With the current credit crisis happening before our eyes, now is the time to make sure your credit report is in order.  Many banks are taking precautionary measures to ensure a credit crisis like this doesn’t happen again.  They are lowering the loan to value ratio on how much they will lend up to the home’s value; for example, my financial institution used to lend up to 100% loan to value, and now the maximum is 85%.  The are verifying income on a regular basis and requiring pay stubs.  It seems that the rules are being changed and banks are buckling down even more on a daily basis.

Today it was announced that if there’s a joint application, the rate of the loan would be based off the person with the lower credit score.  Hypothetically, if Mr. Money and I applied jointly for a loan and my credit score is 800, which would be an interest rate of 5%, and his credit score is 700, which is an interest rate of 7%, they are going to give us the 7%.  It is really devastating for someone who has horrible credit and has a strong co-signer.  It’s almost not worth having that co signer anymore.

While I understand all the rules and regulations, it’s still hard for me to grasp.  Almost my whole banking career we’ve been very giving with our loans.  As long as you had good credit, a steady income, and would sign on the line, you’d get the loan you wanted.  Not anymore.  We’ve been struggling every month to meet our loan goal.  Thankfully, they did lower it, but even then we’re still struggling.  It just amazes me how fast things can go downhill.

What’s your opinion of all these new rules and regulations for lending?  Do you think they are a good thing?

Posted under Credit Cards, Economy, Loans

When I got the mail today, I had received my rebate check from my National City Everyday Rewards Visa! I am so excited! Of course, I had been checking my rebate amount each month when the statement came, so last month when the rebate balance was $99.25, I was a little bit bummed. (Once you hit $100, the check is mailed). I missed my check by $.25! I was patient, and received it with my statement this month.

I’m going to use this check to make a payment on that student loan. I’d love to go out and buy a new digital camera, but I’m going to be responsible and keep chiseling away our debt. It’s for the best.

Here’s my proof of payment:

I don’t know why, but I always enjoy seeing copies of people’s checks, especially when it involves them making money online, or easy money!

Do you think I should use the check for paying on the loan, or do something fun with it?

Posted under Credit Cards, Pay Off Debt

I was reading an article today about “recession-proofing your income” and when I got to a paragraph, I almost had a heart attack.

Savings accounts are safe, though yields will get stingier as interest rates fall. Rogé says it even makes sense to pull money out of an emergency fund to pay off debt. Psychologically, that’s hard to do in a shaky economy. Chances are you won’t lose your job, however, and if you do, why not run up debt then rather than pay finance charges now? If you want a security blanket, apply for a home-equity line of credit, which will probably have a lower rate than a credit card anyway. But tap it only in an emergency.

What?? Are you kidding me? I can’t believe anyone would say this is a good idea in this economy. There are so many things wrong with this statement.

1. Not everyone can get a home equity loan or home equity line of credit.
2. Why drain your emergency fund to pay for a credit card that, chances are if it’s based on prime rate, has a not-so-bad interest rate?
3. Home equity loans or home equity lines of credit should not be used as an “emergency fund”.
4. After you’ve drained your emergency fund to pay off your credit card and you lose your job and need to pay your mortgage (or rent), where are you going to get the cash from to pay it? Your mortgage company isn’t going to accept a credit card as payment!

I just can’t believe that anyone would make a suggestion like that. An emergency fund is just that: for emergencies. Personally there is no way I would ever empty (or take a huge chunk out of) my emergency fund to pay off credit card debt. I guess it’s all a matter of opinion, but I just would never do it. I feel comfortable knowing I have the cash to pay for my mortgage in case something horrible happened.

What do you think about using a credit card as an emergency fund?

Posted under Credit Cards, Pay Off Debt, Save Your Money