Prime Rate Credit

We have definitely entered a new era in the midst of the national credit crisis which seems to have everyone from mortgage lenders to automobile loan lenders running for the hills or closing up shop because many times these loans are simply no longer profitable to them. Included amongst the victims, you could say, are many private student loan lenders who are either not giving as many student loans or toughening their guidelines for giving them, or are just stopping offering them all together and sometimes not even bothering to send current lendees notice (this has happened actually).

Many would be college students and their parents who often get the loans for their children as collateral since they are more financially established, are asking how they are supposed to find private lenders for their kid’s college tuition and living expenses when many of the banks have flat out rejected them or refused their renewal of an existing loan. Student loans typically have a low interest rate, so maybe they are figuring that giving these loans out too much just doesn’t make much sense because they aren’t as profitable to them as other loans may be.

Not only are people being turned down for student loans, but they are also having a hard time finding lenders who still find it “worth their while” to actually offer student loans. This has boiled the choosing pool down, and many are complaining that it’s hard to find someone willing to loan them money for their child’s tuition and other expenses. Increasingly, students are also having to rely on college student credit cards to make up the difference in living expenses rather than overages on their student loans, as was traditional in the past with traditional government backed student loans.

Gazillionaire Warren Buffett is talking about the economy, and as usual, when the guru of investing and economics talks, everyone listens. Buffett says that he believes we will still be in what he calls a recession (although some economists have rebuffed that claim because it may not meet the technical definition of a recession which is so many consecutive weeks of downturn and a decrease in domestic product) several months from now, although he has hopes that the economy will be looking stronger in five years or so.

He says that he believes that the mortgage giants such as Fannie Mae and Freddie Mac may remain solvent, however, most likely not without a lot of help from the government and other non privately held entities since the scope of help would be so huge. Buffett has always said he is a long term “bull” when it comes to the US economy, even with short term bear trends and that he always believes the strength of the American economy will bounce back with a vengeance simply because it is too large to just collapse.

Buffett’s comments are always seeked when we are in financial dire straits, especially in recent years where he seems to have earned a sort of wise soothsayer standing because of not only his age but the testament to how standing steady even during tought economic times can stand to make you a lot of money as time goes on, and how it’s the people who panic sell when the first sign of bad news comes that usually end up in the whole when it comes to playing the stock market.

Buffett is known for buying and holding stocks for years and years, and has made a lot of money from doing so over the years, earning him a status of someone who is not only patient, but also someone who knows which companies are set to weather the ups and downs of the economy. He overtook Bill Gates as the richest man in America fairly recently, and his comments and views are seeked on everything from different stocks to the future of the US economy.

I’ve never read so much about consumer confidence as I have in the recent past months. Or maybe it was always news that was there, I just have now reached an age where I actually care about things in the financial news because I know they can affect me and the prices I pay for things, my job security at the insurance company I work for, and the rates I pay for loans, including how things go in my business life, and also how my investment portfolio (although admittedly it’s no great shakes - yet), performs through the years.

Well, apparently in August consumer’s “mood” has improved which means good things for business in general, which in turn should mean better news for our flailing economy. Speaking of economy, I just read an interesting articles by supposed financial experts who claim that the economy is not showing signs of recession, and it’s rather just going through a contraction of sorts. They say there are plenty of variables that indicate recession, however, the economy has still grown over the past several months, which is counter to the actual definition of a recession.

A recession is, by definition, when the economy, or GDP, Gross Domestic Product, is down for several consecutive months, and they say that while the increased numbers are not the norm and are pretty dismal, they nonetheless have still been imrpoving by small margins, which means that by definition right now the economy is not in a recession. Hmm, interesting, but I wouldn’t give it too much credence yet, as recessions cannot even be validated until several months after they actually occur since the number can’t be gathered and validated until such time.

In August, our current month, consumer optimism has improved reportedly because of a drop in oil prices. While people are still watching their wallets because of the gas prices, it has been assumed that because of the national decrease in oil prices, which is most likely tied to the dramatic demand decreases for gasoline, their attitude about the economy is improving, which usually translates into consumer spending more money - which incidentally, as you guessed it, expands and improves the US economy.

Heck, even those overseas are coming over here to the US to reap the benefits of a down economy as well as spend their Euros, which are worth about double or more what the American dollar is currently. I think I’d be going over there to spend some money if I knew I could get twice the bang for my buck too! The American dollar will come back though.

I’ve just read too much from authors and experts who I know have a good track record with things like this that say they have the utmost confidence in the American dollar while it is not performing now, they say it will come back. It may be a longer road than we’d like, but the US will be on the recovery trail soon, I do believe that. It’s been through these hard times before, and the free enterprise system we are built on will surely come swinging back with a vengeance once the comeback has begun.

I’ve just recently been in the situation that you hear about all the time. Well, not actually me, but my significant other who also happens to live with me. He has a credit card with about a $6,000 limit on it, and just recently received a bill for a minimum amount due that was much higher than it was previously just last month.

So lo and behold, when he looked at the details of his statement, he found that they had jacked his rate up from his special low APR of 13% to 29.99%, over a double jump from what it was before. Granted, they did not guarantee this special rate would last forever when he last negotiated that rate with them over the phone since they talked him into staying last year by offering the lower rate (he never uses the card any more, so they just make revolving interest on his current balance, why this wasn’t enough for them, I don’t know).

If you read the fine print, any credit card will tell you when you sign up that the offer for the APR they disclose is only good for so long, and that after that, based on many different criteria and reasons, including whether there was rainbow over the nearest lake (I kid of course, but you get the point), they reserve the right to do whatever they want with that rate, meaning they usually jack it up. It’s almost never the other way around where they just lower your APR interest rate without letting you know ahead of time unfortunately.

What you can do about this sort of increase in your APR is to call your creditor and see if they can work with you to again lower the rate. If they say they can’t do anything, let them know that you need to compare other companies then. This may prompt them to make an exception in some cases.

If not, then you’re just going to either look for a low APR balance transfer credit card, or maybe even get a low fixed APR loan if you intend to pay it off as my significant other did since he was not using the card any more. At any rate, if your rate goes up so high that your monthly payment would be ridiculous, and wouln’t even be making a dent, it’s in your best interst to explore you options.

The government does put forth an effort to help those in need of financial assistance to further their educational background, however, after recently filling out the FAFS form online (Thank God they allow it to be done online now, I remember this thing being a bear to complete fifteen years ago when my parents had to fill it out for me straight our of high school), I question whether it is able to get a true financial picture of people’s individual abilities to pay for school through their own financial means.

I remember my parents complaining about this very thing, saying that they don’t really ask for your other financial obligations, but instead they base it only on your income and tax information rather than assessing your needs based on a complete financial debts and assets picture, as I feel they should. Sure, they shouldn’t be giving grants to those that make six figures and squander that money on luxury items or a grandiose mortgage payment, but within reason, they should ask about mortgages, car payments and other financial obligations of that nature.

The FAFSA is the Free Application for Student Aid, and it is now available in online format. It’s actually not the long, overbearing form it used to be, and it is used to determine eligibility for Federal grants, loans and student financial aid, but it is definitely also not the end all, be all when it comes to finding ways to finance your higher education.

There are hundreds of foundations, programs and grants that are set up to help people in certain demographics and niche professions that should also be looked into on a state specific basis. For instance, Ohio where I live may have different special offerings when it comes to financial grants and gifts when it comes to education, while the state of California may have dramatically different offerings on a state level. There are some websites that can help you in your quest to find these monies that can help you on your next step to higher education as well.

After completing the FAFSA, you will get a summary of findings that will basically tell you right away if you are eligible for any of the federal grant money for that year or not, and I’m assuming this is based purely on your economic and financial information. It also asks which schools you want your information sent to, and it will send it to them for you so they have your financial aid information. All in all, government sponsored financial aid is a great thing, I just do question whether it is truly a fair way to gauge who is most in need and deserving of grant money.

Well, I know for me personally, the rising prices of everything from gasoline to my breakfast cereal is what’s on my mind these days when I think about our current “economic downturn” ehem - recession. What’s your biggest concern? Most would say it’s the rising costs of everything - not just gas, according to recent statistics on what antsy consumers are the most worried about these days.

Heck, even Wal-Mart is suffering from less earnings now in this economic downturn, which is counter to thought because usually heavily discounted stores thrive in recessions. However, stores like TJ Maxx and other discounted retail outlet stores are doing better, which is to be expected.

When I get the electric bill, I notice it is much higher than it even was last summer, which just goes to show the rising energy costs aren’t just all about gas, they’re about energy across the board. Also, we’ve noticed that our grocery bill has increased somewhat dramatically when factoring in the short span of time that has passed since it increased. Inlfation usually takes a bit longer to kick in than say, a year, which is what’s been going on here with food prices and the general cost of living.

Heck, even when we go out to eat, we’ve noticed our favorite restaurants are cutting portions of our regular dishes. How do we know? Because we tend to order the same dish at many of our favorite haunts, and we’ve noticed the portion sizes have been cut down, big time. It seems like even pizza joints are cutting down on one of the costliest items to make their pizzas - the cheese.

Seems everyone’s hurting this time from the economics of our year so far. Also, 2008 didn’t get off to a great start since that was just when all the subprime hoopla was seriously coming to light as an issue that would not pass lightly. I’m reminded of what economic time we’re in when even one of my favorite discount outlets for food, Marc’s, has increased their prices on just about everything.

Used to be they’d keep their prices on certain items steady for a few years, and they’ve increased the cost of everything from pretzels and chips to dairy products, including my favorite cottage cheese, substantially. It’s still a better deal than the grocery store I suppose, but I use Giant Eagle for all my shopping now because I get the gas points that pay for a portion of my enormous gas tank filling bill. Hopefully we come out of this by next year, if not, people are going to start getting very restless.

It appears that one of the largest credit card and identity theft fraud rings in history has been officially broken up and out of business. Eleven people (so far), have been charged with the frauds which covered a number of large retail outlet stores, including the TJ Maxx family of stores, Boston Market, DSW (for shoe lovers like me), and even Forever 21, a trendy young clothing store that can be found in malls.

No explanation as to why these particular stores were chosen, but the perpetrators hacked into thousands of credit card records so that they could get customer credit information to use for themselves (which is considered identity theft), by driving around and finding open, unsecured networks and hacking into them. They supposedly would then transfer the customer’s credit information onto empty cards with new magnetic strips, and would then use those cards to make purchases on someone else’s dime.

I do remember hearing about this a few months ago, well more than that by now probably, maybe even a year ago, because I was concerned that a store I frequent, TJ Maxx was targeted, however it was unclear whether they targeted those that held store credit cards or just any general credit card, like say any generic Mastercard or Visa. They also said at that time that other stores in that family such as Marshalls were targets, but there is no mention of this in the latest information that came out.

The credit card and identity theives are charged with hijacking and selling more than 40 million credit cards and credit card numbers, which seems nearly impossible to believe, however it was apparently an international operation, so many of those could have also been used abroad which explains the number of cards that were hijacked. The thieves were from allover, including Asia, Russia, and right here in Miami (he was supposedly the ringleader and mastermind of the whole thing). Don’t these people know by now, crime never pays in the end?

We all want our credit cards to do a little work for us, seeing how we pay them so much interest, and on a revolving basis no less, for purchases we make year round, and many times we see nothing but bills in return. In return for that interest, we may want things like money toward future purchases, or gas points, or airline miles, or maybe even the every popular “cash back” card as popularized by Discover Cards way back when.

But do all credit cards really give back, and if they do, are the terms of them giving back to us as the credit card holders so hard to meet that it’s not even worth it, or is it really just such a pittance that we’re getting back that we don’t even want to deal with it?

Some credit cards, or even some banks may give us catalogs where we can use “reward points”, and we can make purchases out of those catalogues to buy things that we can pay for through our reward points garnered through our credit card purchases, and we get the catalogue and it’s brands we’ve never heard of, or you need so many points toward the item you want that you’ll definitely be racking up points for years before you even see the day.

I know a lot of people who have said the reward catalogues are quite the joke, because they give you products that are subpar and either don’t work or are not made well or look cheap. Some of the best credit cards that give back in my opinion, that really give back something you can actuallly use, are airline miles credit cards, and the cards that give you points toward future gasoline purchases, because these are practical items that we really can use.

Even with these you want to make sure the APR is low or that you can pay the balance off every month if it’s a little higher than you are comfortable with.

Apparently this recession isn’t just hitting the likes of regular schmoes (like me), but it’s also starting to show it’s effects on the upper crust rich portion of our population also. So called luxury goods are suffering a bit, and it’s been noted that the rich are now “bargain shopping” more, and are also scaling back on investing agressively, all of which points to the fact that they are feeling the economic squeeze that all the rest of America is feeling at the moment, even those that normally don’t bat an eye at 100 dollar fillups and other such expenses.

It’s not necessarily that the rich class is hurting for money, it’s just following the behavior that everyone is expected to during times of economic slowdown, and the upper class is not immune to following the herd during downturns either, just like you and aren’t immune to watching our pocket books either when it seems like the US is having a hard time in multiple economical areas, such as gas prices, energy prices, food prices, and the horrid housing market.

I know there are ways that I have cut back, and I would consider myself to be middle class to upper middle class, and I can afford the gas, energy and food prices, but I still have to consider that the extra money I am spending on these cost increases is money that I could have done something else constructive with, like invest or purchase things that go up in value, or put money (equity) into my mortgage. All that extra money I could have invested essentially in myself is now going to the things that I need to buy just to get by, so to speak.

I’ve tried to only go shopping at a store where I get ten cents off a gallon of gas for every fifty dollars I spend for one thing, this helps offset the cost of high gas prices. I also only buy clothing that is on sale, and have taken to shopping more at second hand clothing stores where I may have purchased more clothes at retail stores.

I’ve also cut back on things that aren’t necessary, like paper plates, instead we use regular plates, also we’ve cut down on making too much coffee and wasting half of it in the morning, and make sure we don’t waste any food now. There are ways in which all of us have cut back, it just depends on where your priorities lie I suppose.

A recent report has found that Americans, in this time of financial crunch and economic worries, and what is currently a recession that is just yet to be confirmed because all the data needs to be confirmed and compiled, have been forgoeing the credit cards in favor of paying cash for items they need, or not getting them at all. Yes, ironically, Americans are now spending more like they always should have before the recession, because they are shying away from the naughty credit cards that may have helped many get into the situations that started the recession in the first place.

This does come as a surprise, since typically most people tend to whip the credit cards out for necessities in times of economic hardship, simply because they don’t have the cash or the credit lines (non revolving) to pay for the things they need, or need to have done. This current trend of seeing more credit cards being shunned for cash is kind of a perplexing one, since one would think the opposite would be true.

So, it looks like maybe those credit card stocks may not be the best thing to be putting your money in right now, after all, even with the new issuance of the Visa stock, under the stock symbol “V”, which many thought might perform like Mastercard’s stock which multiplied several times since it’s IPO. So, what’s your trend with your credit cards, or are you as snug as a bug in a rug and don’t have to worry about money too much, even when most others are finding that they have to pinch pennies to survive?

I know for me personally, this has not really changed my credit card habit. The only thing different that I do is to use mostly my United airline miles credit card more often, because I try to pay the balance off every month anyways, and I figure at least I’m getting valuable points toward a new exciting trip rather than getting nothing for spending my money, but other than that, my credit card spending has stayed the same, I pretty much just pay it off every month.