Posts Tagged debt
Credit-Card Fees: the New Traps
Posted by Tetyana Matychak in Budget, Favourites on February 26th, 2010
A new federal credit-card law that takes effect Monday could erase billions of dollars a year in fees and interest charges paid by consumers. But card issuers are already deploying new tactics that could prove costly for even the most cautious cardholder.
The law made some important changes. Card companies must now tell customers how long it would take to pay off the balance if they only make the minimum monthly payment. Customers can only exceed their credit limit if they agree ahead of time to pay a penalty fee. And unless a cardholder misses payments for more than 60 days, interest-rate increases will affect only new purchases, not existing balances.
Banning these and other profitable tactics is expected to cost the card industry at least $12 billion a year in lost revenue, according to law firm Morrison & Foerster. This has sent the industry scrambling to find new sources of revenue. So get ready for higher annual fees, higher balance-transfer charges, and growing charges for overseas transactions.
“There are countless fees that can be introduced and rates can go through the roof,” says Curtis Arnold, founder of U.S. Citizens for Fair Credit Card Terms Inc., a consumer-advocacy group.
Consider the new offer from Citigroup Inc. The bank will give cardholders a credit of 10% on their total interest charge if they pay on time. That sounds enticing, except that if you don’t pay on time, your interest rate is 29%. Read the rest of this entry »
Greek drama plays out on Wall Street
Posted by Tetyana Matychak in Fund Markets on February 15th, 2010
U.S. stocks could struggle to make headway next week if a meeting of European finance ministers fails to reassure markets that they can contain Greece’s debt problems.
Greece’s financing problems have focused investors’ attention on the growing mountain of public debt as cash-strapped governments around the world spend their way out of recession. The fear is Greece’s problems could spread, hurting financial markets.
Finance ministers from the euro zone will meet on Monday, when U.S. markets are closed for the Presidents Day holiday, followed by finance ministers from the rest of the European Union on Tuesday.
“What the market wants to hear is that there is a viable remedy,” said Quincy Krosby, market strategist with Prudential Financial in Newark, New Jersey.
“The market will be anticipating how other problems will be handled. Can the solution be applied to the problems that may crop up in Spain, Portugal, Italy (and Ireland) because traders believe the aftershocks are not over.” Read the rest of this entry »
Reducing U.S. debt: Ideas from the Hall of Lame
Posted by Tetyana Matychak in Budget on January 11th, 2010
Only in the world of federal debt do tens of billions of dollars amount to little more than rounding errors.
Yet it’s the rounding errors that many lawmakers reach for when making impassioned speeches about reducing the debt.
Whatever merit their ideas may have, they don’t have a prayer of generating sizeable savings.
Sure, every little bit counts.
But “a little bit” doesn’t really move the needle when you’re talking about $12 trillion in accumulated debt, several trillion more expected over the next decade and tens of trillions more on top of that due to long-term shortfalls in Medicare and Social Security. Read the rest of this entry »
Portfolio makeover: Is our big debt doing us in?
Posted by Tetyana Matychak in Budget on January 6th, 2010
Marc and Sharon LeRoux always dreamed of opening a business together. They took the plunge in 2006, tapping home equity to buy a franchise selling pre-made meals to busy families. Alas, the business failed, and last year the couple closed it down.
Fortunately, neither had quit their day jobs - Sharon is an engineer at Hewlett-Packard, Marc owns a specialty game store. But they still have $154,000 on a home-equity line of credit from the venture dragging them down. “Our income is very good, but we’re living paycheck to paycheck,” say Sharon. “And I’m sure we’re underfunding our retirement and our kids’ college.” (They are parents of Marie, 15, Nicole, 12, and Marc, 5.)
That debt is indeed an obstacle, says Salem, Ore. financial planner Ron Keleman. It eats up $1,000 a month. In spite of that, they’ve been keeping up with retirement, managing to stash away $12,000 a year. At that pace, says Keleman, they’ll have about $1.25 million by age 65, assuming a 7% average annual return (which they may be able to get if they build more growth into their portfolio).
The good news: That amount, along with Social Security, should be enough for their modest income goals. The bad news: They’ve been unable to start an emergency fund - savings that are essential in such uncertain times. As for college, they’re aiming to have saved a year of state-school tuition for each kid . While they can probably get there, wiping out the HELOC would allow them to cover even more. Read the rest of this entry »
Nobel Laureate: How to Get Out of the Financial Crisis
Posted by Tetyana Matychak in Budget, Favourites on December 18th, 2009
The amount of bad news over the past weeks has been bewildering for many people in the world. Stock markets have plunged, banks have stopped lending to one another, and central bankers and treasury secretaries appear daily on television looking worried. Many economists have warned that we are facing the worst economic crisis the world has seen since 1929. The only good news is that oil prices have finally started to come down.
While these times are scary and strange for many Americans, a number of people in other countries feel a sense of deja vu. Asia went through a similar crisis in the late 1990s, and various other countries (including Argentina, Turkey, Mexico, Norway, Sweden, Indonesia and South Korea) have suffered through banking crises, stock-market collapses and credit crunches.
Capitalism may be the best economic system that man has come up with, but no one ever said it would create stability. In fact, over the past 30 years, market economies have faced more than 100 crises. That is why I and many other economists believe that government regulation and oversight are an essential part of a functioning market economy. Without them, there will continue to be frequent severe economic crises in different parts of the world. The market on its own is not enough. Government must play a role.
It’s good news that Treasury Secretary Henry Paulson seems to finally be coming around to the idea that the U.S. government needs to help recapitalize our banks and should receive stakes in the banks that it bails out. But more must be done to prevent the crisis from spreading around the world. Here’s what it will take. Read the rest of this entry »
What to do when a debt collector calls
Posted by Tetyana Matychak in Banks, Favourites on December 11th, 2009
When the debt collectors come calling, know your rights.
Collection companies are governed by the Fair Debt Collection Practices Act, a federal law. Enforcement is overseen by the Federal Trade Commission and state authorities, usually the office of the state attorney general.
The federal law prohibits collectors from:
— Harassment, including use of profanity, threats of violence or repeatedly calling to annoy;
— False statements, including misstating who they are, how much you owe or that you have committed a crime;
— Calling at inappropriate times, including before 8 a.m. or after 9 p.m. Read the rest of this entry »
Stocks Retreat Before U.S. Jobs Report as Yen, Dollar Advance
Posted by Tetyana Matychak in Currency, Favourites on July 2nd, 2009
European stocks and U.S. index futures fell while the yen and the dollar rose on speculation a report today will show that America’s unemployment rate climbed to the highest level since 1983.
The MSCI World Index of 23 developed countries slipped 0.6 percent at 9:21 a.m. in London, while Standard & Poor’s 500 Index futures slipped 0.5 percent. The yen and the dollar strengthened 0.3 percent against the euro.
The U.S. jobless rate may have risen to 9.6 percent last month, economists surveyed by Bloomberg News said before today’s Labor Department report. That increase would suggest the $12.8 trillion pledged by the U.S. government and the Federal Reserve is doing little to shore up the labor market. The European Central Bank probably will keep borrowing costs at a record low to battle the recession, while Sweden’s Riksbank unexpectedly cut its benchmark rate to 0.25 percent today.
“People have become a little bit too optimistic,” Philippe Gijsels, a senior structured equity strategist at Fortis Global Markets in Brussels told Bloomberg Television. “People will be disappointed. Gradually over the summer and into the autumn we will move lower,” he said. Read the rest of this entry »
Is Inflation Really A Concern?
Posted by Tetyana Matychak in Budget on June 19th, 2009
There is a big debate going on right now on whether we should be concerned with inflation. 10 year Treasury securities have started to creep up recently, but it should come as no surprise as everyone knows that the government will need to sell substantial amounts of debt in the next few years.
There is no question that all the debt the government is piling up will increase inflationary pressures down the road. However, the reason it’s not a problem for the moment because demand is so weak and the fact of the matter is, it could be quite some time before that demand recovers.
The Fed has in the past, shown it’s resolve in fighting inflation and there is no reason to believe that they won’t take the necessary steps to combat it once again if they feel it becomes a problem. The main problem I see down the road is that the economy may be entering in a period of higher interest rates, which will be the likely outcome once all that government debt starts to flood the market.
The Fed will probably have to maintain it’s balance sheet operations and continue to be active participants in the Treasuries market if they don’t want those rates to get out of hand. Even once the recession ends, it’s expected to take a long time for the economy to recover to it’s former level and that time frame may be lengthened if the Fed is forced to raise interest rates sooner than they wish. Read the rest of this entry »
Is Paying for Your Kid’s Education Still a Top Priority?
Posted by Tetyana Matychak in Budget on June 2nd, 2009
In a perfect world, we wouldn’t have to rank one financial priority over another.
But now, more than ever, Americans are faced with many tough financial trade-offs. Paying off debt or saving for retirement? Raiding the 401(k) to pay the bills or putting them on a credit card? Trying to slog it out with a tough mortgage or walking away from a home?
New survey data from Country Financial highlights some of the tension parents are face when it comes to juggling their stressed retirement accounts and the ballooning cost of higher education for their kids.
Forty-seven percent of the 1,241 surveyed said that their children’s college plans are a higher priority than retirement savings, whereas 41% said that retirement savings came first. A majority (61%) said that the recession was not going to impact their plans for their children’s college education. Considering all of the belt-tightening — both from families and financial-aid offices strained by anemic endowments — we’ve heard about in the last few months, this is particularly astonishing. In spite of one of the worst economies in generations, parents say they’re still willing to shell out a lot for college education. Read the rest of this entry »
-
Credit-Card Fees: the New Traps
26 February 2010
Credit regulations aim to help students
23 February 2010
The worst is yet to come
17 February 2010
Afflictions of liberty
8 February 2010
Recent Comments