Dennise Williams, Staff Reporter
IN THIS season of frantic preparation, cash management is as important as stocking your shelves with non-perishables and taping up your windows.
And cash management is not just about having a few thousand dollars in the house in case the ABM network crashes during a hurricane.
Cash management is a holistic approach that balances immediate needs while ensuring future growth.
A survey of recent promotions by financial institutions reveals several interesting options.
CASH UP FRONT
Capital & Credit Merchant Bank recently introduced CAPITAL ADVANTAGE.
With a minimum investment of US$10,000 or J$500,000 held for a minimum of 90 days, an investor can get the interest normally credited at the end of the period up front. Jamaican dollar interest rates begin at 11.95 per cent, and U.S. dollar interest rates begin at 5.2 per cent.
Your principal would be held until maturity while you have immediate access to the interest payment.
This can be useful in situations where you do not want to touch your savings but need access to ready cash.
ACCESS HIGH INTEREST RATES
JMMB also introduced a new product. Its Income Builder is geared toward US dollar holders with a minimum of US$10,000 to invest.
The product offers interest rates beginning at 6.5 per cent where the average rate offered is usually five per cent.
Funds are held for a minimum of two years and interest is paid twice per year and is taxable.
What is interesting is that JMMB allows clients to use this product as collateral.
Therefore, you can budget for your semi-annual interest payment, plus use the principle to access additional capital.
PAY LESS TAX
Dehring, Bunting & Golding (DB&G) is actively promoting their tax-free account. This account has a minimum opening balance of $100,000, but this must be held for five years.
Interest starts at 12.6 per cent for a minimum roll over period of 90 days.
At the end of the roll over period, you can withdraw 75 per cent of the interest earned tax-free.
Of course, if you break the instrument before five years, you are fully taxed.
MANAGE YOUR SALARY
When it comes to salaries you are either receiving one or paying one. The market allows cash management from either end.
The National Commercial Bank (NCB) recently launched its KeyCard cash card. This card allows cash to be electronically loaded onto the card for the user's access.
Employers can avoid handling cash and salary cheques altogether by having funds transferred from their NCB account to the cash card of employees.
Similar to a debit card, the cash card can be used at any NCB ATM machine, NCB point-of-sale machine and can be used to top up cellular phone credit.
From the employee perspective, there are times when cash needs are immediate. This is where salary advances come in.
EasyPay, a salary advance company has marketed its services. Obviously restricted to employed individuals, the company requires an employer to sign and stamp an agreement that the amount borrowed will be repaid by the next pay date.
The processing fee is $180 per every $1,000 borrowed and is limited to one half of your net monthly pay.
REDUCE THE DEBT BURDEN
Now many of us have loans that can become burdensome due to high interest rates. Hire-purchase loans attract 60 per cent, credit cards attract 42 per cent and general loans are booked at 23 per cent.
The GSB Co-operative Credit Union has decided to offer their members - public sector employees - a break.
GSB has a PayOne programme that is a debt consolidation vehicle. Once a member meets the collateral and servicing requirements, the credit union structures a package where you pay only them at 22 per cent.
Of course, other financial institutions can create such a deal for qualified clients and if your debts are getting the best of you, this is the best option to pursue.
As you can see, cash management requires focus and strategy for your money to work for you - and not against you.
