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Understanding How Banks Make Their Profit

Banks make millions in profit every year, and you ever wonder how they succeed in doing so? Well, these financial institutions have financial experts whose work is to strategize on how they will make bigger profits. For them, business is not usual until they outshine their competitors with ideas to attract a high traffic to the bank and get more money from them. So, what are these various ways banks make such huge profits?

Different ways how banks make profit

Service fee

visa card illustration Every time a person opens an account, there are various charges one must pay to for maintaining the account. Some charge a monthly fee, while other charge depending on transactions. Also, this fee varies depending on the type of account. However, services like ATM or over the counter withdrawal, salary processing, and statement preparations just to mention but a few, will all have a fee. Banks make a lot of money from this depending on the number of customers they have. No wonder! Banks keep on encouraging people to open accounts with them.

Interest rates on loans

There is no bank loan without an interest rate. Most of them are regulated by the state where the country’s main national bank provides the capping limits. Banks are nowadays going out looking for borrowers so that they can make money through this method. All banks have a loan department which vigorous markets the loans they have. As a matter of fact, this is the second biggest revenue generation option banks have.

Interchange fee

Do you wonder what is interchange? Most people do but if you own a credit card, then you help banks earn money through the interchange. When different banks process the credit card payment, they earn some fee from the merchant with the credit card bank earning more. It still gives banks a reasonable amount of profit at the end of the year particularly now that more people prefer to use a credit card.


coins and clock Ever heard of investment banks? Most of them engage in various investment activities to look for more finances. They can trade in securities and engage in real estate among many other investment opportunities. Their investment advisers make very sensitive probabilities as they do not want to risk people’s money. However, most of them make smart ideas and remain profitable out of which their customers benefit in dividends

The above sources of profits for banks are just but a few examples. Banks are ever looking for profitable ventures to try out.


Introduction To Penny Stock Investing

Penny stocks are companies which trade with share prices less than or equal to $5. Very often, they will sell for less than $1 and hence the name “penny” stocks. As these stocks are so cheap, they do not require a significant amount of capital to own thousands of shares of. If the share price rises by even a few cents, you can’t stand to see a sizable return. However, the opposite could also happen if the share prices drop by a bit.graphic

While their low price is alluring, it is important to keep in mind the pitfalls of penny stocks. They are highly speculative in nature because of small market capitalization, lack of liquidity, large bid-ask spreads and risk of disclosure. However, if you can manage the risk, they are a great option.

Penny Stock Investing Introduction


Penny stocks do not usually trade on major exchanges like NYSE or Nasdaq. Some do, but others fail to comply with rules such as Nasdaq Rule 5550(a) as they have a bid price less than $1 for primary equities. They are primarily traded through Pink Sheets and over-the-counter bulletin boards (OTCBB). OTCBB has some minimum listing requirements while pink sheets are simply quotation publishers. Pink sheet stocks aren’t subject to listing requirements and are not registered with the SEC. Therefore, OTCBB is more legitimate than Pink Sheets which can be riskier.

How to choose a penny stock broker

To start trading in penny stocks, you need a stock broker. Brokers are a very important part of the equation as they provide the infrastructure for trading and can advise and influence the stock you buy. The first thing to note is a broker’s fee structure. Commissions charged on a per share basis a great for those looking to invest a relatively small amount of money into penny stocks. However, if you plan on being a penny stock trader and buy more shares, it would be better to look for a penny stockbroker who charges a relatively low flat rate for every trade.

Some of the top penny stock brokerages regulated by the woman presenting a graphic government of USA are ChoiceTrade, Charles Schwab Corb, Interactive Brokers, Scottrade, TradeKing, and TDAmeritrade. You can not go wrong with any of these options with some charging a commission per share and others a flat rate. Be careful to avoid scams, though. If something sounds too good to be true, it probably is not. Anything with low costs and high returns is potentially a fraud.


Penny stocks are a risky and speculative option more suited for experienced investors. However, if you can choose a good broker and manage risk effectively, you can stand to make some good profits.


Why your business needs cash advance

For a small business to compete with established companies, it may need to increase its sources of finance. One of these sources of funding is a cash advance. However, you need to know how to get a merchant cash advance for your business. The good this about this source is that the payment methods are quite flexible. Below are a few areas that you can channel a cash advance in your business.

Purchasing equipment

Are you looking forwardequipment store to purchasing any equipment? Do you have the finances to buy it? If yes, consider taking a cash advance. A cash advance allows you to buy any equipment. More to this, with a cash advance, you can be sure to make a purchase within the shortest time possible. This will be a great move towards making your business successful.

Stocking inventory

This is one of the reasons for taking up a cash advance. A business that lacks stock can be compared with a dead business. A business needs funds to ensure effectiveness in daily operations. With sufficient stock, the chances of expanding your business are very high. Finally, you attract a pool of customers. Therefore, you can always apply for a cash advance to boost your stock levels.

Paying employees

Whether you are looking forward to recruiting more personnel or you have difficulty in paying the current employees, a cash advance can help you out. When you are hiring extra employees, you are looking forward to increasing your efficiency and productivity. Therefore, the issue of what to use to pay your employees should not be a bother. Take a step today and apply for a cash advance and you will never regret.

Expanding your businessmoney phone and laptop

It would be a great to see your businesses grow from one level to another. If you have plans underway, but you lack the cash for implementation, this is one reason to take a cash advance. You can take a cash advance, to renovate your business, start up new branches, or even introduce a new product in the market.

Marketing and advertising

To increase your profits and attract new customers, you need to let the world know that your business exists. In addition, you need to employ good marketing strategies that will catch the attention of many and at the same time communicate the nature of your business. However, if you lack finances to market your business, this may never come into reality. That said, this is enough reason to take a cash advance.

hands holding money

Beginner’s Guide To The Lending Club

Lending club decides whether the credit of the borrower is right on the credit report, credit score, the requested loan amount and the debt to earnings ratio of the borrower. Then credits are assigned to the borrower and given a credit grade, interest rate, and fees. The loans can be paid back with no penalty at any point. The usual loan period is three years. A five-year period is available too at higher interest and costs.

Understanding how lending clubs work

How lending club functions

Investors search the loan lists on the company website and see whether there are any loans in which they’d wish to invest in are available. You can read an in depth Lending Club review here. If anything looks attractive, the investor can decide how much they would like to invest.


Stockholders Earnings

Stockholders will earn cash from the interest rates on the loans. The prices run from 6.03% up to 27.48%. The lousier the creditworthiness, the higher the rate of interest will be. Lending Club promises to pay the note holder any money received from the borrower. There’s a risk to the bank that Lending Club could go bankrupt. The bank can also put a note up for sale before the maturity of the note.

Benefits to borrowers

For borrowers, the system is touted as giving access to credit at a cheaper IR. Statistics are cited utilizing the 6.78% rate of interest as a comparison to understand bank interest rates for the same loan of up to 9.06% as a state average. For the financier, a higher return on the money invested is suggested that 93% of investors earned between 6% and 18%, miles away better than CD rates of 1% and less. Lending Club protects the secrecy of the financier and promotes the transparency that exists between the company, Lending Club, and the financier.

Growth of lending club

Lending Club is the world’s largest P2P platform for lending. Since its founding in 2007, it has turned heads and received positive reviews for its efficiency and results. By employing technology to match banks (investors) and borrowers, a lower cost system is available and is passed along.

By focusing on prime borrowers, Lending Club has achieved a default rate of only 4%. Lending Club review is growing by powerful jumps. In December of 2012 the company went past $1 bill in loans. Institutional money is taking interest as one or two bigger investors have invested right into the enterprise.



This model certainly is not going away shortly and will definitely be emulated by others. It has still to be seen how widely the peer-to-peer concept will grow. Lending Club may continue to pave the way.


Managing your debts with an IVA

Individual Voluntary Arrangements, or IVAs, are a debt settlement solution that can be arranged for you by a specialist company. It is a formal legal agreement between an individual and creditors. The individual voluntary arrangement creates terms for monthly payments over a set period and after that period has been completed the remaining debts will be written off.

Debt management with IVAman holding a card

With IVAs you simply need to get the creditors of 75% of your debt to agree to it, and the remaining 25% will be bound to the legal agreement whether they wish to or not. This is perfect if you owe 75% of your debt to a single creditor and the remaining to others.Here are the reasons why is IVA better for debt settlement.

You can keep trading

You only need to get that single creditor to agree to the IVA, then no matter what the other lenders wish they have bound to the agreement anyway. With an IVA you can keep trading if you are a business owner and are still allowed to have a bank account, you are also less likely to lose your home as you would be with bankruptcy, so an IVA offers you more control. There is a fee to set up an IVA, but the specialist companies who handle it typically factor their fee into the agreed upon monthly payments under the terms of the IVA.

Your interest owed is frozen

The another advantage of an IVA over bankruptcy is that your interest owed is frozen form the time the period under the terms begins, which means your debt can not increase in the interim. Not every debt problem is best solved with an IVA; you need to make sure there is not a better solution before you enter into one. Many debt companies will provide information on IVAs but be careful that you are not dealing with a company that will only suggest an IVA so that they can collect the set-up fees from you.

You can control your debt

Whether an IVA is ideadebt form l for your situation or not, you will want to make sure you are dealing with a company that can find a solution that is best for you and your situation. If you think an IVA is your best option, then approach some specialists that have a good reputation, get some feedback from a couple of companies and see who can offer you the best deal for paying back your deal, with the lowest monthly cost and the least amount of time required paying that price.

There are plenty of people who have successfully used IVAs to control their debt, and therefore you can find the companies that have arranged these for them without taking advantage