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Knight Watch: Are There Ways To Make Finance Finer?
By Knight Pierce Hirst
As consumers try to control spending, debit cards are becoming the plastic of choice. According to the Nilson Report, debit purchases were expected to increase 13% in 2008, compared with only a 3% increase in credit purchases. Because banks don't make money on interest from debit cards, more banks are offering automatic overdraft protection. Instead of giving customers a couple of days to cover overdrafts, however, many banks are charging immediate overdraft fees – fees which have gone up 3% the past year. It seems you can bank on banks making money. It seems borrowers hurt by the credit squeeze and investors looking for new investments are making peer-to-peer lending popular. Companies like Lending Club and Prosper Marketplace match borrowers online with lenders. The borrowers submit profiles discussing their financial history and reasons why they want loans. Typically the loans are less than $10,000 and make returns of 7%-12%. Because the loans are unsecured, lenders often loan small amounts to several borrowers to minimize the risk of nonpayment. Since 2006 approximately $200 million has been lent this way – which may be the way of the future. Although there have been shopping malls since the 1950's, they may not be the way of the future. Not one indoor mall was opened in the U.S. in 2008 and nearly 1/5 of the country's largest 2,000 regional malls are failing. This is attributed to 4 things: retailers opening stores nearby mall equivalents, city repopulation, suburban gang problems and a down economy. To survive many malls are trying to make themselves look more affordable by adding low-cost retailers. Other malls are being replaced by "life-style centers", which blend retail hubs with residential apartments. Obviously, malls need ideas that will sell. Because retailers are looking for ways to make things sell, layaway plans are back. Layaway plans became popular in the 1950's. They allow customers to pay for items in installments before taking them home. Since Wal-Mart ended its program in 2006, Kmart was the only major retailer to continue layaway; but the down economy has changed that. Now other national retailers like Marshalls and TJ Maxx, as well as regional chains and local stores, have joined Kmart. Layaway is popular with customers because there's only a $5 fee. It's popular with retailers because it attracts customers who can't or don't want to use credit cards. Layaway is basically interest-free credit – and a creditable idea again.
This intel first appeared on: http://knightwatch.typepad.com
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PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
Knight Watch
KNIGHT WATCH IS A HUMOROUS 400 WORDS
knightwatch.typepad.com
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May, 2012
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