Federal Reserve Chairman Ben Bernanke.

It has been sometime since we heard what Alan Greenspan had to say about the economy. That is because he isn’t the Federal Reserve Chairman anymore. Since 2006, Ben Bernanke has been the Federal Reserve Chairman. We haven’t really heard a lot from Bernanke…until now. The American economy continues to spiral downward. Millions of people around the country are in too much debt, either mortgage debt or other forms of debt. The situation on Wall Street continues to get worse.

The financial crisis that our country is experiencing right now could completely hinder more U.S. business growth. Ben Bernanke has pledged to “act as needed” to stabilize the unstable economy. Unfortunately, the Federal Reserve is having to fight the biggest financial battle since the Great Depression. Recently, Bernanke and his team at the Federal Reserve, have undergone intense questioning on Capitol Hill. The questioning is about whether or not the Bush administration’s plan will work. The Bush administration has suggested a $700 billion bailout plan.

This plan has already seen a massive amount of scrutiny. It seems as though the whole country is becoming more and more frantic about how to get our economy back up and rolling. The majority of Americans don’t seem to be listening to the Feds’ reassuring words. Is that because they don’t seem to be all that reassuring? The Federal Reserve and Ben Bernanke keep saying that the Fed will do everything in its power to provide relief to the weakening economy.

Ben Bernanke doesn’t seem as calm and collected anymore either. Do we have reason to be concerned? Absolutely. Our entire economy is falling out from underneath us. Because the economy is slowing down at an increased rate, we can expect more inflation for the rest of this year and next year. However, Bernanke is all for the Bush administration’s bailout plan. He continues to warn Congress about the consequences that our country will face if we don’t enact the bailout plan.

Bernanke says that if the bailout plan isn’t put into force, nobody will be able to borrow money. He says that this “scenario could result in the world’s largest economy grinding to a virtual halt.” Bernanke goes on to explain the caution in which lenders have begun to use. This cautious behavior can completely stop business growth.

Gas prices continue to be a factor in our economy. Although gas prices have dropped since the all time high of $147.27 per barrel, oil prices still continue to fluctuate. Since last week, oil prices have increased approximately $15. The dramatic fluctuation of oil prices leads to the problem of not being able to predict the future price of gasoline.

The Feds continue to meet to see if they should drop interest rates even lower. The Federal interest rates remains at 2 percent. However, the Feds have alluded to the fact that they will lower it further if times get really desperate.

Everyone needs to do what they can to help stimulate the economy. We need to be constantly watching Wall Street and the effects that it has on our economy. Now is the perfect time to be prepared.

President Bush addressed the issue of our failing economy to the entire country on Wednesday night. His address was mainly a warning to all Americans and especially those lawmakers who are reluctant to pass his $700 billion bailout plan. President Bush warned that if this plan is not passed, jobs will be lost, businesses will be forced to close, retirement accounts will fail and our country will be headed towards a “long and painful recession.”

Our economic problems have surpassed President Bush’s ability to correct the problem. In fact, President Bush extended invitations to both presidential candidates, Barack Obama and John McCain, to work out a compromise. One of the aforementioned men will “inherit” the weakened economy in just four months. Key congressional leaders were also invited to help solve the problem.

President Bush stated, “Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.” President Bush expressed his concern for our troubled economy. He is welcoming advice and recommendations from both political parties. However, he said that he would not put any regulation in force that would prohibit economic growth.

The Bush administration’s bailout plan has already been met with extreme skepticism. It was announced just last weekend, and has already undergone a massive amount of controversy. Americans and lawmakers, on both sides, are very concerned about the impact it will have on American taxpayers and the entire private sector. Many wonder whether the timing is right to enact such a large plan. Similarly, many people are concerned with the massive amount of debt the plan entails.

President Bush addressed these concerns. He stated that he was extremely hesitant to put taxpayers money on the line to help failing businesses. Critics of the plan have been concerned that taxpayers will have to bail out individual companies and struggling businesses. Bush stated that individual companies are not the main focus. He also tried to put Democratic fears at ease about whether the CEOs of these failing companies will be rewarded. They will not, he said.

Bush understands that this country faces the largest financial crisis in decades. Because of this, he pleaded with Americans everywhere, especially lawmakers, to accept this plan. Senators Obama and McCain also issued a joint statement urging lawmakers to act and to act promptly. Something drastic must me done if our country wants to rebound quickly from the negative effects of a failing economy.

Representative Carolyn Maloney (D-NY)

Yesterday, the U.S. House of Representatives passed the Credit Cardholders’ Bill of Rights in a vote of 312 to 112. The passed legislation would limit surprise interest rate increases and fees charged to credit card holders. The bill faces an uncertain fate in the Senate amid the current credit crisis and Congress’ debate whether or not to move forward with the current $700 billion bailout.

“For too long card issuers have been allowed to do whatever they want for any reason,” said New York Rep. Carolyn Maloney (D-NY). “No other industry is allowed to raise the price of a product after a consumer has bought it.” Representative Maloney is the bill’s sponsor and has received praise from several consumer groups for the bill.

The Credit Cardholders’ Bill of Rights would prevent banks from retroactively increasing interest rates on credit card balances unless the account is more than 30 days past due. Banks would also be required to notify customers of interest rate increases 45 days prior to a rate increase. Cardholders would also have more time to pay their bill by receiving it 25 days before the due date versus the current 14 days. Mailing a payment 7 days before the due date would be considered “paid on-time” despite processing delays or other arbitrary times; helping consumers avoid late fees of up to $40. The bill also requires banks to apply payments towards balances proportionately, preventing banks from applying payments to lower interest rate balances first.

Banks oppose the bill citing that the legislation could limit their revenue from credit cards when institutions are already struggling from the lack of available capital brought on by the housing slump. The White House and House Republicans also oppose the bill, believing the new bill will restrict access to credit for many consumers and make credit more expensive due to a bank’s inability to adjust for risk and market conditions. The White House says it is concerned about unfair and deceptive practices, but said regulations are better suited to address problems than legislation.

The Federal Reserve typically handles unfair and deceptive consumer practices and has sought input from citizens on the matter this year. Credit card issuers could still face additional restrictions from the Federal Reserve by the end of this year. Among the largest credit card issuers are Bank of America, Capital One, Chase, Citigroup and Discover Card.

Credit cards can be a good thing if you know how to use one. These are ways that credit cards can make your life better:

1. Accumulate reward points for free merchandise. Get a reward credit card and get free stuff. Each time you use your credit card, you’ll accumulate points that can be redeemed for discounts on gas, movie tickets, restaurant gift cards, and more.
2. Buy now, pay later. Credit cards give you the option to make a purchase now and pay for it later. This is a great benefit, especially for emergencies or help with cash flow.
3. Accepted virtually everywhere. Credit cards are generally accepted everywhere. This is great when you are running low on cash.
4. Easy to carry. A credit card takes up less room than a wad of cash does.
5. Online shopping. Pretty much the only way to buy things online is by using a credit card. Your credit card comes in handy if you do a lot of online shopping.
6. Build credit. Using your credit card wisely is one of the best ways to build your credit. This will show lenders how responsible you are and make them more willing to loan you money.
7. Teach responsibility. Credit cards can teach you responsibility because you have to account for each purchase you make in order to stay out of debt.
8. Teach money management. Credit cards are a great way to teach you how to handle your money. You have to carefully budget your money and your purchases.
9. Variety of payment options. Many times, you can chose different payment options. You have the flexibility to chose your due date and payment amount.
10. Online monthly statements. Most credit card companies offer an online program where you can view your credit card activity. This helps manage credit card purchases tremendously.
11. Not having to carry cash. Isn’t it a pain and a hassle to carry cash all of the time? Credit cards make it so easy to swipe and sign.
12. Good Customer service (most of the time). You can’t call a customer service department if you have a question about the cash you carry. You can, however, call in regards to your credit cards and credit account.
13. Earn cash back. You can earn cash back through a percentage of your purchases. This is a great way to combat rising inflation too.
14. Give you a buffer until payday. Credit cards help get you through until payday, especially when unexpected circumstances arise.
15. Tool for tracking your expenses. It is so easy to track expenses and purchases now with different tools that the credit card companies offer. Most companies have an online tracking system. Many also offer a year-end statement that categorizes all of your purchases from the entire year.

These are just a few of the ways that credit cards can make your life better. Credit cards can be an unmatched tool that can assist you on your quest for financial freedom.

As people have become more dependent on credit to purchase homes, cars and more, the importance of your credit rating has also increased.  Often times, people don’t understand what affects their credit reports or rating.  Most people don’t understand that their credit rating is one of the most important things they can ever own and the importance of protecting it.  If you don’t understand something, how can you protect it?

Every time you use credit, you are borrowing money from someone else.  You promise to pay each amount back within a specified period of time.  Your lender uses the amount you borrow, the interest rate and the length of time you are going to borrow it for to determine your monthly payments.  You absolutely, positively have to make each monthly payment, and pay it on time.  Your credit score is a statistical number that shows the likelihood of your paying the lender back.  Your credit score isn’t just a number that the credit bureaus get out of thin air.  It is precisely derived from a set formula.

Each credit bureau uses different criteria for calculating your credit score.  However, they each use the same basic formula and come up with basically the same number.  One credit bureau might only look at your credit report, while another may use more than one factor.  Either way, each bureau gives you an accurate rating based on your credit.

There are many factors that can be used when determining your credit rating.  Your payment history, the amount of your current debt, the length of time in which you have had credit, the mixture of different kinds of debt that you have, and the number of inquiries on your record.  The more loans you are trying to take out (inquiries), the more it will drag your credit down.  Your credit score will also be lower if you haven’t had credit or used credit for a very long time.

Credit scores range from 350-800.  The higher your credit score, the better it is.  If you have a lower credit score, lenders view you as a higher risk than someone with a higher credit score.  In other words, someone with a credit rating of 350 is going to be a bigger risk than someone with an 800 score.

So, why is your credit rating so important?  Every time you apply for a loan or even hook up your utilities, your credit is checked.  Your credit rating is the easiest way for lenders or utility companies to see what kind of risk you are.  The higher the risk you are, the more your payments will be.  This is according to financial theory.  Theoretically, higher credit risk means that a “risk premium” must be added to the amount that you borrow.  Risk premium helps protect lenders, mortgage companies, credit card issuers and others that may loan you money.  Imagine what would happen if lenders gave everyone the same rate and same amount of money.  Some people would pay it back faithfully, while others took advantage of the system.

Credit ratings are a fragile thing.  You need to protect your credit score with everything you’ve got.  If you make your payments on time, be careful about how much you borrow and make wise purchases, you should be fine.  Understanding what your credit rating is and what it is saying about you could save or cost you.