Prime Rate Credit

Another casualty of the increasing credit and mortgage crisis is going to be jobs and livelihoods of many workers for one of the largest credit conglomerates in the US today, Citigroup. You may even have a credit card or a loan bearing their name, however, this wasn’t enough to save the giant from the current crisises facing our economy today.

The corporation announced recently that they will be cutting as much as 5% of their workforce in anticipation of their new CEO and management strategy to better line themselves up with today’s economic and credit climate.

Apparently Citigroup’s current financial conundrum is largely due to it’s dealings in subprime mortgages which didn’t pan out as expected, and the company ended up writing off a lot in losses, and reported a loss in the billions to its shareholders because of this.

The companies other woes have been somewhat of an exodus of leading management and strategic planners and investers, especially after the company announced it’s losses for the last quarter, however the company is looking forward to regrouping and finding new leaders that are up to the challenge of pulling them out of the quaqmire that so many other lenders and creditors have found themselves in as of late.

With the mortgage market the way it is now, I’m also reading that it may be a good time to snatch up some of the stocks that are now at bargain basement prices since the market is bound to rebound at some point, they just warn to think of it as a long term investment since it’s anyone’s guess when it actually pulls out and rebounds fully. Care to venture any guesses?

Are you an online shopper like me for the holidays? I’ll tell you what, I didn’t used to be, until the long lines, and hot malls with overcrowded walkways and even more crowded, stuffy stores, was enough to make me into an online shopper/connisseur quicker than you can say “Cyber Monday”. Anyways, that’s what today is called, or has been cleverly coined by the marketing industry, as a day that people shop online, or the biggest retail sales day of the year - online that is.

I’ve heard both ways though. I’ve heard that it’s just a myth that today is Cyber day, the biggest online shopping day of the year, and I’ve also heard that it’s a myth that Black Friday, that infamous Friday after Thanksgiving when everyone rushes the stores for those early bird specials and other deals, is also a myth, and the biggest holiday shopping day is actually one that is usually closer to the big day itself.

Either way, there were apparently some great deals to be had online if you’re an avid holiday online shopper, but I wouldn’t know what they were because I was at work, and it doesn’t exactly bode well if the boss goes by and everytime sees you on Amazon.com or some other such site.

Keep your credit cards in check, remember, but if you must, at least use something like one of your best airline credit cards, so you can earn those airline miles while making purchases for family and friends, or even better, load and use a prepaid credit card, so that you have all your spending planned out in advance, and this way you can be sure not to go over your credit card spending budget for Christmas, as so many people unwittingly do, uh, including me!

Black Friday is today, and if you’re a die hard Christmas shopper, there are many stores that open the night of Thanksgiving at midnight, and even at four oclock in the morning on the 23rd so you can get “door buster deals” and other special early bird discounts if you’re one of those that can get their butts out of bed early after eating lots of turkey the night before! But this year, with all the broohaha about the economy and the weak dollar, as well as decreased consumer confidence, will we see a booming black Friday, or will people be keeping their credit cards in check, only buying things at deep discounts?

Good question. I’m sure there will be tons of news stories about the success of Black Friday on Saturday though. As for me, I’ll be sleeping in a little the day after Thanksgiving, and may brave some of the stores like Kohls, Michaels and other stores of interest that sent me circulars informing me of these once in a lifetime deals that I may not possibly be able to live with myself for missing.

Laptops at deep discounts, TV’s at bargain basement prices, cashback and gift certificate incentives are just a few of the bits of shum the fishermen will be throwing out for their ultimate shoppers, and also they want to extend their hours, with the new midnight shopping phenomena making waves with those who just have to get the best bargains at Christmas.

I’m curious to see how the holiday season goes for retailers this year. There seems to be no real consensus amongst the “experts” about whether this year will be a retail success or not, and I have no real feelings about it either way, but one thing is for sure, I just got back from vacation, so my credit cards will stay in my wallet, and I’m paying cash for as much as I possibly can!

Parents send their children to college to become prepared for a better job and be financially independent and stable. Along with educating our youth through college credits, parents need to educate them on using credit responsibly.

When college students are applying for credit cards, parents should teach them to look at the annual percentage rate and the method of calculating their balance. Encourage your teens to read all of the terms and conditions for the credit card they are applying for. Compare with all of the other credit cards and make sure they are getting the best card for their situation.

Remind teenagers that the tendency to overspend when using credit cards must be guarded against. Caution them about keeping their spending well below their limit. Also discuss that the interest rates are always high on borrowed money and will become unmanageable in a short period of time if credit is overused.

Discussion about the need to pay the balance in full each month is important. If the teen is unable to pay in full, at least encourage payment of more than the minimum amount each month.

Another important point to educate your teen about is the importance of paying the bill on time. Failure to do this will result in a bad mark on their credit record. Explain to your teen the importance of keeping a clean credit history.

Educate your teen about the ways that a positive credit history will help them to get around in life. The ability to rent an apartment, get a cell phone, buy a car and even get a job are all effected by their credit record.

Taking financial responsibility is as important to a young adult as the college degree they are earning. It is an extremely valuable lesson in life that will help them to succeed.

You’d think that the government intervening to save people from increased ARM mortgage loan interest rates and bailing scores from impending foreclosure would be welcome. To those that is bails out, it most certainly is, but to those of us that pay the taxes to help bail those out of trouble that may not have exactly done their homeword when signing up for loans they inevitably couldn’t afford, it’s really not so great.

We all know that the government may step in to subsidize certain things, like crops of fruits and veggies from America’s farmers, but when they stepped in recently to help bail out subprime mortgagees who couldn’t handle their payments and were either going to need lower payments and less interest, or an iminent foreclosure, some people got downright mad.

You see, it is your tax dollars, and you could get angry about that, but also you may want to look at it more in a “cup half full” way as well. First of all, you are keeping homes occupied in neighborhoods, and hopefully driving up property values in that area, and second of all, on a purely altruistic level, you are charitable and willing to help your fellow man in crisis for making a not so sound financial decision.

Third, from a purely practical point of view, you are helping (hoping) to educate people and financial institutions that borrowing money is serious business and when it is borrowed irresponsibly, or loaned out irresponsibly, it can have dire consequences. What side of the fence do you think you’re on? I’m on the fence a little on this one. I feel like people should be made accountable, but also believe in the greater good. Use a mortgage calculator to make sure you know what you’re getting into.

We’ve been hearing so much about the “Fed” possibly cutting those rates lately on and off, and you were probably wondering what that really meant for regular folks like you and me. At least I know I was.

That is, I was wondering if it really meant anything to me personally or your personally if you were to say, apply for a mortgage loan and pursue the American dream of owning your own home, or maybe selling your home, or upgrading to a newer, better home. After all, when the Fed cuts rates, it is mostly the mortgage lending market that is impacted. Right?

Well, yes, it is largely impactful to the mortgage lending market when there is a rate cut, and since much of the focus on our failing economy is on the miserable mortgage crisis, that is what we will focus on.

Well, the answer kind of surprised me, and if I understand it correctly, when the Fed cuts rates, even at the smallest or seemingly largest percentage - well, make that a fraction of a percentage point, it really does not affect what you personally are going to pay or what you are able to be offered by banks competing for your business.

In other words, it is really the prime rate that is set and considered the bar by which all banks adhere to, which is more or less decided on by what is called the bond market. Since banks use this a benchmark for offering competitive rates to their customers (prospective loanees), because they know this percentage is publicized, and the educated consumer will use this percentage as a measuring stick by which to shop for a new general loan, mortgage loan, and even some credit card.

I recently read an interesting article about how the most currently famous model in the world, Gisele Bunchen, is demanding to be paid only in any denomination of currency that is not US dollars.

Used to be that the US dollar held a strong place compared to other foreign currencies, but this is apparently not the case any more, and is perhaps a signal that our floundering economy is not near being on the mend, thanks to a downer of a housing and mortgage market, the war in Iraq, and other factors that typically don’t bode well for the US economy.

The US dollar used to be one of the most desired forms of currency. Heck, I remember going to Canada when I was a kid and the exchange rate for the US dollar was almost double what the Canadian form of currency was worth. It was pretty cool to pay $5 for something in US money and get almost that back in change! Seemed like your money stretched a lot further that way, but today that’s not the case.

Another problem that was cited for the decline in worth of the dollar was also tied to the mortgage/housing crisis, and that is the fact that Americans are spending above and beyond their means. This is the precise reason that is being eyeballed and hypothesized for the housing situation, since many people are buying “mini mansions” without really knowing what they’re getting into.

The subsequent outcome is a domino effect that trickles down to creditors who were admittedly a little too eager to extend credit without really accurately assessing these people’s income to debt ratios and their ability to comfortabely pay home mortgages. Hence, the mortgage emergency is a piece of the US dollar’s falling value “problem pie”.

In two interesting developments in the biggest banking conglomerate’s woes as of late, the analyst who predicted the banking giants Citigroups downgrading in stock received several death threats, and the CEO of Citigroup Charles Prince, as expected, stepped down in an emergency meeting of the Citigroup’s Board of Directors on Sunday (last night).

The reason for the downgrading of the companie’s stock outlook was exposure to bad mortgage loans in the ever deteriorating home loan and value crisis, as well as other defaulted loans and what is considered to be “bad debt” by the company. Citigroup is the owner of Citibank, a huge credit card company, among other giants in the field of mortgage lending, general loans, and revolving debts.

Now that the stock outlook has been downgraded by the female analyst who received death threats and sticks by her analysis and says she is surprised at other analysts lack of honesty or at least forthrightness in the analysis of the floundering companies assets and outlook, Bank of America is now in a better position than Citigroup, and the stock fell by a record of over 6% after her announcement. She’s sticking by it though, and says what she said was solid and 100% true and undeniable. Good for her. Good to see some serious integrity.

Has this ever happened to you? I don’t think it’s happened to me, but then again, I must confess that I am not one to read the fine print, or heck, even to notice sometimes that my interest rate seems to have indiscriminantly gone up for no reason at all suddenly. Apparently, there is a nice little loophole with credit card companies and how they determine your APR where they can actually jack your interest rate up if they find out you’ve been late on payments to other creditors.

I did know that they could increase the APR you pay them on a revolving basis if you were late with your payments to THEM, but not to other creditors, or that they could run periodic credit checks to see how your credit was faring with other creditors. I’m not sure that makes sense to me, since they should only be concerned of your balance and payment history with them it seems, not with their competition. Or am I not making sense and this seems right?

It’s no secret that many big creditors are really trying to make it harder for people to get credit cards with them by lowering their maximum spending limits, increasing their monthly minimum payments, and scaling back on the once generous introductory periods with no or very little interest and other similar “get ‘em in the door” methods to get people to sign up with them and start using their credit cards like crazy.

This is probably in large part also a response to the mortgage market crisis, and the news I just read the other days paints a picture that things are not really going to get any better any time soon. I’ve already noticed that trying to increase my maximum spending limit on one business credit card was like pulling teeth, whereas before I’d be able to get the increase (it wasn’t anything outrageous) with no problems, and really no questions asked.

This time there was a waiting period and I didn’t reaceive a letter telling me my request to increase was ok until about one month later. That, to me, says that creditors are really being more cautious about who they give money and credit out to, and when and how they increase spending limits.