Credit card companies use a number of tricks to levy fines on your account and collect as much as possible. The Consumerist showed yet another example of this practice when they allowed automatic withdrawls to continue even after accounts have been closed and the have ceased sending statements. In this case, a $38 late fee was imposed... for nothing.

From Consumerist.com:
When Capital One "closes" your credit card account, they'll continue to allow automatic withdrawals even though the account is closed. But they won't send you a statement—you know, because it's closed!—so that you'll end up with late fees. Quenten experienced this first hand when he closed his account recently, and now Capital One has sent his account to collections over a $38.00 late fee for two 38-cent charges that he never knew about.

One of the UK's largest credit card issuers was recently forced to withdraw credit from seven percent of its consumer base (161.000) people in order to increase its liquidity amidst a credit crunch that has affecting many others in the industry. So far, however, it appears that the other players are content without cutting back on their consumer accounts. For better or for worse, many are still letting consumers spend money they don't have...

From Reuters:
Egg’s move to withdraw credit from seven percent of its customer base - a total of 161,000 people - serves as a stark reminder of the severity of the credit crunch, and how it is impacting the man and woman on the street. A quick ring-around other main players in the credit card market - Barclaycard, MBNA, Halifax and Capital One included - did not uncover any other plans to mass-close accounts. But few can deny that the liquidity crisis is continuing to have an impact on consumers.

Many people have rushed to refinance their home loans after the Federal Reserve continued to lower rates. The WSJ reported a surge of 22.1% last week from the previous one while applications are up 70.7% year over year. Unfortunately, these are almost all from existing homes rather than financing for new home purchases, but it does represent people at least interacting again with the real estate financing sector. Is it time for you to refi? Well, rates are lower than they have ever been before...

From The WSJ:
Homeowners' applications to refinance loans surged again in the Mortgage Bankers Association's latest survey of filings, rising 22.1% last week from the previous one. According to the survey, refinancings accounted for 73% of the total number of mortgage applications filed during the week ended Friday, up from 66% the previous week. Applications for new mortgages to buy homes decreased by a seasonally adjusted 17.7% on a week-to-week basis. Overall, applications for mortgage loans rose a seasonally adjusted 7.5% last week, compared with the previous week. And applications rose 70.7% from the year earlier.

Bush unveiled his new $3.1 trillion budget today that may hurt many retirees and increase the national debt but promises to increase support for troops stationed abroad. The proposed budget is largely a political exercise since the Democratically controlled Congress will be responsible for approving it, but it does illustrate the many problems facing our country going forward. Many Democrats complain that the budget will trim health benefits for retirees why skyrocketing our national debt even more than it already has under the direction of President Bush. Bush responded by saying that it is a budget that achieves some important objectives.

From LATimes:
President Bush unveiled a $3.1-trillion budget today that would boost military spending and trim health benefits for retirees. The proposal was immediately tagged by Democrats as "irresponsible." The first spending plan in history to top $3 trillion would freeze or eliminate many domestic spending programs yet still rack up a $407-billion deficit for fiscal 2009, which begins Oct. 1. The Pentagon is the only department for which Bush proposes a significant increase; its budget would grow 7.5% to $515 billion. "It's a good budget," Bush said after meeting with his Cabinet. "It's a budget that achieves some important objectives. One, it understands our top priority is to defend our country, so we fund our military as well as fund the homeland security."

"When President Bush took office, the national debt stood at $5.7 trillion," said Rep. John M. Spratt Jr. (D-S.C.). chairman of the House Budget Committee. "Today it is $9.2 trillion and rising, projected to increase to $9.7 trillion by the time President Bush leaves office -- up by $4 trillion in eight years. This is the legacy our children and grandchildren will inherit from the fiscal policy of this administration."

Many people are tempted to get store cards when they shop, but it might not be worth it for many. BankRate notes that these cards often charge higher interest rates and often have stricter terms that can end up costing you a lot more in the long run. Also, having multiple credit cards can damage your credit score - especially if you carry a balance on all of them. As a result, most people may be better off sticking to one card that they can track and pay off regularly.

From CBSNews.com:
How many times have you gone to a store and have the clerk at the counter say you can get 10 percent off your purchase if you sign up for that store's private credit card? It's pretty tempting, but you'll want to think twice before signing up. According to the folks at bankrate.com, these store credit cards charge interest rates that are substantially higher than those of a regular credit card. You also want to remember that having too many credit cards can damage your credit score. All that said, if there is a store you find yourself shopping at all the time, it may be worth it to get the card, because sometimes they offer deals such as a discount on purchases when you first sign up. And remember -- closing these credit cards can also hurt your credit score, so be careful not to do that too frequently, especially right before you apply for a car loan or mortgage.

The United States has recently decided to give its citizens more money to spend in order to help spur the economy and turn the nation around, but many are skeptical as to the success of such programs. Indeed, the US has countless other problems that stand in the way - consumer spending cannot be relied on to solve problems like it has in the past. The fact is that this nation has been converted into a nation of debt - both in terms of its citizens and the government itself. Broad policy changes and tax hikes are needed in order to pull out of this mess...

From EdmondSun:
Responding quickly to save us from tumbling into a recession, President George Bush and House leaders have proudly unveiled an economic stimulus package worth some $150 billion. If approved, the plan will distribute checks to households across the country this summer. The resulting spending spree will spur the economy into a new era of prosperity. Yeah, right.

Many different countries rely on consumer spending in the United States to support their economies. Many domestic companies also rely on strength in foreign economies to support themselves, meaning that U.S. stock markets could see a further slide if other countries are significantly affected by any problems in the United States. A global slowdown isn't good for anyone...

From Reuters:
Mexican consumer lending by banks, expected to be a key motor of the economy this year, grew 19 percent in December, a slower pace than in previous months, according to a report on Thursday. Consumer credit barely existed in Mexico when its economy was dragged down by the last U.S. recession six years ago.  Mexico cut its economic growth forecast for 2008 on Wednesday to 2.8 percent from 3.7 percent as a possible recession loomed in the United States, its top trade partner.

MasterCard announced its earnings today and in it offered great insight into the economy of the United States and consumer spending. Among its notes, the company said American spending was shifting from discretionary purchases (those that aren't needed) to staples (those needed during every day life). Spending did manage to grow despite the harsh conditions by 5.1% last year, although it is slowing this year and could turn negative.

From TakingTheStreet:
Mastercard offered some useful insight into the domestic economy as well. The firm noted that consumers were spending more money on staples than discretionary items. Consumers are moving away from items like jewelry, restaurants, and home furnishings to instead purchase things like gasoline, groceries, and personal health care items. The company also noted a slowdown in spending in the U.S.; however, spending still did manage to grow at 5.1%. However, countries in Asia, Middle East, and Africa saw their spending increase an astounding 42%. Meanwhile, our neighbors in Latin America saw spending increase 28%. So, while things may be bad in the U.S., they are certainly booming abroad.

A new plan put in action by the President and Congress may help many homeowners struggling to make their payments. The plan calls for a reversal in tax policy that treats forgiven housing debt as taxable income on federal tax returns; allows homeowners who bought last year to deduct the amount of premiums they pay for PMI; and allows widowed spouses to exclude up to $500,000 in capital gains on the sale of a principal resident if the house is sold within two years of death. This is all great news for homeowners.

From AccountingWeb:
Amid daily headlines of a worsening housing crisis, debt-burdened homeowners are looking to two pieces of congressional action that could ease the pain. Monday's headlines stated that new home sales fell by 26 percent last year, which is the biggest drop since 1963, the U.S. Department of Commerce says. And last week's headlines said sales of previously owned single-family homes took a dive - the biggest annual drop in 25 years. Meanwhile, about a quarter of all subprime mortgages are in default. As more and more homeowners face the very real prospect of foreclosures, Congress last month passed the Mortgage Forgiveness Debt Relief Act. Also, Congressional Democrats say an economic stimulus package - centered on $100 billion in tax credits for about 117 million families - is headed quickly for a vote. They aim to get the package to President Bush by Feb. 15.

Many people make the mistake of only making minimum payments on their credit card debt. The problem is that you will never end up paying off your debt because you'll simply be paying back the interest only part while leaving the principal untouched. The key to getting out of debt is paying down as much of the principal as possible so that you can stop making payments sooner. Unfortunately, many people now are doing just the opposite and getting themselves into more trouble.

From LATimes:
Easy credit is great. Except when it's too easy. Millions of people are now in danger of losing their homes as a result of the meltdown in the sub-prime mortgage market. But millions more face the prospect of financial ruin because of an even more ubiquitous problem: the danger of making only minimum payments on monthly credit card bills. "You're not even denting your debt at all," said Schimeck, a Detroit resident. "All you're doing is keeping your credit card company happy so you can keep your account."

The global credit crunch that has already affected many people as lending standards tighten could be set to get worse if the economic downturn in the West continues, according to the IMF. Writedowns are continuing to affect many institutions and there is fear that the may continue to cause problems in the future. Any serious increases in the credit crunch could pour into the consumer credit and other sectors.

From Forbes:

The global credit crunch, already felt by financial institutions could continue to worsen if the economic downturn in the United States or elsewhere deepens, the IMF reported today. 'Evidence from lending surveys already shows some tightening of lending standards,' the IMF said in an update to its Global Financial Stability Report. It added that this crisis is being felt not only in the US, but also in Europe. 'While other regions' financial institutions appear to have less exposure, subprime related writedowns are still possible,' the report said.

American Express announced an increase in its loss reserves for bad consumer debt again this quarter as consumers are expected to continue defaulting on credit cards after troubles in the mortgage markets, higher energy costs, and higher food bills. Meanwhile, many are expecting the housing market to continue stalling until 2010 when the resets start to slow.

From BBC News:

American Express has posted a 10% drop in profits for the three months to December after it set aside extra capital to cover bad credit card loans. The US credit card firm said net income was $831m (£418.7m), down from $922m a year earlier. It attributed the decline to an after tax charge of $274m to boost revenue for credit card-related losses. This reflected huge defaults by American Express customers suffering from higher mortgage repayments and higher energy and food bills, analysts said.

Those with credit problems may find now as the best time to approach credit card companies in order to get their rates lowered, fees waived, and other assitance offered. Credit card companies are desperate to keep their customers these days as they can ill afford to lose them as an increasing number of clients are defaulting on their credit cards or declaring bankruptcy. So, it may be a good time to give you credit card company a call if you are experiencing problems!

From TheStreet.com:

"Before the subprime lending crisis, the banks didn't have to bow and scrape for your business, but now they desperately need you," says Robert D. Manning, author of the book Credit Card Nation. "If you have a substantial debt load, they don't want to lose you" because someone with a big debt load is often profitable for the banks.

In other words, when you're facing an impossible credit card payment, you might have more bargaining power now on how to avoid missing it. In any event, you have reason to fight. Scott Bilker, the founder of DebtSmart.com, says your lender might raise your rate to as much as 32% if you miss a payment. If you were regularly paying off $140 per month on $5,000 of credit card debt at an original 10% rate that got jacked up to 32%, you could end up owing an extra $10,220 as a result.

The numbers speak for themselves - the housing market experienced one of the largest crashes in its history last year and things do not look any better for this year. The reason for this is simple economics: An increasing number of mortgages are experiencing an interest rate reset to a higher level due to an ARM with a teaser rate; higher interest rates will lead to more expensive mortgages and late payments; more late payments will lead to more foreclosures; more foreclosures will lead to more houses on the market (increase in supply); and more houses on the market means lower valuations for the housing market; and finally, a declining market means buyers are afraid to put in money and buy a house leading to even lower prices (lower demand). It's a vicious cycle that may take awhile to end.

From New York Times:

Sales of new homes fell last year by 26 percent, the steepest drop since records began in 1963, the Commerce Department said on Monday.

Last week, the National Association of Realtors reported that sales of previously owned single-family homes, a large portion of the overall housing market, suffered their biggest annual drop in 25 years.

Prices have also fallen sharply. In December, the median price of a new home fell to $219,200, down 10 percent from December 2006.

For the year, the median price of new homes rose just 0.2 percent, to $246,900. But the median price of a previously owned single-family home fell for the first time in at least four decades, the National Association of Realtors said.

Housing prices have hit historic lows and many are predicting further falls into 2010 before things start turning around. So, is now the time to buy up real estate while it's cheap, or should you wait until things settle down a bit more? Well, a lot depends on the person. If you have the financing available to purchase some investment properties, then it may not be a bad time to start getting into the market. It is most definitely a buyer's market out there right now as people continue to struggle selling homes. Those in a position to make payments and have a downpayment ready may want to take the leap while the market is at a low.

From CNN Money:
Is it a good idea to buy real estate during a recession? - jordanfan954

It's not about the economy's health. It's your personal wealth. If you're in a position to make the payments and you have a down payment, start shopping. There are bargains to be had. Housing prices have fallen dramatically in some places. And many economists say that prices will fall even more. Merrill Lynch, for example, says this year home prices will fall 15 percent and 10 percent in 2009. So, it is a good time to start the process of home buying. 30 year fixed rates are at 2 and a half year lows and it certainly is a buyers market. Now is the time to get the best credit score that you can - investigate markets you're interested in and start squirreling away your down payment.

The Federal Reserve has just cut rates in an emergency meeting and more cuts are expected down the road as they tried to stave off a recession. So, is now the right time for you to refinance your mortgage? Well, lending standards have tightened substantially since the last time you probably got your mortgage. It is more difficult for those with poor credit to get an attractive refi offer. Today, you'll need 20 percent equity in your home and a credit score of 760 to even be considered! In short, those who have adjustable rate mortgages facing a higher reset may want to consider refinancing into a fixed low interest rate loan now if they have good credit - the time is right!

From CNN Money:
With the recent Federal interest rate cuts, is this a good time to refinance my home loan? What things should I take into consideration prior to refinancing i.e. credit score? - Ricardo, Florida

The bottom line is: if you have good credit, you'll be a winner. Falling mortgage rates are great for homeowners looking to refinance. This is especially true if you face an adjustable rate mortgage reset. But lenders are getting stricter. Today you'll need 20 percent equity in your home and a credit score of about 760 depending on the loan you get, to even be considered for a refinance. One mortgage broker we talked to said that in the past 8 out of 10 people who walked through the door were able to refi. Today, that number is more like 3 out of 10. So, if you don't have great credit, you want to focus on paying off high-interest debt, mailing in your payments on time and don't apply for any other credit in the meantime. Keep in mind, refinancing isn't free. It can cost 1-2 percent of the value of the loan.