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Peloton loans are a stable source of income for investors

Peloton has had a dramatic year, but its financing options are valued by the banking industry for their stability.

Peloton contracts with the lender Affirm to offer interest-free loans for its connected bikes and other fitness equipment, which are then often packaged and sold to financial institutions in search of a safe bet.

  • Peloton, Affirm’s largest customer, generated around 20% of the lender’s earnings of $ 870.5 million for the business year ending June 30th
  • Unsecured loans to Peloton customers made up the bulk of the $ 845 million Affirm has made money packing interest-free loans since 2020. The interest on these loan packages starts at just over 1%.
  • In August, the home fitness giant cut the price of its signature bike from $ 1,895 to $ 1,495. The treadmill is priced at $ 2,495. After a costly recall, it resumed treadmill sales on August 30th.

The company recently launched its own line of clothing and is probably working on a rowing machine.

While Peloton’s revenue related to product sales declined in the second quarter, subscriptions to its training service steadily increased.

The company more than doubled its affiliate fitness subscribers to 2.3 million for the fiscal year ended June 30, bringing in $ 541.7 million from that segment.


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Mastercard is participating in the “Buy Now, Pay Later” race. However, experts say these loans come with risks.

Mastercard on Tuesday called It will begin offering installment loans known as “buy now, pay later” amid strong consumer demand during the pandemic. However, such offers can harbor risks, such as hidden fees and a lack of consumer protection, that borrowers may not immediately notice, experts warn.

Mastercard said its buy-now-pay-later (BNPL) program allows consumers to take out interest-free loans that are split into four equal installments, with the funds withdrawn from either debit, credit or prepaid cards will. The financial services giant said the program will allow banks, lenders, financial technology companies and other firms to offer the loans that can be provided during an online purchase.

BNPL products saw high double-digit growth during the COVID-19 crisis, outperforming competing types of unsecured credit like credit card debt as more Americans flocked to e-commerce during the pandemic McKinsey. Demand for the loans is expected to continue to outpace other types of consumer loans, with the consultancy forecasting average annual growth in products of up to 20% through 2023.

Many consumers have embraced BNPL as a way to purchase a product in multiple installments with no interest, while the credits are also approved during the purchase process. More than 4 in 10 Americans have used a BNPL product. according to to credit karma.

“Many consumers are drawn to the instant gratification, easy access, and predictable rates,” noted Ted Rossman, senior industry analyst at CreditCards.com. “The line between credit card and Buy Now Pay Later is becoming more and more blurred. Mastercard’s new offering works, for example, with digital wallets and on retailers’ websites.”

Sellers like BNPL loans because they can encourage consumers to open their wallets. Mastercard said such loans for merchants can increase average sales by 45% and reduce “cart abandonment” by 35%.

Other financial giants like American Express, Citigroup, and JPMorgan Chase also offer BNPL loans. And so-called fintech companies like Affirm and Afterpay, used by thousands of retailers including Walmart and Target, are credited with pioneering the product.

Fraud protection

Mastercard said its BNPL product will stand out from competing offerings by offering some credit card protection, such as:

Such risks are one of the reasons financial advocates warn consumers need to understand the loans before signing on the dotted line. Returning an item purchased with a BNPL loan can be complicated and frustrating, an issue that the Consumer Financial Protection Bureau (CFPB) highlighted in a July blog post.

For example, some consumers who have returned products to merchants have reported difficulties with paying off the credits. according to to consumer reports.

Credit risks, fees

When BNPL loans work smoothly, such as when consumers have no problems with the products they buy and make their payments on time, they can be convenient, experts say.

But it’s not uncommon for consumers to get into trouble. Of the 4 in 10 Americans who have taken out a BNPL loan, nearly 40% missed at least one payment – and many of them reported a decline in their creditworthiness. according to to credit karma.

Typically, BNPL companies perform a “soft” credit check on prospective borrowers that has no credit impact. However, missing a payment can cause some BNPL lenders to report the late payment to credit bureaus, which can affect a consumer’s creditworthiness, the personal finance website found.

Some BNPL products also incur fees and interest that may not be apparent without reading the fine print. Most BNPL lenders charge late fees, the CFPB warned. Because of this, consumers should take the time to understand the lender’s terms and conditions before agreeing to a loan, the agency said.


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Absa is partnering with Melanin Kapital to launch unsecured loans for startups

Absa Bank has partnered with Melanin Capital, a pan-African investment platform, to launch an investor readiness program to offer Ksh. 3 million unsecured loans to startups in Kenya.

The initiative called Tuungane2x to see how she gets empowered, expects to reach 1,000 women-focused startups and improve financial inclusion. This is done by providing financial training, building capacities for willingness to invest, structured mentoring, structured networking and access to finance.

Speaking at the start of the partnership, Elizabeth Wasunna, Business Banking Director of Absa Bank said, “It has always been risky for investors and lenders to invest in small businesses for a number of reasons that also hold back their growth, including a lack of proper structures and businesses Documentation, collateral, relevant networks and track record among other challenges. ”

Melanie Keïta, CEO of Melanin Kapital, said: “As a pan-African digital impact investment platform, Melanin Kapital aims to enable early stage financing for impact companies by reducing risks, making them investable and connecting them to impact – driven capital. We aim to close the SDG financial gap by channeling more investment to early stage entrepreneurs in Africa looking for pre-seed, seed, and funding focused on solving a critical social impact challenge focus.”

As part of the partnership, the bank has also worked with international partners to reduce the credit facilities for the startups so that Absa can offer cheap unsecured loans between Ksh and Ksh. 100,000 Ksh. 3 million.

In order to qualify for funding, interested startups must register and register via the online program administration platform Tuungane2X and conduct a 6-month readiness for investment program. The program will culminate in project pitches for impact investors and for Absa Bank.

For Absa, this initiative is part of an ongoing campaign aimed at reaching more than 1 million women entrepreneurs over the next five years through the Absa She Business Account.

“As a bank, we have maintained a strong bias and commitment to expanding the role and influence of women in companies, and our partnership with Melanin Kapital is another of many of those activities that we are involved in,” added Wasunna.


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The difference between credit cards, personal loans, and a personal line of credit

Image for article titled The Difference Between Credit Cards, Personal Loans, and a Personal Line of Credit

photo: Africa studio (Shutterstock)

Most people know how credit cards work, and they may also be familiar with personal loans – but what about one? personal line of creditT? All of these options are similar, but they have subtle differences that can affect which option you can choose when you need to borrow money. This is where you can see when you would use a line of credit versus a credit card or personal loan.

What is a personal loan?

Personal lines of credit are perpetual loans that allow a borrower to withdraw funds as needed over a set period of time, up to limits of $ 1,000 to $ 100,000. Unlike a personal loan, this type of loan allows multiple access to the money instead of receiving the money in advance as a lump sum. Interest accrues as soon as funds are withdrawn, with borrowers making minimum monthly payments like a credit card.

Personal lines of credit are usually available unsecured (which means your property is not used as collateral) and have a variable annual percentage rate (APR) based on your credit score (again like credit cards). While the interest rates on both lines of credit and personal loans can be in the range of 6-35%, Lines of credit tend to have slightly higher interest rates. Another difference is that personal loans are typically Fixed priceswhile lines of credit tend to be variable rates. However, both options offer interest rates that are cheaper than what you would get with credit cards 16% APR on average.

Why should you use a personal line of credit?

For flexibility. Lines of credit are perpetual as personal loans and are typically used for ongoing needs where you don’t have fixed costs in mind. Personal loans, on the other hand, offer a fixed amount upfront, and to qualify you often need to specify exactly what the loan is for, be it a home renovation or car repairs.

The flexibility that a personal loan offers naturally makes them potential debt traps. This is why a solid repayment plan is recommended. Some common scenarios where a line of credit could be used include:

  • Home renovations where cost overruns could be an issue
  • Short term medical expenses
  • As a financial bridge for irregular or seasonal work

Credit cards offer cashback rewards and tend to have higher interest rates compared to personal loans or lines of credit, making them better for daily purchases that can be paid off quickly. If you’re looking to fund expensive, long-term projects that you want to pay off later, avoid credit cards and stick to personal loans or lines of credit.

Otherwise, avoid borrowing when you cannot afford the repayment. And if you are already struggling to pay off debts, consider all of your options before applying for another loan (This Lifehacker post has you covered).


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Study shows that loans that buy now and pay later expand the overall credit market

A relatively new type of small loan created by fintechs and offered by retailers is expanding the credit market, especially among young consumers, according to a study published Thursday.

TransUnion, the Chicago-based credit bureau, analyzed the credit history of millions of people applying for instant purchase loans – or point of sale (PoS) loans – and compared them to other loan seekers who did not PoS -Apply for loans.

Some have feared that these short-term loans could put consumers into debt more than they can handle. Or, from the point of view of some lenders, that consumers would borrow more for these store plans and reduce their balance on their credit cards or other consumer debt.

Liz Pagel, SVP for consumer credit at TransUnion, said the TransUnion survey refutes these concerns.

“They don’t seem to cannibalize any other type of credit,” she said. “It’s an extension of the entire credit market.”

A survey of PoS applicants found that the most common reason they looked for a buy-it-later loan was to purchase an item that was within their budget. While they tended to hold more credit cards and other types of consumer credit, their default rates were comparable to other borrowers in terms of age and risk group.

Pagel said credit unions may want to consider those consumers who are borrowing or applying for buy-it-later-credit.

“They are customers of credit unions; they are customers of banks, ”she said. “These consumers could be in the credit market.”

Buy-now-pay-later loans have been around as long as electronics stores have been selling refrigerators. And the category technically includes indirect car loans with dealers and financing for solar panels or other home improvement sold by contractors.

Pagel excluded larger loans such as financing solar panels sold by contractors from their study to focus on equipment-scale loans and the new type offered by retailers through fintechs for small routine purchases – usually under $ 500 -Dollar.

The fintechs typically charge retailers 2 to 7% of the price and sell their loans to secondary markets that may buy unsecured personal loans.

The small loans are often paid out every two weeks for eight to twelve weeks with the first payment when the purchase is made. Buyers do not pay interest on the small loans, while the interest costs are shared across larger, more traditional buy-it-later loans, which typically have a term of one to two years.

In some cases, the fintechs operate the loans more like the PoS systems used by car dealerships, with banks and credit unions on a list of potential car buyers lenders.

These loans started online, but now many retailers allow their customers to use them for in-store purchases.

Chart showing the reasons given by consumers for applying for a point of sale credit.

Pagel said many lenders’ concern has been that these loans from fintechs like Afterpay Limited, Affirm and Klarna are eating up purchases on their credit cards and unsecured personal loans. They wanted to know if this new lending was a threat to defend against or an opportunity to get started.

“It started as a fintech movement and now more traditional lenders are interested in playing this game,” said Pagel.

Big players from Amazon to Square Inc. have decided to join.

Square Inc., founded in San Francisco in 2009, announced on Aug. 1 that it plans to buy Afterpay Limited of Australia in a $ 29 billion deal that is expected to close in the first quarter of 2022.

Afterpay was founded in 2014 and claims to serve more than 16 million consumers and nearly 100,000 merchants worldwide, including large retailers of fashion, housewares, beauty and sporting goods.

The homepage of her website shows a young woman looking at her cell phone and bears the words: “Shop now. Pay over 6 weeks. Never pay interest. “

TransUnion decided that these new buy-now-pay-later fintechs are worth a closer look.

TransUnion analyzed the borrowing habits of 4.5 million consumers who made a point of sale inquiry and tracked them over six months. The tracked inquiries started on October 1, 2019 and ended on December 31, 2020. The last six months of action were in June 2021.

Each action taken by PoS applicants was compared to a general borrower population within the same risk segment and age group. The study group consisted of consumers with a hard or soft PoS request from October 1, 2019 to March 31, 2021. Their results were compared with other active borrowers at the same risk level. The results presented in the study relate to consumers who have a credit rating of 601 to 660 in the VantageScore range of 300 to 850. Other risk levels showed similar patterns, according to Pagel.

TransUnion found:

  • 54% of applicants for PoS funding reduced their bank card balances in the six months following their application, compared to 60% of individuals in the total credit population.
  • PoS applicants applied for a loan at a higher interest rate than others in their risk level.
  • PoS applicants had a significantly higher proportion of bank cards, customer cards, installment loans and car loans. They had slightly lower mortgages.
  • While 50% of active near-prime borrowers were 50 years or younger, 78% of PoS applicants were under 50.
  • Six months after a PoS application, 3.2% of applicants were 60 days or more behind with their bank credit cards, compared to 2.7% of the general credit population. However, the unsecured personal loan default rate among PoS applicants was 3.7%, compared with 4.8% for the general population.


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Consumers with point of sale credit typically use different ones

CHICAGO, Sep 23, 2021 (GLOBE NEWSWIRE) – A new study by TransUnion (NYSE: TRU) found that consumers who buy now, pay later (BNPL) and seek point-of-sale (POS) finance, too Actively using traditional financing credit – contrary to the assumption that these new credit offers are taking market share away from credit card issuers and other lenders.

The study, Understand the evolving point of sale industryWas unveiled at the virtual TransUnion Financial Services Summit 2021, Smarter Decisions: Emerging for Growth, attended by executives from the financial services sector from across the country.

BNPL and POS financing have emerged as a popular offering among younger consumers, with Generation Z and younger millennials (ages 18-30) making up the largest population of consumers who applied for POS financing during the study period (32 %). Bridge Millennials (ages 31 to 40) and the younger Generation X (ages 41 to 50) were also more likely to favor BNPL / POS, with 78% of all POS funding applicants between 18 and 50 years old.

BNPL and POS offers did not appear to have much of an impact on consumer use of other forms of credit. In fact, BNPL / POS applicants generally used other forms of credit more than the rest of the population.

“Consumers who can take advantage of point-of-sale finance are not doing so at the expense of traditional credit. We saw consumers applying for POS funding to build up credit on bank and retail cards and applying for new loans at a higher rate than the general loan population. These new forms of financing are growing the credit pie – and opening up more options for both consumers and lenders, ”said Liz Pagel, senior vice president of consumer lending at TransUnion. “Consumers are looking for new ways to finance purchases, and the convenience and budgeting of POS offers are driving them to fund more and larger purchases.”

The ease of use and predictable payment schedules allow consumers to spread smaller payments over time in order to be able to afford larger ticket items. A TransUnion survey of nearly 1,000 BNPL users found that the majority of consumers cited a timing distribution of payments (29%) and a simple application process (13%) as the main reasons for using POS funding. In contrast, lack of access to credit was not cited as a major concern for many consumers.

Consumers applying for POS funding are an attractive segment for acquisition growth

The study examined the credit profiles of over 6 million POS funding applicants (defined as consumers with a request for the TransUnion file from a POS lender) to better understand consumers interested in this type of product. The study created a profile of these consumers and examined their wallets and credit behavior.

The results showed that POS funding applicants have more credit products, such as credit cards, loyalty cards, and installment loans, in their wallets than the general credit-active population. Credit cards were the most popular among POS funding applicants (89%), followed by retail cards (75%) and car loans (73%).

POS funding applicants also were more likely to have larger numbers of cards in their wallets compared to the general lending population. However, card usage was very similar across risk levels, with most consumers having open cards on their cards. This suggests that consumers are actively looking for POS funding even if they could have put the purchase on a card.

Consumers applying for POS funding are also more likely to build or maintain credit card balances in the months following their request than the general credit active population – invalidating the assumption that BNPL / POS is driving down card balances.

Bank card Retail card
percentage POS financing
Applicants
General credit
active population
POS financing
Applicants
General credit
active population
Increasingly
Balances
46% 40% 36% 28%
Decreasing
Balances
54% 60% 64% 72%

However, consumers using BNPL / POS funding are still doing well and on par with the general lending population in terms of defaults. The study found that POS funding applicants, while performing slightly worse on credit cards, outperformed the non-POS segment on unsecured personal loans. The high failure rate of POS funding applicants makes these consumers an attractive segment for acquisition growth.

“As more consumers participate in POS funding, these consumers still experience high defaults on traditional products and are heavily involved in the credit market,” said Pagel. “This underscores the opportunity for both traditional and POS lenders to offer this attractive segment more diverse credit solutions.”

For more information on TransUnion’s study, please download the Insight Guide Understanding the Evolving Point-of-Sale Industry.

About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that enables trust in the modern economy. We do this by providing a comprehensive picture of each person so that they are reliably and securely represented in the market. This enables businesses and consumers to do business and achieve great things with confidence. We call this Information for Good.®

As a leading presence in more than 30 countries on five continents, TransUnion provides solutions that help create business opportunity, great experiences and personal empowerment for hundreds of millions of people.

http://www.transunion.com/business

Contact Dave Blumberg
TransUnion
E-mail [email protected]
phone 312-972-6646


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Benefits of Using an Unsecured Business Loan

The companies are mainly looking for financing options as the investments (capex) are large. The reason for funding over one unsecured business loan for MSMEs could be to meet the working capital shortage, expand into a new region, or buy modern machinery. Either a company can opt for equity financing that requires it to be listed on the stock exchanges, but that is a lengthy process that comes with its costs. The alternative route is to take on debt in the form of one unsecured business loan this is associated with interest costs.

In this technology-driven era, loan processing only takes minutes and many lenders are presenting online offers unsecured business loans in india. These loans are designed for businesses that cannot afford to pledge their assets as collateral because they either do not have them or simply cannot provide them as collateral.

There are many benefits to taking and using unsecured loans:

Minimum qualification requirements

There are some basic conditions that the lender expects from the borrower. For business loans, these terms are very strict and range from company history to solid financial metrics. However, in a Loan for companies without security, these conditions are less stringent. You will only be asked to show your PAN card, business documents and a bank statement.

No collateral

This is one of the main advantages of using one unsecured business loan for MSMEs. As a borrower, you do not need to provide collateral to the lender to reduce credit risk. This advantage makes these loans ideal financing options for startups and small and medium-sized enterprises (MSMEs). This feature also saves application processing and loan approval time, securing a loan on the same day.

Fast application

Unlike traditional loans, you do not need to go to the lender’s office in person to apply for a loan unsecured business loan. The entire application process is completely online, so you can now apply for a loan from the comfort of your sofa. The application is not very lengthy and the documents can be submitted online by uploading them to the lender’s website or app. So if you are in dire need of cash then go to unsecured business loans in india.

Faster payout

Not only is the loan application and processing quick, the loan is also paid out faster. The lender will transfer the loan amount to the borrower’s bank account once approved. Unsecured business loan interest rate turn out a little higher, but are the perfect financing option in an emergency. Most borrowers receive the loan amount the same day they apply for it.

Less restrictions

In the case of large-volume business loans, the financial institution usually sets limited covenants for the use of the loan amount. Banks check the correct use of the fund at every quarterly check and pay out the money in tranches instead of all at once. However, in a Loan for companies without security, there are no such usage restrictions on the loan amount. In addition, unlike traditional corporate loans, the funds are disbursed in a single tranche.

Minimal documentation

The paperwork is usually a taxable phase in any loan, especially a business loan with many documents to be submitted in different phases. Then the round of document rejection starts for many reasons and then you have to provide alternative or updated documents in order to get the loan approved. On the other hand with unsecured loans for companies, paperwork is the bare minimum. You can simply upload a pre-defined set of documents about your company online, in no time.

Repayment flexibility

With the business loans offered by banks, borrowers have to pay a fixed amount every month for the entire term of the loan. This amount is the Equivalent Monthly Installment (EMI) calculated based on the loan amount, the term of the loan and the interest rate calculated by the lender. In one (n unsecured business loan for MSMEs, the lenders offer flexibility in repayment. Borrowers can choose the monthly installment amount based on their projected cash flows. There is also no early repayment penalty and no processing fee for the loan.

credit rating

One of the first criteria for a business loan is to check the repayment history of the borrowing company with a credit rating. Banks will not entertain a borrower with a history of default or poor creditworthiness. However, this is not the case in unsecured loans, because companies receive a loan despite a low credit rating. The lender places more emphasis on the borrowing company’s profitability than on its credit history.

That is all we had to you in this issue about the benefits of using unsecured business loans offered by many direct lenders and NBFCs in India. In a nutshell, unsecured business loans in india are a one-stop destination for all financing needs of start-ups, small and medium-sized businesses.

The taking of a. has several advantages Credit for a business with no security, So what are you waiting for? Just find the best lender and apply for one unsecured business loan.


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Poll: Americans with unsecured debt are primarily to blame for credit cards

A US News & World Report poll in late August 2021 shows that among Americans carrying unsecured debt, more …

End of August 2021 opinion poll by US News & World Report shows that of Americans who carry unsecured debt, over 53% say it is mostly credit cards.

Credit card debts are taken into account unsecured debtwhich means it is not tied to an asset like a house or a car. Respondents were asked what types of debt make up the bulk of their unsecured debt, and in addition to credit cards, they name:

Personal Loans, at almost 21%.

– Medical debt, 12%.

Payday loan, more than 5%.

About 52% of respondents say they have between $ 10,000 and just under $ 40,000 in unsecured debt.

[Read: Best Balance Transfer Credit Cards.]

What interest do you pay?

Almost 8% of respondents say they don’t know what their highest interest rate is, which is worrying. Among those who know their prices, here are the results:

– Around 35% indicate an interest rate of 10% or less.

– More than 20% have a quota between 11% and 15%.

– More than 19% have a rate between 16% and 20%.

– Almost 16% have a rate between 21% and 25%.

– Almost 7% have a rate between 26% and 30%.

– Almost 4% have a rate over 30%.

Her interest rate depends on the type of debt you have and your credit rating. With debt comes interest expense. Some types of unsecured debt, such as credit cards and payday loans, charge compound interest.

This means that you are paying interest on a balance that includes the previous month’s interest. With compound interest, your debt can grow quickly. Once you get caught in this dangerous spiral, it is difficult to get out.

Why Americans Are Struggling to Get Out of Debt

Almost 42% of respondents say they have more unsecured debt than they did a year ago. When asked about the biggest challenges in paying off debt, around 20% said it was an unexpected expense.

Further findings:

– Around 19% have problems paying bills on time.

– More than 15% have problems budgeting payments.

– More than 15% cite inconsistent income as the culprit.

– About 13% say rising interest charges are an important factor.

– More than 7% have problems keeping track of multiple accounts.

How to Pay Off Your Debt

The first step is to find out what is preventing you from dealing with your debt. And if you find that you have room for improvement in several areas, that’s fine too. Be honest about your situation and then you can focus on one or more of these solutions:

– Automate your finances.

– Get a debt consolidation loan.

– Apply for a credit card for credit transfer.

– Build up an emergency fund.

– Get a loan counseling.

Automate your finances

Almost one in five respondents stated that they did not pay bills on time. If the problem is that you don’t have the money when the bill is due, you need to contact your lender and explain your situation. Depending on the lender it is possible to get into one Hardness program while you catch up on bills.

If the issue is timing, see if you can change the invoice due date. Postpone it to a week when you have cash flow to cover the expenses.

But what if it’s all about forgetfulness? The simple solution is to automate your payments for as many bills as possible. When you set up automatic payments with your bank or credit card, your lender will deduct your debt from your authorized bank account.

But make sure you have the money in your bank account to cover the amount. Once you’ve found a rhythm and paying your bills on time, you can start looking for solutions that will help you pay less interest on your debt.

[Read: Best Debt Consolidation Loans.]

Get a Debt Consolidation Loan

When asked how to pay off debts, around a quarter of respondents choose a debt consolidation loan as the most attractive option. With this type of loan you will consolidate your debts and thus reduce your number of creditors. And hopefully you get a lower interest rate and lower monthly payment.

You need to do some online comparison purchases. Compare prices and make sure you are getting the best terms that you can qualify for.

It is important to note that it is not a good idea to consolidate medical debt. It can add interest expense to an already unwieldy debt. Consolidating medical debt also removes the consumer protection that applies to medical debt.

However, for other types of unsecured debt, a debt consolidation loan is a great option for those who don’t have one excellent credit scores. However, if you have a large bankroll, consider using a prepaid credit card.

Apply for a prepaid credit card

If you have an excellent credit rating, you should qualify for a credit transfer credit card. These cards are often offered with an introductory annual rate of 0% for a period of e.g. B. delivered 12 to 18 months.

This gives you the opportunity to withdraw (or at least reduce) the balance during the interest-free period. By going this route, you will find out what your monthly payment needs to be in order for you to have a zero balance before your regular APR comes on.

[Read: Best Low-Interest Credit Cards.]

Build an emergency fund

If their debts were paid off, nearly 23% of respondents say they would use the extra money to top up their debt Emergency fundwhich is an excellent choice. An emergency fund will help you weather a sudden financial crisis.

Even if you are in debt, try to put some money in your emergency fund every now and then. A little helps too.

Get credit counseling

If you feel that your debt is insurmountable, get help. No matter how bad your situation is, there is a solution. It may take a long time to fix, but starting today is the right step.

You can contact National Foundation for Credit Advice Find a reputable credit counseling agency.

More from US news

What is a late credit card account?

Can I get a personal loan with bad credit?

What is a maxed-out credit card?

Poll: Americans with unsecured debt are primarily to blame for credit cards originally appeared on usnews.com


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Equinix, Inc. — Moody’s assigns Baa3 rating to Equinix’s proposed senior unsecured notes

Equinix, Inc. — Moody’s assigns Baa3 rating to Equinix’s proposed senior unsecured notes

Rating Action: Moody’s assigns Baa3 rating to Equinix’s proposed senior unsecured notesGlobal Credit Research – 24 Feb 2021New York, February 24, 2021 — Moody’s Investors Service (Moody’s) has assigned a Baa3 rating to Equinix, Inc.’s (Equinix) proposed Eurodollar senior unsecured notes expected to be issued in two separate maturity tranches. Net proceeds from the offering will be allocated to a portfolio of eligible green projects including green buildings, renewable energy, energy efficiency and sustainable water and wastewater management investments. Pending the full allocation of proceeds towards eligible green projects, a portion of the net proceeds is expected to be used to retire existing senior unsecured debt. The Baa3 rating is in line with the existing rating for Equinix’s unsecured debt class. The company’s bank facilities (unrated) are unsecured obligations and rank pari passu with the unsecured notes. All other ratings, including Equinix’s Baa3 rating on the company’s existing senior unsecured notes, are unaffected by the proposed transaction. The outlook is stable.Assignments:..Issuer: Equinix, Inc…..Senior Unsecured Regular Bond/Debenture, Assigned Baa3RATINGS RATIONALEEquinix’s Baa3 senior unsecured rating is supported by Equinix’s position as the leading global independent data center operator offering carrier-neutral data center and interconnection services to large enterprises, content distributors and global internet companies. Equinix benefits from its global competitive position, increasing asset coverage, and more disciplined and balanced debt and equity funding strategy to support organic and M&A-driven business growth and to fund annual cash flow deficits due to high capital spending and steadily rising dividend payments associated with its real estate investment trust (REIT) tax status. Moody’s notes that Equinix’s dividend payout ratio as a percentage of adjusted funds from operations (AFFO), a non-GAAP financial measure commonly used in the REIT industry, has historically been in the mid 40% range which is more conservative relative to many other REITS.The company’s credit profile also incorporates still favorable near-term growth trends for data center services across the world, the company’s stable base of contracted recurring revenue, low churn, scale and strategic real estate holdings in key communications hubs. Equinix’s substantial asset portfolio and qualitative business strengths are supportive of higher leverage tolerance for its rating. These positive factors are offset by significant industry risks as data center business models continue to evolve, intense competition from strategic and financial operators, relatively high capital intensity and a history of opportunistic M&A which could delay more significant deleveraging if primarily debt funded.Equinix has good liquidity for the next 12-18 months. As of December 30, 2020, the company has approximately $1.6 billion of cash on hand and approximately $1.9 billion available under its $2 billion revolver. Moody’s estimates that Equinix will pay around $1 billion in cash dividends during 2021, growing in future periods. Moody’s expects dividends will exceed internally generated cash and capital spending for at least the next two years, and that the company will continue to rely upon a balanced mix of debt and equity capital to finance these annual deficits. Equinix has a $1.5 billion at-the-market (ATM) equity offering program currently available to optimized equity capital raises. Although unlikely, Equinix also has the option of sale leasebacks of its facilities to generate additional liquidity.The stable outlook reflects Moody’s belief that net leverage will fall towards 4.5x (Moody’s adjusted) over the next 12 to 18 months. Moody’s expects Equinix will continue to fund growth and cash flow deficits with a prudent and balanced mix of debt and equity capital.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSMoody’s could upgrade Equinix’s ratings if net leverage is expected to be sustained below 4.5x (Moody’s adjusted), the company continues to use a meaningful amount of equity to fund its annual cash deficits and operating performance is expected to remain strong.Moody’s could downgrade Equinix’s ratings if net leverage is sustained above 5.0x (Moody’s adjusted) for an extended time frame, if liquidity deteriorates or if the company’s operating environment sustainably deteriorates due to competitive or other factors.The principal methodology used in these ratings was Communications Infrastructure Industry published in September 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1076924. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Headquartered in Redwood City, CA, Equinix, Inc. is the largest publicly traded carrier-neutral data center provider in the world with 227 data centers operating in 63 metro markets across the Americas, EMEA and Asia-Pacific. With the most networks, clouds and IT services companies on one platform, Equinix connects its more than 9,500 customers to their customers and partners utilizing over 1,800 networks.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Neil Mack, CFA Vice President – Senior Analyst Corporate Finance Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Lenny J. Ajzenman Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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Vedanta Resources Finance II Plc — Moody’s downgrades Vedanta Resources’ CFR to B2, senior unsecured notes to Caa1; all ratings remain under review for downgrade

Vedanta Resources Finance II Plc — Moody’s downgrades Vedanta Resources’ CFR to B2, senior unsecured notes to Caa1; all ratings remain under review for downgrade

Rating Action: Moody’s downgrades Vedanta Resources’ CFR to B2, senior unsecured notes to Caa1; all ratings remain under review for downgrade

Global Credit Research – 03 Dec 2020

Singapore, December 03, 2020 — Moody’s Investors Service has downgraded the corporate family rating (CFR) of Vedanta Resources Limited (VRL) to B2 from B1. Moody’s has also downgraded the ratings on the senior unsecured bonds issued by VRL and those issued by Vedanta Resources Finance II Plc (VRF) and guaranteed by VRL to Caa1 from B3.

All ratings remain under review for further downgrade.

“The downgrade primarily reflects the holding company VRL’s persistently weak liquidity and high refinancing needs amid growing signs of an aggressive risk appetite, with implications for the company’s financial strategy and risk management, a key component of our governance risk assessment framework,” says Kaustubh Chaubal a Moody’s Vice President and Senior Credit Officer.

Today’s rating action also considers the impact of the company’s governance practices on its credit profile, which Moody’s regard as credit negative.

RATINGS RATIONALE

Holdco VRL’s liquidity is severely challenged with $2.8 billion of its debt maturing from January 2021 through June 2022, including intercompany debt maturities of $507 million and a $325 million debt maturity at VRL’s sole shareholder Volcan Investments, which Moody’s expects to be serviced out of VRL group cash flows. Further weakening the holdco’s liquidity is an estimated $470 million of annual interest expense. And following the upstreaming of the intercompany loan from Cairn India Holdings Limited (CIHL) earlier this fiscal year and VDL’s commitment to investors that no further intercompany loans will be extended without approval from the VDL board, cash movement options from operating subsidiaries to the holdcos may be restricted to dividends and a nominal management/branding fee from its operating subsidiaries. However, Moody’s cautions that the group’s complex structure with less than 100% shareholding in key operating and cash rich subsidiaries, restricts the amounts of such dividends.

“VRL’s funding access had been underpinned by continued support from Indian and multinational banks not only at the operating entities, but also at various holding companies,” adds Chaubal, who is also Moody’s Lead Analyst for VRL. “However, VRL had to repay its $425 million debt maturity from one of its relationship banks, as opposed to rolling it over or refinancing it with other long-term debt, a sign of reduced bank support.”

On 20 November, VRL announced it had appointed a top-15 accountancy firm, MHA Maclntyre Hudson as its statutory auditors for the fiscal year ending 31 March 2021 (fiscal 2021) following Ernst & Young’s — the company’s former statutory auditors — decision not to be reappointed as auditors. Ernst & Young were statutory auditors of VRL for the fiscal years 2017 through 2020 and had issued a qualified audit report for fiscal 2020. However, the exiting auditor has confirmed that there were no reasons or matters that need to be brought to the attention of the members/creditors of the company in connection with them ceasing to hold office.

S R Batliboi & Co and other Ernst and Young member firms continue as statutory auditors of VRL’s 50.1% owned subsidiary Vedanta Limited (VDL) and its subsidiaries. However, VDL’s unaudited interim financial statements for fiscal 2021 also contain a qualified conclusion from the auditors pertaining to the $956 million intercompany loan from VDL’s wholly owned subsidiary CIHL to holdco VRL.

Earlier in November, VDL announced that one of its independent directors resigned for personal reasons, marking the fourth senior departure in 2020. Departures in the senior management/board at such frequent intervals can be alarming, especially at a time when the company’s liquidity is weak, statutory auditors opt not to be reelected and are providing qualified reports and qualified conclusions.

Further adding pressure to VRL’s credit profile is an accident in November at one of its mines in Gamsberg, South Africa, where mining activity remains suspended due to a geotechnical failure. The geotechnical failure trapped 10 of the company’s employees, killing two. With 108,000 tons of zinc production in fiscal 2020, the Gamsberg mine is relatively small and the suspension in its mining is unlikely to meaningfully dent VRL’s consolidated earnings or cash flow generation. Even so, the accident underscores social risks, with plausible implications for the company’s globally diversified mining operations.

Meanwhile, VDL’s operations continued to improve steadily with performance in the second quarter of the fiscal year ending March 2021 (Q2 fiscal 2021) significantly higher than Q1 fiscal 2021. More importantly, against consolidated revenues and operating EBITDA of $4.9 billion and $1.6 billion respectively in H1 fiscal 2021, Moody’s expects VDL to achieve consolidated revenues of $9.5 billion – $10.0 billion and consolidated EBITDA of $3.5 billion – $3.6 billion in full year fiscal 2021. With these operating metrics, Moody’s expects VRL’s consolidated adjusted debt/EBITDA leverage at March 2021 to marginally improve to less than 5.0x from around 5.5x in September 2020 and 5.3x in March 2020.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Moody’s expects to conclude the review within 90 days. The ratings review will focus on VRL’s ability to refinance its upcoming debt maturities in a timely manner with long-term debt.

An upgrade is unlikely, given the review for downgrade. However, Moody’s could conclude its review for downgrade and confirm all ratings if VRL successfully simplifies its complex group structure and refinances its upcoming debt maturities, in particular its bank loans, with long-term debt and also addresses the $670 million maturity of the June 2021 notes.

The ratings could be downgraded if the company fails to secure a firm refinancing plan, if there are further signs of reduced bank support, or if the company undertakes a large debt-financed acquisition without any immediate and meaningful impact on earnings.

The principal methodology used in these ratings was Mining published in September 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1089739. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Vedanta Resources Limited, headquartered in London, is a diversified resources company with interests mainly in India. Its main operations are held by Vedanta Ltd, a 50.1%-owned subsidiary. Through Vedanta Resources’ various operating subsidiaries, the group produces oil and gas, zinc, lead, silver, aluminum, iron ore and power.

Delisted from the London Stock Exchange in October 2018, Vedanta Resources is now wholly owned by Volcan Investments Ltd. Founder chairman of Vedanta Resources, Anil Agarwal, and his family, are the key shareholders of Volcan.

For the fiscal year ending 31 March 2020, Vedanta Resources generated revenues of USD11.8 billion and adjusted EBITDA of USD3.4 billion.

REGULATORY DISCLOSURES

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Kaustubh Chaubal VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Singapore Pte. Ltd. 50 Raffles Place #23-06 Singapore Land Tower Singapore 48623 Singapore JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077 Ian Lewis Associate Managing Director Corporate Finance Group JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077 Releasing Office: Moody's Investors Service Singapore Pte. Ltd. 50 Raffles Place #23-06 Singapore Land Tower Singapore 48623 Singapore JOURNALISTS: 852 3758 1350 Client Service: 852 3551 3077

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody’s investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody’s Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody’s Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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