Banking Explained

Technology continues to march forward on Wall Street. It seems as if the markets are now dominated more by machines than by humans. According to some industry pundits, algorithmic trading and high frequency trading now accounts for anywhere between 50% and 80% of all US equity volumes.

This has brought about a whole new set of risks. The potential danger of one of these systems running out of control, going haywire and bombarding the markets with millions of orders per second, is very real and could have disastrous consequences for the world’s financial systems.

There are many types of algorithmic trading systems and strategies used by proprietary trading firms. Some systems “scrub” news stories to look for news and events that might move a particular stock. Other systems are “non-directional”, looking for price discrepancies and capitalising on their speed of execution to arbitrage those opportunities.

What is getting some people worried is the speed at which these systems can generate and execute orders, and the volume of throughput they can handle. Orders can now be generated, sent to an exchange, executed and reported back in less than a millisecond (a thousandth of a second). And multi-processing, high-throughput parallel processing technology allows for millions of such orders to flow through the exchanges systems.

But just because the technology allows high frequency trading to take place, doesn’t mean that all the controls are necessarily in place to prevent errors occurring. With increased speed and increased throughput comes increased risk. It is this risk that the regulators are now trying to get their heads around.

What happens if one of the machines does go haywire? And is the integrity of the markets threatened by the fact that only the biggest players have the fastest technology? Are those big players “fleecing” smaller investors?

The regulators have a tough job ahead. Only time will tell whether they are able to introduce controls that benefit all.

When it comes time to move your funds from your existing retirement account, the transfer can be rather overwhelming. The best way to overcome your fear of the transaction is by educating yourself to the various options you have available to do the transfer. There are a number of ways to facilitate your 401k rollover. It is usually just a matter of matching your needs with the appropriate vessel.

The 401k rollover option that many people do not realize is not available to them is the 401k rollover to Roth Individual Retirement Arrangement. This method of transferring your funds now allows you to transfer directly into a Roth IRA. Up until the last couple of years, this was previously impossible. If you wanted your funds to end up in a Roth, it generally required a number of tedious and complicated transfers between different retirement accounts.

Similar to a Roth rollover is the rollover to a Traditional IRA account. This option allows you transfer your funds directly into a traditional IRA account. This rollover is fairly straightforward as the two retirement account types behave quite similarly. IRA accounts tend to offer a wider range of flexibility upon retirement however.

Another option for your retirement funds it to transfer them into another 401k account. This allows you to continue in a vessel that you are familiar with. The transfer is usually just a matter of coordinating between the two account managers and making the change. For those that are simply changing jobs, this may be a good option for your transfer.

Another option for you funds is to simply withdraw the money from the account. If you are not of sufficient retirement age, this may have adverse tax consequences however. You will want to be aware of any tax responsibility or early withdrawal penalties that may be associated with the transfer out of the account.

The only way to fix bad credit is to build good credit. The only way to build good credit is to get credit and use it responsibly. How can you do that when you have bad credit?

Regardless of your FICO score, you can still get a credit card. The catch is that you’re going to have to pay for the privilege of fixing your bad credit. You’re buying an opportunity to show lenders that you’ve become responsible. Using the new card prudently, you can raise your FICO score significantly within a few years, regardless of your previous credit history.

Credit reporting agencies and lenders give more weight to your recent payment habits than to your past credit history. The best credit cards for bad credit are not used for spending money or buying on credit. They’re merely tools you’ll use to fix a bad credit report.

Secured Credit Cards

The best credit cards for bad credit are secured cards. You’ll put down a deposit with the credit card company as collateral against your credit card balance. If you deposit $300 into a secured account, your credit limit will be $300, and you’ll be expected to pay your balances as with any card.

Most, but not all, secured cards charge fees in addition to requiring a deposit, but secured card fees can be considerably less than fees charged by unsecured cards. Annual fees, processing fees, or set-up fees may apply. Carefully review the terms and conditions to be clear on the charges.

The interest on your card will also be high, so you’ll want to pay your balances in full before the due date. Look for a secured card that gives you a repayment grace period before interest accrues, rather than one that charges interest from the date of a purchase.

Rebuilding Your Credit

All fees are billed to your account immediately. Paying off the fees before making purchases will begin the process of improving your credit score. Credit card companies report your repayment behavior monthly.

Use the card regularly, but only for purchases you already have the money to pay for. If you have $20 to spend on groceries, use your card to pay for them, and then put the cash aside to pay your bill. Better still, go online and pay the credit card company when you get home. Do this religiously and you’ll start to see your credit score improve. It won’t happen overnight, but it’ll happen.

As your credit score rises, you’ll be offered credit cards with better terms – you won’t have to use bad credit credit cards anymore. You can then close your secured card account and recoup your deposit and fix your bad credit.