Passage of the Credit CARD Act protects those who slip up once in a while

QUESTION:
My husband and I are trying to pay off our debt. I keep track of the bills on Quicken and try to pay everything early. Today I was 3.5 hours late paying a credit card bill. Not like me at all, and I’ve never been late otherwise. Now I’m deathly afraid my interest rate will be raised. I tried calling after I paid my bill online. They have agreed to waive the late fee, as I have been with them forever, but I can’t afford higher interest on this card. Is there anything I can do? It seems so unfair the bill was just a few hours late today. Please help! — In Trouble

TO CONTINUE READING THIS ARTICLE, CLICK THIS LINK FOR CREDITCARD.COM:  Late credit card payments don’t justify rate hikes anymore.

The nonpartisan Congressional Budget Office predicts that Obama’s budget plans would generate deficits over the upcoming decade that would total $9.8 trillion. That’s $1.2 trillion more than predicted by the administration.

The agency says its future-year predictions of tax revenues are more pessimistic than the administration’s. That’s because CBO projects slightly slower economic growth than the White House.

The deficit picture has turned alarmingly worse since the recession that started at the end of 2007, never dipping below 4 percent of the size of the economy over the next decade. Economists say that deficits of that size are unsustainable and could put upward pressure on interest rates, crowd out private investment in the economy and ultimately erode the nation’s standard of living.

Still, the Feb. 1 White House budget plan was a largely stand-pat document that avoided difficult decisions on curbing the unsustainable growth of federal benefit programs like the Medicare health care program for the elderly and Medicaid, which provides health care to the poor and disabled.

TO CONTINUE READING THIS ARTICLE, CLICK THIS LINK FOR MONEYNEWS.COM:

Moneynews – Congressional Report: Deficit Will Be Much Worse Than Obama Says.

It’s time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg’s municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn’t be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Social Security’s shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program’s finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there’s concern that the looming crisis will lead to reduced benefits.

TO CONTINUE READING THIS ARTICLE, CLICK THIS LINK FOR YAHOO! NEWS:

Social Security to start cashing Uncle Sam’s IOUs – Yahoo! News.

The Federal Deposit Insurance Corp. took over Sun American Bank, based in Boca Raton, Fla., with $535.7 million in assets and $443.5 million in deposits. Also seized were Bank of Illinois of Normal, Ill., with $211.7 million in assets and $198.5 million in deposits; and Waterfield Bank in Germantown, Md., with $155.6 million in assets and $156.4 million in deposits.

First-Citizens Bank & Trust, based in Raleigh, N.C., agreed to assume the assets and deposits of Sun American Bank and to share losses with the FDIC on $433 million of the failed bank’s loans and other assets. It was First-Citizens’ fourth acquisition of assets of a failed bank since last July; the others were First Regional Bank of Los Angeles, Venture Bank of Lacey, Wash., and Temecula Valley Bank of Temecula, Calif.

Heartland Bank and Trust, based in Bloomington, Ill., is buying the assets and deposits of Bank of Illinois, and is sharing losses with the FDIC on $166.6 million in loans and other assets.

For Waterfield Bank, because no buyer was found, the FDIC set up a new savings institution that will operate until April 5 to allow customers access to their deposits and give them time to open accounts at other banks.

TO CONTINUE READING THIS ARTICLE, CLICK THIS LINK FOR USA TODAY:

Regulators shut 3 more banks to bring total this year to 25 failures – USATODAY.com.

“For the most part, the bottom line was, ‘I’m being squeezed out of my home because I couldn’t make my mortgage payments,’ ” said Leslie Appleton-Young, the association’s chief economist.

In response to another question on specific financial woes, sellers cited difficulty meeting  monthly mortgage obligations (30%); loss of a job (18%); and mortgage payment increases(15%) as among their primary motivations to sell, according to the 2009-2010 Survey of California Home Sellers.

By comparison, in 2008, 1 in 5 sellers cited difficulty paying the mortgage, while 11% sold because of financial difficulties.

FOR CONTINUATION OF THIS ARTICLE, CLICK THIS LINK FOR THE ORANGE COUNTY REGISTER: Mortgage woes lead to most home sales – Lansner on Real Estate : The Orange County Register.

One likely explanation for the difference: Big banks rely on automated credit scoring to make loan decisions, while smaller banks rely on relationships and more labor-intensive credit analysis, says Bob Seiwert, senior vice president of the American Bankers Association Center for Commercial Lending and Business Banking. The group represents banks of all sizes in Washington.

Less than 30% of small businesses that bank at the 18 largest institutions reported having their credit needs met in 2009, compared to 50% at other banks, according to the survey, which sampled 750 employer firms with fewer than 250 workers. “It appears that the nation’s largest banks have not filled the credit needs of their small business customers nearly as well as smaller institutions have filled the needs of theirs,” the NFIB report says.

Smaller banks, where loan officers have relationships with customers and personal knowledge of their businesses, are more likely to make loans that large banks’ credit scoring models reject. “Credit scoring uses statistical techniques to determine the probability that a borrower will repay a loan or won’t repay a loan,” based on the applicant’s industry, location, and credit history, Seiwert says. “It doesn’t analyze the cash-flow generating capability of the borrower’s specific loan request.”

TO CONTINUE READING THIS STORY, CLICK THIS LINK TO BUSINESS WEEK: Largest Banks Less Likely To Meet Business Credit Needs – BusinessWeek.

The new act, which was signed into law last May, promises consumers more transparency about their credit card bill. But cardholders still need to watch out for a whole new series of traps and tricks

Higher fees: For starters, consumers could suddenly find themselves socked with a variety of new fees and charges.

Banks and other card issuers have already been aggressively implementing new fees or raising existing ones to help make up for any potential revenue lost as a result of the CARD Act.

Last May, for example, Discover Financial Services (DFS, Fortune 500) announced it would start charging a 2% fee on all purchases made outside the United States.

And whereas 3% was once the standard charge for rolling over a balance from one credit card to another, issuers like JPMorgan Chase (JPM, Fortune 500) are now assessing customers a 5% fee, according to Bill Hardekopf, CEO of the card rating site LowCards.com.

But with the new law setting no restrictions on the types of fees issuers can implement, consumers should pay particularly close attention to the “Terms and Conditions” section of their statement so they know exactly what they are being charged for, warn experts.

CONTINUE READING THIS STORY AT CNN.  CLICK HERE: New rules, new traps for credit cards – Feb. 17, 2010.

Reporting from Washington – Experts fear that a new wave of foreclosures will hit this year as prolonged unemployment makes it difficult for millions of homeowners to pay their mortgages — and many of them aren’t likely to get much help from a federal program aimed at keeping them in their houses.

Banks participating in the Home Affordable Modification Program, announced a year ago this week by President Obama, have been slow to turn temporarily reduced mortgage payments into permanent ones.

“The overarching sense is that the mortgage modification process has not worked that well,” said Bert Ely, an independent banking consultant.

Obama administration officials acknowledge that the $75-billion program, which offers banks cash incentives to reduce payments, has had growing pains, and they said they were considering revisions to make it more effective.

Still, the program is expected to show continued progress when data from January are released Wednesday after a strong push by Treasury Department officials to get banks to make more of the modifications permanent.

FOR CONTINUATION OF THIS ARTICLE, CLICK THIS LINK FOR THE LOS ANGELES TIMES: New wave of foreclosures by end of 2010 is feared – latimes.com.

• High-risk students may have better success at small banks, credit unions.
• Community bank loans don’t offer the same benefits as student loans.
• Shop around and ask big and small lenders for the full cost of a loan.