Prime Rate Credit

Hey - I posted this article I wrote about something that is very near and dear to me, since I am a Generation X’er, as they call them, so I wanted to post it here too for you to read. It’s really about how my generation, who is now in their late twenties and early thirties, needs to really educate themselves better on saving for the future and not living beyond their means, which I’ve seen so much of in myself and amongst my peers. Enjoy!

Generation X is that age group that is just now starting to reach its late twenties and early thirties. Gen X’ers, as they’re called sometimes, are increasingly demonstrating a lack of financial knowledge and budgeting know-how unfortunately, and it’s really going to hit them hard in their golden years when they’re ready to retire. I’m actually in the Generation X age group, and I have seen too many examples of this generation being financially irresponsible, and financially uneducated.

So, why are Gen X’ers so carefree with their money, and what price will these young jetsetters pay down the line?

It’s been said that the baby boomer generation also was not prepared for retirement. This is the age group that was born in the 1950’s during or right after WW II and became a part of the 60’s hippie generation. The same was said about them, that they were not preparing themselves adequately for down the road, and they “lived in the moment” too much without worrying about saving for their future and ensuring a peaceful, worry free retirement.

Many of those baby boomers now are scrambling to make up for lost time, investing their money aggressively so that in the next ten years or so when they reach retirement age, they’ll be more equipped to individually deal with retirement, rather than rely solely on Social Security, which many believe simply won’t be reliable in the future. Not to mention, Social Security provides only a pittance of “security”, financially speaking.

The lucky baby boomers will have an inheritance of some sort to look forward to from their parents, since their parent’s generation consisted of people more equipped for retirement, who’d been investing or saving for a long time for their golden years. Us Generation X’ers may not be so lucky though, and many among us are spending record amounts of money on credit cards and “bad debts” that will take years upon years to pay off, and which also easily racks up thousands of dollars in interest. All of this adds up to our inability to save money, and puts a huge dent in our future net worth.

Heck, most Gen X’ers, even the oldest ones who are now in their 40’s, owe more money than they’re worth (in other words, their financial obligations outweigh their financial assets). Our parents, who are most likely baby boomers, as said before, are not as well prepared and do not have as high a net worth usually than the generation before them, so we should be seeing a decline in inheritances when Generation X gets to be retirement age.

That means that it’s up to us to seize control over our financial future. Do you know how many of my peers have the opportunity to participate in a 401k retirement program with matching employer contributions, who don’t? Let’s just say it’s a lot more than it should be. These Gen X’ers are making a huge mistake, in that they are not getting the tax benefits of having a pre-tax 401k, nor are they getting “free money” from their employer. Essentially, they are throwing money away, as well as not saving for their future!

Not only is it akin to “throwing money away”, it is also going to dramatically reduce the net worth of any Gen X’er when they retire. You see, due to the principle of compound interest, the earlier you begin saving can have an enormous, mind boggling impact on the bottom line when you reach retirement age. Saving just one year earlier than you would have many times can result in THOUSANDS UPON THOUSANDS of dollars in missed retirement money.

Compound interest is the principle of interest (money), being paid on the original (principle) amount of an investment, as well as on the interest that accumulates on that principle amount. So essentially what you end up with under the concept of compound interest is money on top of money being earned on an original investment amount over the years. The longer you invest, the more this money continues to “build on itself”, hence the principle of “compound interest”. In other words, invest earlier and you will be amazed by the difference it will make in your overall investment strategy and the end result of your investment endeavors.

So, does Generation X still have a chance at pulling itself out of lagging retirement planning? Sure. But the time is passing every day, and those days add up to thousands of dollars in the end. So please, if you’re a Gen X’er and you’re reading this, don’t wait! Start investing now. You’ll be amazed at what you can do if you just put your mind to saving for your future, and you’ll also experience greater peace of mind for the future of you and your family.

I read this statistic and my jaw dropped. I’m not sure how accurate it is, because as they say, everything that you read on the web is definitely not 100% true, or accurate for that matter. Can you believe that up to 71% of all credit cards in circulation are actually issued to US citizens?

If this staggering statistic is actually true, then that means we really do have more problems than we originally thought, and we really do need the tons of consumer credit counseling agencies that seem to be popping up out of the middle of nowhere.

Not only that, but apparently credit card companies are also losing out (gee, I thought all they did was make a killing), because so many people are getting into so much trouble with revolving (credit card) debt that they are being negotiated right out of a high APR for these people in order to actually have hope of getting their debt paid off sometime in their life!

Credit card fraud and abandonment is also becoming a growing concern, and this only forces the credit card APR’s up higher for the rest of us chumps, so even if you think this kind of stuff doesn’t affect you, it does in an indirect way.

I find it funny how you take out a loan with a higher interest rate, and then after you pay it back, you keep getting offers for “free money” from the lender around the holidays and other times when they figure you might be weaker and go for that seemingly easy money all in exchange for paying interest down the road.

Well, thank God I never took the bait, but after I paid off my higher interest rate credit consolidation loan with Citi Loan, I got a new offer for credit every 4-6 months it seemed. I actually still get money lending offers from them, even years after I paid them off.

You have to be careful with the “get it now, pay for it later” mentality. Keep in mind, this has been the same mentality that has gotten so many other Americans in trouble that they find very hard to get out of.

Try to really stick to it if you’ve paid off a significant loan or credit card. You’ll find that after a while, you REALLY do pay these things off, and they don’t come back to haunt you any more. If you need to seek out a lower interest rate loan or credit card to help you out in paying things off faster and more efficiently.

Well, in a word, usually not such a good deal, because most lenders make us really pay for having poor or unestablished credit, right? The truth is, if you have poor or unestablished credit, you really just need to SHOP AROUND a lot more than the average consumer with an average or above average credit score and history.

I have had a couple of friends and acquaintences get really burned by high risk credit cards, and loans for that matter because the hair of the dog that bit them is the hair of the dog that is causing them to get in even further debt.

What do I mean? I mean high risk lending usually equals high interest rates and longer loan periods. Simple as that. Just shop around, you won’t be sorry you took your time!

I am actually a Key Bank customer, and noticed the other day when checking my account information online that they are offering a new lower APR credit card with a 5% cash back bonus. So I read on, of course. It’s called the “Platinum” credit card, and it’s a Mastercard.

The Platinum Key Bank credit card offers the following deal:

0% APR on balance transfers for 12 months with the Platinum Card. After the introductory zero percent period, it does advise that you will then be charged the going prime rate, or actually the standard variable APR on the card, which isn’t too bad actually. The catch is, you may not qualify for the Platinum (probably based on your credit history and debt to income ratio), so you may be bumped down to a Gold card of some sort and not get as good benefits.

5% cash back on purchases for the first 3 months : This of course has some guidelines as well. I believe it says after three months introductory special, you get 1% cash back on qualifying purchases. Still not bad though.

No annual fee - I never pay a fee for a credit card, unless it provides exceptional benefits, like frequent flyer miles or something.

Well, I know I’ve gotten some really good deals on some zero - 3% APR credit cards recently in the mail. Some of the credit card companies I’ve gotten them from are Chase, Bank of America and Capital One. I already have an active Chase card, as a matter of fact, that is the only card I even use any more.

My other cards I still have, but they have a zero balance on them (remember we talked about NOT cancelling your cards when you’ve paid them off, just keep them open with a zero balance - it’s better for your FICO credit score).

I’ve found that with Capital One, although they have all those funny TV commercials about getting “robbed” on your credit cards APR offers and monthly interest fees that kill you, seem to be one of the worst offenders when it comes to getting you in at a lower APR, then jacking you up for random reasons.

This happened to me and my boyfriend with Capital One actually. I’m not sure why, and I’m not sure if this is their regular practice, but we both had to pay them off and stop using them because the APR had become too high and the credit card was just not worth keeping open.

Why Choose a Low APR Credit Card?

The difference between credit cards with lower APR’s and other regular credit cards can mean hundreds, if not thousands of dollars in savings for you when it’s all said and done. Especially if you plan on using it for large purchases, or you keep the credit card open for a long period of time.

Lower APR credit cards really help any consumer out by giving them a little leeway to pay off balances with little penalty and little interest being built up, instead of an endless cycle of revolving debt that so many of us have found ourselves stuck in at one time or another (or currently). Shopping around for these lower rates is really going to be key to keeping your financial health - and sanity.

In loans, that is, they’re borrowing less in loans. Credit card borrowing is still a boomin’ business though. Not such a good thing for consumers, since we all know a credit card is that dirty word, a “revolving debt”. But the report says that the increase or steadiness of credit card borrowing is not enough to offset a big slowdown in auto loans (remember a couple posts ago, about auto loans?)

Financial specialists believe that the cutback in loans, specifically auto loans, is due to the fact that America is under financial duress due to rising energy costs, namely the high gas prices we’ve all come to know and love (I say that facetiously).

Still, credit cards and other revolving debts are on the rise, since May actually. Financial analysts believe that consumer spending, a whopping 2/3 of the total economy will continue to slow until the end of this fiscal year, barring any unforseen gas price relief. When are we going to get electric cars?

When traveling, I read a really good tip to getting cheaper gas off the exit ramps. When you see the signs close to the exit ramp with gas company A, B and C, choose the one that says it’s further away from the exit ramp.

For example, BP gas is closest, but it’s probably more expensive for convenience sake and also because the proprietor of the gas station knows that people will tend to not look any further than the closest one to the ramp for time purposes.

The further out you go, the cheaper the gas will be. This is probably where local people get their gas, because they know the tendency to gouge travelers is going to come into play if it’s closer to the exit ramp.

Wages have reportedly risen sharply in June, which is flagging worries of inflation to financial analysts. The bad news is, that employers still are not hiring at the rate they need to to lower unemployment and get our economy going again.

The limited job growth and opportunities is related to overall rising energy costs, including the cost of gasoline, which has hit many retailers in the pocket book and prevented them from hiring for new jobs since many of them need to pay for gas for shipments and other shipping and freight costs.

Then there are the job cuts by department stores and other big retailers, home builders, and telecommunications companies that cut the hope for new job growth. There are other sectors such as health care though, who have been able to boost their payrolls, which accounts for the sharp increase in wages this month.

Did you know that one of the biggest overall indicators of financial hard times here in the US is an increasing trend in late credit card payments? It’s pretty easy to guess why. If your budgest is squeezed between getting enough gas in the car to get to work to buy your family food and keep them warm, the last thing on your mind is going to be getting those credit card bills paid on time!

Another sign of bad economic times, as I indicated in one of my previous posts, is the fact that nonprofit consumer credit management agencies are getting record amounts of calls for help. People are drowning in their debt, especially credit card debt, and other priorities are taking precedence over these revolving debts. Can you blame them?