Prime Rate Credit

Although banks have historically had a set of criteria to go by when lending money to an individual or couple for the purpose of purchasing a home with it (in other words, a mortgage loan), many admittedly let some of the criteria either slip by or be minimally qualifying in years past, which analysts say is part of why we are facing one of the largest mortgage and subprime meltdowns ever which is just now coming to light now.

However, if it’s been a lesson to anyone, it’s been a lesson to major lenders that they need to tighten the noose on their lending practices, meaning they had to better screen candidates for mortgage loans so that they could keep both themselves out of hot water by avoiding bad loans, and the consumer, by not letting them get in “over their heads” so to speak, by taking on too big a mortgage for their salary and other forms of compensation to cover over the duration of the loan, typically 30 years.

A survey taken in April of major lending banks found that over 2/3 of the banks reported they had adopted tighter lending restrictions and new criteria and guidelines, including proof required of income, before they let a consumer sign on the dotted line and purchase a home with money borrowed from their institution.

Not only that, but banks are also severely tightening (compared to years ago), their restrictions on lending for credit cards and other common loans as well, extending their caution into other fields of concern, since consumers have generally overextended themselves in these areas, which many analysts say has also led to the current economic conditions and “credit crunch”, as it has been termed.

Banks have grown more concerned as well because with the erosion of current credit including mortgages, loans and credit card delinquencies, they are forecasting that even more loans are going to go bad in the near future, only further pulling back on their profits and putting them in the red, so to speak. There are of course some banks that have avoided this crisis as greatly as they can, but most are in some form of trouble because of one thing or another, and many think it will be years before they and consumers recover from this debacle.

My boyfriend and I live together. We do not share bank accounts as I personally do not believe that to be with someone, even married, that you have to share checking accounts, or even credit accounts. We do have our home we bought last year in both of our names, but even that is slightly split in that he is on one of the loans (we got two mortgage loans, it was the best way for us to go at the time), and not on the other because we had varying credit.

Which is funny because now he actually has better credit than I do, perhaps because my name is on the larger mortgage and that symbolizes a higher debt to income ratio for me, especially since I am partially self employed, which is typically a harder income to prove than a regular “salary” job. However, I digress. We both receive plenty of credit offers in the mail, ranging from special loans to balance transfer credit cards, to mortgage lines of credit that can be transferred into fixed rate low interest loans, but he still receives the bulk of the credit card offers.

Like I said, I think that even though I have a higher income and pay my bills on time every month, it is looked at as higher risk to extend more credit to me because of my debt ratio, so he does still get the bulk of the credit card offers. However, when do you know if it’s worth it to transfer a lot of outstanding revolving debt to a card that may be just the same thing pretty much after your introductory period is over? Well, it’s important to read the fine print on these.

Always go for something that says “fixed rate”, otherwise they “reserve the right” to change your APR terms on you any time, which can end up being the opposite of getting you out of debt, but instead steeping your further into it by increasing the interest you owe on your existing debt. Always have your calculator ready.

We’ve sat down and actually calculated, when the term is over, and how much you are paying for monthly payments, you are actually saving in the end on interest when taking on these deals, and sometimes you are better off just sticking with several balances on lower APR fixed rate cards rather than transferring it all to one card. Sure, it’s easier to make one payment a month as opposed to 2-5 payments to separate cards, but who cares when in the end you are paying more money for the luxury to do so?

My boyfriend and I live together. We do not share bank accounts as I personally do not believe that to be with someone, even married, that you have to share checking accounts, or even credit accounts. We do have our home we bought last year in both of our names, but even that is slightly split in that he is on one of the loans (we got two mortgage loans, it was the best way for us to go at the time), and not on the other because we had varying credit.

Which is funny because now he actually has better credit than I do, perhaps because my name is on the larger mortgage and that symbolizes a higher debt to income ratio for me, especially since I am partially self employed, which is typically a harder income to prove than a regular “salary” job. However, I digress. We both receive plenty of credit offers in the mail, ranging from special loans to balance transfer credit cards, to mortgage lines of credit that can be transferred into fixed rate low interest loans, but he still receives the bulk of the credit card offers.

Like I said, I think that even though I have a higher income and pay my bills on time every month, it is looked at as higher risk to extend more credit to me because of my debt ratio, so he does still get the bulk of the credit card offers. However, when do you know if it’s worth it to transfer a lot of outstanding revolving debt to a card that may be just the same thing pretty much after your introductory period is over? Well, it’s important to read the fine print on these.

Always go for something that says “fixed rate”, otherwise they “reserve the right” to change your APR terms on you any time, which can end up being the opposite of getting you out of debt, but instead steeping your further into it by increasing the interest you owe on your existing debt. Always have your calculator ready.

We’ve sat down and actually calculated, when the term is over, and how much you are paying for monthly payments, you are actually saving in the end on interest when taking on these deals, and sometimes you are better off just sticking with several balances on lower APR fixed rate cards rather than transferring it all to one card. Sure, it’s easier to make one payment a month as opposed to 2-5 payments to separate cards, but who cares when in the end you are paying more money for the luxury to do so?

A lot of people I work with were supposed to be getting their stimulus checks that the Federal government is issuing in the next few weeks, in this current week we are in now. Many of them said that the check could not come soon enough for them, many of whom are struggling to pay off old gas bills from the winter and are also struggling to pay to fill their gas tanks large and small just to make the commute to work and back and to make other small necessary commutes as well.

It’s really crazy times we’re living in these days when our citizens in the US can’t even make ends meet and have to pinch pennies just to live, and not even to live on any extravagant means, just to make it by, to buy groceries and other necessities and yeah, maybe to splurge on a little something here and there because after all isn’t that what living is all about?

The government stimulus checks were issued earlier than originally planned, thanks to urges by the president and congress to get them out quicker to help the struggling economy and get it back on its feet faster. Next question is, when is someone going to step in and force these oil companies to stop gouging the gas prices for no good given reason?

The stimulus checks supposedly go by the last few digits of your social security number, and there were numerous places online for the schedule of mailing to be found according to this individual information. I think last I looked married couples could get up to $1200 and people who filed as single or are married filing as single can get back up to $600, all depending on how much money the individual or the married couple makes.

The next question on these stimulus tax return checks is, where are we really getting this money from? Is it hidden somewhere or are we in effect really borrowing social security money from our future generations? These are hard economic times, but the good news is that hard economic times and times of recession, which we are in right now according to most financial analysts, are usually followed by economic booms. So it’ll be a good time to position yourself and your investments for when things pick back up hopefully!

We all hate to pay them, some more than others, myself included admittedly. What am I talking about? Those darn ATM fees that eat up a couple bucks, and sometims up to three to four dollars at some ATM’s, for the privelege of accessing and withdrawing money that belongs to you anyways. It’s kind of the way that a lot of banks are making money when you withdraw your money, but they would never own up to that. Instead they say that is covers administrative and maintenance costs for your account, the machines that dispense the money, and keeping tabs on your account balances properly.

But we all know that’s something that needs to happen anyways, so I personally take those excuses with a grain of proverbial salt. I’ve seen the recent ATM fees go up as high as five bucks, which if it were me, unless I were in dire need of that money, I probably would not pay based on the sheer principal alone that it’s a rip off to pay five bucks, which equates to a perfectly good meal at a fast food restaurant, just to withdraw my money.

Then there are the fees that you have to pay to use an ATM that isn’t actually owned by your bank. For example, my sister is in town from California right now, and just for her to withdraw money from an ATM that was within her network, but owned by my bank and not hers, which is a small town bank from where she lives, she was charged a 3.50 fee for withdrawing her money.

This one is particularly baffling because I’m not really sure why they put that extra fee on when it’s “outside your network” or from another bank. Sometimes your bank may actually charge two separate fees, one from them for using the ATM, and another one if that particular ATM is out of their “network”.

It’s really highway robbery if you think about it, considering banking fees are also going up just for your monthly maintenance fees as well. Heck, I pay six dollars on one account every month, and ten on another, just for them to keep my account going. I think these fees are really getting out of hand, but they can get away with it because you “need” them, and you need checking accounts and savings accounts often times to establish credit. Bummer.

Let’s talk about the current stock market for a minute. First of all, you should know that I’m not a huge skeptic when it comes to the resilience of the American economy and the American stock market as well. I know, times have been extremely tough over the past year, actually about two years now, for our economy with a multitude of factors affecting consumers as well as stocks, because whatever affects the consumer basically affects the stock market as well as you may already know.

Many people who are not so convinced of our economy’s resilience are bailing out big time on US stocks, and delving their money into money market accounts which are a much safer option, but are an incredibly (odds have it) lower rate of return over the long haul on your money. Remember, you should almost always invest in stocks with the long term - at least 3-5 years in mind, if not more, or you could be in for a lot of losses as well as getting taxed out the wazoo for short term gains.

It makes me kind of sad that the paranoia about the state of the US is forcing people to panic and put their money in places that really don’t even keep pace with inflation - which by the way, in broaching a 5% mark this year, especially for food and other goods, rather than putting their money in places that have a much higher rate of return over the long haul. Think about it, the wealthiest people are the ones who still buy when everyone else is running away, just look at Warren Buffett as a prime example of this philosophy.

He has a well known theory that you should be greedy (buy stocks you think are good) when everyone else is scared, and be scared when everyone else is greedy. Hence he is one of the world’s richest men, actually I believe he tops that list now. As long as you are a person who can research good stocks and buy it at a good price (aka, when most others are scared to invest in the stock market), you could definitely make out like a bandit around retirement time!

In yet more ominous news about today’s economic situation, both microeconomically and macroeconomically for those who enjoy referring back to old highschool and college terms, unlike me, foor prices are being forecasted to go higher than they have in more than 17 years, and they are saying that right now is just the beginning.

What are the higher food prices attributed to? Well, it is supposedly a combination of factors, a few being the weather in major food, wheat and corn producing areas of the world, high gas prices which increases the cost of transporting food to places that sell it and use it in their food products, and a higher global demand for food stuffs.

The average annual food cost increase is usually at about a 2.5 percent increase, while last year (2007), it rose around 4 percent, setting the path for higher and higher prices according to many analysts and consumer watchdog groups. This year, they are saying that the rise in food prices could be even worse than last year, and additional half a percentage point again, rounding it out to about 4.5 percent increase.

It doesn’t seem like a lot, but when you consider this is an incremental increase that happens every year, and we are talking on a global scale here, it certainly does add up. These increasing percentages are bound to strap several working classes, but will especially strap the poor financially, making food donation programs and subsizdizations a virtual necessity just to feed our own population. Or the poor class will be forced to give something else up in order to eat properly.

I’ve noticed higher prices on fruits and veggies so far, but the squeeze hasn’t hit me nearly as hard as I know it could hit others who are having a tough time paying their bills and keeping up as it is. McCain, the Republican presidential nominee, has actually just proposed a gas tax holiday, which would take away gas taxes, which make up a significant portion of what you pay at the pump, for the coming Memorial day weekend, hopefully easing some of the financial burden on families and businesses. I’d say much more drastic measures are called for, but this would at least be a start. Heck, it would make McCain a pretty popular guy too!

Most small business owners are not expecting the fed’s stimulus package tax rebates that, for many, are coming as early as May, to really help boost their businesses in any meaningful way, if at all, according to recent surveys. Some do still believe though that the rebate checks may help stimulate their business. Those that are in the majority may be right though.

According to recent polls done in samplings of populations around the US of people expecting rebates showed that most people don’t plan to make any wild purchases with their rebate checks, but rather either save, invest, or pay bills off with it. Very smart, but if this is the case, it may not help to stimulate the economy by giving money back to businesses and getting consumers to do what they do best - spend, as anticipated.

The economic stimulus package was created in hopes the people would go out and spend it in retail and services so that we could get the GDP, or Gross Domestic Product, going back up again, and get the spending mentality going in America again, which has helped us become a dominant economy and marketplace, and a great place for entrepreneurs - it’s the “land of opportunity” for exactly that reason, but the land of opportunity has recently suffered some setbacks which the government is trying to bail us out of.

Well, it seems like there are a lot of things at work in this economy that are unfortunately not working for us as consumers, but rather very much against us. While I hate to take on the doomsday tone since I think that the media’s doomsday attitude on the economy, housing market and credit crunch has only lended itself to a further roll in the turmoil around us, I have to admit that things just keep sounding worse.

At least that’s what the media would lead us to believe, so please keep an open mind that some of these forecasted happenings may not happen at all and may in fact be overblown by “newsmakers”.

Well, they are now saying that food prices for simple staples like cooking oil, bread, wheat and rice and things of that nature, but I’m also thinking a lot of the more expensive perishables like fruits and veggies may also continue to make their way up the pricing scale due to higher gas prices and more demand for the foods, especially in the developing countries, where this type of food is scarce to begin with.

Corn, wheat and other grains have doubled or more so since this time last year. I actually just got back from the grocery store and did notice a few higher than usual prices on items, but it’s a good thing I have my Giant Eagle Advantage card, because at least all of my food purchases are making their way to something useful, like fuel points which allow me to purchase gas at a discount (I think this is the best advantage of having a card, this is my favorite card for gas, since you just are buying things you already need and can get a generous discount per gallon on your gas just for making food purchases, whoever thought of this is a genius.)

What about those of us who are just scraping by to begin with though? I do wonder how they are making it when me, someone who has a steady income from their job as well as side incomes from other various projects, is noticing a bit of a painful increase in the overall cost of living. Things definitely need to be getting better. Heck, GE, the energy giant, just announced that their earnings for this quarter were lower than expected, and also warned that forecasts for the 2008 year may be lower, so everyone’s suffering.

Ugh, it’s hard to keep up with what’s going on in the crazy economy today, isn’t it? I swear just a few short weeks ago, I read a headline that promisingly claimed that US consumer borrowing was on the up trend. Not so any more according to this latest headline, claiming that no, consumer borrowing is in fact on a downswing. Apparently it has to do with credit cards (we wonder why we have bad credit these days, read on for more of why) Can’t keep up? Neither can I, so bear with me.

They have all these nifty figures that they use to figure out whether consumer spending and borrowing is up, but what they don’t tell you is that even though it may be technically “up” from last year, it’s still not considered “up” to them because they have already made projections about what it would be at for the next year at the same time.

Not really sure how they come up with all those numbers, since I haven’t heard of a recent population explosion which would lead me to believe that consumer borrowing or spending would skyrocket in one certain year over the next, but I guess we should listen to them because they’re the experts. Economic analysts had expected consumer borrowing to be up more than it actually was, so apparently this is a signal of some sort that yes, we are indeed experiencing a faltering economy right now. News flash, right?!

The bad part is that consumer borrowing went down in relation to non-revoloving types of credit, such as mortgages and loans, but went up ever so slightly for other sectors that really don’t benefit the consumer because they are charged on a revolving basis, which means the consumer is charged on purchases they made months ago but havent’ paid off, over and over and over until the card is paid off. It’s a system where credit cards, even the best credit cards out there, charge interest every month, even on balances that are carried over.

So you don’t just pay interest once on that set of dishes you charged on your favorite low fixed apr credit card, but you keep paying whatever percentage you signed up for over and over again on that amount until it’s totally paid off. Raw deal, but also a great deal when you think about the things you have been able to purchase because of credit cards that would not have otherwise been possible due to budget restrictions.

Well, the Federal government was hoping that the tax rebate checks that are fairly generous amounts of money for many people, especially married couples, would spur the economy with a bit of old fashioned frivolous spending. Wait, what did I just say? Frivolous spending? That’s a thing of the past in this gloom and doom economy, right?

Well, the government is not counting on that, and they are hoping that the tax rebate checks coming in May and beyond will be spent (blown) right away, boosting the retail environment and prompting a surge in consumer spending that may in fact boost the economy by giving more to business, small and large alike, and help pull us out of an impending or already-here recession. Heck, maybe while we’re at it, it may even boost the stock market which seems to be as volatile as oil and water mixed together right now.

Problem is, in polls that were run recently, consumers are saying that they plan on either saving the money or paying off bills with it. Does this really count as spending, at least in the way the rebates were intended to be spent? Well, that’s for a specialist to decide, certainly not me, but I’m not so sure that’s what the Fed had in mind when they put together the economic stimulus package that included the tax rebates to tax payers.

It still may help though, because if Americans are going to save it, that means more money for the faltering banking economy, and also may mean more money to businesses anyways, since they will still supposedly be paying off bills that may be late, or will be paying this money to some other business, whether it be a grocery store, a utility business, a car payment, or whatever other late bills of catch ups the American people decided needs it most (hmm, maybe even that gas credit card you’ve been meaning to get paid off so you don’t have to look at it any more, you name it).