When credit is tight, getting the best loan

Now more than ever it pays to be a prime borrower - here's how to be that guy.

by Carolyn Bigda
posted by Greg Lipinski

Just as housing prices stall, lenders are making it tougher to borrow.

A recent report from the Federal Reserve shows that 15 percent of U.S. banks began tightening credit standards at the end of 2006 - the most since the early 1990s.

Since then, the belt-tightening has only accelerated as lenders worry about a slowdown in home price growth and borrowers' ability to repay their loans.

In December, for example, EMC Mortgage Corp., a subsidiary of Bear Stearns Companies, as much as doubled the amount of cash savings that loan applicants need to qualify for a loan.

Then in February, the bank announced it would no longer offer so-called "piggyback" loans, which let consumers finance 100 percent of a home's price. Now, you must put down a minimum of 5 percent or 10 percent, depending on other factors in your loan application.

To read further, click here.

"South Park" Is Good For Laughs and Advice

by Greg Lipinski

People call it offensive, garbage, nonsense, and a slew of other derogatory terms, but the fact of the matter is that South Park writers are unbelievably intelligent; some people don’t even realize it. The have an unbelievable ability to create intelligent humor on some of the most recent events in the world today. This season of the show, its 13th, they have undoubtedly attacked the economy and the U.S. mindset.

The episode itself begins with a man enjoying a margarita out of a machine he had bought that day, whilst lecturing to his family about how they have to be more frugal in these tough times. Eventually, this man becomes a preacher of sorts, and the episode parallels the Catholic story of Jesus Christ. This father eventually has the entire community wearing robes made from bed sheets and using candlelight as opposed to electricity. He got the town of South Park to stop spending money all together. It wasn’t until a small Jewish boy named Kyle managed to show the people that responsible spending, not stopping the act, was the way out of this horrid economy.

I could go on about the episode, but it’s best if you watch it yourself for both a laugh and a sobering look into your own spending. The fact is it’s true. You can’t halt your spending, but at the same time, you must be very responsible with your money especially if you don’t have much. There needs to be a solid middle ground between the two extremes for this economy to strengthen and for people to stay healthy and sane.

There are cases of people saving crumbs of prior meals for toppings of the next and turning bottles inside out to use a product dry. These are extreme cases, and if you feel these are necessary measures, then by all means use them. But for others out there that can relax from time to time, remember to relax. It’s important to not sail to one end of the spectrum. For example, don’t stop buying leisure products. People need to be entertained and challenged intellectually. So maybe you can’t afford the latest video game? Then purchase a few books. The idea is to compromise and prioritize.

If there is one thing I know is that this economy has me pinching pennies as much as the other guy, but I pick my fights wisely and know that from time to time, going to the movies is as important to my mental health as a meal is for my body.

Resources:
http://www.smartmoney.com/personal-finance/debt/8-credit-card-traps-for-obama-banks-to-discuss/

http://www.msnbc.msn.com/id/29623198/

South Park Studios website
The episode is named "Margaritaville" out of Season 13

Say 'No' to Debit Cards for Teens

If you want to teach your kids about managing money, stick with cash.

by Janet Bodnar
posted by Greg Lipinski

Even as consumers try to unload credit-card debt -- and card issuers try to unload high-risk borrowers -- some banks are still trying to get teenagers hooked on plastic.

"Call it plastic on training wheels!" chirps the press release for the new Current Card by Discover, the latest debit card aimed at "kids, tweens and teens." I've never been a fan of these cards, and I like them even less given the current economic climate.

The idea is that parents deposit money in the card account, which the kids can use to buy stuff or make withdrawals from ATMs. The cards tout selling points designed to appeal to parents. "Unlike cash," says the press release, "the Current Card gives teens a better way to track and manage their spending while developing smart money-management skills."

To read on, click here.

Credit card reforms pressed by Obama

Posted by Yen Ho

President Obama met with executives from 13 of the nation's largest credit card issuers at the White House yesterday and pressed them to curb excessive fees and provide consumers with more straightforward contracts.

Obama told the executives that he supports pending legislation to stamp out unfair practices, such as raising interest rates on outstanding balances even when consumers have paid their bills on time.

Read more

Geithner urges global effort to tamp crisis

Posted by Yen Ho
Written by Glenn Somerville and Corbett Daly

WASHINGTON (Reuters) - The United States bears "substantial" blame for the woes besetting the world economy but it will take a global effort to ease those strains, U.S. Treasury Secretary Timothy Geithner said on Wednesday.

Speaking to the Economic Club of Washington, Geithner said it was essential to find a better-balanced model for world growth that relies less on U.S. consumers as economies bid to climb out of the steepest downturn in decades.

"We must set ourselves on a path so that one country, or group of countries, does not consume in excess while another set of countries produces in excess," he said.

Read more

Student loans and repayment issues

By Jennifer Ng

Students are always worrying about two things when they are in college, their grades and how they are going to pay back their loans. But it seems now that worrying about repayment will become much more stressful than keeping grades up. The default interest rates on student loans are rising at an alarmingly fast rate despite a weak job market for graduates and increasing tuition costs. Federally guaranteed student loans are expected to reach 6.9% for the fiscal year 2007, from 4.6% two years ago according to the U.S. Department of Education. Lenders say that more are asking for help as unemployment gets worse and debt levels rise among graduates. Borrowers struggling to repay their federally backed loans can call their lender to request holds on their payments until they are able to pay back. Many types of federal loans qualify for forbearance and certain need-based loans qualify for deferment. But for borrowers with private loans there are fewer options. Borrowers for private loans have rapidly risen recently because limits on federal borrowing haven’t kept up with rising college costs. In the past getting forbearance on a private loan was not too difficult for lenders gave loans to people who were struggling and kept giving forbearances. But as the economy has worsened and more borrowers are in trouble, lenders have to adopt a stricter policy. Many private lenders are working with students help pay back loans by offering forbearances but only with limits on how long it will cover and how much. Student loans and in particular private loans are seeing a struggle now but although the options of repayment are hard to keep up, private lenders are offering their assistance.

Sources:
http://online.wsj.com/article/SB124027600001437467.html
http://www.finaid.org/loans/
http://www.chasestudentloans.com/student-loans/faq-federal-stafford.html

Outsized Finance Sector Meant Outsized Consumer Spending?

Copied and Pasted by Jennifer Ng

Investors have lately embraced the possibility that just maybe the economy is improving. If that’s right — and given the economy’s tendency to bounce back after hard falls it just might me — it will be welcome news. But a respite may not be the same as a lasting recovery.
There is, of course, the matter of the banks and their balance sheets. Japan saw growth rebound several times throughout the 1990s, but that didn’t mean its problems were over. Indeed, those fitful false starts were problematic, because they helped sap the government’s political will to make the hard decisions it needed to on the banking system.
Beyond the bank balance-sheet problems, there are structural problems to consider. In recent years, the finance sector grew far larger than economic fundamentals said it should be. Thomas Philippon, an economist at New York University’s Stern School of Business, estimates that it was 8.3% of GDP in 2006. He thinks that a more natural level would be around 7%. What’s more, he and University of Virginia economist Ariell Reshef estimate that, controlling for education and employment risk, finance workers were paid about 40% too much in 2006.
One thing the outsized finance sector was doing was helping underwrite a lot of consumer spending. Last year, household liabilities came to 35% of household financial assets, according to the Federal Reserve, compared to 22% in 2000. That jump in debt levels coincided with a jump in consumer expenditures as a share of GDP — it averaged about 71% last year, compared with 67% in the 1990s.

Click here to read more.

Credit Card Chargeoffs Continue to Rise; 10% Rates May be Seen in 2009

Copied and Pasted by Rie Umano

Credit card chargeoffs are continuing to grow, with no immediate signs of any change despite some improvement in overall financial institutional performance in the last couple of months.
Financial institutions will likely be looking to sell off more of their credit card debt, however, Kaukin Ginsberg analyst Dimitri Michaud said that large supply of portfolios mean that debt sales will continue their trend of weak pricing.
“There doesn’t appear to be any sign of this trend slowing down,” Michaud said, pointing out that while many consumers have cut back on spending, they aren’t cutting back as fast as their earning power is eroding. Earning power continues to drop as people lose jobs and part-time workers lose hours – meaning less earning power, even if they are still employed.
“Chargeoffs have been increasing steadily since 2007,” Michaud added. Michaud monitors credit card performance for his Credit Card Performance Index (CCPI), part of the Kaulkin Ginsberg Consumer Finance Report. The CCPI tracks the performance of securitized credit card receivables for the nation’s 10 largest credit card master trusts. The latest CCPI showed continued weakness in all three CCPI components: the card charge off rate was at 8.43 percent, the delinquency rate was 6.38 percent and the recovery rate was 0.54 percent.Major credit card issuers have also reported deterioration in credit card performance.

Click here to read more

Apple’s New iPhone Ad Targets Small-Business Users

Posted by Rie Umano

Apple Inc. now is focusing its new iPhone advertisement on small business next.
Since Apple introduced the iPhone and the iPod Touch, the Apple App is approaching its 1 billion download. Consumer demand reached about 110 million applications to be downloaded each month. Some of these applications are even free, or can be bought for 99 cents or $1.99. Apple is now boosting their revenue even more since they produced iPhone and iPod Touch from Apple Store.
New iPhone 3G ads show a small business bent. During the ads, it explains that you can process credit-card transaction by using Inner Fence’s credit card terminal c\application. You also can print a shipping label for a package using the Print & Share application and check on the status of a delivery with FedEx mobile application.
Apple now is moving to target into the business market. Those applications already made a lot of business users happy.
One of consumers says, “Apple obviously has made some changes to their software earlier this year to include enterprise applications”. Consumers who run small business will utilize varieties of functions that Apple provides. Apple did good job targeting business user customers by changing their functionality.

Sources:

http://blogs.wsj.com/independentstreet/2009/04/22/apples-new-iphone-ad-targets-small-business-users/

http://www.topix.net/personal-finance/small-business/2009/04/new-iphone-ad-targets-small-business

http://www.latest-mobile.com/articles/apple/new-iphone-ad-targets-small-business_6069

Mothers Day Spending Projected At An All Time Low

By Brian Redhead

Mothers Day is quickly approaching and in recent years everyone prepares to spend hundreds on the one that gave them life. This year however with the economy in a slump some consumers and retailers are concerned that spending will be greatly reduced. In fact it is estimated that spending for Mothers will be as much as 11% less than from previous years (Waters).

In a recent survey conducted by the National Retail Federation, it was found that 4 out of 5 Americans will participate in gift giving for Mother’s Day, but admit that they will be shopping at discount stores to save money (Business First). All of the common gifts will still be sought during this busy Mothers Day season; however the amount of money spent on each gift is proposed to be reduced. According to an article published in the Business First journal, the average spent on flowers in a normal year is $2 billion, $2.3 billion on jewelry and $1 billion on clothing and/or personal items. Those average spending patterns are not expected this year and armed with this information retailers are looking for ways to help consumers still purchase gifts and enjoy Mothers Day with budget friendly gifts. Items that are being targeted in the down turned economy are more practical gifts such as apparel, digital cameras and books. This move on the part of retailers not only assists the consumers, but also their financial stability. By preparing for a slower Mother’s Day rush and providing gifts that are affordable, these retailers are protecting their best interests as well (Reidy).

Mothers Day is a very important holiday to most because it signifies one day where they can honor that special lady that gave them life. While mothers are known for their understanding, it is still customary to receive gifts and retailers are gearing up for a decrease in revenue this holiday season.

Works Cited

http://www.boston.com/business/ticker/2009/04/merchants_expec.html

www.bizjournals.com/louisville/stories/2009/04/13/daily53.html

http://online.wsj.com/article/BT-CO-20090416-707440.html

Credit Card Consumers : Beware !

By Ryan Dennin

Penny slots making lots of cents in Missouri

Posted by Brian Redhead


Gamblers may be cutting back like other consumers, but one thing they're not doing is pinching pennies.



Their spending on penny gambling machines produced about one-fourth of all slot machine revenue in Nevada last year, and more in other states. In Missouri, one of few states where gambling revenue rose in 2008, more than half of all casino revenue came from penny slots. For many casinos, penny slots are producing the only kind of revenue that's rising.



Gamblers say they like the machines -- which were impractical before quiet paper payouts started replacing the tumbling bucketfuls of coins in a jackpot -- because they can play longer for the same amount of money.



No matter that casinos like penny slots because they're more lucrative for the house.



"It's all just for recreation," said Kansas City resident Cora Logan, 72, who was playing a penny slot machine at Isle of Capri in Kansas City on her 42nd wedding anniversary. "When you come here, don't expect to win. If you put a lot of money in these you're crazy." Click here to read more.

Six Lenders Join Mortgage Program

Posted by Yen Ho

The Treasury Department said yesterday that it has signed contracts with six major mortgage lenders to participate in the Obama administration's $75 billion foreclosure prevention effort.

Together, the lenders could be eligible for up to nearly $10 billion in incentive payments for helping troubled borrowers save their homes by agreeing to lower the payments to affordable levels. The administration has said the program, launched last month, could help as many as 4 million homeowners stay out of foreclosure.

Read more

Consumer Finance @ All Time Low

By: Ryan Dennin

During these tough times an industry that is hit harder than most is the consumer finance industry. There are 2 fundamental issues with why the consumer finance industry isn't growing during a recession. Is it simply that people aren't shopping as much? Or has credit become so tight that people wanting that new 42" Plasma just simply can't get approved? The reality is a little of both. It seems people are "saving" at an all time high, something Americans are notorious for not being great at. While at the same time banks are locked down on the supply of capital and becoming very picky as to who and why receives it. With retail dips, housing declines, and car sales approaching all time lows, the consumer finance companies are certainly taking their fair share of the losses. One Wachovia columnist says "that the personal savings rate at the start of 2009 was the highest it’s been since the 1990’s slowdown" The fact that Americans are becoming more conscience of what they spend, and saving vs. borrowing could have a positive impact as it starts to correct this imbalanced budget we have been living on for decades. Maybe this whole recession thing has it's perks after all...

Sources:
http://medillmoneymavens.com/2009/04/07/consumer-credit-drops-in-february-driven-by-high-savings-rates-and-tighter-credit/
http://www.senseoncents.com/2009/03/housing-prices-plummet-consumer-confidence-at-all-time-lows/
http://www.smallbusinessnewz.com/expertarticles/2009/02/06/times-are-changing-and-so-are-consumer-spending-habits

Visa Introduces a Credit Card on a Phone

Copied and Pasted by Jennifer Ng

I wrote last week about a way to make your cellphone work like a credit card by applying a sticker to the back. The sticker, equipped with a radio frequency identification, or R.F.I.D., tag lets you wave the phone over a terminal to make a purchase.

Visa is introducing a cellphone payment system that is more than sticker-thin. The service is currently available only in Malaysia, but it will be expanded to other countries in coming years.

Like some phone payment schemes already used in Japan, the Visa service uses a chip on the phone to communicate with a payment terminal. But the latest version is based on a global standard for phones and telephones called near field communications.

Here’s how it works:

You buy a phone with the appropriate near field communication chip in it, such as the Nokia 6212.
You connect the phone over the mobile Internet to your bank to set up your payment account.
When you want to buy something, you wave the phone within 4 cm of the terminal at the merchant. The transaction proceeds as if you have swiped your magnetic stripe card in the terminal.

Click here to read more.

Cash over plastic for holiday travel

By Jennifer Ng

Everybody enjoys a nice vacation but no one wants to spend more then they need to, especially in these hard economic times. As people try to find the best ways to scrimp and save when they go vacation internationally, it will be a surprise that the method of payment can have a great effect on your savings. Cash is the better option to use when travelling internationally when compared to credit and debit cards. Cash avoids the currency and till charges that follow when using plastic. The downside of using cash over plastic is that you must shop for the best exchange rate before booking your flight. Hotels, apartments, and villas are also indirectly making cash the best option to bring abroad because of security boxes to keep money and passports safe. Also having the right type of holiday insurance can recover any lost or stolen cash. If you want to save money when you go on holiday internationally, the way you pay for things can have a big impact on how much you save on your trip.

Sources:
http://www.thisismoney.co.uk/consumer/travel/article.html?in_article_id=482276&in_page_id=1093

http://bgnentrepreneur.net/cheapest-option-for-holidaymakers/

http://www.independent.co.uk/money/invest-save/save-your-holiday-cash-for-enjoying-yourself-405189.html

Is Facebook losing its glow?

Copied and Pasted By Rie Umano

Fortune Magazine) -- It's been a busy couple of months for social networking site Facebook. CEO Mark Zuckerberg appeared on the cover of FORTUNE (dressed in a tie, no less) and shared with us his plans to turn Facebook into the next digital communications platform. Soon thereafter he landed on Oprah Winfrey's couch to offer a tutorial on the site he'd initially built four years ago. In March the company launched a redesign that a vocal group of users roundly criticized. A few weeks after that chief financial officer Gideon Yu resigned unexpectedly, prompting bloggers to speculate that the company must be readying itself for a public offering.

Meanwhile the site has kept adding users at a rapid clip (the redesign has not kept newcomers away), and analysts are starting to raise questions about just how much Facebook is spending on infrastructure to maintain the large site.

click here to read more

Credit card fee frenzy

Posted by Rie Umano

Currently, credit card issuers are raising rates and penalty fees each year.
It is due to the economic downturn cycle. As the economy worsens and job losses increase, more people cannot pay their credit card bills. Then, credit card issuers are trying to limit only people who can at least afford and pay back their bills.
This punishment is not only for people who pay late or not all. Even people who never failed to pay back need to face with the raising rates and penalty fees. Banks in the U.S. will rake in almost $22 billions in penalty fees and average interest rate on credit card will reach to 14% this year according to R.K. Hammer.
This whole economic cycle brings our bad economy even worse. Even though many banks are out of money, they are raising rates and fees and many consumers are not eligible for the credit service. In addition, credit card companies are also trying to make harder for customers to pay on time by shortening grace periods.
Many banks say that they need money to offset record credit card delinquency rates, but if they continue kicking many customers out, there is no way to raise revenue.

Sources:
http://www.bankrate.com/brm/news/cc/20010514a.asp

http://moneyfeatures.blogs.money.cnn.com/2009/04/13/credit-card-fee-frenzy/

http://www.credit-card-comparison-online.co.uk/news/increased-interest-rates-since-penalties-capped.html

March CPI rises 0.5%

Pasted by Brian Redhead

The Consumer Price Index (CPI) rose by 0.5% in March compared to February, the Central Bureau of Statistics (CBS) said Tuesday, following four months of price reductions in light of the recession.

Analysts were surprised by this figure in light of pre-estimations pointing to a stable CPI or a price-hike of up to 0.2%. Since the beginning of the year, the CPI has fallen by 0.1% on the backdrop of rise in unemployment, the cutting down of production and the drop in demands.

Price-hikes were mainly recorded in the following categories: Fruit and vegetables (3.6%), housing (1.6%), transportation (1.6%) and food (0.4%). The clothing and footwear category, on the other hand, saw a price reduction of 3.9%

The inflation rate in the past 12 months (March of 2009 compared to March of 2008) totaled 3.6%, surpassing the Bank of Israel's inflation target of 1-3%.



According to the Bank of Israel's publications in March, the capital market estimates that the inflation in the next 12 months will stand at 0.6%, with banks and investment houses estimating that the price-hike over this period will total 0.7%. Click here to read more.

Consumer Prices Dipped in March

U.S. Industrial Production Fell 1.5%

Posted by Greg Lipinski


Click here for video source and article.

Consumer spending declines: A historical oddity

Posted by Yen Ho
Written by Carter Doughterty

That the American consumer is cutting back spending is blindingly obvious these days, but it is still hard to over-emphasize this central feature of the current recession. Americans borrowed like crazy for years against their home values, which have now fallen and are dragging consumption down with them.

The sustained decline in consumer spending is also — as the European Central Bank points out in a tight piece of work synthesizing features of past recessions — a historical oddity of the first order.

Link

Mortgage Refinancing During a Recession

By: Ryan Dennin

You can’t turn on the news these days without hearing about how bad the economy is or about the recession looming on the horizon. This gloom and doom about the economy is putting many homeowners off refinancing their homes.

If you are in this situation and would benefit from refinancing your first and second to get a lower payment or just want a lower mortgage rate, there are still good deals available even if your credit is less than ideal. Here are several tips to help you refinance your mortgage during this economic recession. To read more click here.

Report: U.S. Consumers wary of mobile banking

Posted by Yen Ho
Written by James Pearce

A survey by KPMG has revealed that most people in the US are uncomfortable with mobile banking, mostly citing concerns about security as a main reason. Most US respondents (91 percent) said they had never tried banking through a mobile device, and similar levels were reported for mobile payments: 95 percent of U.S. respondents said they never made a purchase from a vending machine using their mobile device and 95 percent said they never made a purchase using a mobile device through a retailer’s mobile website.

Read more

Ford in uphill challenge despite cutting debt $9.9 billion

Posted by Yen Ho
Written by Kendra Marr

The good news: Ford announced yesterday that it cut its debt by $9.9 billion.

The bad news: Analysts say the automaker's finances could still crumble later this year despite the aggressive restructuring.

While Ford has strived to set itself apart from its struggling Detroit rivals, who have turned to the Treasury Department for federal loans, it must tackle the same economic slump that has dragged down the entire industry.

Read more

Treasury prices on the rise

Copied and Pasted by Rie Umano

NEW YORK (CNNMoney.com) -- Government debt prices rose after three auctions Tuesday, as investors sought safety while the stock market slipped.

The Treasury Department sold $28 billion worth of four-week bills and $25 billion in 1-year bills.

The government also reopened a 10-year TIPS note - which protects investors against inflation - with a $6 billion offering late Tuesday. The Treasury received $13.5 billion in bids.

Stocks fell Tuesday, with the Dow Jones industrial average down almost 200 points with two hours left in the session, as investors feared the start of another grim corporate reporting period.

"Treasurys have reversed yesterday's losses in large part because stocks are under pressure, making investors nervous," said Peter Cardillo, analyst at Avalon Partners.

Stocks and bonds have mostly traded in opposite directions during the recession. Economic confidence leads investors to take on riskier stocks, while fear drives them to safe-haven bonds.


Click here to read more

Tobacco tax hikes

By Rie Umano

On Feb. 4, President Barack Obama signed a law that will increase the tax on tobacco products. The proceeds from tax will be used to fund the State Children’s Health Insurance Program (SCHIP), which makes health care more affordable for children from low-income families. While the tax would be used to support an important program, some smokers are frustrated with increasing prices and burden. The federal government rose cigarette tax by 61.6 cents per pack, or $6.16 per carton. Now the total tax on cigarette now comes to about $10.10 per carton, or $1.01 per pack. While some thinks it is ridiculous that the government is picking only on smokers, the others think that it is better to tax on cigarette rather than water or gases which are necessary to everyone.
Not only smokers, but also tobacco companies are worrying about the sales decrease due to the tax increase. The tobacco manufactures are suffering from maintaining their profit margin while the sales profit is expected to decrease.
However, the sales decrease is not solely based on the tax increase. Ironically, some people would not quit smoking how much tax would increase. Gloria Egger, 83-years-old smoker says.”As old as I am, I am not going to quit smoking, regardless of what they do.” What really ironic is that increase in tax creates an incentives to bring cigarette illegally from other countries. It would decrease the sales of major U.S. tobacco companies even more and decrease in sales would lose the revenue for the state. The increase in tax might hurt the economy even worse.

Sources:
http://www.cnn.com/2009/US/04/01/cigarette.tax/index.html?iref=newssearch
http://www.mndaily.com/2009/03/10/federal-tobacco-tax-inequitable
http://www.usatoday.com/news/nation/2007-02-26-tabacco-tax_x.htm

AmEx Encourages Cardholders to Leave

Copied and Pasted By Jennifer Ng

It used to be that credit-card companies lured customers with cash rewards. Now American Express Co. is paying to get rid of them. The card issuer is offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts.

The unusual move underscores how quickly conditions have deteriorated in the credit-card market. The current economic morass was provoked by spiking mortgage defaults. But as the economic crisis widens and unemployment climbs, there is growing concern that credit-card defaults will soar into the stratosphere as well.

"This is a huge paradigm shift," says Curtis Arnold, founder of CardRatings.com, a credit-card review Web site. He says he expects other large companies to follow suit with offers to entice consumers to pay off their balances, as card issuers cope with increasing defaults.

Selected members -- the company wouldn't disclose how many -- began receiving letters with the voluntary offer earlier this month, according to Molly Faust, an American Express spokeswoman. "It's a relatively small number of cardmembers who have sizeable balances and little spending and payment activity," she says.

AmEx declined to disclose the specific criteria used to determine who is eligible for the offer. However, Ms. Faust did say that it was offered only to retail credit-card holders, not corporate accounts. Customers who received the offer have until Feb. 28 to respond.

Click here to read more.

Getting broadband for $20

By Jennifer Ng

Having a fast internet service is what everyone always wants but finding the best deal for it is always a struggle. Japan’s J:Com is offering 160 mbps, which makes it essentially the fastest consumer broadband in the world, and only had to invest $20 per home to upgrade its network to get that speed. The modem needed for that speed costs about $60, which is double for the current generation. This suggests to major cable systems in the United States that they can have their broadband service increase in speed by 5 to 10 times. They may not need to charge significantly more than they do now and will still be able to make as much money. What’s better is that the cable industry in the United States uses the same technology as J:Com so many homes in America can experience the same high speed as those in Japan do. So the problem lies in that major cable companies are charging almost double what J:Com does to offer them not even half of the speed J:Com offers. The reasoning behind this is that there is no competition for broadband services. Cable executives fear that by offering faster broadband, the prices will gradually drop for consumers.

Sources:
http://bits.blogs.nytimes.com/2009/04/03/the-cost-to-offer-the-worlds-fastest-broadband-20-per-home/?scp=9&sq=consumer%20finance&st=cse

http://www.dailytech.com/JCom+160+Mbps+Internet+Service+Upgrades+Cost+Company+Just+20+per+Household/article14767.htm

http://www.multichannel.com/article/191112-Cable_Show_2009_Japan_s_J_Com_Racks_Up_DOCSIS_3_0_Subs.php

Tightening of Credit Card Regulations

By Brian Redhead

Directly catalyzed by the faltering economy, federal regulation of credit card companies is becoming significantly more rigid, aiming to protect the consumer from both predatory as well as deceitful practices. Specifically, in the April, 2009 article entitled “Credit Card Spending Linked to Addiction”, the staff of Talk News Radio allude to a connection between the incurrence of credit card debt and the addictive personality, effectively placing extensive blame on credit card companies for enabling the addictive personality through such common practices as readily offering credit to those already substantially in debt.

By extension, the federal government is beginning to legislatively recognize the role consumer debt has played in causing the economic downturn. Author Jessica Holzer, in her article entitled “Bill-Tightening Credit Card Rules Advances In-House”, asserts that new regulations would ban credit card marketing to minors as well as restrict the ability to offer teaser rates and subjectively change agreement terms. In a similar article, the staff of The Advocate support Holzer’s description of the new bill and offers that new regulations would protect the consumer by not allowing the recession to give an excuse to incur more debt. Additionally, the new bill would protect consumers that pay their bills on time by not allowing unsubstantiated, and indeed unexpected, rate increases.

In essence, new federal regulations would restrict the credit card companies’ ability to deceitfully entice consumers to sign up for potentially hazardous credit terms. In recognition that consumer debt was largely to blame for the economic crisis, the government is hoping to stave a further downturn that would undoubtedly result from struggling consumers opting to obtain easy credit for fear of a job loss or other inability to remain financially sound.

Sources:
http://talkradionews.com/2009/04/credit-card-spending-linked-to-addiction/

http://online.wsj.com/article/SB123869894386283373.html

http://www.stamfordadvocate.com/norwalkadvocate/business/ci_12067067

Avoid Sneaky Credit Card Fees

Posted by Brian Redhead

Fed up with your hard-earned money going to big corporations while you're struggling to get by? Want to do something about it?

You're not as powerless as you think.

It's not just tax dollars that get funneled to big companies. Consumers spend billions each year on fees and add-on charges, many of which are unnecessary, and often because they're just not paying attention.

Take credit cards. MasterCard, Visa and other bank card customers paid $14.6 billion in 2008 just in penalties -- such as late payments and over credit limit fees -- according to Brian Riley, research director for Bank Cards at TowerGroup, a financial services advisory firm near Boston.

And that's just the beginning. Fees and surcharges are added to household bills, travel costs, banking, phone bills and more.

Some of these line items cover things like taxes that companies must pay. But often, those add-ons produce extra profit. Like the $2.50 "restocking fee" some hotels charge on top of the exorbitant prices for beverages in a mini-bar. Click here to read more.

Auto Loans for "Bad Credit Consumers"

By Ryan Dennin

Bill Tightening Credit-Card Rules Advances in House

by Jessica Holzer
posted by Greg Lipinski

Legislation to impose sweeping new restrictions on the credit-card industry cleared a key hurdle Thursday when it passed a U.S. House subcommittee.

The legislation would put into federal statute new restrictions on credit-card rules that the Federal Reserve adopted late last year, making them more difficult to change in the future. It would also go further than the Fed in some areas by banning the marketing of credit cards to minors and allowing consumers to set their own lower credit limits.

A bill addressing many of the same credit-card practices was approved by the Senate Banking Committee on Tuesday.

The House measure, which must be approved by the full Financial Services Committee before it moves to the House floor, would restrict card companies' ability to raise rates on existing customers and ban certain controversial practices, such as applying payments to the portion of a borrower's balance with the lowest interest rate. It would also prohibit issuers from charging interest on parts of the balance that were already paid on time, a practice known as double-cycle billing.

To read on, click here.

Congress takes a serious look at reforming the mortgage market

Posted by Yen Ho

Congress is preparing to take up a comprehensive plan that would fundamentally reform the home mortgage market, starting this year.

Had the same rules and standards been in place earlier in the decade, congressional supporters say, it could have eliminated much of the funny-money loans, slipshod underwriting and Wall Street abuses that distorted the market from 2002 through 2006. The boom wouldn't have been as big, and the bust might not have happened.

Read more

A slowing descent: Auto sales fell 37%, but improved slightly

Posted by Yen Ho
Written by Kendra Marr

Only in America's beleaguered auto industry could a 37 percent drop in sales signal good news.

After months of falling sales pushed some U.S. automakers to the brink of collapse, a slight uptick in March compared with February brought a glimmer of hope that the auto industry may have already hit bottom.

"It's maybe a little tiny sign of life," Jim Press, Chrysler's vice chairman and president, said in a conference call. "It's kind of like a little seedling you have to nourish. It's too early to tell. Customers are worried. There's still a lot of bad news out there. But it isn't continuing to be worse, worse, worse."

Read more

Using Twitter to save money

By Jennifer Ng

Twitter and personal finance aren’t usually two things you think that work together well. But now many brands are using Twitter to market their services and deals to customers. Many special discounts and sales can be found by simply going to a brand’s Twitter page. Twitter helps consumers save money by having sales and deals from brand companies posted. It’s effective marketing for the brands and good deals for the consumers by using Twitter. Many well known brands like Dell, Amazon, and Motorola, utilize Twitter to advertise their specials. Twitter can also be used more effectively for customer service if you do not want to use the phone. Comcast and JetBlue answers customer questions in real time that would usually take longer on the phone through Twitter. Twitter works helps both sides by saving businesses money with marketing and providing consumers with deals and specials. Many small businesses are taking advantage of Twitter than larger corporations, for smaller businesses will be more cash strapped. Twitter is usually seen as a time consuming social network but many companies are turning it into an important tool for marketing special deals and sales.

Why small companies keep shedding jobs

With slow sales and tight credit, many small businesses are caught in a death spiral that contributes to the hemorrhaging job market.

Copied and Pasted by Jennifer Ng

NEW YORK (CNNMoney.com) -- Employment at small businesses with 500 or fewer employees decreased by 614,000 positions in March, marking one of the sharpest drops yet in 14 consecutive months of declines, according to an employment report released Wednesday by payroll processor ADP (ADP, Fortune 500).

The magnitude of the losses indicates that the recession is ravaging the small companies that employ an estimated half of America's workers.

Compared to large firms with more than 500 employees, which shed 128,000 jobs, those with fewer than 50 employees lost 284,000 jobs.

"The resiliency displayed by these businesses earlier in the recession, as compared to medium- and large-size ones, is no longer apparent," says Joel Prakken, chairman of ADP's research partner, Macroeconomic Advisers.

Although shaving staff is often a last resort, many owners are finding themselves with no other choice if they want to keep their business alive. Credit is tight, consumer spending is down, entire industries are cutting back, and customers are paying their bills more slowly than they used to.

Click here to read more.

Get the best refinancing deal

Copied and Pasted by Rie Umano

NEW YORK (CNNMoney.com) -- Mortgage rates are lower than 5% - but how can you get the best refinancing deal?

Everyone has been asking me about how to secure these low, low mortgage rates. And many people are having a hard time even getting through to their lender on the phone. They're pretty frustrated.

I spoke with the chief economist of Fannie Mae yesterday. He told me it will take as much as three months for the mortgage industry to start working at full capacity. His full year outlook for mortgage rates is 4.8 to 5%. The takeaway here: Be patient - there will be lines.

Click here to read more

what you should know before buying a car from a company that's in danger of bankruptcy

Posted by Rie Umano

Do you think it is a good idea to buy a new car from an automaker in bankruptcy? Due to the result of our current economic recession, auto manufacture industry is in danger of bankruptcy. For example GM and Chrysler are well-known major U.S. automobile manufacture companies that are in danger of bankruptcy. According to a survey by Consumer Reports, almost 80% of people said they weren’t likely to buy a new car from an automaker in bankruptcy. There are things you need to consider before buying a car from those companies.
First is the warranty issue. The risk of buying a new car from a company that is in danger of bankruptcy is that you would not get any warranties if the company goes into bankruptcy. There is a program, called Warranty Commitment Program, backed by the federal government. If you buy a GM or Chrysler vehicle, your warranty will be honored regardless of what happens to each automaker.
The thing you also have to consider is depreciation. GM has created “GM Total Confidence” program which covers the loss in a GM vehicle’s value if when you later trade your vehicle in for a new GM model.
Even though there are many programs offered when you buy a new car from a company that’s facing bankruptcy, you still should not buy a car from a distressed company, if you especially like to trade your car in every few years.

Sources:
http://money.cnn.com/2009/03/31/pf/saving/car_incentive_willis/index.htm
http://www.autoblog.com/2009/03/30/details-on-governments-warranty-commitment-program/
http://www.thetruthaboutcars.com/gm-total-confidence/

"Live Checks"

In today’s faltering economy, subprime lending, both within and outside the mortgage industry, is becoming increasingly scrutinized for its deceitful business practices. One aspect of subprime financing that even the large financial institutions are guilty of continually utilizing is the mailing of unsolicited, so-called ‘live checks’ that, when cashed, become high-interest loans. Legal in most states, these live loan checks often deceive consumers regarding the precise conditions of the loan, weighted with the promise of thousands of dollars that can be easily and instantly deposited into personal checking accounts with no more than a signature.

Bank officials contend that the mailing of live loan checks is perfectly ethical, as it’s similar to mailing credit card applications, a practice that’s rarely called into question (Adcox, “SC”). However, the practice has been debated significantly during recent years, with several bills introduced that would ban live-loan checks on the federal level (Caputo, “When”). Additionally, unsolicited checks are a frequent vehicle for mail fraud and identity theft, often costing unwitting consumers their credit rating, at the very least (“HSBC”). Undoubtedly a predatory practice, live check lending is likely soon to become a thing of the past, with the recent economic downturn placing an irrevocable spotlight on less-than-ethical lending.

By Brian Redhead

Works Cited

http://www.scnow.com/scp/news/politics/south_carolina/article/sc_senate_debates_banning_so-called_live_checks/33617/

http://www.bankrate.com/brm/news/cc/19990830.asp

http://householdwatch.com/news/interactive/196

http://www.bankrate.com/brm/news/cc/19990830.asp