Just about every adult in the 21st century developed world relies upon credit to finance large purchases like houses, cars and even electrical goods. Spreading the cost of payments is the only way we can do it, even if it means paying more money in the long term.

Some loans are offered to everyone, regardless of their credit history. However, these types of loans can be expensive.

But not everyone can actually get a credit card that easily, and often that is where secured credit cards come in. These may be offered to people with a poorer credit history than unsecured credit cards are. That is because the credit companies know they can get their money back on them, as you guarantee your repayments by securing them against some kind of property which you own, such as your house or car. That way, if you default on your credit card debt, the property can be repossessed and become the property of your lender.

That sounds quite bad, but there is a silver lining with secured credit cards. We have already mentioned that these secured credit cards are easier to obtain, even if you have a poor credit history. So that helps some of the poorest people to get purchases such as cars and the latest electrical equipment.

The other good news is that the interest rates are usually quite a bit lower on secured credit cards than they are for other credit cards. That is because the lender is comfortable that they will get heir money back, as they have some of your property as a guarantee of that. So, secured credit cards can work out to be a lot cheaper for you.

However, you may find secured credit cards a little harder to find than the more traditional unsecured credit cards. By n means all credit card companies offer secured credit cards so you would be best advised to go online to a search engine such as Google and search for ‘;secured credit cards’ to find what is available to you. That way you will be able to compare APR rates (Annual Percentage Rates) and know what interest you will have to pay on your credit card bills. Look for the long-term picture, not just great introductory APR deals and you will find yourself the right secured credit card for your borrowing needs.

To learn more about extra credit cards:

Equity Indexed Annuities can often be an excellent solution for anyone with long term money to invest, but with a strong need to avoid risk. An Equity Indexed Annuity can help an investor avoid two major risks – The risks of low returns, and the risks of capital loss. Take, for example, the case of Jack and Cindy. Jack is a sixty five year old retiree with $200,000 in retirement funds targeted for long term savings and growth. Jack and Cindy also have a small employer pensions and social security providing for living expense cash flow. Jack and Cindy are likely looking forward to 20 to 40 years of retirement and need to grow their nest egg so that it lasts for decades. It has taken Jack his whole working life to accumulate these funds, and he has no way to replace them if he loses money on a risky investment. On the other hand, if they invest too conservatively and only secure a minimal fixed return, their nest egg won’t grow enough to take care of them in their later years.

An Equity Indexed Annuity (EIA) could be an excellent fit for a family like Jack and Cindy. An Equity Indexed Annuity is an insurance product that credits the owner with income based on the growth of a related stock market index. It is not a mutual fund, and is not considered a “security” because there is no risk of loss to your invested principal. The insurance company promises to absorb any losses in your investment in exchange for keeping some of your investment growth in positive years.

A simple EIA might work like this. Jack and Cindy could purchase an EIA with a Point to Point Crediting method, tied to the S&P 500, with an annual reset, a 7.5% cap, 100% participation rate, no spread, no costs, no fees.

First lets define the terms: Point to Point crediting means that the policy has specific dates where the value of the associated index is verified, and used to credit your account with whatever gains the market index made in that period. There are EIA products that check the market and lock in your gains each month, indexes that check each year, and even products that check once every other year. In Jack and Cindy’s case they chose a policy that checks the market and locks in gains once per year based on the performance of the S&P 500 index.

In our example, Jack and Cindy chose a simple Cap Rate product with no margin and 100% participation. That means that whatever growth the market index shows is directly credited to their account without deduction – up to the first 7.5% in market growth. If the market goes up 3% they get all 3% with no costs or fees. If the market goes up 10%, they go up 7.5%, again with no costs or fees. And if the market drops 20% the carrier absorbs the loss. Even better, that new lower market value becomes Jack and Cindy’s new baseline, and if the market recovers 10% the next year Jack and Cindy would go up an additional 7.5% even though the market hadn’t yet recovered to their original buy-in price. That means that if the market went down 20% and recovered 7% per year for 3 years a mutual fund investor would still be just around breakeven and Jack and Cindy would be up over 20% for the three years. With a simple cap rate product, Jack and Cindy have traded away the highest end of their potential upside (above 7.5% per year) but in exchange, they’ve gained themselves bullet proof insulation against a market contraction.

So, in more general terms, funds that are performance-linked to the S&P 500 stock index, such as equity indexed annuities, are appealing to many people who want to earn competitive rates of return on their investment without market risk.

The first and possibly most-attractive provision of equity index annuities is the no-loss provision, or minimum rate guarantee. This means that once a premium payment has been made or interest has been credited to the account, the account value will never decrease below that amount. This provides safety against the volatility of the market index like the S&P 500.

The next benefit that appeals to many people is interest guarantees. Most policies have a cap (the maximum interest rate that can be credited to a policy in a policy year) and a floor (the minimum interest rate that can be credited in a policy year). The cap rate can vary from no cap to a fixed percentage, but the floor is generally zero. This allows the policyholder to benefit from potentially high returns and be guaranteed at the same time that no money will be lost.

Finally, equity index annuities offer the same benefits as traditional annuities, such as tax-deferred growth and early withdrawal of funds without penalty. This early withdrawal is usually conditioned upon the annuitant’s death or admittance to a nursing home. Guarantees are provided by the issuing insurance company.

Roger Ray of Fremont, Ohio, just bought a fixed annuity. “I need something stable with a decent rate,” he said. Ray said he’s unhappy with how his stocks have plummeted in recent months, and he just wants something to get him through these uncertain times.

“I’m not going to make a killing off a fixed annuity,” Ray said. “But at least I know I’m not going to lose any more money. Plus my rate is the best I could find out there.”

Let’s face it. The stock market’s fluctuating around the bottom of the barrel, and some bank interest rates are the lowest they’ve been in decades. And while a fixed annuity may be best for Ray, perhaps you’ll want to look at it for yourself, too.

A fixed annuity is one in which an interest rate of return is solidified for a specific number of years. The contract may even be set up for your lifetime, instead of a few years. This is opposed to a variable annuity in which the interest rate of return varies based on the performance of the investments that are chosen by the policyholder. And in uncertain economic times, predicting the future can be tricky.

Ray said when the economy stabilizes and the stock market starts looking up, he may look at cashing in his annuity and putting his money in a higher-yielding account.

Plus, with a fixed annuity, you save yourself money, said Rick Grabowski, an All State agent in Miami, Florida. “The tax benefits are much better for a fixed annuity than for a certificate of deposit plus an annuity can cover the policyholder for life,” he said.

With a certificate of deposit, you must make one payment to buy the CD. You can’t add to your account in a few months. However, with a fixed annuity, there is no limit to how much you can contribute. You may make either one big payment or smaller ongoing contributions.

You will know for certain the rate of return on the investment from day one of the purchase with your fixed annuity. And as June Lynn, an insurance investment specialist for All State said, “Because annuities offer a guaranteed rate of return, even if the performance of the investment drops to zero, the return is still guaranteed to the policyholder.”

Since the markets are so volatile, having an investment guaranteed makes the policyholder feel safer. A slumping economy may dwindle your earnings down, but a guaranteed rate of return protects you from that danger.

“Because of the current market conditions, more people are turning to annuities because they are safer,” said Lynn. “With the way companies are going under and the lack of certainty in the market, fixed annuities are definitely a way to go.”

Now, something else you need to consider with fixed annuities is how much you’ll have to pay when you sell. And if you’re investing in an annuity for the short-term, you need to do some careful math to make sure it won’t end up costing you money.

There are two ways to handle this “payout phase.” The first is called a deferred annuity, in which the policyholder elects to not touch his earnings until he reaches age 59 1/2. The first advantage to this type of annuity is that taxes are deferred until the money is withdrawn. By the time you reach age 59 1/2, you may be in a lower tax bracket, which means your taxes will be lower at that point. The second benefit is that this is a very good investment option for someone younger who is saving for retirement. A third plus is that there is no limit to your contribution. This is not the case for a 401K or IRA investment account. Fourth, if the policyholder dies, the policy does not. It goes to straight to the heirs, which is a nice death benefit. Finally, this type of annuity allows the policyholder to receive the earnings (during retirement) either in one big payment or in regular payments. If the payments are taken in installments, the tax liability is stretched out over a number of years.

You may also decide to receive the payments now instead of later by selecting an immediate annuity. With this option, you’ll receive income payments for the rest of your life or for a specified period of time. Therefore, you don’t have to wait to age 59 1/2 to earn income from the annuity.

“The payout phase for an individual will depend on how long he or she has to wait until retirement, says Lynn.” This is a good option for someone who is retiring sooner than later. Thus, a struggling economy will not disrupt your investment. A distinct advantage to this plan is that you are only taxed on the earnings when the income is paid out.

Keep in mind that the IRS inflicts a penalty on you if you withdraw income before you are 59 1/2. If you’ll fit this category, you’ll pay a 10-percent penalty on the income withdrawn. Because the economy is very unstable, leaving your money in this account for the long-term is much safer.

Ray is only in his 20s, but said he bought an immediate annuity. So he’ll start reaping his benefits now and can change his investment when the economy has a brighter outlook.

An annuity is a contract between you and an insurance company. You give the insurance company money one time, or over a period of years, and the company, in turn, promises to make regular payments to you over your lifetime, or for a certain period you specify.

Two types of annuities are available: immediate and deferred.

An immediate annuity will start making secure, guaranteed payments to you right away (usually within the first year of paying your premium). If you are still saving money for retirement, however, a deferred annuity is probably a better option for you. Deferred annuities enable you to grow your money through tax-deferred interest accumulation over a period of time before they begin paying you. After the accumulation period (usually 1, 5, or 10 years), the insurance company will begin making payments to you based on the income option you selected.

And tax-deferred annuities offer important benefits not found in in other tax-qualified accounts (such as IRAs and 401(k) plans): first, there is no limit to the amount of money you may contribute to an annuity; and second, annuities guarantee that upon the death of the investor, his or her beneficiary will receive either the annuity’s market value or at least the amount of the original investment.

Should You Buy an Annuity?

The answer depends on your individual circumstances. Do you have money to invest as a result of an inheritance, a pension plan or the sale of a home or business? Do you have a bank CD or money market account that is no longer generating competitive yields? Do you have more money available now that your children are grown? If any of these situations apply to you, a tax-deferred annuity can be a smart way to turn your money into a steady stream of retirement income you can count on for as long as you live.
Many people today use annuities as part of their overall financial plan instead of savings accounts and certificates of deposit because their tax-deferred money can grow and compound faster over a shorter period of time. “Tax-deferred” means that the earnings are not taxed until distributed either in a withdrawal or in annuity payments. Even then, the amount you contribute to the policy is not taxable.

See below for which annuity is right for you, and also our Annuity Glossary.

Which Annuity is Right for You?

If you are near retirement and/or wish to turn your 401(k), IRA, or sale of a home into a secure, guaranteed income stream, an Immediate Annuity might be right for you.

On the other hand, if you are still saving for retirement and want to grow your money with the power of tax-deferred compound interest, consider the following deferred annuities:

• Fixed Annuity
• CD-Type Annuity
• Equity Indexed Annuity
• Variable Annuity

More about Annuities:

We want you to make the most informed decision possible when planning your personal finances. Below you will find financial calculators to help you determine how much to save tax deferred to generate a certain future income. Informative articles, government links and other helpful resources are also here for your convenience.

Retirement Calculators:
Use our easy retirement calculator to estimate the annual annuity investment necessary to reach your retirement income goals.

If you’re wondering how well a tax-deferred annuity may perform against a taxable account (such as a bank CD), try our account comparison calculator.

Featured Articles:
See our complete Library of Annuity Articles, or choose from the following:

• Annuities: A Retirement Plan with Better Benefits
• Fixed Annuity: A Solid Return in a Down Market
• Retirement Planning: How do Annuities fit in?
• Survey Shows: Half of Baby Boomers Have Neglected Their Retirement Plans
• Survey finds: American Women are Unprepared for Retirement

Government Resources:
Because annuities are issued by insurance companies, the regulations that govern the insurance industry apply to them as well. Each state has a department or division of insurance which monitors the industry.

State Departments of Insurance Regulators

Furthermore, under variable annuity contracts, the owner can generally allocate the purchase payments among several types of investment portfolios or mutual funds and the contract value is determined by the performance of those investments. Accordingly, variable annuity contracts require that you review a prospectus before investing money, and are regulated by the U.S. Securities and Exchange Commission.