What is the definition of CALLABLE LETTER OF CREDIT?(bank)?
basically it is a letter of credit that can be revoked or demand that it is paid in full at any time. it is similar to a demand loan. the following information may help also. Able to be redeemed prior to maturity. The term usually applies to bonds and convertible securities. The issuer of a callable security has to state the conditions under which the security may be called at the time of issue. For most securities, there is a certain initial time period in which the security cannot be called. A bond will usually be called when market interest rates fall below the yield being paid on the bond (bonds are usually called when the price rises to a certain point). To reflect this risk, a callable security is usually priced lower than a non-callable security. /C. A binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be tranferred to the seller. Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the delivery of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability. Letters of credit reduce a company’s borrowing capacity with their bank and create a contingent/balance sheet liability. Further, the letter of credit will consume its portion of the legal limit a bank may lend to your business. Bonds are cost effective. Almost always, banks will require specific assets to be pledged to secure the ILOC. In the case of a claim/dispute the "standby" Letter of Credit is callable by the state or federal agency upon demand -- no questions asked. When this happens the bank pays the agency the amount of the lette r of credit. Guilty until proven innocent. Conversely, surety bonds and their issuing insurance companies have duties and responsibilities to resolve any disputes in an equitable manner protecting a company’s rights. Innocent until proven guilty.
How many credit cards should you have?
After only 6 months you will have a very low score and limited credit history. You may not be able to get another card. The rules have changed and folks under 21 have to prove sufficient income to qualify for credit cards or have a parent co-sign. Use the card you have and pay in full every month. In about a year, consider applying for a second credit card. Use both and pay in full every month. In another year, you may have a halfway decent credit score. Don't make the mistake of applying for a bunch of credit cards just to have a long list of cards. Only get store or gas credit cards if you have a specific purpose and will actually use the accounts. For your second major credit card, look for something with a rewards plan. Credit experts say that you need 3 or 4 active credit card accounts and at least 2 installment loans to get the best mix of credit for the best score. But it still takes time to build a good credit history.
Do you need a credit card?
Do you NEED a card? No. Is it a good thing to have, if used properly? Absolutely. A credit card is the easiest way to build credit, and building credit early is a wise choice. Just don't fall for common pitfalls, mainly: Always pay your balance in full every single month. There is no benefit whatsoever to carrying a balance. Ever. The only good interest is the kind you collect. Pay on time. NEVER be late. This is the easiest way to ruin your credit. It's wise to set up online payments, either directly at the credit card company or send payments from your bank account through your bank. Then your payments will never show up late. Not to mention you'll save on stamps. While some may disagree my staunch opinion is never get a card with an annual fee. They aren't worth it. I should also point out that you don't need a *credit* card to order stuff online. A debit card (which pulls money right out of your bank account for the purchase) works just the same as a credit card; with a few exceptions such as some hotels or rental car companies. Although this will do nothing for building credit, since it isn't a loan.
Why are we encouraged to use credit cards so much?
Why do we get pushed so much to use credit cards? Because those issuing banks can make a profit from transactions and (potentially) from the interest. Particularly, processing foreign currency transactions (or even DCC) is a lucrative deal for them. For domestic transactions (within the same country and without forex) the fee is usually born by the merchant in the sense the bill amount is same for the customer irrespective of payment methods. But there are exceptions. I know merchants who add 2-3% for card payments. Does credit card significantly benefit the economy?Excellent question, but I am afraid a detailed answer will be somewhat technical. In fact, any analysis will go to the heart of monetary economics, impacts of base money, interest rate and leverage on the system. Also, the way to see things here can highlight the huge drift between two competing schools-Keynesian and Austrian. Prima facie, many people will say YES. If you buy with credit card, that will stimulate spending, consumption, resulting in more jobs, higher demand for goods and services at a macro level. However, the Austrians (and I am one of them) will say wait, not so fast. When you borrow using credit card, that also adds to the private bank credit. You demand things for which you cannot pay for yet, creating inflation and leverage. Bear in mind that credit cards are typically used not to acquire productive assets, they are used to fund consumption-lavish dinner, television, furniture etc. Even if the interest is zero, when you buy something worth $100, you are borrowing consumption from your own future. Supposing you earn the same $100 eventually and pay it back, you could consume the $100 when you earned it, without using credit card. People will come and say that inflation will make it easier for you to pay back and you would potentially get more purchasing power than when you borrowed it. But that means credit card users are relieved by the inflation and inverting the logic, inflation is good for consumers who cannot delay the gratification. This has dangerous implications on a macro level when used as a guide for monetary policies. This creates massive degree of malinvestments, unsustainable booms and busts in various sectors and sudden convulsions of deflation which the central banks try to stave off by printing money. I will not blame the consumers for the bubbles, but this is just one of the evils of central monetary politburos and fiat currency.