Choosing the right credit card can be challenging. (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

If you pay for everything in cash, learning how to find the best credit card may not be for you. However, if you plan to use credit cards responsibly and pay them off each month, choosing the right credit card is important. Save cash with these helpful hints.

No credit card is perfect

Imagine a credit card with a permanent zero percent interest rate, rewards and an ample grace period during which no late payment penalties occur. Now crumple up that fantasy and get ready to wade through thousands of credit card offers on sites like Bankrate and Credit Card Offers, to name two of many. The path to finding your ideal credit card must begin with a clear assessment of where you stand. The ideal situation is to pay off your credit card balance each month, but most people fall into one of these three categories:

1. You’re attempting to pay down a pre-existing balance
2. You sometimes carry a balance, spread across multiple cards
3. You have either no credit history or are sporting a battle-scarred credit rating

1. Paying down the mountain

If you’re already dealing with a balance, you’ll want a credit card that offers a low introductory rate and an even lower rate on balance transfers. Such cards generally don’t offer additional perks, such as frequent flier miles. However, most credit card companies have pulled rewards programs off the table these days, so go for a great interest rate, no annual fee and no hidden usage fees.

Read the fine print to ensure that things won’t go south after the initial rate expires. If you execute a large balance transfer, you probably won’t pay it all off during the introductory period. Hence, be prepared for when interest rates go up. Watch out for loopholes in the introductory rate, too. It may only apply to purchases and not balance transfers. The cap for balance transfers may also be significantly lower than your approved credit limit.

2. Be prepared, balance carrier

If you plan to use a credit card regularly and carry a balance, go for a rewards program that offers air miles, points or even cash – if you can find such a program. Watch for expiration dates on your rewards, blackout dates for airline miles and minimum-spending requirements for cash-back programs. When it comes to managing your balance, choose a card with at least a 20-day grace period. That way, you can avoid being charged interest before you even receive your bill.

3. No credit? Not necessarily a problem

While no credit or bad credit will limit your options when it comes to choosing a credit card, many online resources can clue you in to the best subprime secured credit card offers. Try not to carry a large balance on a secured card because the APR is almost always more than 20 percent. Upfront fees of $200 or more on a card with a credit limit of only $250 should not even be considered.

Sources

Bankrate

Credit Card Guide

Motley Fool

Learn how to have fun without spending money. (Photo Credit: CC BY/Allan Lee/Flickr)

If you’re looking for summer fun but burdened by a miniscule budget, consider what your community has to offer. A little creativity and a community activity guide can lead you to free fun in no time. Here are some ideas about how to have family fun without spending any (or much) money.

Mining your community for gems

It’s easy to plop down major coin on entertainment. Food, activities and monthly memberships are fabulous fun, but not if you’re left with too little money to pay the bills. City tourism bureaus and chambers of commerce are great places to find out about fun, free summer activities that will enable you to still save money.

Community swimming pools

For little or no money, a community swimming pool is a great place to keep cool. Prices range from free to just a few dollars per visit, depending upon where you live. For frequent swimmers, season passes can translate into significant savings.

Join the YMCA or YWCA

Top-of-the-line gym facilities, swimming pools and childcare are available at most local YMCA/YWCA facilities. Family rates can make the monthly expense much more affordable; they are weighted on a sliding scale depending upon your household income.

Free events at the community center

From art and exercise classes to dances and potlucks, local community centers offer many events that are free or minimally expensive. Community centers are a great place to meet people, too.

Go for a run in the park

Put on some running shoes and hit a safe neighborhood park. Enjoy sunshine, fresh air and exercise. You’ll feel better and won’t spend a dime. During summer, many communities offer free concerts, plays and art festivals in large public parks. Look online for a community events calendar!

Unleash your imagination at the library

A good book is a window into another world. Checking out books movies in DVD and Blu-Ray format, music CDs and, in some areas, vinyl and cassettes, is free at the library.

Enjoy a free museum or gallery ride

Once or twice per month, most public museums feature a free admission day. Contact your local museum to see when you should go. Expect the free day to fall mid-week when visitor traffic is low.

Back in your own backyard

Have you ever tried camping in your backyard? This can be a fun activity, particularly if you have young children. Watch squirrels scamper and listen to the summer chorus of crickets and cicadas when the sun goes down.

If you have a table or a flat patio, board games can also be fun on lazy summer days. If you don’t have board or card games, scan the “free” column in Craigslist, or watch local garage sales.

If the gaming fun spins on, break out the lantern for nighttime fun!

Real fun at no cost: Supermarket twist-tie art

Sources

For Dummies

One Girl’s Quest

Trent’s Blog

Learn how to write a cover letter that gets attention. (Photo Credit: CC BY-SA/Joel Gillman/Flickr)

In order to taste victory in the job market, you must convince a hiring manager that you can financially benefit the company and that you are likable, too. Before securing an interview, stating your case begins with a cover letter. Learn how to write a customized cover letter that emphasizes your unique qualifications to stay ahead of the game.

Don’t just send a resume

For the most part, resumes are a painful bore for employers. Names and jobs change, but the anonymity remains the same. The cover letter is an applicant’s chance to stand out from the herd and capture some interview time. Tailor your cover letter to the company in your sights, and your chances of receiving attention increase. It isn’t as hard as you think.

Changing names on the fly

Admittedly, resume blasts to large groups of companies within a desired field require a great deal of time if you plan to customize each cover letter from scratch. Thus, just changing names to suit the occasion can work, provided you’ve put thought into truly tailoring your language to match the requirements of the best companies within the chosen industry.

Ramp up the detail

A cover letter shouldn’t merely restate the objective or opening statement from your resume — perhaps it shouldn’t do that at all. Change the introduction, including pertinent details you’ve gleaned from your research of the target company. Point out how your work has increased efficiency, “dollarizing” your worth whenever possible. Once your cover letter packs that extra punch, you can flow in bullets regarding your skill set to sell yourself.

Use the best bullets your career can provide

Bullet points are visually convenient for quick reference. An HR staff member or hiring manager can scan your skills and experience to see if it matches up with what the company needs. Address specific requirements laid out in the job ad for the position, but don’t parrot them back exactly. Artful manipulation of language is key. Along the way, use spell check and as many human proofreaders as you can find before clicking send.

Throw the boomerang

Marketing guru Jeffrey Fox wrote a book entitled “Don’t Send a Resume: And Other Contrarian Rules to Help Land a Great Job.” The book is an invaluable resource for any job seeker, plus it’s short and cheap. When it comes to cover letters, Fox prefers the “boomerang” letter as a response to job ads more than the cookie-cutter resume and cover letter. Not merely an arrow that points to your resume, a boomerang letter is a sales letter that gives a prospective employer a snapshot of your skills and ambitions as they relate to generating money for the company. And like any good sales letter, the high point of a boomerang letter is the point where you assertively ask for the job.

Skip the HR department after the cover letter is sent

Sources

“Don’t Send a Resume: And Other Contrarian Rules to Help Land a Great Job”

eHow

Job Finder Advisory

Quintessential Careers

Credit cards can feed a spending addiction. (Photo Credit: CC BY/Andres Rueda/Flickr)

Once you enter the world of credit cards, it becomes tantalizingly easy to buy today what you can’t afford tomorrow. Swiping magic plastic seems painless, but few things are as damaging to your credit score and financial future as unchecked credit card use. Here are some ideas for how to break the cycle of credit card dependency.

Track your credit card spending

Even if it means writing down every cent you put on your credit card, having documentation of your spending is essential. If your credit card bills are too many and too high due to over-spending, seeing hard evidence can be just the “scared straight” encounter you need. Use a pen and paper or a personal accounting program like Quicken.

Understand marketing messages

As wonderful as credit card companies make it seem, using a credit card won’t spirit you away to a blissful realm of contentment. Be aware that credit card companies aren’t in the business of making you feel better, no matter how many rewards programs or ephemeral references to peace and tranquility are hinted at in brochures and commercials. On the contrary, credit card companies are in the business of creating consumer debt.

Decide to change

Avoiding credit card debt is a logical choice, considering how fast compound interest multiplies. You must approach breaking the credit card cycle of addiction with both your heart and mind. It requires full commitment.

Minimize damage through consolidation

If you have the option to execute a balance transfer at a low APR, take advantage and save yourself cash until it is paid off. This is handy if you have multiple credit cards with smaller balances, too, as one card is generally easier to manage.

Pay in cash, cut the cards

A great way to avoid revolving debt altogether is to pay for everything in cash. If you are deep in the throes of credit card addiction, don’t even use a debit card. Cut up your cards, credit or debit. Once problem credit cards are paid off, keep them at zero balance rather than canceling them, unless again your credit card addiction is severe. If such is the case, cancel them all except for the card of longest standing, but only in the event that you’re applying for a mortgage, Yahoo! Finance advises. Put that one on ice and use it for emergencies only.

Save money for emergencies

If you don’t trust yourself to save that one card for emergencies, open a high-yield savings account that will allow automated deposits from your paycheck. Deposit a portion of your paycheck each pay period until you’ve saved 3 to 6 months of salary in the account.

Seek professional help

Battling credit card addiction alone can be debilitating. Various books can help you tackle addiction and its associated feelings of helplessness. Seek the help of a mental health professional if possible.

Sources

Credit Card Addiction Stories

Psychology Today

Yahoo! Finance

Living in a credit card nation

Get your head in the game with this primer on how to buy stock. (Photo Credit: CC BY-ND/Chris Brooks/Flickr)

Ever wanted to learn how to buy stock? You’re in the right place. Learn what a stock is, how to choose good stocks and some of the basics of buying stock with this “stocks for dummies”- style guide.

What is a stock?

Essentially, buying stocks means buying partial ownership in a company. If the financial fortunes of the company improve, share value generally increases. The reverse can also occur. If you purchase shares at $10 each, then the share price skyrockets to $30 each, you’ve tripled your investment dollar, minus brokerage fees at sale. The classic investing phrase “Buy low, sell high” can truly be a gateway to financial security.

What stocks should you choose?

The Motley Fool demystifies the decision-making process by breaking it down into its component parts. With some due diligence that includes research into corporate earnings, revenue, cash flow and more, you too can chart safe investing waters.

Read the company’s balance sheet: This is the record of the company’s total assets and liabilities. Corporate balance sheets are available for research purposes via the Securities and Exchange Commission EDGAR website.

Understand valuation: Think of a share of stock as a stand-in for a share of corporate revenue, earnings, cash flow, etc. The portion of these that is paid to individual investors is called the dividend. If a stock has a good dividend yield – a high valuation – the more desirable it is.

Get a good return on equity: Return on equity (ROE) measures how corporate management works to increase the value of a company – through profitability, asset management and financial leverage. If the executive team manages these well, stock value rises.

Return on Invested Capital (ROIC): This is the amount of return on each dollar invested in a company, the “real cash-on-cash return.” ROIC is considered an accurate tool for measuring corporate earnings growth.

Where to buy stock

There are two basic ways for beginners to buy and sell stock:

1. Through a brick-and-mortar brokerage service.
2. Through an online brokerage.

Online brokerages have become increasingly popular, due to their convenience and flexibility. So long as you’re 18 years or older, you can deposit cash or stock in a brokerage account and get started. Companies like Charles Schwab and Smith Barney offer accounts that investors can manage online themselves, or use a live broker for added cost. Sites like E*Trade, TD Ameritrade and Sharebuilder offer respected online exchange services.

Brokerage fees will apply to most buy and sell transactions, the Wall Street Journal reminds. These fees can vary greatly by brokerage. Popular online exchange services charge in the neighborhood of $5 to $25 per month, with additional per-trade fees and minimum purchase requirements. If you wish to avoid fees entirely, sites like DRIPInvestor lists companies that sell direct to investors.

Additional information on investing is available via sources referenced in this article.

A stock market primer

Sources

Charles Schwab

DRIP Investor

E*Trade

Motley Fool

Securities and Exchange Commission EDGAR

Smith Barney

Sharebuilder.com

TD Ameritrade

Wall Street Journal

Compound interest adds up fast. Pay off your credit cards and high-interest loans first. (Photo Credit: CC BY/Dan Foy/Flickr)

When it comes to personal finance, few concepts are as important to understand as compound interest. Many consumer finance products use this form of interest. Knowing about compound interest can save you from a potential bankruptcy.

Compounding snowballs

The process of adding interest to principal is called compounding. Depending upon the type of personal loans, student loans, mortgages or other loans in question, interest is compounded on a regular schedule, be it daily, monthly, etc. Keep in mind that once compounding begins, interest itself earns more interest. This is a credit card company’s bread and butter, an easy way for a consumer to fall rapidly into debt. To understand the true cost of any credit card or loan, interest-related factors like how often the remaining balance is compounded and the annual percentage rate must be considered.

Compound interest should not be confused with simple interest. Simple interest is charged on principal balance only and doesn’t charge interest on accrued interest as compound interest does. Simple interest is quite rare in the field of consumer finance.

Doing the compound interest math

Here’s the math you need to know, using hypothetical numbers:

1. Divide interest charged by the amount you owe to produce the periodic interest rate. If you are dealing with personal loans in the amount of $3,500 and you’re paying $25 monthly in interest, divide $25 by $3,500 to get 0.0071428571428571.
2. Take the answer from the previous step and add 1. Now you have 1.0071428571428571.
3. Raise the result of Step 2 to the exponential power of the number of payments you make on the loan or credit card each year. If you pay monthly, you make 12 payments per year. Using the same figures, the result is 1.089163111.
4. Subtract one from the result in Step 3, which converts the compound annual interest rate to a decimal. Here, you have 0.089163111.
5. Multiply the personal loan compound annual interest rate you changed into a decimal number by 100 to create an easy-to-read percentage. Here, you’d take 0.089163111 and multiply by 100 to produce an annual compound interest rate of 8.92 percent.

Understand interest and avoid bankruptcy

Sources

Compound interest Wiki

eHow.com

Saving money during summer feels fine. (Photo Credit: CC BY-ND/Chris Bartnik/Flickr)

Summertime is here, and for many people, that means higher costs on electricity and home improvement. However, there are summer savings available. Here’s how to save money during summer on things like the cost of running your air conditioning and other household tasks.

Tame the air conditioning beast

Air conditioning is among the largest summer expenses for individuals and families who live in large, insufficiently shaded or insulated homes. Thankfully, there’s an obvious solution that doesn’t require much discomfort: Turn it off on cool evenings and before you go to bed. Dress down, open some windows, use a floor fan or even a swamp cooler. Watch the weather report for cooler days.

If you must use air conditioning, set the temperature a bit higher, even close to 80. According to the U.S. Energy Information Association, the average cost of electricity per kilowatt hour is 11.09 cents in U.S. residential areas so far this year. The savings can add up to a lot.

Another thing to consider is cleaning your air conditioner filters. A dirty filter makes your air conditioner less efficient, which in turn leads to increased cooling costs. A professional HVAC inspection, which usually costs around $75, can also ensure that your A/C is running at maximum efficiency.

Cook out and cool down

When you run an indoor stove, excess heat seeps out and stays in the house. Rather than turning up the heat on your cooling bills, try using an outdoor barbecue more often during summer.

Hang them out to dry

Hanging clothes on a line to dry may seem like a hallmark of a bygone age, but it can be a great way to save money during summer. While not everyone has the space or surroundings to take advantage of this technique, the summer savings are a slam dunk when available, as sunlight doesn’t cost a thing.

This is the a where warm summer breezes can work wonders on your electric bill, as running a 4,400-watt electric dryer two hours per day, 20 days per month can cost $252 per year when rates hit 12 cents per KWH. Even if hanging clothes out to dry isn’t an option, try using a dryer’s lower settings for garments that aren’t difficult to dry.

Summer sales that bear fruit

If you’re a DIY home-and-garden type, you know that prices tend to be higher early in the season. If you can wait until later in the summertime, season ending sales on landscape plants, tools and other materials tend to pop up. When others are thinking autumn and staying indoors, you can think summer savings.

Seal the cracks and save

A recent report by EnergyStar.gov found that proper home insulation – such as caulking and weather-stripping – can save up to 20 percent on electricity costs annually. If you go the distance and aim for the energy efficiency federal tax credit, you can save up to $1,500 each year.

Saving money on summer camps for kids

Sources

About.com

Canadian Office of Energy Efficiency

Saving Electricity

U.S. Energy Information Association

American families have cut expenses to the bone, but stagnant wages still make keeping up with inflation impossible for the middle class. (Photo Credit: CC BY-SA/Dennis Jarvis/Flickr)

A corporate information service called American Pulse recently conducted a survey that shows how far the U.S. job market has fallen into the mire of class distinction. As the Huffington Post notes, 90 percent of U.S. workers surveyed admitted that they do not expect their stagnant wages to be able to compensate for rising gas and food prices.

‘Permanent midnight’ for the middle class

As the American middle class continues to sink beneath mountains of debt, rising prices and inadequate pay en route to a “permanent midnight” of poverty, faith in U.S. government’s economic policies has declined. Talk of rising inflation and a double-dip recession continues, and families who can ill afford to tighten the belt any more wonder where they can cut back. Provided salaries remain at low levels and prices continue to skyrocket, survey respondents said they’d undergo greater austerity measures in the following areas:

• Only buying necessities: confirmed by 70.5 percent
• Infrequent driving: 63.4 percent
• Spending less on clothes: 58.9 percent
• More bargain hunting: 53.1 percent
• Tightening the personal budget: 50.0 percent
• Buying generic: 49.9 percent
• Buying fewer groceries: 42.0 percent
• No change: 6.6 percent

Adieu, gross domestic product

Historically, consumer spending accounts for about 70 percent of the United States’ gross domestic product. Significant decreases in consumer spending retard economic growth. As the consumer spending growth rate of 2.2 percent in the first quarter of 2011 was much lower than economists had anticipated, the problem becomes obvious.

Nearly half of Americans believe a second Great Depression is rapping at the chamber door, according to a CNN poll. A June Gallup poll reflected shrinking consumer confidence, while a separate poll found that workers are currently less satisfied with their salaries and overall economic condition than they were before recession struck in 2008. Lack of career advancement was a common problem listed by respondents in nearly all recent surveys on the topic.

Breaking the link between profits and raises

Getting a raise used to have some connection to corporate profits, notes Brad Delong in Mother Jones. However, even though U.S. Department of Labor research has shown that U.S. worker productivity has surged, income has remained stagnant for most Americans. Data indicates that if the median U.S. household income had kept pace with the state of the economy since 1970, it would currently be $92,000, rather than $50,000. U.S. CEOs are making more money than they have since 2007.

How to ask for a raise, just in case

Sources

American Pulse

CNN

Economic Policy Institute

Huffington Post

Mother Jones

Paying off credit cards can save you big money long term. (Photo Credit: CC BY-ND/lemonjenny/Flickr)

A certificate of deposit is traditionally a worthwhile, low-risk investment. However, CD rates have been so low lately that many consumers have moved their money into more productive financial ventures, reports Bankrate. Paying down debt – particularly credit card debt – has taken center stage.

One-year CD rates scraping the bottom

According to Bankrate, the current average for one-year CD rates is a miniscule 0.44 percent. The highest surveyed was 1.31 percent. Considering that credit cards typically carry an APR of 20 percent or more, a paydown is attractive. U.S. consumer credit card debt still exceeds $790 billion, despite significant shrinkage since 2004, reports the Federal Reserve. That explains why CD balances have fallen to a six-year low of $839.2 billion.

This isn’t a new phenomenon. Market Rates Insight notes that such a shift was apparent in September 2010. From Jan. 1, 2010, to June 30 of the same year, the average monthly CD amount declined by about $3 million. Of the amount that was not rolled over, surveys indicate at least 15 percent was used to pay down credit cards. The rest went into liquid accounts like checking, savings and money markets.

Demand for liquid accounts is high

The Credit Union National Association’s June Credit Union Trends Report found that highly liquid accounts are desirable to consumers looking to eliminate debt. Regular share accounts, money markets and share draft accounts have all seen greater activity since April 2010: a 128-percent total savings increase. The $834 billion in total savings reflected a $35 billion (4.4 percent) increase since April 2010, writes Credit Union Times. CDs dropped 5.2 percent over the same period. These results are consistently below historical trends and suggest that the U.S. is still firmly in the grip of economic uncertainty.

Dave Colby, the chief economist at Credit Union National Association Mutual in Madison, Wis., sees the writing on the wall.

“From a member perspective, households are rational and will continue to pay down higher-cost debt obligations versus building savings, which are losing ground to inflation,” he said.

Savings vs. debt: Weighing the pros and cons

Sources

Bankrate

Credit Union Times

Credit union trends report (PDF)

Money Rates

Like the ancient Acropolis, Greece's current economy is in ruin. (Photo Credit: CC BY/*clarity*/Fotopedia)

Greece is quickly sliding toward third-world status as austerity measures drive citizens to riot. The International Monetary Fund is concerned that if Greece defaults on its multi-billion dollar debt, the cost to the Eurozone will be tremendous, sending other teetering nations over the edge, reports the Washington Post.

Europe fears Grecian formula

Flagging support for the euro and rampant unemployment has made recovery difficult for numerous Eurozone countries. Continuing to funnel billions of dollars into Greece would be a crushing financial blow to Europe, argued the IMF. In spite of austerity plans in place across the Eurozone, which include unpopular measures like cutting funding for public programs and public employees, signs of recovery have remained elusive. Similar sluggish returns in the U.S. and Japan have damaged the global economy. For Greece to receive any more aid money, the IMF is requiring that the nation follow severe cutback plans to the letter.

“We have entered into a new phase of the crisis that I would term the political phase, where hard political decisions need to be made because the window for substantial policy action is closing. Time is of the essence,” said IMF financial counselor Jose Vinals.

Papandreou hanging on by his fingernails

Amid the chaos of Greece’s slide – it has the lowest credit rating of any developed nation on Earth, according to Standard & Poor’s – Prime Minister George Papandreou attempted to assemble a new cabinet in order to maintain political control. He has announced that he will replace finance minister George Papaconstantinou, who was the face of the government’s austerity plan, with defense minister Evangelos Venizelors. Numerous sources compare such moves to shuffling the deck chairs on the Titanic.

The Wall Street Journal noted that not all the news surrounding Greece and the economy is bad news. German Chancellor Angela Merkel and French President Nicolas Sarkozy have announced their nations have reached agreement regarding a Greek bailout package that has been called the “Vienna Initiative.”

Greek riots intensify as credit collapses

Tens of thousands of protesters blocked Athens’ Syntagma Square Wednesday in effort to pressure Greek Parliament into rejecting the latest austerity measure proposal. If the plan passes, it is believed that it will only provide a short-term fix, as Greece is currently not selling long-term bonds and is depending solely upon emergency installment loans. With Greece’s CCC national credit rating, the interest rates demanded by investors are tremendous.

“There is very little way that Greece can pay back the debt,” said Jonathan Tepper of London economic research group Variant Perception.

Is the US like Greece?

Financial doomsday cultists like to say that the U.S. should watch its p’s and q’s, lest it fall into the same social welfare/entitlement trap that has nearly consumed Greece. The U.S. has a much larger, more diverse economy than Greece, which means that the fall would take much longer. Yet a weak U.S. dollar could hasten the process, resulting in a credit downgrade.

Greece’s credit rating is world’s lowest

Sources

CNN Money

Wall Street Journal

Washington Post

Visit America's Credit Unions website to find a credit union near you. (Photo Credit: CC BY/John Benson/Flickr)

One of the most important decisions consumers can make regarding their money is where to keep it. Banks are a common option, but those who have tried depositor-owned credit unions will argue that the advantages over banks make them quite worthwhile. Here are a few of the advantages of choosing a credit union versus a bank.

Shareholder versus depositor interest

While large commercial banks are the domain of corporate shareholders – and hence most concerned with generating profits for a small, select group – credit unions belong to the members. Volunteer customers even serve on each credit union’s board of directors. The sense of shared ownership is reflected in the name credit unions give to checking accounts: share draft accounts.

Interest rates on loans are generally lower at credit unions than banks, and the rate of return on deposits can be significantly higher, particularly on CDs. A credit union’s responsibility to its depositors is highly desirable for the average banking customer.

Smaller size, better individual care

Considering that credit unions are smaller than most banks and generally have fewer overall customers, the opportunity for greater individual care from a financial professional exists. The tradeoff here is that ATM networks may be smaller with credit unions, and the list of services provided will be slightly abbreviated when compared with those of a large bank.

NCUA stability

The banking crisis has caused many smaller banks to go under. Larger banks have depended upon federal bailout money and taxed the reserves of the Federal Deposit Insurance Corp. to the limit. Credit union deposits are insured against loss by the National Credit Union Administration, and the number comparison is telling, reports Bankrate. From the beginnings of the financial crisis through May 2011, 44 FDIC-insured banks failed, versus only nine NCUA-insured credit unions. This disparity exists largely because banks made more risky loans in their drive to boost shareholder profits.

Payday loans at a credit union near you

Recent programs instituted by the NCUA, such as Better Solutions, have enabled credit unions to offer payday loans and similar short term loans to customers at annual interest rates that top out at about 28 percent. A 30-day repayment period is required, and the number of loans a customer can take within a six-month period is limited to three.

Banks versus credit unions

Sources

America’s Credit Unions

Bankrate.com

MonitorBankRates.com

In 1923 Germany, inflation was so bad that burning money was cheaper than buying firewood. (Photo Credit: CC BY-ND/illuminating9_11/Flickr)

Manufacturing activity and consumer optimism took a nosedive despite a continued upward creep in national consumer prices. The creep has slowed to less than zombie-like pace, however, which indicates that the economy still needs a jolt.

The Consumer Price Index

According to Ameriprise Financial senior economist Russell Price, the decline in manufacturing plus low optimism are much ado about something nobody wants to hear.

“Both of them are reflective of the slowdown in the economy that we have experienced over the last few months,” he said.

The Consumer Price Index, according to the U.S. Department of Labor, was up 0.2 percent in May, versus 0.4 percent in April and 3.6 percent one year previous. May’s under-performance is the lowest CPI since November, according to the Bureau of Labor Statistics.

Rising food prices — up 0.4 percent — didn’t help. Strangely, one economist managed to report that the U.S. energy index fell by a percentage point last month. Within the central bud of that surprise was a 2 percent U.S. gas price decrease. Lower fuel prices didn’t seem to help skyrocketing food prices.

Clothing, shelter and cars getting more expensive

The Consumer Price Index report had more to say regarding price acceleration. According to the New York Times, clothing, residence, recreation and new automotive costs were all on the rise in May, yet demand did not falter. Airline prices, personal care items and sot-weed tobacco went down last month.

Conditions didn’t slack off – they ‘deteriorated’

The choice of words the Times uses to describe the state of manufacturing in New York is telling. According to the New York Federal Reserve, conditions for manufacturers have deteriorated so far in June, marked by a 20-point drop in the manufacturing industry’s conditions index to minus-7.8 points, the first dip below zero since November 2010. Forecasters had pegged a decline that was supposed to have settled at positive 14.

Part of the reason for the dismal manufacturing performance is tied to the decline in auto production following the Japanese earthquake, tsunami and nuclear disaster.

“It affects just about every region,” said Price. “In the manufacturing report, the component shortages were the No. 1 factor, and then the broader softening that went along with the higher gasoline prices.”

Enjoy your $20 watermelon

Sources

Consumer Price Index

New York Federal Reserve

New York Times

That's what she said. (Photo Credit: CC BY/SOCIALisBETTER/Flickr)

While economists continue to argue that the U.S. remains stuck in a growth recession, CEOs beg to differ. According to MarketWatch, the heads of some of the biggest companies in the country envision higher sales and increased hiring in the upcoming months. Yet, they’re less optimistic now than they were three months prior.

Hop on the happy Business Roundtable merry-go-round

In its latest quarterly survey, corporate research conglomerate Business Roundtable polled 135 U.S. CEOs from various areas of the corporate spectrum. Annual sales for the companies involved topped $6 trillion.

Most of the large companies attached to the survey plan to increase hiring and capital spending within six months. A whopping 87 percent of companies believe that sales will increase over that span to make hiring easier, yet that’s down from 92 percent after a more prosperous first quarter.

“This continues a positive trend for our companies’ activity heading into the second half of 2011,” said Ivan Seidenberg, Business Roundtable chair and CEO of Verizon Communications.

Despite signs of economic sluggishness, Seidenberg said that as long as oil prices recede as expected, growth can occur. Once Congress agrees upon limiting the debt cap and leans away from higher business taxes, the way will be clear.

(Lack of) May jobs bring June gloom

The May jobs report was less than stellar, as the U.S. Department of Labor indicates a steep drop in the percentage of new jobs added to the economy. Small and medium businesses couldn’t move forward, notes Seidenberg. Thus, expectations from CEOs on the panel have lowered since the first quarter, dropping from 113 then (the highest indicator sine 2002) to 109.9 now.

Fuel costs still a pain for consumers

As oil and gas prices remain high, the average U.S. household may not be able to see signs of recovery.

“You still have the kitchen table issue for most consumers,” remarked Seidenberg, referring to how fuel costs hurt the American family’s ability to afford basic staples.

Things aren’t so bad, right IT?

In the high-tech business world, some positive news has surfaced of late. According to TechJournal South, continued hiring in IT sectors in the third quarter of 2011 is expected. Seven percent of CIOs plan to expand their departments, while only 3 percent see cutbacks ahead.

Sources

Business Roundtable

MarketWatch

TechJournal South

What kind of cake is your credit report? (Photo Credit: CC BY-SA/Alex Gorzen/Flickr)

If you’ve had a bankruptcy, foreclosure or lots of missed bill payments, you know that your credit score was diminished. But do you know about the smaller things that lead lenders to believe you’re a credit risk? A few FICO foibles can cause credit card issuers and lenders to view you with less favor and lead them to either deny you credit or charge higher interest rates.

Too much credit is a bad sign

While it may be a fact that people who max out their credit cards tend to apply for more credit cards, such behavior does not speak well to potential creditors. Too many credit applications in too short a time raise red flags. Norm Magnuson of Consumer Data Industry Association told Bankrate that banks have “shrunk the window” of frequency in which applications for credit audits are performed.

“It used to be months and months. Now you find companies doing account monitoring monthly or every other month,” he said. “That would raise some questions.”

A short sale isn’t magic

When you’re upside down on your mortgage, the specter of foreclosure may not be far away. Lenders will sometimes tell you that a short sale is the way to go. Even though you’re taking a loss, at least you’re avoiding foreclosure. Yet, how a lender reports a short sale to the credit bureaus can be just as damaging. Experian’s Vice President of Public Relations Maxine Sweet says even though the account is technically settled, the short sale ends up hurting your credit score as much as a foreclosure.

The best thing to do, advises SmartCredit.com President of Consumer Education John Ulzheimer, is to negotiate with your lender so that the difference between what’s left on the mortgage and the amount repaid isn’t reported as balanced owed.

Co-sign at your peril

Whether it’s an auto loan, student loan or any other large scale loan, if you’re a co-signer and the primary borrower defaults, you’re on the hook. Hopefully, you keep in touch with the person for whom you co-signed. Otherwise, you may not know the damage being done to your credit until it’s too late.

Minimum effort, maximum worry

It may seem easy to settle for the minimum payment on your credit cards each month, but there’s nothing easy about what that does to you in the eyes of prospective creditors.

“It suggests you’re under financial stress,” says Nessa Feddis of the American Bankers Association. “You may be defaulting.”

A busy report can indicate trouble

The more inquiries for credit that appear on a credit report, the more tiny nibbles that are taken out of your FICO score. If you know you’ll be applying for big loans – home, auto, education – try to do it all within a two-week window. This will minimize the inquiry impact, as they will be treated as a single unit. The same does not apply to credit card applications, however.

Disputing credit report mistakes

Sources

American Chronicle

Bankrate

MSN Money

A stronger dollar is the key to recovery, not quantitative easing, says investment manager Abigail Doolittle. (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

Quantitative easing (QE) has been referred to by some economists as the last vestige of an empire in ruin. The idea is to create money, suppress rates, promote liquidity and watch inflation spread. It’s like a plumber who tries to fill a bathtub by pouring in massive amounts of water, without plugging the drain first. According to CNBC, however, the Federal Reserve is reaching toward turning off the tap, and investors have decided to cut back.

Fed sends S&P into downward slide

The S&P 500 was down by 2 percent this week and is in the middle of a 7 percent slide that began May 2. The loss in investor confidence has much to do with drops in a variety of economic indicators, the Federal Reserve turning off the tap being one of those. And the worst may be to come, suggests United-ICAP energy analyst Brian LaRose.

“If you look at what values have been rising over the course of the quantitative easing program, it has been merely commodities and equities, nothing else,” he said. “Reality is starting to take hold.”

Pop goes the golden goose

That reality may be that the gold and oil bubbles will pop, reports Bloomberg. That, in turn, would lead to a surge in the U.S. dollar, which has lost as much as 10 percent against other world currencies since the last time Ben Bernanke and the Fed boarded the QE bus.

The possibility of further bailouts for debt-ridden Greece has dragged the euro down, as has the lack of a unified financial plan between euro-zone nations. The indecision has been less than inspiring to global investors.

In the U.S., consumer worry continues to spill over into the housing market. If people aren’t spending and housing prices continue to fall, the path of disaster for the U.S. is clear, says CNBC.

Finding the bottom with both hands

While analysts like Richard Ross claim that the U.S. economic fix is only beginning to take hold and that, as investment strategist Jeffrey Saut puts it, the market is “bullishly configured” as long as the S&P holds around 1,250, the naysayers remain out in force.

“We have mountainous inflation efforts in place with historically low yields and strong demand for bonds. That’s like a rubber band that’s going to snap at some point, and somebody’s going to get hurt,” says Bill Larkin, portfolio manager at Cabot Money Management in Salem, Mass.

In order to find out where the economic slide will stop, investment firm manager Abigail Doolittle believes the Fed should do much to strengthen the dollar and allow rates to rise. The effect will be slow but lasting.

“Force investors off of the liquidity high of the last few years, and replace immediate-term gratification with the long-term satisfaction of investing in an economy with a truly solid foundation,” she said.

Quantitative easing: When failure doesn’t sound like failure. (Contains adult language)

Sources

Bloomberg

CNBC

Huffington Post

Quantitative easing Wiki

Advanced ATM technology will make automated banking safer than ever. (Photo Credit: CC BY/Tim Moffatt/Flickr)

If your ATM card and PIN number are intercepted in the U.S. without your knowledge, your money is immediately at risk. In Russia, however, banking giant Sberbank is testing out new ATM machine technology that will make the playing field safer. Sberbank is rolling out ATMs that use 3D face recognition and lie-detective voice analysis, reports the New York Times.

Top technology to battle consumer credit fraud

As a part of the banking automation process Sberbank views as the future for the industry, holographic bank tellers greet customers at bank branches. Most banking transactions are handled with no human interaction required on the bank’s part, just highly advanced technology. The Russian ATMs use the same technology for 3D face recognition and voice analysis in a process called biometrics – uniquely recognizing humans based upon multiple intrinsic physical and behavioral traits.

The ATMs scan passports, record fingerprints and take 3D face scans for recognition purposes. Voice analysis enables machines to determine whether customers are truthfully answering questions like “Are you employed?” or “Do you have any other outstanding loans?”

The first lie-detecting ATM machine

Provided that the test ATMs go into standard commercial use, Sberbank, which is owned primarily by the Russian government, will become the first bank in the world to use a voice analysis system. While Sberbank executives point out that the system will adhere to Russian privacy laws, the view that it could invade a consumer’s privacy will no doubt prevent such a system from appearing in the U.S.

What voice analysis can tell

According to experts on the voice analysis system, the software is able to search for several markers in the human voice simultaneously. Nervousness or emotional distress that frequently accompanies lying can be detected in vocal inflection. A wide range of other vocal qualities and pace of speech that indicate involuntary nervous responses are monitored, too.

In order to comply with Russian privacy law, Sberbank reportedly does not maintain a database of customer voice signatures. The bank does plan to store individual voice prints on chips contained in customer credit cards, however.

Sberbank uses biometric technology for security

Sources

Biometrics Wiki

Finextra

New York Times

If your online bank account is hacked, the bank may not be liable for all the money. (Photo Credit: CC BY/Don Hankins/Flickr)

Maine Magistrate Judge John Rich has ruled that despite the fact that a bank allowed online hackers to steal more than $300,000 from a customer’s account, the bank is not responsible for the lost money. According to BankInfoSecurity, the judge said the plaintiff, a construction company, should have done a better job of protecting its bank account details.

Judge recommends charges against Ocean Bank be dismissed

Judge Rich recommended that the U.S. District Court in Maine dismiss a complaint filed by Patco Construction Company against Ocean Bank after Patco’s account was hacked and more than $300,000 was stolen. How much security banks should reasonably be required to provide commercial customers was called into question. If U.S. District Court follows Rich’s recommendation, legal experts see a precedent being set for liability claims in which online bank theft occurs via password interception. Each year, small- and mid-sized U.S. companies lose hundreds of millions of dollars via fraudulent ACH (Automated Clearing House) transfers, and the District Court ruling on the Ocean Bank case will no doubt be of interest.

Patco v. People’s United Bank: The inside story

Patco Construction Company’s case against People’s United Bank (the owner of Ocean Bank) states that in May 2009, it was discovered that hackers were stealing $100,000 per day from the company’s online Ocean Bank account. Apparently, the company’s password had been stolen via a malicious email that placed trojan malware onto a Patco employee’s computer.

Nearly $600,000 was gone before Patco noticed and informed Ocean Bank. The bank was able to block $240,000 in transfers, but told Patco the rest was irretrievable. Patco’s lawsuit accused the bank of “failing to implement best security practices,” i.e. requiring customers to use multi-level authentication. Ocean’s initial defense was that because the online user identification and password matched, it had done its share of maintaining security.

While Judge Rich agreed that Ocean Bank could have done more to maintain security, he concluded that the law does not require banks to use the best security methods available. As Ocean’s security was similar to other online banks, Rich deemed that Patco was responsible for not securing its log-ins.

Not the best, just multi-factor

Patco Construction Company President Mark Patterson argued that Ocean Bank was not in compliance with the Federal Financial Institutions Examination Council’s authentication processes by only asking for username and password. IT security attorney David Navetta seconded Patterson’s concern, yet the court was satisfied by Ocean Bank’s two-step, “multi-factor” process of requiring username and password.

How to avoid identity theft

Sources

BankInfoSecurity

Federal Financial Institutions Examination Council

Wired

She seems happy, but the stress of dad's unemployment could be hiding behind that smile. (Photo Credit: CC BY/Vicci/Moon Stars and Paper)

According to a new interdisciplinary academic study by the National Bureau of Economic Research, the stress of unemployment hits children hard. The study, entitled “Children Left Behind: The Effect of Statewide Job Loss On Student Achievement,” finds a correlation between community job loss and decreased performance on math and reading scores, reports the Huffington Post. This applies to the children of both the unemployed and the employed.

Significant effects on academic performance

In analyzing the math and reading test scores taken from fourth- and eighth-grade sample groups compiled by the National Center for Education Statistics, the study found that the stress of unemployment had significant effects. Specifically, for every 1 percent of a state’s working age population that is unemployed, the average math test score declined by 3 percent.

Study co-author Dr. Elizabeth Ananat of Duke University’s Public Policy and Economics department sees how uncertainty can create anxiety.

“Research has found that the stress and anxiety of losing your job is actually not so much greater than the stress of worrying about losing your job,” she said. “When there is a lot of job loss going on, the community gets depressed, and anxious. … That makes it harder for kids to learn.”

Growth recession indicates no real improvement

The current state of the U.S. labor market does not indicate to economic experts that a turnaround is in store, and thus the study authors expect the negative student achievement trend to continue. As many as 13.9 million Americans are officially unemployed, and another 8.5 million pursuing full-time work have had to settle for part-time jobs. Millions more face a kind of unemployment coma that keeps them from looking because of discouragement.

“When kids are at vulnerable times in their development, the impact of events like this can have long-lasting consequences,” Ananat said.

Low test scores in particular can remain on a child’s record for years, as numerous NBER studies have shown before.

‘The tip of the iceberg’

Study co-author Dr. Anna Gassman-Pines of Duke University said actions such as lowering class size can help counteract the negative effect of unemployment somewhat. However, many schools don’t have the economic means to make such changes.

Co-author Dr. Christina Gibson-Davis suggested that while the NBER’s test-score findings imply a problem, the implications likely run deeper.

“These are just test scores — not the greatest measure of the kids’ behavior,” Gibson Davis said. “This is probably the tip of the iceberg.”

Such scenarios as parents working multiple part-time jobs and multiple families living in the same household are no doubt issues that also contribute to the general sense of stress, experts believe.

Unemployment is a family affair

Sources

Huffington Post

National Bureau of Economic Research

Goldman Sachs claims the Senate subcommittee's characterization of its subprime business was “sloppy and incomplete.” (Photo Credit: CC BY/Ludovic Bertron/Flickr)

Goldman Sachs Group Inc., the securities firm Sen. Carl Levin, D-Mich., once described as a “financial snake pit, rife with greed, conflicts of interest and wrongdoing,” is preparing to strike back. The Wall Street Journal reports that the firm plans to counter the Senate’s financial crisis subcommittee’s 639-page report, which alleges that Goldman Sachs sought to profit by betting against the housing market and betraying its clients. Reports indicate that Goldman’s defense will focus on what the company believes to be “sloppy math” on the part of federal regulators.

‘Sloppy math and incomplete analysis’

The Senate Permanent Subcommittee on Investigations went through tens of millions of documents disclosed by Goldman Sachs, yet the securities firm says in its defense that the Senate’s analysis was incomplete. Goldman Sachs has not denied that the firm profited from the subprime mortgage crisis as prices fell and borrowers defaulted, creating the big short. However, the firm believes data suggest the Senate’s numbers are inaccurate.

One document the Senate found particularly damning for Goldman Sachs was a chart that characterized the company’s net short positions against the housing market being as high as $13.9 billion on June 25, 2007. Goldman says that number appears artificially large when juxtaposed against the 2007 net revenue of $11.6 billion the Senate reported. Goldman claims its actual net revenue was $46 billion.

Insider trading, truthful and accurate

The WSJ reports that Goldman Sachs will use data on bullish mortgage trades to temper the opportunistic venom behind such numbers, data to which the Senate already had access but chose not to highlight in its report. Goldman argues that billions of dollars in bullish trades – as well as more than $5 billion invested in prime mortgage bonds – more than offset the subprime short bets.

Despite the fact that former Goldman Sachs corporate board member Rajat Gupta backed away from his position following allegations of insider trading, the firm maintains that its dealings with the U.S. government have been “truthful and accurate,” according to a company representative for CEO Lloyd Blankfein.

Goldman Sachs gambled more than $1 billion of Gaddafi’s money

Sources

The Atlantic Wire

Goldman Sachs

Wall Street Journal

Another casualty of the growth recession. (Photo Credit: CC BY/khteWisconsin/Flickr)

Think it’s time to celebrate economic recovery? Don’t get cocky, suggests Investor’s Business Daily. In this job-starved economy, we’re already living a kind of double-dip recession that economists call a growth recession.

What’s a growth recession?

When economic growth is so low that it creates net unemployment, that’s growth recession. Growth recession can also suggest underachievement, or below-potential growth in such areas as job creation. Job contraction typically means that a country’s real gross domestic product is expanding, but too slowly.

Numbers in a tailspin

Here are just a few of the signs that a growth recession is here, writes Investor’s Business Daily:

• ADP Payroll Services found that 38,000 private-sector jobs were created in May 2011. That’s 100,000 short of the minimum goal economists had marked for economic growth.
• Employment consultant company Challenger, Gray & Christmas noted that 37,135 jobs were cut in May, a 2 percent increase from the previous month.
• U.S. housing prices fell 4.2 percent in the first quarter.
• The Mortgage Bankers Association’s mortgage application index fell 4 percent in May’s final week.
• The Institute for Supply Management’s factory activity index – an indicator of U.S. manufacturing health – dropped from 60.4 in April to 53.5 in May, the lowest score on the index since September 2009.

Re-enter the recession

U.S. gross domestic product growth was reported at 2.7 percent in May, which most economists believe is insufficient to create private sector jobs and beat back unemployment. Match this uninspiring growth with continued frantic borrowing by the U.S. government ($1.5 trillion estimated for 2011), and avoiding a prolonged double-dip recession seems impossible.

According to Michael Pento, senior economist at Euro Pacific Capital, the U.S. is following the wrong formula for economic health.

“Genuine government stimulus comes from low taxes, stable prices, reduced regulation and low debt,” said Pento. “Our economic policymakers have scrupulously avoided such remedies.”

Summer 2011 will bring economic déjà vu , says The Indypendent. The Federal Reserve is backpedaling; spending cuts and tax increases on the city and state level are in progress, and federal spending is pointing downward. Combine everything, and the U.S. will likely face not just a growth recession, but a full-blown return to depression.

Growth recession at teatime

Sources

Growth recession Wiki

The Indypendent

Investor’s Business Daily