Wells Fargo wants to be different. It wants to stand out. It wants to raise your credit card rates and it’s doing so right now.

Getting the news that credit card rates won’t be able to just go up and down like an expensive roller coaster anymore starting in either December or February, Wells Fargo has made the decision to raise the interest rates on most of the company’s credit cards 3% before the law goes into effect.

You know, it’s not really fair for me to say that Wells Fargo wants to be different because, in reality it’s being the same. JPMorgan Chase has also decided that it is going to likely raise the rates for consumers. The only bank that has made it public that it is NOT going to raise rates is Bank of America actually. So, I suppose actually it is BofA that wants to be different and stand apart from the crowd.

Wells Fargo is saying that the new rates will take effect November 30th, just one day before new legislation will likely go into effect saying that credit card companies can no longer just raise rates because they feel like it.

“We are raising interest rates up to 3 percentage points for a majority of our Wells Fargo customers due to the current business environment, including rising business costs and current consumer credit challenges,” a company spokeswoman says. “We decided many months ago that it would be necessary to increase interest rates. We delayed our decision in hopes that the business environment would materially improve

Wells Fargo is, at least, giving customers 45 days to decline the new terms, close their accounts, and pay the balance off at the old interest rate if they so choose. However, for someone who has thousands on their credit card, this may not only be a bad choice, but also one that is just not feasible. If someone is that much in credit card debt, then they will probably just have to “grin and bear it” when it comes to the new rates.

This is the kind of practice that led to the new legislation. This is exactly why this kind of legislation had to be put in place. Wells Fargo (as well as most of the other large lending banks) have no one to blame but themselves and their greedy ways for Congress cracking down on them. I’m glad that something is finally being done.

Source

It is a huge deal when banks charge everyone and their mother huge overdraft fees. Bank of America was one of the worst. The bank would hold your deposits or allow small transactions to go through prior to the larger deposit being made. Of course, this led to many overdraft fees being incurred by the customer. For every transaction that the customer made, they were tinged $35.

Bank of America just announced though that on October 19th, it will begin laying off the serious overdraft fees and only begin tinging the account once it reaches a $10 overdraft in one day. This means accumulated and not that you can continue to overdraft as long as it doesn’t go above $10 (at least this is the way I understood it). The account holder also has to have the account back in the black in five days time.

That’s not the most exciting news regarding the overdraft fees in my opinion, though. I like the fact that customers will soon be able to opt out of the program just by visiting a Bank of America branch or calling a yet to be determined phone number. Of course, the program I’m referring to is the one that starts the overdraft problem in the first place. I would much rather be declined at the grocery store than begin incurring overdraft fees at the bank. My embarrassment is less than the  $35 that the bank would charge me for the “overdraft protection”.

Bank of America will also be limiting the number of overdraft fees that can be incurred in a day to four. This is down from 10. The rule that it could charge 10 overdraft fees in one single day was put into place earlier this year. It is nice to see that rule gone and a new, better one in its place.

I don’t know if this will position BofA in a more positive light, but anything helps when it comes to the business practices this company has been doing. I know I talk a lot about the company, but I also hold a credit card from them and have yet to see my interest rates spike or my credit limit reduced. I haven’t had one bad experience with the company (knock on wood, right?).

Is it time for the Fed to relinquish some of its power?

Question:

The United States Federal Reserve has a lot of power when it comes to the economy. They oversee more than just the money the country has, but other things too like consumer issues. So, is it time for the Fed to give up some of the control?

Answer:

I think the Fed needs some of the power that it has. I don’t think it needs to be able to move the interest rates without a longer bureaucratic process simply because the movement of the economy is settled on the shoulders of the Fed.

Overall, the Federal Reserve does good things for the economy and typically works in the interest of the people. However, the economy is more than just interest rates.

Well…maybe not, but it looks like the Federal Reserve may be stopping any new efforts to “revive the economy” at its meeting this week. According to economists, Chairman Ben Bernanke and his colleagues don’t want to “overdo” the stimulus medicine and that “stimulating the economy” through the Fed may fan the flames of inflation later, so the Fed is expected not to make any new moves this week.

Over the past year, the Fed has done everything it could do to try to help stimulate the economy including putting $1.2 trillion into the economy in an attempt to lower interest rates. The lower interest rates were meant to get consumer spending up.

The Fed is also expected to hold the key lending rate to banks at the record low of near zero percent. It has said in the past that it will keep the rate low for “an extended period.” Economists believe that the rate will stay between 0 and 25% until sometime next year.

It is looking more and more like some of the things that the government has done to help the economy has had a bit of an effect…after all it was just in January when the first stimulus was passed and took effect. Since then, home prices have stopped declining as rapidly and are actually starting to level out in a lot of places, and in the last month, consumer spending has increased and the jobless rate has also started to slow down. Some analysts think that the economy is declining, but at a much lesser rate than the final quarter of 2008. The April-June quarter is between a 1 and 3% decrease, while the final quarter of 2008 was 6.3%.

Of course, some of the problem is that we will not know whether the economy would have recovered as quickly without the government interfering as much. A lot of the government agencies we currently have in place were put in place to keep a depression like the one seen in 1929 from happening again.

A problem that is happening now is that mortgage rates have started to increase again, and while eventually mortgage rates need to go back up, right now the housing market is still hurting and home buyers are still a bit scarce. To help this out, the Fed may decide to start buying more mortgage backed securities as well as government debt to help drive the rates of mortgages down.

Yesterday I received a phone call, I assume a telemarketing phone call, on my home phone number that I knew I had to share with my readers at Lucrative Investing. It was by far the most humorous phone call I have received in a long time, and definitely something worth sharing for the entertainment value and the lesson it provides. The call came up on the caller ID as “Local Area” and the number 1-850-390-4590. When I answered the call, a recording said something close to, “Hello, this is a call from Card Services concerning your current credit card account. We are pleased to inform you that you are eligible for lower interest rates because you have made all your payments on time and have shown responsible use of your credit. To inquire further about lower interest rates on your existing credit card, press ’1’.”

I was curious and a little bored, so I pressed ‘1’ and a man came right to the phone. This is the exchange from that telephone conversation, with “Telemarketer” being the man on the other end that represents ‘Card Services’, and “MB” being myself:

Telemarketer: Hello?

MB: Hi.

Telemarketer: Are you responding to the offer for lower interest rates?

MB: I guess.

Telemarketer: Well, you are eligible for lower interest rates on an existing credit card.

MB: What card?

Telemarketer: Your qualifying Visa or Mastercard.

MB: Okay, well, this call could be for anyone in the house. Who is this call for?

Telemarketer: The primary credit card holder, and you pressed ‘1’, so I would assume that’s you.

MB: Well, we have four credit card holders in this house. If you would like to give me a name, I can certainly….

Telemarketer: [Click]

MB: Hello? [Humorously, having heard the click] Helloooooooo….

He did not have a clue who that call was for or what card he was offering me a lower rate on. Nobody even knows if whatever group or company he works for is reputable. I thought it was humorous that they used the name “Card Services”, considering some reputable companies that you may actually do business with use that when they call, because that is the name of the department that is calling you. When Chase, who I once had a card with, called me, they often said they were with “Card Services”, so I thought it was possible Chase was calling me, though I seriously doubted it as I no longer have that card. When someone says they are with “Card Services”, do not assume it is a shifty call, but do press them to find out what company they are with.

Remember that they called your phone, concerning your alleged credit card, and may ask for your information. Do not assume they are on the level and do not assume that they already know anything about you. Nicely require that they give you some more information about who the call is for, what card this is concerning, or something else before going any further. I will never know if that was a potential scam or not, but I do know that they had no business calling me, especially since we are on the “Do Not Call Registry”, which has long since proven that it means nothing.

Be smart, be aware, and be conscious of the fact that there are thousands, if not millions, of companies and people out there who want your money, and especially your social security number. They are calling you everyday and one false move could compromise your financial wellbeing, either in a small way or a big way. They might have been legitimate, but they might have been a scam, just hoping I would give up the information they were looking for. Either way, they had no business calling me with an assumed guise the way they did, and I suggest that all of my readers be cautious when a call like that comes in.

Many who have looked forward to retirement are now finding themselves back to work after being retired or holding off on retirement to continue working. In a recent survey by Lincoln Financial Group, 41% of potential retirees think that they will have to keep working to pay the bills and 11% don’t think that they have enough money to last them until they are 70.

Many seniors who can’t afford their living expenses anymore are going without things like heat or other forms of energy. In the United Kingdom, there is something called the winter fuel payment, which once covered 35% of the average gas and electric bill. Now, with higher energy costs, it only covers 20%. They are also going without or just trying to limit consumption of other resources like water, which was up 4.1%in price for 2009.

There is a little silver lining for potential retirees in the UK, Age Concern has estimated that 4.6 billion pounds goes unclaimed every year. The Department for Work and Pensions also estimates that 310,000 people don’t claim a housing benefit, which accounts for 660 million pounds a year.

It is sad to see our parents and grandparents having to worry about whether or not the money they have earned throughout their lives will last them for the rest of their lives. If prices were to keep increasing at the current rate, then those who were and are on fixed income will be left in the cold.

One of the best things a retired person or someone looking into retirement can do for themselves is to check and see with a government official or an accountant if there are any services, pensions, or other forms of financial help that can help them make it. If you look at the amount of money that goes unclaimed in the United Kingdom, then perhaps there are similar unclaimed funds in other countries. The trick is to be able to find out where the funds are and how to obtain them.

Concern for the Elderly as the Cost of Living Increases

Credit card holders feel they just won, but the new credit card legislation that President Obama signed into law Friday does not mean that you can start racking up those purchases worry-free. The rules will mostly go into effect in nine months from when Obama signed the bill, while others will kick in as early as 90 days afterward. As the new rules kick in and banks halt the abusive practices this legislation saves consumers from, you are likely to see more practices that are not against new policies that will hurt consumers just as badly, maybe worse. This may have been harmful to the balance we once saw. The banks have to respond to these changes in a way that is financially beneficial to them.

Not every response is positive. When you change a situation someone against you is banking on (pun intended), you often do not like their response. Whether you hold credit cards in order to rack up free rewards points or a debt you hope to one day pay off, you should watch out for several things: new fees, higher interest rates, less generous rewards and fewer promotional offers. It seems a few tips cannot hurt anybody.

Watch out for new fees. The new federal credit policy prohibits over-limit fees unless the cardholder agrees to allow transactions that exceed their limits. To make up for the obvious financial loss, banks will likely introduce other fees, possibly fees the “baby boomers” paid on their first cards but now thought were past history. As an example of the fees cardholders should watch out for, expect fees for rewards programs and possibly even fees for checking your balance.

You should expect annual fees to make a comeback. A few decades ago, annual fees were standard but dropped as competition among card issuers heated up. If you are anything like this author, you looked for cards with limited fees and an annual fee could be the deal breaker. Some issuers will attach annual fees on all their credit cards, while others will tie the fee to spending thresholds, so that only big spenders get away with fewer fees. It may be necessary for you to start racking up those reward points!

Prepare for higher rates. The current industry universal default allows banks and credit agencies to increase rates if a cardholder’s credit score drops or if they make late payments on other accounts. Once the new policies are in place, credit issuers will lose this powerful risk-management tool. Without the ability to act upon perceived risk level, card issuers will just start charging higher rates to everyone. Interest rates will likely go back to the 19% to 20% range for most people. The average variable-rate credit card today charges a low risk consumer 10.79% APR. (This information comes from BankRate.com, a leading industry analyst.)

Grace periods will become a thing of the past. The new legislation requires card companies to give consumers at least 21 days to pay their bills, but it doesn’t require them to offer a grace period, which isn’t the same as the cardholder’s due date though the two usually coincide somewhat. While the due date designates the day by which a payment must be received for the cardholder to avoid a late-payment fee, the grace period is the time during which the cardholder isn’t charged interest. Card issuers may get rid of grace periods altogether so that cardholders who pay their balances off each month will start paying interest immediately after making a purchase. Issuers have for many years wanted to get rid of the grace period on convenience users. It has become a bargaining tactic you will likely not see anymore.

Expect higher introductory rates. Low or 0% introductory APR offers have attracted consumers who posted a balance-transfer or opened up a new card. For example, this author is currently using a card that has three months left of a 0% introductory APR, one of many reasons it was such a wonderful credit move. Banks were able to offer those deals thanks to all the money they made on card users who made a late payment before the offer expired, invoking the bank’s penalty rate of 20% or more. Now that banks will no longer be allowed to increase interest rates on existing balances and all promotional offers have to last for at least six months, these promotions will likely disappear. Even those with perfect credit will likely see introductory rates no less than 6%.

Also expect lackluster or non-existent reward programs. Some companies have already been lowering rewards programs. Once they see lower revenue from penalty fees and interest charges due to the new legislation, they’ll become even less rewarding. Spending thresholds will likely go up so you will have to spend more to earn airline miles, points or cash back. Your creditor may also adopt more stringent rules, such as returning your rewards balance to a lower amount, maybe even wiping it out completely, if you make a late payment.

What can you do as a cardholder? Examine credit card statements and change-in-terms letters carefully. Issuers can currently change terms at any time with 15 days’ notice, but once the new law is in effect, they will have to give 45 days’ notice. You will be notified ahead of time that rates are increasing and you will be given the option to cancel your card prior to the rate hike. Remember that the vast majority of changes in terms are to the benefit of the creditor. If they send you a notice that terms are changing, read over it and find out if there are any changes that impact you in any negative way and act accordingly. When you receive any mailing from a creditor, look over every inch of every slip of included paper. You have heard of fine print. Do not assume that the fine print will be easy to find. Frankly, assume nothing.

Consumers who carry a balance will have to shop around for lower rates, perhaps in exchange for paying an annual fee in order to avoid high interest rates. Cardholders who pay their balances in full each month should not be affected. There is only so much interest that can be charged on purchases that are seventeen days old. To compare rates on new card offers, even preapproval offers, use sites like CreditCards.com, CardRatings.com or CardTrak.com. The only way to avoid interest charges upon disappearance of grace periods would be to stop using credit cards altogether or make sure credit card payments are on time and you have plenty of available balance on your card. In fact, experts advise that you keep half of your card balance unused because future creditors will not be inclined to think you are overextending your finances or living beyond your means.

If you have a low APR offer right now, do everything right and make no mistakes. Send payments in on time and do not do anything to trigger a penalty rate such as exceeding your credit limit. If you can acquire internet access via an SSL secured website, do it. It allows convenience and reduces mistakes. This author prefers internet access to credit accounts and has never had one problem.

If you have any significant miles, points or cash back and worry that your card may scale back its program, it may be smart to redeem your rewards now while there is still such a thing as a free lunch. (My apologies, Mr. President, but you made it the best cliché to use at that moment.)

1. The banks are really in survival mode, but they will never admit it.

I recently switched banks. Every single bank I walked into told me they were in good shape. Wow. In an economy that caused some people to commit suicide, every bank in Maryland was in good shape? Amazing! I did a little research and I found out that all but one were lying through their window bars. I started with Wachovia. The account management official told me that Wachovia was in great shape and ahead of the game. (I researched that claim and found out they had recently obtained a bank in the west coast that came with millions of dollars worth of sub prime mortgages and were currently in negotiations with Wells Fargo before collapsing.)

I walked into First Mariner Bank, local to Maryland, and found one teller who was bored out of her mind playing pin-the-tail-on-my-text-messages, so I walked right back out. When I walked into Provident Bank, also local here, there were boxes on desks and I was told they were bought by M&T Bank, also a local bank and sponsor of the Baltimore Ravens. The courtesy Ravens stadium blanket they give you for starting a checking and savings account is folded up in my dresser at home. I was so impressed there I switched my business accounts over too.

2. This is only the beginning of inflated fees.

If you are anything like me, you have gotten more notices than ever from your bank, often included in your statement envelope, about “changes to your account.” Those changes are fees, my friends. The fee you pay for an overdraft is likely at least $35. If you are part of the majority of bank clientele, you are flirting with $40. It is likely that your free account has been changed to “basic”, which secretly comes with fees. Your savings account fee for a low balance has changed from $3 to $5, or, like my last bank, from $11 to $15. (Now you see why I decided to leave.)

3. Interest rates change constantly.

If you are anything like the majority of consumers, the interest rate on your savings account has gone down, and any adjustable rate loan you are paying has adjusted you into poverty. Whether or not you have done anything wrong, you can have impeccible credit and one day receive a notice that your APR has gone from, say, 12% to 27% and your only option is to cancel the card and pay it off at the old rate. (President Obama has begun to rally against unfairly changing rates.)

4. If you’re not a student, your bank doesn’t care.

College campuses are a gold mine for banks. Some students have the option of getting student IDs that double as debit cards, courtesy of bank that is really hoping a few plastic spenders will have a few overdraft fees. Do you spend responsibly? Was your last overdraft 22 years ago when they called it “bouncing a check?” Your bank hates you. You make them a maximum of 3% of the money you put in your savings account and nothing on your checking account because they cannot invest it and have to leave it available to cover checks. You aren’t even worth the free checks anymore.

5. In debt? The courts will not help you.

Have you ever signed an “arbitration agreement?” I signed one a couple of years ago when I took out a small loan. What it does it mean? Well, it means you cannot sue, for any reason. If they raise your rates, charge you early, or do anything, you must see their arbitration mediator that is in their pocket. Even identity theft victims find themselves subject to arbitration agreements that make their situation three times worse than a stolen identity. You can find a lawyer, but you will be reduced comic relief that lightened his day.

6. Your bank is more excited about your trip to London than you are.

If you use a foreign ATM, your bank alone (not counting the foreign bank) will charge you upwards of $7 for a foreign currency transaction and using a competitor’s ATM. Visa and Mastercard charge 1% of the transaction for converting currency. Check and see if any of your cards, for instance, Capital One, waives the foreign currency fee. Also check and see if your bank has an agreement with a foreign bank it has good relations with to waive customary fees.

7. For all the fine print, banks sure leave a lot of things out. Everything you should really know is nowhere to be found.

Banks hand you all sorts of meaningless paperwork with lots of fine print. The Government Accountability Office sent investigators around to many banks to test their information disclosure. One-third of them failed the test, leaving out information altogether or informing the person after ten minutes and with a little prodding. More than half did not disclose information on their websites or brochures. Consumers just have no idea what they are signing up for until two years later when they are at home receiving letters that make them use four-letter words.

8. Your money is better off anywhere else, maybe even under your mattress.

Banks offer savings accounts, CDs, IRAs — all sorts of ways to invest your money. Unfortunately, most savings accounts offer no more than .5% interest. Even in this economy, you can find places as high as 3% to put your money. I wouldn’t mind multiplying my interest by five, would you?

9. When it comes to banks, smaller is better.

I am part of a small bank. After five years with a semi-national bank and a year with a regional bank, I decided that smaller banks were the right way to go due to more personalized service, lower fees, and higher interest rates. I was right. Even though larger, nationalized banks have more convenience and more ATMs to choose from, they make 54% of their revenue from fees while smaller banks make 28%. Also with low overhead, they can offer higher interest rates for interest baring accounts and lower maintenance and problematic fees. Somehow with low fees and higher interest rates, my bank still has enough money to sponsor the Baltimore Ravens — so much so that the Ravens’ stadium is named M&T Bank Stadium.

10. Your online account information is probably inaccurate.

If you are like me, you used your bank card to buy gas, sent two checks out in the mail and deposited a check in your account, all of which are currently pending. With a good online account system, that gas purchase is holding for $1.00 and will only show the true amount when it posts. Let’s say your balance before those transactions is $1,219.48. (I’m making these figures up.) You just bought $45.28 of gas for your Ford Expedition at Exxon. You went to Wal-Mart and bought $62.48 worth of hair care products, office supplies and clothing. You stopped at the post office and sent out a $65.72 cell phone payment and an $800 payment for rent. Before arriving at home, you deposited a $600 check. You just checked your bank information online like you do every couple of days and it said you have $1,218.48 in the bank. You liked how that looked so you bought a $350 Pez dispenser on eBay.

Oops. Your gas held for $1.00 if you’re lucky. If you keep your checkbook accurate, you know that your balance before the deposit, which will probably post last, was $246.00 and you wouldn’t have bought that pez dispenser until the deposit cleared. You will likely overdraw and a $38 fee will come out of that deposit when it posts, leaving you only with $458. It is a good idea to check your online statement, daily if possible, to safeguard yourself from identity theft, but keep your checkbook accurate and spend from that balance, not your online balance.

They are also thinking about taking some “unconventional” ways to help revive the economy.

Specifically, the Fed said it is now “prepared” to buy longer-term Treasury securities if the circumstances warrant such action.

“As expected, the study on buying longer-term Treasury paper is completed,” said Ram Bhagavatula, managing director at Combinatorics Capital. “Now they will buy it if needed. But with all the programs in place to buy risky assets, I don’t think it will be needed in the near-term.”

While the interest rate is the rate charged to banks to lend to each other, maybe the low rate will translate into even lower interest rates for mortgages and loans than now and some families will be able to refinance and lock in lower rates.

Source

Before it got the bailout money, GMAC was unable to offer low interest rates (or zero percent like its rivals) because it just didn’t have the funds available. It said it will begin offering auto loans to those with a credit score of 620, as opposed to a minimum of 700 which was imposed two months ago.

For the other news expected this week and more information see the video below from the New York Financial Press.

With many professionals calling a bottom today, casual investors should now be investing for the long haul and not the quick rally. As always pigs get slaughtered and right now all the streets look red.

Well, as long as you are being responsible with your spending and paying off the balance, not just the insane interest rates, credit cards offer several benefits.

First, it helps you build a credit history and improve your credit score. Both of those things are important. Poor credit can make your insurance go up (auto and home owner’s) and can even keep you from getting a job. Employers are looking at credit scores now and having a low score could keep you from getting a job or even a promotion.

Second, credit cards offer a lot more protection than a large wad of cash. If your wallet is stolen, all you have to do is call a number and go through a process and all of the money is restored. If you do a lot of online shopping, they are necessary, not only for the ability to purchase items online, but also for the protection they offer.

Also, some credit cards offer rewards that you would not otherwise get. I don’t spend a lot of money on my credit card, but I have built up enough rewards to get a CD or something, but it is a CD I would otherwise not have.