In the evenings, when I work on this blog, I usually watch some of the financial shows that come out on CNBC like the Carmen Ulrich show. On more than one occasion I herd viewers calling in with a very intriguing question. Several people called in with the greatest credit card offer in the world (at least it sounded like to me). Anyway, these people were being offered large cash advance sums like $25,000 to $50,000 with no interest for a year. The callers, wanted to know if they should take out that money and put it in a CD with a bank and earn some interest on it. I soon came to find out that the answer was absolutely not.

Credit card companies will entice cardholders with these great offers that have many strings attached. If for any reason you are late on any one of your payments, they will hit you with fines and raise your interest rate on that cash advance from 0% to 20%. Furthermore, once you lock money into a bank CD, you are always penalized for early withdrawals. If for some reason you suddenly need that money, you will loose money in penalties.

In my opinion, unless you have plenty of money for emergencies and pay your bill a few days before the due date online, you might want to give it a try. However, if you do have money, there are better ways of investing your money. There is too much risk for that introductory offer to change for whatever reason. I would definitely agree with Carmen and avoid making that kind of financial move.

In the evenings, when I work on this blog, I usually watch some of the financial shows that come out on CNBC like the Carmen Ulrich show. On more than one occasion I herd viewers calling in with a very intriguing question. Several people called in with the greatest credit card offer in the world (at least it sounded like to me). Anyway, these people were being offered large cash advance sums like $25,000 to $50,000 with no interest for a year. The callers, wanted to know if they should take out that money and put it in a CD with a bank and earn some interest on it. I soon came to find out that the answer was absolutely not.

Credit card companies will entice cardholders with these great offers that have many strings attached. If for any reason you are late on any one of your payments, they will hit you with fines and raise your interest rate on that cash advance from 0% to 20%. Furthermore, once you lock money into a bank CD, you are always penalized for early withdrawals. If for some reason you suddenly need that money, you will loose money in penalties.

In my opinion, unless you have plenty of money for emergencies and pay your bill a few days before the due date online, you might want to give it a try. However, if you do have money, there are better ways of investing your money. There is too much risk for that introductory offer to change for whatever reason. I would definitely agree with Carmen and avoid making that kind of financial move.

In 2008 the United States government has come up with more acronyms that will go down in our history books for ever. The TARP act also known as the Troubled Asset Relief Program has basically evolved into a new plan called TALF, or Term Asset Backed Securities Loan Facilities. Essentially our government decided to abandon the idea of buying up troubled assets, and instead investing the nations failing banks.

It is my understanding that the TARP program was going to be originally used to purchase foreclosed homes. The intention was to stop home prices from further falling. However, Paulson has decided that it would be better to spend the bailout funds unfreezing consumer credit instead. Paulson is now using the TARP funds to inject more capital into our banking system in order to stabilize the economy.

Congress under the TALF fund has given away billions of dollars to financial institutions that otherwise might have failed without it. Paulson has been strongly criticized for allowing the failure of Lehman Brothers to take place. Congress has recently agreed to inject $20 billion into Citigroup, which has seen its stock price on a roller coaster ride. Around this time last year Citigroup stock was trading around $35 a share and has plummeted all the way below $4 a share. News of the bailout sent Citigroup stock soaring back up to around $8 per share.

The new bailout plan is designed to restore confidence in our banking system again. Our banks need to be healthy in order to be able to lend money to businesses and consumers who spend the money in our economy. Auto loans will help the failing American automakers to increase the sales it needs to survive. Credit cards will help our retailers continue to sell higher priced items that they would otherwise not sell as much. Student loans are needed in order to continue the spark of innovative and revolutionizing ideas that come out of our country. It is these ideas that will drive our future economies as well.

Henry Paulson has left the remaining 50% of the bailout funds for the Obama administration to administer. It will now be up to our new leaders to use these funds wisely and keep our economy from further implosion. As a nation, we must stand behind our current and new leaders and keep this country moving forward. Only time will decipher what the future has in store for our economy. One thing, I do know for certain is that one way or another our country will prevail.

North American Cities You Can Survive Without a Car

There are not too many cities anywhere either in the United States or Canada where you can survive easily without your own vehicle. Los Angeles would be an absolute nightmare to navigate without your own vehicle. However cites like New York and San Francisco make it easy for those without a car to get from one end of town to the other relatively quickly. Underground subways or above ground trains are a very efficient way of transporting people back and forth between relatively short distances.

The most well know subway system in the world is probably going to be the New York City Transit Authority. In 1898, the City of Greater New York which consisted of New York, Kings, Richmond Counties and areas of Queens envisioned and began to develop what is known as the underground subway system in New York. The technology available during the Industrial Revolution allowed New York City to develop a massive underground transit system that could transport its people, quickly and efficiently. Today, it is much easier to move from one place to another in New York City. Since traffic is so congested it is actually a lot easier not to have a car.

Another easy place to easily move around without a car is San Francisco. The Bay Area Rapid Transit system, also know as BART, is a very sophisticated high-speed transit system which is comprised of more than 70 miles of high speed rail tracks. This underground rail road system is able to move people quickly from the suburbs to the Bay Area very quickly. The use of your automobile becomes very inefficient when you have to sit in traffic for long periods of time, burning expensive gasoline and polluting the environment. The Bay Area Rapid Transit System can get you where you need to go very efficiently. The trains are all programmed to run simultaneously and do need to stop for any traffic lights. This makes getting from the suburbs to the big city much faster.

Perhaps, more large cities should consider using rapid transit systems like the ones implemented in New York and San Francisco for its citizens to move to and from work, school, etc. This country is filled with many traffic jams that pollute the environment and frustrate those who are stuck in it. Europe and Japan have for a long time been implementing this technology into their own countries infrastructure. Busses are not as efficient as trains and pollute our environment more.

What Are Biometric Credit Cards

How many times have you gone to the grocery store or fast food check out lane and all of a sudden discovered that you forgot your purse or wallet? Imagine if you could use some other way to pay for that item based on something unique about you. Biometric security measures are already in place in some very sensitive highly secure places. If you have ever had to access a building by using your thumb print, then you have already been exposed to biometric technologies. Apply the same technology to credit cards and other financial transactions and you have opened a completely new way for consumers to pay for purchases.

It would be quite convenient if all we had to do was go to a convenience store and give our thumbprint to pay for an item. Your unique thumbprint will then identify that you are authorized to use certain credit cards. After selecting which card you want to use, the computer will then use your thumbprint information to retrieve your credit card number, expiration date and your available balance. Once you give the final authorization, the credit card transaction is finalized.

There are other methods to retrieve your biometric profile besides your fingerprint. Retina identification is another way to gather such personal data. The human retina is just like you fingerprint in the sense that every person has unique features that set them apart from every other individual. Although not 100% perfected, retinal scanning is being used by agencies such as the FBI, CIA and prison institutions. This same technology can be used to identify your credit card or banking information also.

One of the big advantages of using some sort of biometric wallet is the security features that such a system has to offer. No longer are you tied to carrying around your plastic credit cards or paper money with you everywhere you go. That completely eliminates the chances of you loosing your wallet full of valuable credit cards and money. Your wallet now becomes built into your physical person. This also completely eliminates the chances of you forgetting your wallet at home. No longer can your overly frugal friend forget his or her money when you go out. With biometric identification technology incorporated into our financial transactions, even the checkout station at the grocery store will move smother.

This futuristic wallet has already been attempted by a company called Pay by Touch. Unfortunately, they were unable to make a successful go at it due to bad management and hardware costs. At this point there are too many configuration and cost obstacles to overcome. However, this technology will eventually be used by everyone from your bank to your hospital. The ability to identify a person’s medical history instantaneously will definitely help save many lives. I am quite certain that this technology will be embraced in the future. Perhaps it may or may not be cost effective to implement such a system at this time, but there will certainly come a day when costs come down and the technology is available at Wal-Mart.

Why Everyone Should Have a Credit Card


There are many advantages to having a credit card. First of all, a credit card can help build your credit history. Credit card companies regularly report to the three credit bureaus. Paying your credit card on time will reflect positively on your credit score. Also, it is important that you pay off your balance in full every month. Do not charge what you will not be able to pay off. Cardholders who demonstrate financial responsibilities will be rewarded with lower interest rates on other loans such as car notes and home mortgages. Young people can take advantage of credit cards to start building their credit for the future.

Credit cards can also be used to simplify your accounting. If you run a small business, you will be very grateful for your end of the year itemized reports. Credit card companies typically categorize all your expenses for you automatically. Charges that are made at restaurants are categorized accordingly while charges made at an office supply are categorized under office supplies. This is very handy when you need to determine how much you have spent on a particular expense so that you can deduct it from your income tax. If you spent $5000 at restaurants, your yearly itemized statement will show exactly where and when the money was spent.

Credit cards also offer you added security if you loose the card. Should you loose a wallet full of cash, chances are you will not see it again. However, with credit cards, all you need to do is call the lost or stolen hotline, cancel the card, and have another one reissued to you immediately. I remember traveling to California and loosing my American Express Gold Card at the House of Blues. Within a couple days I had a new card sent to me. Some rewards credit cards even offer additional travelers insurance in case you loose your luggage. Credit cards also offer consumers protection on certain purchases. Some card issuers will even go as far as offering insurance for a specific amount of time in case your purchase is stolen or damaged.

Another advantage to having a credit card is the ability to make purchases on line or over the phone. Most online commerce websites accept only credit cards to make purchases. Amazon.com is a classic example of a commercial website that requires shoppers to have a credit card in order to make purchases. New technologies have made it safer for consumers to use their credit cards online. Most online shopping sites use SSL secured technology to encrypt confidential data being sent back and forth between computers. This makes it almost impossible for hackers to steal your card information.

Credit cards also come in handy during emergencies. Emergencies always creep up on us and demand that we cough up cash fast. A car repair can easily cost more money than you have on hand. You will not be able to take care of important tasks without the use of your vehicle. However, with a credit card you can pay for the repair expenses immediately. Then you will have time to pay off the debt to your credit card company. If you were to have to use the only cash that you have on hand to fix your car, you would be without other necessities until you are able to make the money back. A credit card will allow you to fix your car and not be without groceries or rent money.

Credit cards when used responsibly can make any ones life much easier. If you are on vacation and loose your card, not to worry, you can always cancel and have a new one sent right away. Credit cards can also help you out of a bind or allow you to purchase the new television set or purse that you have always wanted. Credit cards can also help build your credit if used properly. In modern times, credit cards have become an integral part of our day to day lives.

Today the government announces that it would provide up to $800 billion to unfreeze consumer credit. The financial crisis has spread from Wall Street to Main Street. Student loans, auto loans and credit cards have been much harder to come by because of the crisis. Credit card companies are raising interest rates, cutting credit limits and raising minimum payment from 2% to 5%.

Consumers this year are not spending as much money on their credit cards as they have in previous years because of reduced credit limits and higher interest rates. More people this year will be buying holiday presents using either cash or debit cards. In order to alleviate the situation the government will spend $200 billion for consumer credit.

All these billions of dollars that are being spent on bailouts are supposed to help get our economy out of the biggest financial crisis since the Great Depression. Our national economy is based on people’s abilities to borrow and repay loans. Consumers who are making large purchases usually require credit in order to make those purchases. It is not uncommon for someone to purchase a $1000 or more television set on their credit card. Retailers relay on credit cards to increase sales. If consumers are denied credit then spending will slow down and the economy will suffer even more. Consumer spending is the lowest it has been in almost five decades.

It will be up to the Obama administration to stimulate the economy and keep the nation from going into another depression. It is quite obvious that we are in a major recession, but with action, our economy will pull through. According to recent news, Obama will unveil a stimulus package that includes rebuilding our national infrastructure. Public works programs will employ thousands of workers who have lost their jobs. These people will turn around and continue to spend money, make mortgage payments and be able to pay their credit card bills as well.

Our country has been through many troubled financial situations throughout history. In 1974 unemployment was at 11.5 percent. In 1983 unemployment was at 8%. No matter how bad off things have gotten, the United States always manages to pull through. We are a resilient country that can survive almost anything that comes are way. The stock market goes up and down, yet people continue to start new companies, build new buildings and prosper without regards to the DJIA.

It was the United States that created the internet. During the 1990s we experienced years of prosperity because of the dot com era. The dot com bubble did burst, yet the technology that was created during that time moves our economy today. Companies like Google and EBay have transformed the way we do business. There are many who feel that our economy is headed for doom and gloom with no end in site. However, there are those that believe our economy will eventually triumph. I am of the belief that we will come out a stronger country because of this recession. Perhaps, we will experience on day an energy boom created by new technologies. These new energy technologies will in turn create jobs and spark another boom era; and the economic cycle will start all over.

Consumer Groups Lobby for Gift Card Bill of Rights

Consumer advocacy groups have come together to come up with a “Gift Card Holder’s Bill of Rights”. Gift cards have become popular within recent years. Everyone from Target to Chili’s offers some form of gift card. This year holiday shoppers will purchase 100 billion dollars worth of gift cards. As the economy worsens, more people will give away gift cards and prepaid credit cards to loved ones.

There are two popular types of gift cards available. Gift cards offered by large retailers like Chili’s or Target are called closed loop cards. Open loop cards are those prepaid cards issued by banks or credit card companies.

The National Consumers League wants both open and closed loop credit cards to adhere to the following guidelines:

1) Gift Cards should not expire.
2) The value of the cards should not be reduced by unnecessary fees.
3) The purchase price of a gift card should be 10 percent of the purchase value and not exceed $5.00.
4) Card replacement fees should be 10 percent of the purchase value and not exceed $2.00
5) A card should become redeemable in cash once it reaches a balance of $5.00.
6) Balance inquires should be free of charge
7) Gift card accounts should be held separately from the issuer’s funds. This money should be held in trust separately and refunded to the owner should the issuer go bankrupt.

There are definitely some important points covered in the “Gift Card Bill of Rights”. I do feel that it is important for prepaid funds not to be commingled with the operating funds of the gift card issuer. As a small business owner, I know how money from one thing gets used to cover another. In the case of a gift card issuer going out of business, consumers should be able to redeem unspent funds on their cards. Without the creation of separate accounts, many people who are holding on to a gift card risk loosing their available credit.

These types of issues need to be addressed; however, the government should not regulate what gift card issuers charge for the use of their cards. Regulation is important, however, we can not over regulate free markets and decide how much profit a company should make.

Gift cards should not be allowed to expire either. A gift card should be as good as cash at any of the retailers who are participating. Cash does not have an expiration date, neither should a gift card or prepaid credit card.

Any regulation imposed on our economy should benefit both the businesses who have to adhere to the laws and the consumers it is supposed to benefit. It should definitely be law that gift cards should not expire and that money should be held in separate account should the issuer go out of business. However, we should not be telling companies how much they can or can not charge for fees. There needs to be a balance between what is going to be fair for consumers and what is going to be fair for businesses.

Congress Debates Citigroup Bailout

During the last week we have seen financial giant Citigroup’s stock plunged more than 60% in value. At this time last year, Citigroup stock was worth somewhere around $30 per share. Today Citigroup stock is worth $3.77 per share. That is major tumble in stock price for a company once revered as one the most prestigious financial corporations in the world. It is surprising that Citigroup is requesting money from the Paulson Act’s Troubled Asset Relief Program. It is estimated that Citigroup owns about $100 Billion in toxic assets.

On November 23, 2008 congress held an emergency session to determine what will be needed to stabilize Citigroup and keep the stock from falling any further. Citigroup has an estimated $2 Trillion in assets. Many of these assets are tied to mortgages, auto loans and credit cards. Our economy can not afford another failure of a major financial institution like Citigroup. Citigroup has more than 200 million customers and operates in 106 countries around the world.

The government definitely needs to come up with a rescue plan that will keep Citigroup from going under. A corporation as large as Citigroup employs several hundred thousand people. We simply can not allow this company to go the route of Lehman Brothers. The confidence lost in the markets has been felt deeply due to the failure of Lehman Brothers. Citigroup has definitely become an icon in our financial system. Their failure would be certainly quite catastrophic. However, with the help of congress it is unlikely that such a failure will take place.

The Pudding Guy

Has anyone ever heard of the “Pudding Guy”. David Phillips also known as the “Pudding Guy” is an entrepreneur and teacher at the University of California, Davis. Davis got his nickname by figuring out that the frequent flyer miles being offered during a promotion by Healthy Choice was worth more than the actual entrees themselves. He also discovered that they were also giving the same promotion for a package of pudding. Subsequently, Davis went to multiple grocery stores in his area and purchased cases of pudding. He then made a deal with the Salvation Army to give them all the pudding in exchange for helping him pull off all the UPC codes from the little cartons. He was able to purchase enough pudding to earn him 1,253,000 frequent flyer miles. This is enough miles to make a little over thirty round trips to Europe

David Phillips was able to turn a $3000 dollar investment to a seven times that value in airline tickets. With 1,253,000 frequent flyer miles Davis can certainly fly any where in the world that he wants. His idea was so ingenious that he made the attention of the Wall Street Journal and The New York Times.

Lastly, the Pudding Guy was able to earn more than just frequent flyer miles. Since he donated all the pudding he bought to the Salvation Army, he was able to get an $800 tax deduction. It would definitely be interesting to see what this guy could do with a rewards credit card.

New Treasury Secretary Appointed

On November 21, 2008 President elect Barrack Obama appointed a new treasury secretary to serve under him while he is president. Tim Geithner has been officially been given the position. Geithner has a master’s degree in economics from John Hopkins University.

Geithner seems to have quite an impressive resume as well. In 1988 he joined the International Affairs division of United States Treasury Department. Furthermore, Geithner also served as deputy assistant for international and financial policies. Furthermore, he worked under Treasury Secretary Robert Rubin from 1998 until 2001.
He was also named president of the Federal Reserve Bank of New York in October of 2003.

On Friday Wall Street responded well by rallying almost 500 points. Geithner has also stated his support for the Paulson Act. Our new Treasury Secretary will definitely have a tough job ahead of him. Our struggling economy has sparked layoffs in almost every sector. Furthermore, this credit crisis has not been a problem in the United States only. The crisis has unfortunately spread world wide and has affected every market from China to the United Kingdom. Our country must now look to its leaders to guide us through and away from this financial mess. The country now awaits the change that has been promised by our new leaders. We must all wish Mr. Geithner the utmost success in his new job.

Prepaid credit cards make an excellent gift for holiday shoppers. There are many advantages to giving friends and loved ones a pre paid credit card over traditional gifts. First of all, pre paid cards can be used for a wide variety of purposes. You can use your pre paid credit card to purchase just about anything. The gift recipient can use it to purchase new clothes or apply the money towards a vacation. College students will be very happy to receive pre paid credit cards as gifts also. This person can use their gift card at the grocery store or even at the student book store. Pre paid credit cards will come in handy especially for those who are having financial difficulties. These people can use their cards to pay bills or even put it away for an emergency. Prepaid credit cards are an even better option over using a particular retailer’s gift card. The recipient is not limited to purchases at one particular place and can use it from anywhere to the movie theatre to the emergency room.

A prepaid credit card is also a gift that can keep on giving should the giver decide to re fill it. Most prepaid credit cards can have more money added to the balance simply by going to local retailers who sell the cards. You can also go online and use another credit or debit card to refill the balance. Some prepaid credit card offers will even send you text alerts when your balance reaches a certain level. Other popular features include the ability to check your recent transactions online as well as your balance.

Another important feature to consider when purchasing your prepaid credit card is the balance limit. Some prepaid cards have a $1000 limit while others can go up to $10,000. It is also important to know that prepaid credit cards are not insured by the FDIC like checking or savings accounts. Therefore, it is probably not wise too keep much money in a prepaid credit card acount. The FDIC is currently looking into extending coverage to prepaid cards as well, but until then there is no FDIC insurance provided.

There are a variety of prepaid Mastercard and Visa credit cards. However, not all pre paid cards are equal. Some pre paid credit card issuers will charge a monthly fee while others will charge you every time the card is used. The Vision Premier(SM) Prepaid Visa card is a good example of a prepaid card. They charge a one time $9.95 activation fee and a weekly fee of $0.95. Vision Premier will waive this fee if you are enrolled in their direct deposit program. They also charge you $1.95 for every time you withdraw money from any ATM machine. In addition, they also charge you $0.95 every time a transaction involves the entry of your personal identification number (PIN). Most gasoline stations require you to enter your credit card’s PIN number every time you pay at the pump. This prevents people from using stolen credit cards to fill up their gasoline tanks. The Vision Premier(SM) Prepaid Visa

will also allow you to deposit money to it at many worldwide popular locations including Western Union, ACE Cash Express and MoneyGram.

Many prepaid credit cards also come with a rewards program. For example the Wired Plastic Prepaid Visacard offers one point for every dollar spent on the card. These points can then be redeemed towards other offers like prepaid cellular time, music downloads and even cellular ring tones. Some card like the The Baby Phat Prepaid Visa RushCard even offer a cash back rewards program.

The Holiday season usually brings out the Chris Cringle in all of us. For those who are stumped about what to give a loved one this holiday season, consider giving a prepaid credit card. Anybody will be happy to receive a gift that can be used for just about any purpose. This year don’t just give your friends or loved ones a $50 gift card to Chili’s. Give a prepaid card that can be used at other places as well. Perhaps, the person you give the Chili’s card to prefers Red Lobster, or better yet going on a diet. Instead the person you give the prepaid credit card to will be able to choose what he or she wishes to do with that money. Prepaid credit cards will make perfect gifts for anyone from your niece in college or your mom and dad in Florida.

A Long Road Ahead

No matter where we look these bad news seems to be upon us. Citigroup recently announced that it would raise interest rates on credit cards. Interest rates were raised for cardholders who had not had rates raised on them in two years. Interest rates have been raised as much as 3 percentage points for Citigroup customers. This announcement came even after Citigroup promised to congress in 2007 that they would not raise rates if they were forced to face more regulations.

These rate hikes do not come as surprise during these tough economic times. It is only logical that as people get laid off from their jobs, they will not be able to pay their bills. Credit card bills often go unpaid because people need to use whatever available funds they have to barely make utility bill payments.

2009 will definitely be a difficult year for many people the country has already been in a recession all of 2008 and things will probably get worse before they will get any better. The Dow Jones Industrial Average closed at 7552 points. The massive sell off comes after the government continues to put more stipulations on the auto industry. However, automakers don’t make a good argument that they are broke when executives arrive to Washington in private jets wearing expensive suits and expecting a handout. This does not sit well with our lawmakers or the general public who will have too pay the bill.

More job losses will definitely not mean good news for the credit card industry or anybody else for that matter. The future of the American automotive industry in is definitely a catch 22 situation. If we bail out the Detroit automakers then we are going to have to finance another 25 billion dollar bailout. However, if we do not bailout the auto industry then we face more job losses.

Despite this deep economic recession that we are in, we will prove history once again that we will recover. It will be up to our leaders to make the right decisions to get us out of this mess as quickly as possible. Our new president and his staff will definitely have a challenging job ahead of them. Repairing our economy will not be an easy task. Much damage has been made due to the years of deregulation. Our banking industry should definitely be regulated but not overregulated.

The country is now entering a new era of capitalism. It has always been the common school of thought to keep government out of business, but now our government will become shareholders of some of the largest financial institutions in the world. In reality, this will be a good thing for our economy. If as a country we are going to rescue those companies that are about to sink we might as well take control.

How to Protect Yourself from Identity Thieves

It is estimated that one in thirty-five Americans will be a victim of identity theft in his or her lifetime. One of the fastest growing crimes is now identity theft. There is even a good chance that you will not know that you are a victim of identity theft. On average, an individual does not discover that they are a victim of identity theft for about fourteen months.

There are many ways from keeping yourself protected from identity theft. One of the most important is to monitor your credit report on a regular basis. Be sure to pull your credit score at least once a year. The credit agencies will charge somewhere around $9 per agency should you wish to pull it more than once per year. If you see a sudden drop in your credit score after you have been keeping up with you’re your bills then there is a good chance that you have become another victim. You can contact any of the three credit agencies for a free annual report. Remember, that knowledge is power to stop the thieves from further ruining your credit.

Another good way to protect your self is to purchase a paper shredder. Thieves will go to any length to get what they want. A thief can find information in all sorts of interesting places like trash cans, dumpsters or even the city dump. It is very common for people to throw away voided checks, deposit slips, old tax return information, bank statements, credit card receipts and credit card offers that you receive in the mail. They will look for anything possible where they can get to your account numbers, social security information and even your drivers license number. The best way to avoid this is to shred all your important documents. You can purchase a shredder for under $75 at most any retailers like Office Max, Office Depot or better yet Wal-Mart.

Email is another way that thieves will also try to get information from you. Do not answer any emails that say they are coming from a bank and asking you for your information to update their records. These perpetrators will make the emails seem very realistic and convincing. They will disguise themselves as being from Bank of America, EBay, Pay Pal and even the IRS (Internal Revenue Service). I have received many an email claiming to be from the IRS telling me that I have unclaimed refund money. They want your social security number. That is why they claim to be from the IRS. Banks or the IRS will never solicit information from you via email. It is also very difficult to catch these online thieves as more often than not they are from out of the country. If you do receive an unsolicited email pretending to be the IRS you can report it online at www.IRS.gov. Should you receive an unwanted email pretending to be a bank such as Bank of America you can report to http://www.doi.gov/pam/Fraudalert411.html.

Also, be careful if you live in a dormitory or with roommates. You might know your roommates well enough to trust; however, they can bring someone else who brings another person that ends up steeling your check book. Lock up your valuables in your own home. You can never be too careful with important information like your bank statements, inactivated credit cards or even your driver license. All someone needs to open up new accounts is your social security number or license number and it’s off too the races. Many times people can find information about you on Google as well. One piece of information given to a search engine can retrieve other data as well.

Be careful where you give out information when online. Do not log on to online banking or other online financial sites like credit card online accounts when you are on an unsecured wireless network. Hackers can be intercepting data while you’re logged onto to your computer at popular wireless hangouts like Starbucks. Lastly, do not use public computers to access online account information either. It’s quite possible that your password information stays on that computer and is retrievable by the next person to log on.

Thanks to improvements in a technology called near-field communications is now making it possible to integrate your cell phone and your credit/debit cards. This new technology is currently being tested in the United States, Germany, the Netherlands and few other countries. Essentially your cell phone will be affiliated with a carrier as well as a bank or credit card issuer.

The advantage of this new technology is that it enables devices to communicate back and forth with each other in a secure environment. This technology uses something called inductive coupling which acts uses the principles as electromagnetism. Two devices that have the NFC chips built into them will be able to communicate. For example, when you make a payment using your NFC enabled cell phone at the Wendy’s drive through several transactions must occur. First, your NFC cell phone will send the NFC enabled cashier system your credit card information like card number and expiration date. The cashier then processes your card information. Next you will have to authorize your transaction using your credit card pin. However, instead entering into the cashiers pin keypad, you will just enter into your cell phone and the phone will communicate with the cashier allowing you to approve the transaction. Then, just like if you were at the keypad, you will receive a message to your NFC enabled cell phone letting you know whether or not you were approved. If you are approved it will be able to keep track of your receipts which you could then upload to a computer or printer.

At the 2007 Consumer Electronics Show, Nokia unveiled its Nokia 6131 NFC enabled cell phone. This phone looks like any other unassuming flip phone; you might buy for $39. The only difference is that this phone comes equipped with NFC technology that will allow you to do things like pay with your credit card or even open your front door. Even some hotels are now using near-field communication technology to grant guests access to their rooms. If you have this capability they will be able to send your phone the access code you need to get in to your room. Once you arrive at your room, you will be able to open the locked door simply by entering a code into your NFC enabled cell phone.

For those worried about security, Nokia, allow you to disable the payment option via customer service. The payment button feature that is integrated with your credit card company can also be turned on and off. If you have the option on, you have the ability to enable a password for protection. You also have the option to disable the password so that you can “express pay”.

Bank of America has announced a test run that will be conducted by its employees. 500 of its workers will be given an NFC enabled phone that they can use at vending machines in the company cafeteria and break areas.

Today there are also credit cards available from Bank of America and Chase offer “express pay” credit cards that are enabled with RFID chips that don’t require you to enter a signature or password. This offers convenience for those who are willing to run around with a “loaded credit card” in their wallet. However, most of us do not like this idea very much. An NFC enabled cell phone will allow people to make safe quick payments. This will increase the amount of people who use a credit or debit card since almost everyone carries a cell phone.

Citigroup announced today that it would lay off 52,000 employees. This is equivalent to 20% of its workforce. Like many other banks, Citigroup has been struggling with losses for the last four consecutive quarters this year. Citigroup stock has also been down 73% since last year.

It is very unfortunate that so many people have to loose their jobs. Even though, they plan to leave the job cuts for the first quarter of next year, it will still affect the lives of many a family. A twenty percent cut in workforce is a rather large number. That is equivalent to one-fifth of its 352,000 workers.

This will certainly hurt our economy significantly. More than likely 52,000 people will be spending less money of Christmas presents this year. Not only are many children going to be disappointed, but so will retailers when their sales do not equate what they expected to earn from the usual Holiday season shopping frenzy.

Despite such large layoffs, Citigroup’s Chief Executive Officer Vikram Pandit, has yet to agree to forego yearly bonuses for already highly paid executives. He says he will wait till next year to for the board of directors to determine executive compensation. How can such a decision with an obvious answer wait till next year? It is quite obvious that executives should not be entitled to bonuses after the company has reduced its workforce by 20%. This in my opinion is not fair. If they are trying to cut fat from their overhead then certainly company bonuses should be trimmed away as well. I would imagine that they will cut or eliminate many bonuses; however, it makes no sense to delay the inevitable.

All the banks who have participated in the TARP, Troubled Asset Relief Program, have agreed not to give bonuses to executives who make more than $250,000. This is in line with the guidelines that were set by Congress on October 3rd of this year.

This has been a very troubled year for the United States. Many companies, especially in the financial sector, have had to make massive layoffs. Lehman Brothers, a well known, respected and established investment bank was forced to file for bankruptcy Chapter 11. Unlike other firms, Lehman Brothers was not offered any assistance from the Federal Governments TARP program. The failure of Lehman Brothers caused the layoff of approximately 26,000 people.

Thousands of additional jobs have been lost in the financial sector as well. Everyone from J.P. Morgan to Royal Bank of Scotland has also made statements that they need to reduce their workforce by 10%.

All these layoffs are certainly not good for the economy. We have been in a recession for a year and it is likely that we will continue this recession well into 2009. No one really knows for sure how long this recession will last. The bottom line is that eventually history has proven that the economy goes in cycles. Just like there are better boom times, there will also be worse recessions. The one thing I do know is that we will eventually get through this and be a stronger country because of it.

As the world continues to turn, the United States continues to bailout failing companies. The next bailout on the agenda is for the United States automobile industry. General Motors, founded in the 1908 is among the most fragile companies. It is unfortunate that General Motors will not have a happy 100th birthday celebrate. The failing automaker is now asking the government to grant them 25 billion dollars to continue to operate. Executives from GM are saying 2008 the company could implode if they do not get funding by December of 2008. The next question that congress is asking is whether or not they should loan GM the money to keep it from going under.

The financial repercussions would be felt at all levels of society should General Motors fail. It is estimated that 2.5 million people could loose their jobs if any of the big three American automakers would go under. Jobs would be lost all they way from factories to car dealerships and all those that supply the automotive industry. Suppliers, like the Lear Corporation, who supplies the automotive industry with interior components would be forced to close down manufacturing plants as well as lay off some of its workforce. This would in turn hurt other industries such as transportation that move raw materials and finished goods from plant to plant. A downturn in the transportation industry would then affect other aspects of the economy who service that industry as well. Mechanics and parts manufacturers will not have as much work due to less wear and tare on fleet trucks that are not moving as much. Even the credit card industry will be effected as unemployed workers will not be able to make their monthly payments.

Unfortunately, in order for General Motors to save the company, they need to bring back the glory days when the American automobile was considered the epitome of quality. After all, was it not Henry Ford who invented the automobile? Yes, the automobile was invented in the United States. However, foreign competitors have been able to improve upon our technology and manufacture a superior product. During the 1950s, the Cadillac was considered the one of the most prestigious. Today, Mercedes Benz, which is German made, is considered to be superior over Cadillac in both quality and performance.

The other major moral dilemma affecting the automotive industry is the future of its many retirees who count on a pension from General Motors to make ends meet. From a socialistic point, this is a great way to provide for your employees who worked hard for the company. However, from a business perspective, pension plans only increase the cost of the product. It is estimated that at least $1000 of car American car sold goes to fund pension plans. Foreign auto makers are not forced with this problem. The other factor that is driving profits down is labor costs in the United States, especially in northern states like Detroit. Workers in Detroit earn an estimated $35 per hour while workers in Alabama earn far less at $17 per hour. In order for the auto makers to survive unions must come to terms with over inflated wages being paid to some of its employees.



The next dilemma is how to make General Motors a profitable and renowned company once again. Perhaps, there too many things to mention that GM needs to improve upon, among the most important are their level of quality. Other technologies, like ways to run our cars on alternative fuels to gasoline need to be developed. We need to become a world leader in the arena of alternative fuels. Honda and BMW are already working on hydrogen engines that will power some of its cars. GM needs to do the same as well as look for other ways to power our vehicles, such as solar power. Lastly, workers need to take less pay so that the company can be profitable. In turn, General Motors can issue stock to its employees.

The Fed has stated that GM will have to abide by TARP guidelines, such as restricted executive compensation should they grant monies. As citizens we need to stand behind our manufacturing industry in order to keep the economy going. After all, this nation was built because of manufacturing jobs, particularly in the automotive industry. Lastly, we need to stick together as a country during these trying times.

As the credit crisis worsens, many people are starting to fear that the next financial crisis will involve the credit card industry. Over the last ten years the credit card default rate has been at the 5% level. By the end of 2009 some analysts are predicting that the charge off rate will double to 10%.

Due to skyrocketing charge-offs, credit card companies are forced to increase rates. Recently, Citigroup was forced to lay off 10,000 workers and raise interest rates for over 50 million card holders.

Although, some argue that the industry is going to be the next crisis, there are others that would argue otherwise. Even if the default rate goes up, others will still be able to pay their payment in full. Very few people pay off their mortgage at the end of the month.

The other argument is that the mortgage business is a 14 trillion dollar industry, while the credit card industry is a 970 billion dollar industry. As the saying goes, you have to compare apples with apples.

The other major most important factor that favors the future of the credit card industry is the fact that nobody is placing bets on whether or not people will be able to pay their bills. In reality, the mortgage crisis was caused by something that is known as a credit default swap. Prior to the great depression, people used to bet whether or not the stock market was going to do good or bad on any given day. A credit default swap is very similar in that an investor buys a credit default swap from a creditor, and is essentially making an investment on whether or not that debtor will pay or not. If the debtor does not pay than the creditor has to pay the credit default swap holder. However, if the debtor pays his debt in full than the bank collects fees back from the investor that purchased a default swap against certain loans. The banks were selling credit default swaps to investors unaware that so many people would end up defaulting on their loans. Therefore, the banks would now get stuck with property, plus they had to pay out to investors the value of the default swaps. Credit card debt is not wagered against like this.

Another very important factor to consider is that credit card companies are more flexible with their billing abilities than the mortgage business. To start credit card companies charge annual fees on top of late fees, etc. In addition, the credit card industry charges more interest than what you pay on your mortgage.

Overall, I think America as a whole will survive the 2008 financial crisis. We are the backbone of industry and the creators of some of the most innovative concepts of modern times. In all the United States has proven that it can withstand just about anything. We withstood and triumphed over foreign occupation when we were a young country. We also lasted through the Civil War and we are still here after the 1929 stock market crash and the Great Depression that followed. Therefore, I am quite confident that the credit card industry which started in the United States will survive one of the most trying times of our history.

American Express has recently gone from a credit card company to a bank holding company as well. This will allow the company to access funds from the TARP, troubled asset relief program. American Express is seeking 3.5 billion dollars from the Federal Government in order to help relive the stress it has encountered during the current credit crises.

Typically American Express sells off its credit card debt in the form of bonds to institutional investors. These investors then would receive monthly income from monthly credit card payments. However, in recent times it has been much harder from American Express to sell those bonds to investors. Therefore, Amex is seeking relief from the Federal Reserve. So far, 52 institutions have sought help from feds.

Reduced consumer spending has affected the credit card industry as a whole. American Express has experienced declining profits in the last four quarters of this year. Bad credit card debt this year has increased 50% from last year to 1.35 billion dollars. Furthermore, Amex expects bad debt to continue during this financial crises.

It only makes sense for American Express to become a bank holding company. This gives them the ability to access funds from the 700 billion dollar bailout recently passed by congress. The diminished ability to sell credit card debt as bonds to investors could cause American Express to fail. This is now highly unlikely with its new line of credit that they have acquired from the government.

This plan is also good for the public as well. We need liquidity in our consumer credit markets to continue to fund consumer spending. Consumer spending directly affects the job market as well. If spending is down, then retailers and other sectors of the economy are affected. Less revenue means less jobs.

These are troubling times for the world economy. American Express is an institution that has been around since 1850. Once a courier company, American Express is now going to be a bank like Bank of America or Wells Fargo. Will American Express now enter the realm of banking? Only time will tell the answer.

The last 6 months has changed the banking industry completely. We have seen the failure of many well known banks like Wachovia and Washington Mutual. The mortgage crisis has changed banking forever. No longer will a lawless wild wild west exist. Federal regulations will now curtail risky lending practices and limit executive compensation. Perhaps, American Express will be able to take advantage of this changing banking arena.

U.S Treasury Secretary Henry Paulson has decided to use the remaining funds from the 700 billion dollar bailout to help unfreeze consumer credit. The credit crunch which has been affecting Wall Street over the last year has finally hit Main Street. It is now harder for consumers to qualify for automobile loans, student loans and credit cards.


If consumers are unable to qualify for auto loans then the troubled automakers will experience fewer sales than now. As it is, automobile sales are down 50% this year over last year. The automobile industry provides thousands of jobs all over the United States. Everyone from car dealerships too to auto parts manufacturers will suffer tremendous losses should the United States automobile industry fails. More lost jobs will not help the current mortgage crises. Although, the Paulson Plan does not call for aid to the automotive industry, it is important that we stand up as a nation to save this dying industry. The government should give tax credits to anyone that buys a brand new American made car. Incentives such as tax benefits for those who buy American made vehicles can only help bolster sales. We need to keep people employed so money can continue to flow through the economy.


Credit card approvals have also seen a decline because of the credit crises as well . As consumers we rely on credit to purchase things that we need or want. These purchases that people would not otherwise be able to make without credit pump billions of dollars into our economy. Consumers need buying power. Without consumer buying power, retail stores will suffer more losses. We are seeing very large retailers like Circuit City filing for bankruptcy. Without credit consumers find it much harder to make larger purchases like televisions and computers.


Less consumer spending will also affect other sectors of the economy like transportation and manufacturing. If goods are not being purchased then they are not being shipped from the manufacturer to the retailer. This hurts everyone from those working in factories, trucking companies, warehouse workers, and all the support needed to keep products moving.


Student loans are also needed to keep our work force trained for jobs of today and tomorrow. Without student loans many high school graduates will be faced to find low wage paying jobs or even no job at all. Education is what keeps our work force competitive with foreign markets. The country needs engineers, teachers, doctors, and other trained professionals to keep our way of life going.


Ultimately, the economy needs credit to continue to grow. Businesses rely on bank lines of credit so that they can pay employees. Retailers count on consumers with credit that spend money at their stores. Without credit, there will be more job losses. Small businesses will have a harder time paying people and will be forced to cut jobs. Retailers will sell less and have to cut jobs as well. These losses will only further worsen the mortgage crises. In order to keep home values from falling any more than they have, we need to keep the country working.

There are many different types of businesses entities to choose from when you set up your businesses. The most simple and least costly to set up is a DBA or as it is also known, a “sole proprietorship”. In this scenario, the owner, as an individual, assumes sole responsibility for the businesses. Therefore, any actions tied to the businesses are ultimately linked to the owner. This type of entity leaves the owner on the hook for anything like taxes or unpaid vendors should the businesses fail. This leaves personal property exposed for unpaid vendors, local and state tax entities or even civil judgments. To set up a DBA, all an individual has to do is go to your local town hall and pay for the application fee. The DBA will allow you to go to your local tax office and apply for a re sell certificate and go to your bank and open a businesses account.
The second type of businesses entity is the Corporation. The corporation can be divided into two different types; “C” Corporation and “S” Corporation. The major advantage of forming a corporation over a sole proprietorship is that the corporation becomes its own entity. This protects the owner or owners from individual liability. The difference between an “S” corporation and a “C” corporation is the way the taxes are structured. “C” corporation's are responsible for taxes at the corporate and share holder level. Therefore, if you are a working owner of a corporation, your businesses will have to pay taxes on profits and as an individual you will have to pay taxes on your own salary as well. An “S” Corporation changes the tax structure so that the owner or owners are all responsible as individuals. It is a little more challenging to set up a corporation. A local attorney can easily set it up for you but will typically charge you attorneys fees plus the state filing fees, etc. Many states also allow individuals to go on line and fill out the applications and pay the filing fees. In Texas, the application fees are around $300.
The third type of businesses entity is the General Partnership. In order to form a general partnership two or more individuals or businesses entities must come together under a common agreement that allows them to own and operate a businesses . The structure is very similar to the sole proprietorship in that the individual partners are responsible for the companies debts ,taxes, etc. Again, this leaves the owners exposed to many sorts of problems that can arise from the operation of a business.
The fourth type of businesses entity is the Limited Liability Partnership. This operates pretty much the same as a general partnership, however, the company becomes an individual entity itself, and thus limits the partners from personal liability. In addition, each individual is responsible for his or her own federal taxes. Not every state will allow you to set up an LLP. Contact your local Secretary of State for further information.
The fifth type of businesses structure is the Limited Liability Company. This operates very similar to to a corporation and a partnership. Individuals or partners can own shares in the businesses while limiting their personal liability based on “who owns what”. Furthermore, each individual is responsible for their own taxes.
In order to determine which businesses entity works best for you consult with your CPA. If you are setting up a small business and basically just want to limit your own personal exposure, I would recommend the Limited Liability Company. The tax advantages of an LLC is that it pays taxes only on the individual level. Whereas, a corporation will have to pay taxes at the corporate level and then on an individual level as well. Single member Limited Liability Companies are viewed by the IRS as a sole proprietorship and therefore, the owner, only has to file IRS form 1040 schedule C. A multi member Limited Liability Company will also be seen as a partnership and its members should file United States Partnership tax form 1065. Lastly, the main purpose of forming an LLC is to limit your personal credit exposure. The companies credit is separate from the individuals credit, therefore one does not affect the other. The good is thing is that if the business should fail, creditors can not come after you for any credit that was taken out in the name of the company.