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The New American Financial Fad

More Americans are raiding their nest eggs now than ever before. Many factors are forcing Americans to dip into retirement funds early. Layoffs. Job searches. The need to get some help to pay the mortgage. The reasons are countless.

Those who have already dipped into their retirement funds are counting their blessings. They feel as if they are the fortunate few who actually have a retirement fund to dip into. A recent Hewitt Associate study gives us a glimpse at how bad things really are. This survey showed that 6.2 percent of people who had retirement accounts at large corporations had already taken out a withdrawal as of September 30, 2008. In 2006, only 5.1 percent of these people took out early withdrawals.

So what is happening to the other thousands of people who have recently been laid off or face financial challenges from the financial crisis? Many of these people are foreclosing on their homes and are living off of their credit cards.

Watching the credit card bill pile up is certainly not a great way to live. Credit cards can be a real lifesaver, if used correctly. If not used correctly, credit cards can become a huge detriment.

Whether you are considering living off of your credit card or dipping into your retirement fund, both methods can create a huge financial burden. Living off of a credit card without any incoming cash can lead to bankruptcy in a hurry, and is not the best financial advice. Making a withdrawal from your retirement fund early will minimize the amount in your savings account and often is coupled with a large fee. Both of these methods should be used as an absolute last resort.

The economy is starting to improve. But, Americans around the country are still having to make crucial financial decisions. Live off the credit card? Take out an early withdrawal from the retirement account? Hopefully, these decisions won’t have to be made in such abundance in the near future.

The Secret to Black Friday

Black Friday is always the biggest shopping day of the year. On this particular day, millions of people wake up at unbelievable hours to sit in the cold and try to pay low, low prices for Christmas gifts.

The key to Black Friday shopping is to put all of your purchases on your credit card. Don’t just put these purchases on any credit card. Put these purchases on your cash back credit card or your reward credit card. Using your reward credit card or your cash back credit card is the only way to make it through Black Friday. Here are the top three reasons to use your reward credit card on Black Friday this year.

1. Using your reward credit card allows you to really take advantage of Black Friday deals. Some stores and other retailers offer exclusive discounts when you use a certain credit card or credit account. Plus, using your credit card allows you to buy your Christmas gifts now and pay for them later. Not everyone has enough money in their checking account to pay for Black Friday in cash. Using your reward credit card or your cash back credit card lets you complete your holiday shopping in one pain-free day and take advantage of exclusive deals.

2. Why not go shopping and earn rewards while you do it. You can earn more rewards on Black Friday than you have all year long. It just makes sense to use your reward credit card for all of your purchases on Black Friday. Pay for your gifts and earn extra rewards for yourself by using your reward credit card.

3. Pay off the balance of your credit card after Black Friday by using your rewards or cash back points. Using these cards lets you pay for the majority of Black Friday purchases with the rewards that you already earned.

Pay a lot less this Black Friday by using your reward credit card or your cash back credit card. You can take advantage of great deals. You can also earn points and even pay off the balance of your card by using the points you earned from your Black Friday experience. It just makes sense…Don’t leave home without your reward credit card on Black Friday.

A Desperate Attempt to Cut Credit Card Fees

Small business owners absolutely depend on credit cards. Is this dependence on credit cards a good thing or a crippling thing? Small businesses have had to pay high fees every time a customer swipes a credit or debit card at its terminal.

Small business merchants say enough. These merchants have started lobbying for new legislation to help them out. They are hoping for legislation that would force banks to negotiate lower fee rates with them. The legislation’s sponsors are calling for a “credit card bill of rights for merchants.”

The relationship between merchants and credit card companies has become fiercely bitter. Several merchants are joining together in a class action suit against Visa, MasterCard, and several banks. They claim that these credit card giants have violated sensitive antitrust laws.

The problem is that small businesses no longer have the option of whether or not to accept different cards. Economists are saying that when it comes to credit cards, Americans have been socialized. What they mean is that the ‘norm’ is only pay with plastic these days. The days of paying with cash or a check are long since gone.

Merchants are forced to pay high fees to keep up with credit-’socialist’ times. There are two main parts to the fees they have to pay. The interchange fee includes the average 1.7 percent of the sales price and a per-transaction flat fee. In addition to the interchange fee, merchants have to pay a fee that goes directly to their bank.

Let’s look at a common example. Say a consumer paid $1,000 for a T.V. at a local electronics shop. To buy the T.V., the consumer used a credit card. The credit card company that issued the consumer’s credit card gets paid the interchange fee. This fee is $17.10 (this includes a $0.10 flat fee). The electronics store’s bank gets four-tenths of one percent of the total sale. In this example, the bank gets $4. The electronics shop keeps only $978.90 from the sale of a $1,000 television.

Small business merchants paid over $61.50 billion in electronic payment fees in 2007. It has been estimated that credit card lenders received 82.5 percent of those fees. Merchants don’t plan on giving up easily. They are determined to fight for a more reasonable fee plan. The House Judiciary Committee has already ruled that merchants and banks are supposed to negotiate fees. However, merchants will keep lobbying for a more concrete law.

Rates as Low as Your Birth Year

Imagine a Hotel and Resort company that celebrates you! Imagine staying at a 4 or 5 star hotel and only paying a small, small rate. You can now with the Starwood Hotel and Resort Birth Year Promotion.

Here’s how it works.

-The rates vary by participating properties the first night. Rates start at just $95.
-Get the second and/third night rate equal to your birth year!
-Say your were born in 1938. You’ll pay just $38 per night.
-Be sure to bring a valid ID so that your birth year can be confirmed.
-Hurry and plan your next getaway today because this offer is only good until December 30, 2008.

Here are some hotels to choose from.

-The Boston Park Plaza Hotel and Towers
Go stay in the heart of Boston. You’ll be in the center of Boston’s finest shopping district, which will allow you to get all of that holiday shopping done. Pay $199 the first night and your birth year the second nigh.

-Sheraton Hotels and Resorts
Stay at the historic Sheraton Commander hotel in Cambridge. You’ll pay $249 your first night and rates equal to your birth year the second and third night.

-Le Meridien
Stay in the heart of Cambridge’s Central Square at Le Meridien Cambridge. You’ll be sure to have a wonderful, luxurious and historic stay here. Pay $259 your first night and rates equal to your birth year the second and third night.

These are just a few wonderful hotels to choose from. You can also choose to stay in different cities. These cities include:

-Providence
-Manchester
-Lexington
-Hartford
-Stamford
-Burlington
-Toronto
-Montreal
-Ottawa
-Quebec City
-Halifax
-Collingwood
-Hamilton
-And More!

This offer isn’t going to be around very long. Make sure you book your get away today.

This guest post is brought to us by Plastic Rewards, leader in offering cash back rewards for credit card issuers.

Credit Card Holiday Shopping

‘Tis the Season for holiday shopping. Halloween is just around the corner. Thanksgiving will be here before we know it. And, we all know what that means…Black Friday. Black Friday has been the biggest shopping day of the year for decades. Retailers offer great deals and unbelievable discounts. If you feel brave enough to fight crowds and hoards of people rushing to get the best deal, Black Friday can be your favorite day of the year.

Economists are predicting that Black Friday, or the Day After Thanksgiving, sales are going to be quite grim. Most economists don’t think that the bailout plan will have taken effect by then. Economists shouldn’t have the power to tell us whether or not our shopping experience this holiday season will be good or bad.

Let’s prove all of those ‘bah, humbug’ economists wrong. Let’s use our cash back credit cards wisely. Some of us have recently had our limits lowered. Others of us haven’t experienced any changes to our cash back credit card reward program. Either way, this holiday season can be a good one for us all.

How? Here are some great tips to use your cash back credit card wisely this holiday season.

1. Pay it off. Try an get the balance of your cash back credit card paid off in the next few weeks. Do whatever you have to do to lower the balance of your card. You’ll be able to free up your limit and make room for the holiday shopping.

2. Be informed. Keep up-to-date on the latest policies and procedures for your cash back credit card account. Banks and credit card companies are tightening their reigns, but this doesn’t have to ruin your plans. Make sure that you are aware of their ever-changing policies. This will allow you to make the most of your holiday shopping.

3. Get the deals. We are going to see unbelievable deals this holiday season. Retailers and companies around the country have been forced to drop their prices. For instance, the price of an Apple iPod is incredibly low right now. Take advantage of these deals. Stock up now before prices start increasing again.

This holiday season is going to be great for all of us. Use your cash back credit card to do all of your holiday shopping. You will be able to get everything on your list and get some cash back in the process. Don’t let the economists ruin your holiday cheer. Use your cash back credit card to spread some holiday cheer of your own.

Holiday Shopping to the Rescue

Economists aren’t holding their breath in hopes that this holiday season will be a good one. In fact, leading economists around the country have already begun telling us how awful this shopping season will be. The 2008 holiday season doesn’t look like it is going to pull the U.S. economy out of its slumps. Our economy needs consumers to get out there and do a little holiday shopping this year.

Don’t be afraid to spend money this Christmas. You can save a lot of money during your holiday shopping when you use your cash back credit card. Prove the National Retail Federation wrong this holiday season. Show them that this year is going to be a great one, in terms of sales.

More and more people are looking into getting cash back or reward credit cards. Why? Because these cards come with real incentives that actually benefit the cardholder. You’ll earn cash back points every time you use your cash back credit cards. These points can be redeemed after you’ve accumulated a certain amount.

These points will come in handy this holiday season. The more people utilize cash back credit cards this holiday shopping season, the better off our economy will be. Truly, cash back credit can be the thing that helps our economy rebound. Why? Because cash back credit cards offer incentives to anyone who uses them. These incentives just might encourage people to start using their credit cards again and stimulate the weakened economy.

This holiday season will certainly be a dismal one without the use of cash back credit cards. Our economy absolutely needs the use of these credit cards in order to get it moving again. So take this financial advice, and let cash back credit cards come to the rescue by using them this holiday season.

The Need for Small Business to Get Creative

More and more people are beginning to feel the credit crunch on an everyday basis. The credit crunch is not only affecting individual lives. It is majorly affecting businesses, especially small businesses. Banks and credit unions around the country have started using drastic measures to keep afloat. These drastic measures are affecting small businesses more than anyone else.

Entrepreneurs and small business owners have been forced to get creative. These business men and women have to have money and credit available to run their businesses. The much needed credit and money cannot come from banks and credit unions because these organizations have put a tight leash on all outgoing money. In fact, we are at a 15 year low in terms of the number of small businesses that are currently using bank loans. So, that’s where the creativity comes into play.

Small business and entrepreneurs have turned to nontraditional funding. The most common form of this nontraditional funding is person-to-person lending, social lending or peer-to-peer lending. A common funding network is LendingClub. This Internet venture connects borrowers to individuals willing and able to lend much needed cash.

These sites are set up somewhat like Internet dating sites. Individual lenders are able to search different profiles of potential borrowers. These profiles are laden with information about the needed money, how the borrower plans on using the money, what their business set-up will be, etc. Lenders are able to lend to each and every borrower they want to and have the freedom of choosing the amount they wish to give. Some individuals lend the bare minimum, $25. Others offer several thousand dollars.

These individual lending programs are set up similarly to bank loans. Individual lenders are able to earn interest on each of their loans. Rates for these loans are similar to the rates you would find at a credit card company.

Small business owners and entrepreneurs appreciate this new and innovative lending method. One small business owner need to borrow $25,000 to open his store. Within two weeks, he had the money he needed from using LendingClub. He borrowed his $25,000 from 74 different lenders. This method of lending just may be what saves small business owners until this country can get back on track.

Protecting Your Hard Earned Cash

Your money is most likely federally insured, up to $100,000. However, there are still several things you can do to protect that hard earned cash, in case your bank is seized. Recently, we have several institutions in serious trouble. The once powerful IndyMac Bank was shut down by regulators, something that its customers never saw coming.

Thousands of people lined up (some even bringing lawn chairs) in the Summer months to pull their money out of the failing institution. Most of these people didn’t lose a dime because they were federally insured. In fact, everyone still had complete access to their account via the Internet, checks, debit cards, credit cards, and ATMs.

The problem is that most Americans don’t know what to do if something like this happens. We had gone almost 20 years since the latest savings and loan crisis. More than 1,000 banks and other financial institutions failed during this time. This crisis also cost taxpayers more than $125 billion.

The FDIC has a list of troublesome institutions. Check to see if your bank is on that list. If it is, switch banks. At the end of June, there were 117 “problem” institutions. Compare that number with the number that was released at the end of March…90. IndyMac’s failure noted the eleventh bank failure just this year. It was also the second largest financial institution to ever fail. Bad mortgage loans, the credit crunch and falling home prices have bank analysts predicting that dozens (even hundreds) more institutions will fail this year.

Here what you can do to protect your hard earned money.

1. Advance warning. It is almost completely impossible to know which financial institutions will fail ahead of time - who would have though Washington Mutual would fail? Some banks struggle for years and then completely rebound. Other seemingly strong banks can fail in a matter of days. You can use bank ratings to get an idea of what lies ahead. Most of these ratings however, are based on the bank’s own reports. The key is to be aware but don’t expect to know all of the answers.

2. Coverage. Banks are typically federally insured up to $100,000. Many credit unions are insured by the National Credit Union Association or NCUA. If you have certain retirement accounts (such as IRAs), your limit can reach up to $250,000. Your limit can further be increased for each “pay-on-death” account that names beneficiaries. For instance, if you name each of your four children as beneficiaries on a POD account, each child would get up to $100,000 of coverage. That all adds up to $400,000 for the entire account.

3. Know the process. Bank seizures can either be the biggest hassle or nothing to worry about at all. Government regulators often close a bank of Fridays. Most times, another financial institution has already been lined up buy the failed bank’s business. Keep in mind, they buy the failed bank’s business minus any trouble loans or assets. As soon as regulators step in, they give the FDIC complete rein over the “merger.” Over the weekend, the FDIC finishes handling the case to ensure an hassle-free transition. By the time the bank opens the following Monday, it is already under new ownership. As with IndyMac’s situation, customers have complete access to their accounts the entire time.

4. Read it all. Once your accounts are transferred to the other institution, you are sure to get plenty of literature to read. Don’t toss it aside. Make sure you read everything. Check to see if the terms of your checking account and savings account stayed the same or if they changed. Also, the address where you send your installment loan payments may have changed. Don’t be caught unawares, make sure you read everything from the new institution.

5. Keep cash at home. You probably won’t need any cash at home if your bank fails. But, it is always better to be prepared. Keep just enough cash at home to get you through a couple of days in the even your bank isn’t sold immediately.

Chances are, your bank isn’t going to fail. If it does, chances are there won’t be anything to worry about. However, it is always better to be informed and stay prepared. You can be sure that you can protect your hard earned money.

Thanks to our guest blogger from Plastic Rewards, a site putting the best credit cards side by side and giving you the information you need to chose.

How American Express is Helping Students Build Their Credit

Major credit card companies, like American Express, could care less about how a student builds their credit, right? Absolutely wrong. American Express has recently been trying to help students built their credit. They do this by offering a number of realistic credit cards, especially designed with the college student in mind.

Many of the American Express student credit cards come with a variety of features that help students manage their finances and build their credit while still in school. In recent years, many college students didn’t feel that it was necessary to worry about their credit history while in college. This is a costly mistake. The longer your credit history, the better your credit will be. Many students didn’t realize that good credit took years and years to build. They thought that all they had to do was graduate college, land a great paying job, take out a mortgage loan, several car loans and some credit cards, and instantly they would have good credit.

American Express, along with other major credit card companies, have begun offering “student” credit cards to help students realize the need for good credit. American Express offers online account management which helps the students get into good credit habits. It offers email reminders about upcoming payment due dates and other notifications. Here are some of American Express’s most popular credit cards.

Blue from American Express
-No Annual Fee
-0% APR on purchases for the first 15 months
-Low balance transfer fees
-Earn points-points can be redeemed for gift cards, travel, merchandise, entertainment, etc
-Membership Rewards Program
-Express approval

Clear from American Express
-No fees of any kind (no annual fees, late fees, overage fees, cash advance fees, balance transfer fees, etc)
-0% APR for up to 12 months
-Automatic Rewards
-Every time you spend $2500, you get an American Express gift card worth $25
-Carry a balance or pay in full
-Express approval

Although these credit cards are not designed specifically for the student, they are a great way to earn rewards and build credit. These reward credit cards are the most popular reward credit cards among students and professionals. If you are looking to build your credit history and get rewarded at the same time, try the Blue card or Clear card from American Express.

How $45 Saved Me Over $1000 This Year

Saving all that money was simple and easy. All I had to do was change my behavior slightly for my family and I to reap such a large benefit. It took time to implement and getting my wife to also change her behavior wasn’t the easiest either, but we did it. We have been able to save over $1000 just this year alone on hotel and airline tickets. All we did is use our American Express Starwood credit card for every possible purchase we could and pay it off every month, allowing us to acquire a significant amount of points. The only money it cost us was the $45 annual charged by American Express.

This year we took a vacation to San Diego to visit friends of ours whom we had not seen in several years. We decided to stay in a Starwood Hotel close to their home that would have cost us $119 per night for a total of $595 for the five nights we vacationed in San Diego. Instead of paying out the almost $600 before taxes and fees, we were able to redeem accumulated points and stay in the hotel for free - eliminating a very large portion of any vacation expense. This wasn’t the first time we had redeemed points for a free hotel stay either.

I was also able to travel to San Antonio to visit with family. Guess how I got there? That’s right, with points I was able to redeem for an airline ticket on Delta Airlines. With sharply increasing prices on airline travel it didn’t make much sense to buy an airline ticket. I was simply able to use my points and save over $400 on the cost of my trip - a huge savings!

This is how easy it was for me to save over $1000 by spending only $45. We just used our credit card to charge all our purchases and earn reward points. You can do the same or similar by finding a credit card that fits you and your lifestyle. Just because a credit card has an annual, doesn’t mean it is not worth considering, given the rewards it offers.