” the economists wrote.

Income gain

Among the top 10%, average income jumped 10% while most households reported little change or slight declines and the bottom 10% saw an 8% drop. By comparison, the Fed said the share of all U.S. household income collected by the top 3% of families surged to 30.5% last year from 27.7% in 2010.

And so they grew richer. While the net worth of the top 10% in earnings rose 2% on average, the highest-ranked 3% saw their share of all household wealth climb to 54.4%. For the rest, their slice of the pie fell to 24.7%, led by a 21% drop among the poorest 10%.

For most of the families in between, home values have traditionally been the key to accumulating household wealth. Yet with prices sagging, at least until the past year or so, the rate of home ownership dropped to 65.2%, the lowest level in a generation, according to the Fed. It said the average household wealth derived from housing sank 3.1% from 2010 to $159,400 last year. That’s an almost 28% plunge from $221,000 in 2007. The bottom half of the home-owning public was hardest hit by these declines, the Fed said.

So it’s hardly any mystery why many younger Americans have shied from becoming homeowners, despite historically low mortgage rates. The market bust that led to the Great Recession showed just how risky that asset class can be as millions lost their investment to foreclosure or saw the value of their property drop below what they owed on the mortgage.

Debt mix

While the indebted households reduced what they owed by an average of 13%, much of that came from lower rates of homeownership. By last year, the percentage of households with debt tied to their primary residence slumped to 42.9% from 47% in 2010, while the proportion with education loans increased to 20% and the average amount owed climbed 5% to $28,900 on average. The Fed said the balance outstanding was concentrated in households led by someone under 40 years old.

Consumers with credit card debt sharply reduced the burden, cutting the average owed 25% to $5,700 last year. The Fed said the portion of families carrying balances slipped to 38.1% and the overall debt-to-income ratio for U.S. households fell to 104.6% from 124.7% in 2010.

Measures of debt distress also showed signs of improvement, as the percentage of borrowers with a payment-to-income ratio of over 40% slumped to 8.2%, its lowest level since at least 2001. Those described as credit constrained either because they had been turned down for a loan or didn’t apply because they feared being rejected also declined slightly.

The proportion of households that were late on debt payments also slid. But the number of consumers who took out payday loans – very short-term debt characterized by high fees and astronomical annual interest rates – rose to 4.2% from 3.9%.

So even as home prices rebound in many areas and jobs become more abundant, the economy still hasn’t lifted the fortunes of most Americans, just the wealthiest.

Federal Reserve image via Shutterstock

Source Article http://ift.tt/1y39EC7

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Home Depot Data Breach: What to Do If You’ve Shopped There Recently

If you spent the long holiday weekend working on a home improvement project, listen up: There’s good reason to believe that Home Depot shoppers are the latest victims of a major retail data breach.

Not sure what happened, or what to do if you’ve shopped there recently? Take a look at the details below – the Nerds have you covered.

Home Depot data breach? What we know so far

On Sept. 2, 2014, investigative journalist and security blogger Brian Krebs posted an article to his site indicating that Home Depot customers may be the latest victims of a massive credit card data breach. Although this might not seem like enough to cause concern, Krebs cites multiple pieces of credible evidence to support his story.

For one thing, Krebs reports that a large number of stolen credit card numbers were put up for sale on underground markets on the morning of Sept. 2, 2014. A group of them were labeled “American Sanctions.” Another unit of stolen payment data was labeled “European Sanctions.” Krebs interprets this as retaliation against the United States and Europe for recent sanctions these Western powers placed on Russia; he states that the hackers might be the same Russian/Ukrainian group that carried out the Target data breach at the end of 2013.

Krebs also states that a number of banks are investigating evidence of a data hacking that might be traced back to customer purchases made at Home Depot. At the same time, multiple news sources, including Bloomberg and the Wall Street Journal, report that the retailer, law enforcement and banks are looking into “unusual activity.”

In an update to his original post, Krebs reports that “several banks” think the breach might extend as far back as late April or early May 2014. This could mean millions of captured credit and debit card numbers, if it turns out to be true.

What to do if you’ve shopped at Home Depot recently

If you’ve shopped at Home Depot in the past few months, you might be worried that your credit card number is up for grabs on the black market. While there is cause for concern, it’s important not to panic. Remember, this story is still developing. The authorities have not yet definitively confirmed that a breach did occur at this particular retailer.

With that being said, your best course of action right now is to remain alert for new information. Specifically, you should monitor the activity on any credit card you may have used at Home Depot in the past few months very closely. For the time being, checking it once per day is probably a good idea. If you spot anything unusual, contact your card issuer immediately.

Also, keep a watch on your email for further instructions from Home Depot and/or your credit card company. If this does turn out to be a hacking that your card was swept up in, you might be receiving information about replacing it. If your issuer sends out any guidelines for further action on your part, follow them.

Otherwise, you can rest easy knowing that federal law limits your liability to a maximum of $50 in the event that you’re a victim of credit card fraud. If this possible breach occurred by way of skimming malware installed in Home Depot’s credit card readers, the Fair Credit Billing Act states that you won’t be responsible for any of the unauthorized charges.

Other tips for keeping your credit card data safe

Again, it’s not yet clear how the Home Depot data breach (if there even was a breach) happened. But it never hurts to review the steps you can take to keep your credit card information safe:

• Keep your credit card out of plain sight when you’re in public places.


• Don’t share your credit card number with anyone.


• If a credit card terminal looks strange to you, don’t use it.


• Only put your credit card number into websites that display “https” before the URL.


• Be suspicious of anyone asking for your credit card number – in person, over the phone or via electronic communication. If you’re even remotely concerned about the source’s authenticity or motives in asking for your payment information, don’t provide it.

The takeaway: Home Depot may be the latest retailer to get caught up in a massive data breach. If you’ve shopped there recently, don’t panic. Just follow our tips above, and check back in often with the Nerds for updates.

Home Depot image via Shutterstock

Source Article :http://bit.ly/1qmLzEe

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Home Depot Data Breach: What to Do If You’ve Shopped There Recently

If you spent the long holiday weekend working on a home improvement project, listen up: There’s good reason to believe that Home Depot shoppers are the latest victims of a major retail data breach.

Not sure what happened, or what to do if you’ve shopped there recently? Take a look at the details below – the Nerds have you covered.

Home Depot data breach? What we know so far

On Sept. 2, 2014, investigative journalist and security blogger Brian Krebs posted an article to his site indicating that Home Depot customers may be the latest victims of a massive credit card data breach. Although this might not seem like enough to cause concern, Krebs cites multiple pieces of credible evidence to support his story.

For one thing, Krebs reports that a large number of stolen credit card numbers were put up for sale on underground markets on the morning of Sept. 2, 2014. A group of them were labeled “American Sanctions.” Another unit of stolen payment data was labeled “European Sanctions.” Krebs interprets this as retaliation against the United States and Europe for recent sanctions these Western powers placed on Russia; he states that the hackers might be the same Russian/Ukrainian group that carried out the Target data breach at the end of 2013.

Krebs also states that a number of banks are investigating evidence of a data hacking that might be traced back to customer purchases made at Home Depot. At the same time, multiple news sources, including Bloomberg and the Wall Street Journal, report that the retailer, law enforcement and banks are looking into “unusual activity.”

In an update to his original post, Krebs reports that “several banks” think the breach might extend as far back as late April or early May 2014. This could mean millions of captured credit and debit card numbers, if it turns out to be true.

What to do if you’ve shopped at Home Depot recently

If you’ve shopped at Home Depot in the past few months, you might be worried that your credit card number is up for grabs on the black market. While there is cause for concern, it’s important not to panic. Remember, this story is still developing. The authorities have not yet definitively confirmed that a breach did occur at this particular retailer.

With that being said, your best course of action right now is to remain alert for new information. Specifically, you should monitor the activity on any credit card you may have used at Home Depot in the past few months very closely. For the time being, checking it once per day is probably a good idea. If you spot anything unusual, contact your card issuer immediately.

Also, keep a watch on your email for further instructions from Home Depot and/or your credit card company. If this does turn out to be a hacking that your card was swept up in, you might be receiving information about replacing it. If your issuer sends out any guidelines for further action on your part, follow them.

Otherwise, you can rest easy knowing that federal law limits your liability to a maximum of $50 in the event that you’re a victim of credit card fraud. If this possible breach occurred by way of skimming malware installed in Home Depot’s credit card readers, the Fair Credit Billing Act states that you won’t be responsible for any of the unauthorized charges.

Other tips for keeping your credit card data safe

Again, it’s not yet clear how the Home Depot data breach (if there even was a breach) happened. But it never hurts to review the steps you can take to keep your credit card information safe:

• Keep your credit card out of plain sight when you’re in public places.


• Don’t share your credit card number with anyone.


• If a credit card terminal looks strange to you, don’t use it.


• Only put your credit card number into websites that display “https” before the URL.


• Be suspicious of anyone asking for your credit card number – in person, over the phone or via electronic communication. If you’re even remotely concerned about the source’s authenticity or motives in asking for your payment information, don’t provide it.

The takeaway: Home Depot may be the latest retailer to get caught up in a massive data breach. If you’ve shopped there recently, don’t panic. Just follow our tips above, and check back in often with the Nerds for updates.

Home Depot image via Shutterstock

Source Article http://ift.tt/1y39EC7

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Money and Marriages: Impact of Gay Marriage Legalization in Key States

Since the Supreme Court decision in United States v. Windsor last year, gay marriage advocates have been successfully overturning marriage bans in states across the nation. Gay marriage is now legal in 19 states and the District of Columbia.

According to a recent Associated Press report, bans in all other 31 states currently face legal challenges— many of these bans have been overturned and are now in the appeal process.

Using data from the Williams Institute, a national think tank at the UCLA School of Law, NerdWallet decided to take a look at the economic and human impact of legalizing gay marriage in some of the key states pointed out by the recent AP report.

State	Marriages	Total Spending	Sales Tax Revenue	Jobs Created	Total Score
Florida	24248	$182,247,968	$12,064,815	1750	96.68
Texas	23200	$181,586,400	$14,799,292	1046	90.25
Ohio	9842	$70,842,716	$5,036,917	592	32.67
Arizona	7909	$61,895,834	$5,056,890	344	24.88
Michigan	7299	$53,217,009	$3,193,021	304	19.97
Virginia	6305	$53,285,641	$2,850,000	527	19.65
Colorado	6212	$50,348,260	$3,720,736	436	19.26
Indiana	5537	$39,116,137	$2,738,129	564	16.76
Tennessee	5449	$36,726,260	$3,470,631	221	13.65
Nevada	2551	$37,488,221	$2,972,817	321	7.66
Kentucky	3598	$28,877,548	$1,404,515	218	6.18
Oklahoma	3067	$20,496,761	$1,787,317	149	3.89
Utah	1955	$15,524,594	$1,037,043	268	1.23

Methodology:

Marriages: We looked at the total number of predicted marriages. Data is from the Williams Institute. This accounted for 50% of the overall score.

Money: We looked at the total wedding-associated spending in each state, including both direct spending on weddings and spending by out-of-state guests. We also looked at estimated sales tax revenue and job creation resulting from spending. Data is from the Williams Institute. This accounted for 50% of the overall score.

For more great cities and state content, click here.

Two Wedding Rings image from Shutterstock

Source Article :http://bit.ly/1ClbQI8

Read More

Money and Marriages: Impact of Gay Marriage Legalization in Key States

Since the Supreme Court decision in United States v. Windsor last year, gay marriage advocates have been successfully overturning marriage bans in states across the nation. Gay marriage is now legal in 19 states and the District of Columbia.

According to a recent Associated Press report, bans in all other 31 states currently face legal challenges— many of these bans have been overturned and are now in the appeal process.

Using data from the Williams Institute, a national think tank at the UCLA School of Law, NerdWallet decided to take a look at the economic and human impact of legalizing gay marriage in some of the key states pointed out by the recent AP report.

State	Marriages	Total Spending	Sales Tax Revenue	Jobs Created	Total Score
Florida	24248	$182,247,968	$12,064,815	1750	96.68
Texas	23200	$181,586,400	$14,799,292	1046	90.25
Ohio	9842	$70,842,716	$5,036,917	592	32.67
Arizona	7909	$61,895,834	$5,056,890	344	24.88
Michigan	7299	$53,217,009	$3,193,021	304	19.97
Virginia	6305	$53,285,641	$2,850,000	527	19.65
Colorado	6212	$50,348,260	$3,720,736	436	19.26
Indiana	5537	$39,116,137	$2,738,129	564	16.76
Tennessee	5449	$36,726,260	$3,470,631	221	13.65
Nevada	2551	$37,488,221	$2,972,817	321	7.66
Kentucky	3598	$28,877,548	$1,404,515	218	6.18
Oklahoma	3067	$20,496,761	$1,787,317	149	3.89
Utah	1955	$15,524,594	$1,037,043	268	1.23

Methodology:

Marriages: We looked at the total number of predicted marriages. Data is from the Williams Institute. This accounted for 50% of the overall score.

Money: We looked at the total wedding-associated spending in each state, including both direct spending on weddings and spending by out-of-state guests. We also looked at estimated sales tax revenue and job creation resulting from spending. Data is from the Williams Institute. This accounted for 50% of the overall score.

For more great cities and state content, click here.

Two Wedding Rings image from Shutterstock

Source Article http://ift.tt/1y39EC7

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