boored ape nfts

Why NFTs are a Scam

In our flurry to grasp the next big thing, we have always teetered between rejection and acceptance of unfamiliar advancements. Non-Fungible Tokens (NFTs) is one such technological breakthrough that has aroused public scepticism and admiration. This article aims to dissect the argument that NFTs are a scam by critically analyzing their ecosystem, procedures, and potential pitfalls.

The Promise of NFTs

Before discussing why NFTs might be a scam, we must first understand what they are. NFTs are digital assets built on a blockchain network, typically Ethereum, serving as proof of ownership or authenticity for a unique item or piece of content. They allow artists and creators to monetize their work in the digital world.

The glowing promise of NFTs involves cutting out middlemen, direct artist-consumer relationships, and a revolutionary take on content ownership and distribution. Further, they offer an innovative perspective on art acquisition, preserving intellectual property rights, and introducing profit avenues for creators in the digital space.

Why Some Call NFTs a Scam

While the above promises sound like an artist’s utopia, the picture might be painted with different hues. Here’s why some critics label NFTs as a scam:

  • Environmental Impact: Mining and executing NFT transactions on the Ethereum blockchain consume massive energy, promoting the use of fossil fuels. This high ecological cost has brought NFTs under severe scrutiny.
  • Market Volatility: The cryptocurrency market, the backbone behind NFTs, is notoriously volatile and speculative. In other words, the high costs paid for certain NFTs might not hold their value over time, leading to significant financial losses.
  • Questionable Ownership Rights: Owning an NFT does not automatically bestow usage or copyright rights to the buyer. The seller usually sets the terms and can, in many cases, leave the buyer with nothing more than a glorified receipt for their expensive purchase.
  • Lack of Regulation: The NFT market currently operates in a largely unregulated environment. This lack of oversight can make room for fraudulent activities, scams, and market manipulations.
  • The Illusion of Scarcity: The idea of owning something rare makes NFTs so alluring. However, given that digital files can be replicated infinitely, the concept of scarcity is sometimes nothing more than an illusion, a marketing gimmick to lure unsuspecting buyers.

Concluding Thoughts: Uncharted Territories or Scams?

Like all new technologies, NFTs come with their fair share of promises and tribulations. While they have revolutionized the digital marketplace and given artists a lucrative platform, they aren’t untouched by various pitfalls that have given them a scam-like image.

However, it’s essential to remember that not all NFTs are scams, but the potential for manipulation exists. Buyers must perform due diligence, understand their rights and the terms of purchase, and be wary of buying into hype.

Innovation often comes with risks, and NFTs aren’t an exception. By acknowledging these risks, understanding potential downsides, and pushing for regulation and transparency, stakeholders can harness NFTs’ transformative potential while minimizing their susceptibility to scams. It’s a careful balance—one that’s yet to be perfected in the world of NFTs.

consolidate many small loans into one big

When should you consilidate your debt

Debt consolidation has become a common strategy for individuals looking to regain control over their financial stability. Often seen as an effective solution, consolidating your debts infers merging multiple payments into one manageable monthly remittance. This can be achieved through various financial products such as personal loans, balance transfer credit cards, and home equity loans. However, the crucial question is – when exactly is the right time to consolidate your debt? While this can vary from person to person, several indicators can guide you through this decision-making process.

High-Interest Rates on Multiple Debts

Interest rates can have a considerable impact on your overall debt. If you have multiple debts with high-interest percentages, it might be time to consider consolidating them into one debt with a potentially lower interest rate. This strategy can help you save money in the long run and potentially clear your debt faster.

 Difficulty Keeping Track of Multiple Payments

Juggling different payments each month can turn into a labyrinth of deadlines. If these financial chores feel overwhelming, consolidating your debts can simplify the situation. Instead of keeping track of several payments, you will only have one monthly payment to consider.

Your Credit Score Has Improved

An improved credit score could mean qualifying for better interest rates for debt consolidation. If your credit score has increased significantly since you accrued most of your debt, it might be in your best interest to consolidate it to take advantage of lower interest rates.

Struggling with Monthly Payments

Are you having trouble keeping up with your monthly debt payments due to a tight budget or a sudden life change like a job loss? Consolidating your debt may provide a temporary solution. It allows you to extend the repayment term, which may lower your monthly payments. However, it’s crucial to note that this can also mean paying more in interest over time.

Prioritize Your Financial Health

Debt consolidation should ultimately lead to a healthier financial situation. If you are not able to make any headway with your current debts due to high interest rates, multiple deadlines, or hefty repayments, it might be time to consider consolidating.

When You Should Not Consider Debt Consolidation

While debt consolidation can help streamline your finances, it’s not a suitable solution for everyone. Suppose you are struggling due to excessive spending habits or cannot afford reduced payments. In that case, consolidating your debts might just delay the inevitable financial pitfalls, potentially leading you into more debt.

Consult a Financial Advisor

Deciding if and when to consolidate your debt requires a comprehensive review of your current financial situation. Consulting with a financial advisor or a credit counselor may be beneficial. They can provide expert advice tailored to your unique circumstances. Remember, your goal should always be to progress towards paying off your debts and ultimately achieving a debt-free life.

In conclusion, while debt consolidation can potentially offer respite from financial distress for many people, it needs to be timed correctly to maximize its benefits. Identifying the precise time to consolidate debt requires a mindful evaluation of your financial status, spending habits, interest rates, and credit score.

coins forex pips

Understanding the Fundamentals of a Forex Pip

In foreign exchange (forex) trading, understanding the basic terminology is pivotal to effectively navigating the complex nuances of the forex market dynamics. One essential term that every forex trader comes across is a ‘forex pip.’ This article delves into what a forex pip is, its importance, calculation, and implications in the forex market.

What is a Forex Pip?

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Forex Pip, an acronym for “percentage in point,” represents the smallest increment by which the price of a currency pair can change. Translated into a numerical perspective, a forex pip is generally equivalent to a one-digit move in the fourth decimal place of a currency pair, or 0.0001. Consequently, if the exchange rate of a currency pair like EUR/USD moves from 1.1850 to 1.1851, it would be said to have moved by one pip.

However, for currency pairs involving the Japanese yen (JPY), the pip’s value is considered at the second decimal place because the yen denotes much closer to a whole number. Therefore, a one-pip movement for USD/JPY might be from 109.90 to 109.91.

The Concept of Pipettes

In recent years, the concept of pipettes or fractional pips, equivalent to one-tenth of a pip, has introduced more granularity. This implies that most brokers now quote currency pairs to five decimal places and yen pairs to three decimal places, effectively allowing for more precise price movements to be captured.

Importance of a Forex Pip

A pip is principally important because it forms the basis for calculating profit or loss in forex trading. Each pip movement influences the profit amount. Thus, if a trader bought a currency pair and the price moved up by 10 pips, they would make a profit proportional to the invested amount. Equally, a trader would record a loss if the price falls by a set number of pips.

Calculating Value of a Forex Pip

The pip value calculation depends on the forex pair, the trade size, and the exchange rate. Typically, the value of a pip is calculated by multiplying one pip (0.0001) with the specific lot size. For standard lots of 100,000, the pip value can be calculated as (0.0001 * 100,000), which equals $10 for pairs that involve USD. In mini lots (10,000), the pip value turns out to be $1.

Understanding Pips in Forex Trading Strategy

Forex traders use pips to measure price movements, set targets, and define stop-loss levels. By understanding pip values, traders can manage their risk and reward profile effectively, which is an integral part of a successful forex trading strategy.

For instance, if a trader is willing to risk 50 pips on EUR/USD to make a potential gain of 100 pips, this creates a risk-reward ratio of 1:2. The trader won’t enter the market until he finds a trade with such favourable conditions.


A forex pip, in its simplest sense, is a fundamental unit of measure in forex trading. It plays a significant role in depicting price changes, calculating profits and losses, and shaping trading strategies. As a forex trader, mastering the concept of pips and how to calculate their value is crucial for making informed trading decisions. Thus, successful forex trading is not just about predicting the direction of market movement correctly but also about understanding the underlying mechanics, such as the concept of a forex pip.

index trading

What Are Synthetic Indices Brokers and What Do They Do?


  • Synthetic indices brokers offer simulated markets.
  • These brokers provide a controlled trading environment.
  • They enable 24/7 trading opportunities.

What Are Synthetic Indices Brokers

In the evolving landscape of online trading, synthetic indices brokers have emerged as a unique and intriguing option for traders. But what exactly are these brokers, and what role do they play in the financial market? Here’s a closer look.

Introduction to Synthetic Indices Brokers

Synthetic indices brokers specialize in offering simulated markets to traders. Unlike traditional brokers who provide access to real financial markets, these brokers create and manage synthetic indices. These indices mimic the behavior of real financial markets but are constructed using a random number generator, ensuring that they are free from real-world market influences like economic news or geopolitical events.

Controlled Trading Environment

One of the main attractions of trading with synthetic indices brokers is the controlled environment they offer. Since external factors do not influence these indices, traders can focus solely on understanding market dynamics and refining their strategies without the unpredictability of real-world events. This makes them an excellent platform for both beginners and experienced traders to test and develop their trading techniques.

24/7 Trading Opportunities

Unlike traditional markets that have specific opening and closing times, synthetic indices are available for trading 24/7. This round-the-clock availability provides flexibility for traders, allowing them to engage in trading activities at their convenience. It’s particularly beneficial for those who want to trade outside of regular market hours or live in different time zones.

Risk Management

While synthetic indices offer a controlled environment, they still carry risks, just like any form of trading. Synthetic indices brokers provide various tools and features to help traders manage these risks. These can include stop-loss orders, take-profit levels, and other risk management strategies to help traders protect their investments.

Diverse Trading Options

Synthetic indices brokers often provide a wide range of trading options. These can include different types of synthetic indices that simulate various market conditions, allowing traders to experience and adapt to different trading scenarios. This diversity helps traders gain comprehensive trading experience.


Synthetic indices brokers play a vital role in the world of online trading by providing a unique, controlled, and flexible trading environment. Whether you are new to trading or an experienced trader looking to test new strategies, these brokers offer a valuable platform to hone your skills.

Remember, while trading with synthetic indices can be rewarding, it’s important to approach it with the same level of caution and strategy as you would with traditional trading.

What is Solana

Several platforms stand out in the realm of blockchain technology due to their innovative and ambitious applications. Solana’s name continues to reverberate increasingly louder as it gains momentum in the fast-paced world of cryptocurrencies and decentralized finance. This article presents a comprehensive view of Solana, explaining what it is, its fundamental concept, how it functions, and its significance in the current blockchain environment.

Understanding Solana

Solana is an advanced decentralized computing platform that uses SOL, its native cryptocurrency, for transaction processing and incentivising network validators. It falls under the class of blockchain platforms comprising Ethereum and Bitcoin. Satoshi Nakamoto, who invented blockchain, primarily designed it to record digital currency transactions. Solana, on the other hand, extends blockchain’s functionality further, offering a fast, secure, and scalable infrastructure to host decentralized applications (DApps) and crypto-currencies.

Solana’s Fundamental Concept

Solana’s main tagline is that it’s the “fastest blockchain in the world” and “the fastest growing ecosystem in crypto.” While these assertions may sound lofty, Solana’s technological features do provide it with a considerable edge.

The foundation of Solana rests on Proof of History (PoH), a system for creating trustless time-based transactions on the blockchain. PoH is designed to help solve some of the scalability issues experienced by other chains. This unique timestamp feature allows for the processing of many transactions in parallel, leading to faster confirmation times and high throughput, reaching up to 65,000 transactions per second (tps).

How Does Solana Work?

Solana employs a unique linear scalability solution: the more nodes, the more throughput. It breaks away from the traditional blockchain mechanism of processing transactions in sequential order. Instead, it reduces processing time through a clever mix of Proof of History and the Tower BFT (Byzantine Fault Tolerance) consensus algorithm.

The Tower BFT leverages the historical records created by the PoH, which reduces messaging overhead and computation. The operation then adopts a more streamlined, sophisticated GPU-friendly process, resulting in a system that validates and executes transactions with high efficiency.

Importance of Solana in the Blockchain Sphere

Solana’s groundbreaking features offer a solution to the scalability and speed issues that have long plagued blockchain networks. Its robust architecture provides much-needed infrastructure for DeFi (Decentralized Finance) applications, which are rapidly gaining traction in finance. Additionally, it facilitates new possibilities for blockchain-based gaming, tokenized assets, and a range of DApps. Despite being relatively new, about 90 projects are reportedly building on Solana, which indicates its growing prominence.

Given the nascent stage of blockchain technology, the final verdict on Solana is still upcoming. However, as of now, it presents a viable proposition for many real-world applications looking for a fast, secure, and scalable blockchain platform. Its potential contribution to manifesting the ultimate promise of blockchain technology—a decentralized future—cannot be overstated.

In conclusion, Solana represents an exciting evolution in the blockchain universe. Its capability to challenge traditional finance models and accommodate a rapidly growing user base attests to its role as an emerging powerhouse in decentralized computing platforms.

learn to trade with a demo account

How to find a broker that offer a demo account

Finding the right brokerage with demo accounts for new entrants or beginner investors is critical for their initial trading journey. It allows one to test the trading platform, develop skills, and execute strategies without risking real money. This comprehensive article outlines the process of finding a perfect broker offering a free demo account.

Understanding Demo Accounts

First, it’s necessary to understand what a demo account is and how it functions. A demo account is essentially a simulation of the live market environment brokerage firms offer. It uses virtual money to simulate real trading experiences, thus allowing a user to develop a clear understanding of the platform without risking actual capital.

Features You Should Look For

While locating a broker with a demo account, ensure the account has certain features that align with your learning needs. These include:

  • Real-Time Market Conditions: Go for a broker’s demo account that mimics the actual market conditions to give you an accurate feeling of live trading. This will help you get a firm grasp on the market’s workings.
  • Virtual Cash Balance:** Adequate virtual balance is essential for gaining extensive experience over different strategies and trades.
  • Fully Functioning Platform: A demo account should have all the tools, charts, and indicators available in a real trading account to provide the right learning platform.
  • Customer Support: Make sure the broker’s customer service is available to demo account holders. This will help if you encounter any issues while navigating the platform.

How do you find a broker offering a demo account?

Now that we’ve covered what to look for, here are some steps in finding such brokers:

  • Online Research: Start with extensive online research. Look into broker comparison websites, financial news pages, industry analysis sites, and financial forums. Many websites provide detailed reviews of different brokers, including information about their demo accounts.
  • Read Customer Reviews: This is another crucial step. Customer reviews offer real insights into a broker’s performance, the authenticity of their demo platform, and customer support.
  • Testing the Platform: Once you have narrowed down your options, request a demo account and test the platform. Ensure the interface is user-friendly, and all the mentioned features are present.
  • Check if It’s Free: Most demo accounts are complimentary. However, it’s best to confirm whether any charges or future commitments are involved.

Top 3 Brokers Offering Demo Accounts

Here are the top 3 brokers known for their user-friendly and feature-packed demo accounts:

  • EToro: EToro provides a free and unlimited demo account with a virtual amount of up to $100,000.
  • IG Markets: IG Markets offers an excellent demo trading suite with a sizeable virtual balance.
  • Plus500: Plus500’s demo account stands out due to its unlimited time usage and virtual funds facility.

Understanding the risks and strategies of online trading can be quite daunting. Therefore, using a demo account from a reliable brokerage can significantly ease the pain of transitioning from a beginner to an experienced trader. However, while a demo account can be a great learning tool, remember that real trading involves emotions and risks that a demo account can’t replicate. So, trade wisely!


What does the Financial Conduct Authority (FCA) do?

In the labyrinthine world of financial markets, safeguarding consumers and maintaining integrity is of utmost importance. In the United Kingdom, this mantle is held by the Financial Conduct Authority (FCA). This article provides an in-depth exploration of the roles and responsibilities of the FCA, examining how it contributes to the stability and reliability of financial markets.

FCA regulates Stock, CFD, forex and binary options brokers in the UK.  Here you can find a list of FCA-regulated forex brokers.

Origin and Purpose

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The Financial Conduct Authority was established in April 2013, taking over many of the responsibilities previously held by the Financial Services Authority (FSA). It functions as a regulatory body for financial markets and firms in the United Kingdom, with the aim to safeguard the interests of consumers, ensure market integrity, and promote competition.

Statutory Objectives

The FCA operates under the Financial Services and Markets Act 2000 (FSMA), as amended by the Financial Services Act 2012. The statutory objectives outlined in the FSMA include:

  1. Protecting consumers
  2. Protecting and enhancing the integrity of the UK financial system
  3. Promoting competition in the interests of consumers

Protecting Consumers

One of the cardinal roles of the FCA is consumer protection. This entails ensuring that consumers are provided with suitable products and services and are treated fairly by financial firms.

Ensuring Fair Treatment

The FCA imposes stringent standards that financial firms must adhere to in their dealings with consumers. These standards ensure that firms act transparently, provide appropriate products, and communicate fairly and clearly.

Redress Mechanisms

The FCA also plays a crucial role in ensuring consumers have avenues for redress when things go wrong. This includes overseeing the Financial Ombudsman Service, which resolves disputes between consumers and financial firms.

Ensuring Market Integrity

Market integrity is critical for the functioning of financial markets. The FCA adopts a robust framework to prevent market abuse and ensure that firms operate in a manner that is consistent with the interests of consumers and the market at large.

Supervising Market Conduct

The FCA is vigilant in supervising the conduct of firms and individuals to ensure that market integrity is upheld. It has the authority to enforce regulations and impose sanctions or fines on those that breach market conduct rules.

Combatting Financial Crime

An integral aspect of ensuring market integrity is combatting financial crimes such as money laundering and fraud. The FCA employs supervisory and enforcement activities to detect and prevent financial crime.

Promoting Competition

Promoting competition in financial markets fosters innovation and enhances consumer choice.

Market Entry and Exit

The FCA oversees the authorization process for new firms entering the market and ensures that competition is not stifled. It also regulates the orderly exit of firms, minimizing disruptions to the market and consumers.

 Advocacy and Market Studies

The FCA engages in advocacy and conducts market studies to identify barriers to competition. Based on the findings, it might propose changes to market structure or regulations to encourage competition.

Regulatory and Supervisory Tools

The FCA employs a range of tools to achieve its objectives, including:

  1. Rule-making
  2. Supervisory
  3. Enforcement
  4. Competition powers

Each of these tools plays a distinct role in guiding the behavior of market participants and ensuring adherence to regulatory standards.

Debt relief order in England and Wales

debt reliefChapter 4 of the Tribunals, Courts and Enforcement Act 2007 established a new form av insolvency in England and Wales. This form of insolvency is called debt relief order (DRO) and is not the same thing as bankruptcy. Compared to traditional bankruptcy, the debt relief order is intended to be easier, quicker and cheaper. It is aimed towards debtors who have few or no assets and a low disposable income.

Debt relief order has been available in England and Wales since 6 April 2009 when the new law came into force.

At the time of writing, the fee for applying for a debt relief order is £90. If you can not pay the whole amount as a lump sum, you can pay it in instalments prior to applying for the debt relief order.

You can apply for a debt relief order without attending court.

What is a debt relief order?

If you are granted a debt relief order, you will not have to make any payments on your loans during a 12 month period. If your financial situation is still sufficiently bad after these 12 months, you debts will be written off.

The DRO will have an effect on your credit rating for six years.

The DRO will appear in the Individual Insolvency Register, a register that is open to the public.

If you do not follow the DRO-rules, the court can make a Debt Relief Restrictions Order (DRRO) against you. A DRRO can also be issued at the same time as your DRO is approved, if the court believes that you have been dishonest or are to blame for the situation you’re in. A DRRO can be in place from 2 to 15 years, which is much longer than the 12 months of restrictions that come with just a DRO.

drowning in debtAre you qualified for a debt relief order?

Not anyone with debts can get a debt relief order. There are several conditions that you need to meet in order to be approved for a DRO. Here are some of the most important ones (the list is not complete):

  • You must live in England or Wales, or have lived / carried out business there in the last three years.
  • You must owe £15,000 or less. If you have larger debts than this, a debt relief order is not possible.
  • You must be unable to repay your debts.
  • You must have £50 or less remaining per month after having paid for basic household expenses.
  • You can not have assets worth more than a total of £300. There are however a few specific assets that will not be included in that sum.- A car worth £1 000 or less.- Approved pensions

    – Household equipment and other basics that your or members of your household needs, including furniture, bedding and clothing.

    Please note that homes are not excluded, so if you own a home worth more than £300 you can not qualify for DRO.

  • You can not have obtained a debt relief order in the last six years.
  • You can not be involved in any other kind of formal insolvency procedure when you apply for a DRO. Three examples of formal insolvency procedures are bankruptcy restrictions or undertakings, interim order, and an individual voluntary arrangement in accordance with the Insolvency Act 1986.

What you must and mustn’t do once you have been approved for a debt relief order

erase debtOnce you have been approved for a debt relief order, there are certain rules you must adhere to. Below, you will find some of the most important ones (the list is not complete).

  • You are not allowed to act as a company director, or be involved in the ‘promotion, management or formation of a limited company’ without getting permission from the court.
  • You are allowed to obtain credit, but you are not allowed to obtain credit worth £500 or more without telling the lender that you are currently going through a debt relief order. This includes credits that you apply for together with someone else. It also includes ‘acting with the intention’ of getting credit, e.g. ordering something online without signing up for credit but then fail to pay for the item right away when it arrives.
  • If you apply for an overdraft facility, you must tell the bank or building society that you are currently undergoing a debt relief order. Also, you are not allowed to write cheques that you wont honour.
  • If you carry on business in a different name than the name that you had when you obtained the DRO, you must tell everyone that you do business with the name under which you were approved for an DRO.

Six situations where a credit card may be better than a payday loan

creditcardCredit cards are often a better solution than payday loans. Of course, it should be mentioned that many credit card companies will charge you an annual fee for your credit card. This should be taken into account when you compare credit cards with payday loans, and also when you compare different types of credit cards and debit cards with each other.

Below, you will find six situations where a credit card may be a better solution than a payday loan.

When you have an interest free or low interest credit card

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There are many credit card companies that will give their costumers 50 days or more of interest-free credit, provided that you pay the bill in full on the maturity date. This is not the case with payday loans, where even a one week loan can rack up a substantial amounts of interests and fees. Take for instance the Wonga payday loan, which is very popular in the United Kingdom. At the time of writing, borrowing £100 for 7 days from Wonga would cost £12.89 in interest and fees. Borrowing £100 for 43 days (the longest time period offered by Wonga) would cost £50.87 in interest and fees.

Once your in a serious pinch, it can be difficult to obtain a credit card that offers short-term interest-free credit. It is therefore a good idea to plan ahead and research the pros and cons of getting this type of credit card when you don’t really need it. Even if you dislike the idea of using credit cards, it could still be a good idea to have one (provided it is low-cost) just as an extra layer of protection.

Once you do need access to immediate credit, e.g. because of an unforeseen emergency that is eating through your personal savings, you will be glad that you planned ahead and got a good credit card (or other credit solution) for yourself in advance.

When you need to borrow money for a very short period of time

payday loanMany payday loan companies have fixed fees on their payday loans. This has to do with the nature of the payday loan. Since a majority of payday loans are small and run for less than a month, even a payday loan with a huge interest rate will give the lender a fairly small amount of interest when it is paid back. The cost of setting up and administering the payday loan can easily exceed the interest charged on the loan. Compare this to the total interest paid to the bank over the years on real estate mortgage that you set up 25 years ago, and you can easily see why payday loan lenders are eager to attach fixed-fees to their loans.

What this means for you as a borrower is that even if you just need to borrow money until your next paycheck arrives in four days, you will still pay dearly for your payday loan. It is not uncommon for payday loans to have a fixed fee of $25 per $100 borrowed, regardless of whether you repay your loan in four days or in 31 days.

If you on the other hand have a credit card, a four day long $100 loan will most likely not cost you anywhere near $25. Even if you do not have a credit card that offers interest free 50 day periods, you may still have a credit card where you can borrow $100 and only pay interest for those four days. Even with a really high monthly interest rate, it won’t amount to much for a four-day period.

When you do not known exactly how much money you will need

When you take out a traditional payday loan, you will normally have to decide right then and there how much you want to borrow until your next payday. Some lenders will not allow you to return later to borrow more before your next payday, and the ones that will allow this will typically charge you a new fixed-fee which make multiple borrowing extremely expensive.

payday loanBecause of this, many borrowers are tempted to borrow more than what they think they will actually need. They are already paying a high fixed fee for their payday loan, so they want to “get the most out of it”. Also, they want to safeguard themselves against having to pay an additional fixed-fee if the run into any unforeseen emergency and need more money than expected before the next payday.

The problem with over-borrowing is of course that it can be tempting to spend your money once you have it in your pocket. You also run the risk of your money being stolen or lost, or that friends or relatives will pester you for money if they get a glimpse of the “extra cash” you have at hand.

When you purchase something an pay with your credit card, there is no over-borrowing. If you need to make a new purchase later in the week, there is no new huge fixed-fee to pay. This way, a credit card gives you more flexibility and you do not have to keep extra borrowed cash around ‘just in case’.

There are of course plenty of examples of people that go crazy and overspend with their credit card as well, but for many consumers it is more difficult not to overspend when they have cash burning a hole in their pocket than when its just a credit card. Which group, if any, do you belong to?

When you need repayment flexibility

A payday loan should be repaid on the day you receive your next pay. That is the basic idea of a payday loan. Many traditional payday lenders will even make you sign a post-dated check as collateral, so that they can cash the check if you do not show up to repay the loan when it is due. If you fail to pay back the loan on your payday, and have an empty check account, the bank will charge you an overdraft fee when the payday loan company cashes your check.

If you on the other hand have a standard credit card, you will most likely have have the option of doing a minimum payment this month and then pay the rest of the loan back the following month, or make a minimum payment the next month as well and continue to push the loan. This is of course not a comfortable situation to be in, but it may be better than ending up in a downward spiral where so much money from you next paycheck will go to repaying your current payday loan that you will be forced to take out a new payday loan to pay rent and groceries.

Since payday loans tend to be so expensive, it is often better to use a credit card for your emergency and then slowly pay off that loan over several months. As long as you make at least the minimal payment each month, you shouldn’t incur any hefty fees but you will need to pay interest.

short term loanExample 1: You borrowed $100 on your credit card. That is $1,52 in monthly interest on a credit card charging 19,9%. This month, you will pay back a part of your loan (not the full loan) plus $1,52 in interest rate. Also, as your loan decreases with each payment, so will the monthly interest payments.

Example 2: You borrowed $100 in the form of a payday loan, when there was 20 days left to your next payday. On your payday, you must pay the full $100 back + interest and fees. It is not unusual for payday lenders to charge $25 in fixed fee for a loan like this, so even if don’t pay much in interest for a mere 20 days you will most likely end up paying back at least $27 in fee + interest.

Of course, it is ALWAYS important to check the exact terms and conditions of your specific credit card and of several payday loan companies before you decide which option that is best for you. Also keep in mind that for some people, paying back a payday loan once and for all is easier than properly managing a credit card where you have more flexibility.

When you want extra consumer protection

Many credit cards will offer extra consumer protection. You may for instance get travel insurance when you purchase a trip using your credit card, or fraud insurance when you order a product online. Of course, if you need to take out a payday loan to buy milk, bread and beans than the consumer protection offered may be of little use to you. But there are those rare situatios when purchasing airline tickets on credit or ordering a spare part for your space heater on credit actually make sense, and in those situations it can be a really good idea to use a credit card that offers you extra consumer protection instead of using a payday loan to pay for the emergency purchase.

If you live in the United States, more information can be found in Section 75 of the Consumer Credit Act.

Invest your money, dont gamble it on longshots

stop gamblingIt is often said that the secret to becoming rich is easy. Spend less than you earn. It is hard to argue with the logic off that statement but it is still only a small part of financial success. Another equally important part of financial success is to never gamble with your money. You should think about investing as a game of poker where you make strategic investment that is likely to give a good return and that give you a good value in comparison to the risk you take. You should never gamble and bet your money on high risk investment where a large element of luck is needed for you to see a return on your investment. Investing should be skilled based like poker, never luck based like casino games such as roulette and slot machines. The promise of easy money and large jackpots entice a lot of people to casinos all over the world. But is is important to remember that casinos make huge profits and that most people leave the casino poorer then when they came in. It does not matter how big the potential pay day is if the chance of getting it is too small.

Gamble or investment

poker investmentsIt can sometimes be hard to know what is to be considered a good investment and what is to be considered gambling. A simply rule on thumb is that if an opportunity seems to good to be true it is likely a long shot gamble. If you know that you like very high risk investments and to dream about their returns it can be a good idea to set a limit for how much you are allowed to invest/gamble on this type of investments. Extreme high risk investments can be an interesting spice in a portfolio but should be kept small enough that the negative effect caused of them failing is minimal. I recommend that you never invest more than 1% of your portfolio in high risk investments.

How to stop gambling and start investing

The key to stop gambling with your money is to start looking on your investment over a longer time span. By focusing on your long term success you will not be as tempted to gamble and take large risks in the hope of getting rich quick. Focusing on your long term success makes you more likely to succeed.

invest dont gambleA common problem among poker players is that they are more focused on winning money then they are on avoiding loosing money. The allure of profits is bigger than the fear of loosing money. To become a successful poker player they have to learn that a saved GBP is worth just as much as a GBP that they won. As an investor you have to learn the same lesson. Avoiding losses is just as important for long time success as it is to earn money. This is just one of the many lessons poker can teach you as an investor and that can help you stop gambling and start investing.

Another important lesson that you can learn from poker is risk management and risk assessment. If you want to be successful as a poker player you have to know how to assess risk and be able to judge whether the potential pay day is worth the risk. As an investor you will need to asses the risk of investments the same way. Only when they pay out is bigger than the risk should you ever devote to a pot or an investment. Assessing risk is easier when you play poker than it is when you invest but the basic principles remain the same.

It is important to remember that you can play more poker hands in a single night than you might make investments in a year. That means that the law of averages will have a large effect when you play poker than when you invest. In poker you know that if the risk assessed value of a hand  is bigger than the investment required to stay in the hand you should stay in it and you can feel certain to win money over time. When you invest on the other hand every individual outcome will have a larger impact on your overall success since you repeat the action with lower frequency. As an investor this means that you need to be more risk averse than a poker player has to be. As an investor it doesn’t matter how big the potential profit is if the risk is too big.

earn money with penny stocksPoker is not a perfect metaphor for investing and the financial world but in many ways it remains a good distillation of the essence of finance. I therefore recommend that everyone who wants to become a good investor spend some time at the poker tables. There are many lessons to be learned that will make you a better investor and help you in your life in general. You do not need to play for high stakes. The lessons can be learned on any level. If you prove to be a successful poker player you might want to devote more money to it. If you find poker hard you can keep playing at lower levels to learn the lessons without loosing too much money. Good luck.