Came across this recent report and it seems to re-affirm what you may be hearing on TV and Radio about even customers in good standing experiencing rate play from their credit card companies.

We took a quick sampling of credit card issuers’ recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December 2008 but won’t take effect until July 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are raising interest rates on a larger portion of customers than usual and increasing the number of fees they impose. The new Fed rule will ban some but not all of these activities.

Perhaps most notable is what these issuers — Citigroup, Bank of America, JP Morgan Chase, Capital One, HSBC, Discover, American Express, and Wells Fargo — have not done. All continue to apply a customer’s monthly payments to the least costly balance first, leaving the most expensive to continue to grow. None have changed their policy of imposing interest rate hikes for any reason, any time. Additionally, there is no evidence that any of these companies has expanded the period of time between when monthly bills are sent and when late fees apply.

Many folks look into balance transfer cards for the above-bolded reason. To avoid a high interest rate on one card, a more competitive one is used to get the cardholder in a better position for repayment. But if that card is also subject to unannounced increases in rates, a consumer is left wondering what they can possibly do to get ahead of the curve. Especially when seven of the top eight issuers increased their penalty APRs. Many families are finding themselves stuck between a financial rock and a hard place.

Read the rest of this entry »

What Has Been Seen?

Well, quite a lot actually. After the bailout passed, the Dow continued to crash, and we’re seeing how things are affected on a world scale… what else is going on?

Looks like property taxes will be going UP, not down for Arizona residents:

Maricopa County homeowners saw an average 3.9 percent tax increase at a time when real-estate values are dropping and foreclosures rising, said county Treasurer Charles Hoskins. That’s because this year’s bills are based on peak valuations set by the Maricopa County assessor two years ago. How much the taxes went up – or if they went up – depends on the spending practices of local cities, schools and special districts.

Myth Busted: “It’s been sort of folklore in the industry that people always pay their home mortgage or auto loan first”:

In the study, researchers looked at thousands of borrowers who had taken out mortgages in 2002 and 2005 and tracked their payment behavior over a 24-month period. Of those in the 2002 sample who missed two payments on their mortgages during the two years, 26 percent maintained a spotless credit-card payment history and 59 percent kept pace with car payments.

Mortgage payments continued to slide down the list of priorities a few years later. Of those in the 2005 sample who fell behind on their mortgages, 38 percent kept up with credit-card payments, and 62 percent made all their car payments.

…

These borrowers did not lack financial sophistication, Ms. Hart added. “The people who were delinquent on their mortgages but who paid their credit cards on time tended to have higher credit scores,” she said.

…

Meanwhile, borrowers who neglect their mortgages could be doing so because they think banks or the government will help keep them in their homes.

Global Rate Cut? Looks like Central Banks are saying this economic fire requires a global response:

The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an emergency coordinated bid to ease the economic effects of the financial crisis.

The Fed, ECB, Bank of England, Bank of Canada and Sweden’s Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn’t participate in the move, said it supported the action. Switzerland also took part. Separately, China’s central bank lowered its key one-year lending rate by 0.27 percentage point.

…

“The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability,” according to a joint statement by the central banks. “Some easing of global monetary conditions is therefore warranted.”

Interest rate skeptics: We have lived beyond our means for too long. Are interest rate cuts appropriate? Also – Inflation and Japan:

Japan’s experience suggests that, sometimes, interest rate cuts simply don’t work. It is not difficult to see why. When a bubble bursts, asset prices, by definition, collapse. Even if interest rates do fall to 0 per cent, there is not much point borrowing if you and everybody else think asset prices are more likely to fall than rise. Why buy a house, for example, if you think house prices are persistently falling (one reason why last week’s stamp duty announcements from the UK Government were met with such derision)?

…

Where, I suspect, the interest rate sceptics are right is in the idea that we have lived beyond our means for far too long. But does this mean that interest rate cuts now are inappropriate? In one sense, yes, because interest rate cuts create the illusion that, despite our collective profligacy, we can all be bailed out by the central bank. But, in a more worrying sense, no, because much depends on the likely impact of lower interest rates. Monetary policy works a bit like the lights in your kitchen. Flick the switch and, in normal circumstances, everything is illuminated. What happens, though, if a number of light bulbs have gone? Then, flicking a switch doesn’t have quite the same effect.

The issue, then, is not so much whether interest rates should come down but, rather, whether reductions will be both effective (by boosting demand) and safe (by avoiding inflationary risks). Japan’s experience in the early 1990s suggests that, in the aftermath of a bubble, only the second of the conditions is likely to be met. From an inflationary point of view, rate cuts may be safe – because banks are simply unable to lend – but, from a demand perspective, rate cuts may be ineffective – again, because banks are unable to lend.

First the Dow drops almost 10%, then rebounds a bit, then comes Monday and we’re back down over 500 again. When it rains, it pours. The same can be said for the housing market as it tries to lift itself on wobbly legs. Granted, we’ve added more wobbly legs through artificial supports, but wobbly legs are wobbly legs and nothing is going to change that.

To wit, Arizona just broke a record for the number of foreclosure notices in September. Expect many more foreclosure stories to come.

One dreary week in September set a new record for foreclosure notices in Maricopa County, with 2,210 notices outpacing sales in a three-county region, according to a Mesa data company.

“It was a record buster,” said analyst Zach Bowers of Ion Data in Mesa, which tracks the notices.

“We’ve been averaging 1,700 to 1,800, and that (week) just kind of caught us off guard,” he said.

The record, which includes residential and commercial foreclosure notices, came Sept. 15-19, for an average 442 notices a day.

Unless the people receiving the notices are able to work out their finances, the notices likely will become foreclosed properties by January.

That indicates the number of foreclosed properties in January could be double the 3,295 tracked by Arizona State University across the county in August.

A comparable week in mid-September last year saw just 758 notices total, about one-third the number during the record week.

The previous weekly record came June 9-13, Bowers said, when 1,915 notices were filed.

Making the foreclosure figure even uglier, it outpaced total affidavits of sale in the county for the same week (1,551) and even the total combined sales in Pima, Pinal and Maricopa counties (2,063), according to Ion.

Last month, the U.S. Department of Housing and Urban Development announced Arizona would get $121 million to help areas blighted by foreclosures, but officials are doubtful even that large sum will mitigate the growing problem.

The problem here though, isn’t that states need money to keep afloat. The problem is that the problem is not known. If you hang up a dartboard on a wall, turn off the light, turn around a couple times, and start throwing darts… How many bulls-eyes do you think you are going to hit?

We can’t turn off the lights, go in sight unseen (ironic that those two words are responsible for many of the investor purchases that helped explode this bubble), and start throwing invisible US Dollars at the problem. Especially if we are suggesting amounts which equal bandaids on severed limbs.

But I only seem to be preaching Read the rest of this entry »

Now that Ron Paul isn’t a presidential candidate anymore, he seems to be in great demand by the mainstream media. As odd a pairing as it is, especially given that the mainstream media was one of his movement’s greatest enemies, it is great to have such an honest voice of reason help explain things to us when we’re not sure who to believe. Ron Paul is one of the few people who have been consistent for decades on why our federal reserve system is flawed. Not only did he predict the bailout earlier than anyone else, he’s also been honest in both good times in bad. Something other politicians refused to do – speak out against the market when it was good.

Secretary Henry Paulson has been pushing not only for a quick vote on the Bush Administration’s $700 billion bailout package, but also for complete control and discretion over how and where the money is spent. There is an argument that more government red tape, political posturing, grandstanding, and bickering will only bloat the process of fixing the US economy. For the most part, it could be believed that one person could do things better than a committee. Meetings are often a waste of time.

However, the problem with this is that Henry Paulson, as early as last month, was stating how strong our economy was and how we had little reason to worry. Now that he’s so sure we’re in trouble that he needs close to one trillion dollars to fix it, it definitely puts the amount of confidence his opinion deserves into question.

The other day Ron Paul was speaking with Wolf Blitzer on CNN and had some amazingly strong points about why the bailout won’t work and why it could affect those without a 401k.

Ron Paul vs John McCain and Barack Obama’s Plans

Here is a quick recap of Ron Paul’s thoughts and some reasons he disagrees with John McCain and Barack Obama on what needs to be done. Read the rest of this entry »

In this new economical era, people are beginning to question, “Should I buy a house or rent a house”. Prices are falling, but they don’t appear to be stopping. Many people are scared after seeing very responsible friends and family face foreclosure as a result of being unable to sell or owing more than they can get for their home.

But while buying a home can be dangerous and has its own set of things to watch for, renting can be just as bad, if not worse. When you own a home and face foreclosure, you have ample time to figure out your next steps. The process can takes months or years depending on your location and the financial details.

However, eviction has a much shorter notice. But if you pay your rent on time, you don’t have to worry about eviction… right?

Well, that’s the first, and perhaps the most important mistake many people make.

Rental Mistake #1: Not Checking County Records On The Property You’re Renting

In the post-bubble years, we’ll see this grow more and more. Many people are paying rent on time, following their contract to a T, only to face the Sheriff or a process server at the door letting them know they need to vacate in days or weeks. It turns out, many landlords rent a property, collect the monthly rental payments, and never pay their mortgage. They know they’re going through foreclosure, but you probably have no idea at all. For those that miss the official notices, you may even find yourself homeless just days before the auction.

In Arizona, you can visit the Maricopa County Recorder’s site and do some official searching for your property address and things to check on (is this house going through foreclosure, are property taxes paid, etc.). For those in other states, a simple google search for your county’s Recorder Office should yield quick results.

In one of the next mistakes, you’ll see that while I suggest working with individuals, you should also pay attention to see if there are any of the big trouble signs:

Bugging you for rent earlier than normal or appearing anxious or nervous about payment

Allowing agreed-upon services like landscaping or pest control stop without notice

Having someone stop by the house asking for the owner, who isn’t just selling magazines or Omaha Steaks

One thing you can also do very easily from the comfort of your own chair, is to surf the web and see if the house you’re renting is for sale. A quick google search for “(insert state) mls search” like this great public MLS tool for Arizonans, will help give details that you might find shocking. Many houses you see on the craigslist rental page or elsewhere, are more than likely for sale. Renting is usually a secondary option for when a property isn’t selling. This is why this is the primary mistake most poeple make that can lead to yourself finding you and your belongings evicted and out on the street with little, if any, notice.

Rental Mistake #2: Using A Rental Agency Or Realtor

Take Mistake #1 in deeply. Really let it settle in your mind. Now think, what if I had no contact with the owner. What if, I didn’t even know where to go if I needed to discuss something that important with him or her?

This is why you should NEVER use a Realtor. At least when you’re renting. Read the rest of this entry »