Fed cuts rates... again Options

[Spectatrix]

... by three quarters of a percent. Thoughts?

[impala454]

Great... now by the time I buy a house in the summer prices will be through the roof. Damn economy, do what I want when I want

[Spectatrix]

Nah, housing prices are predicted to continue falling, possibly through the end of 2009.

[impala454]

Was that before or after the .75% rate cut?

[Spectatrix]

From articles I was reading today, but they might not have been written today. Hrm.

Regardless, I think that the rate cut is pretty much useless and will do little but increase inflation.

[Hartmann]

Yep. Useless.

The market isn't looking too bad today as I was expecting it to take a dump... But we'll see how the day ends.

[impala454]

I seriously doubt a 3/4% rate cut will take two years to have an effect on house prices.

[jwttu]

great time to refinance, too bad i dont have anything to refinance

[dauss]

I was 10% richer when the year started. It seems that the rate cut did stop what was looking like the envitable, one of the largest percentage drops of the stock market ever. The overseas markets didn't fare as well, such as the Bombay stock market which took the largest drop ever(7%+) or other markets from Hong Kong to Europe which faced the largest single-day drop since the 9/11 attacks. Not sure if it will be able to stave off a recession, but at least it recovered somewhat from the 420+ points the Dow had earlier today.

[blaarg]

hyperinflation is inevitable.

[impala454]

so many financial experts in here...

[pysex]

inflation wins

[Spectatrix]

It's all conjecture, Impala. Sometimes educated, sometimes not. This rate cut will increase inflation -- that's pretty much a guarantee. The question is whether it'll be a little or a lot. It sounds like, from what I've read, that this might slow the recession, but it certainly won't cure it.

[impala454]

I know. It's just funny to see people come on here with words like "hyperinflation"

[Spectatrix]

hyperinflation hyperbole!

ubiquitous uberinflation!

annoying alliteration!

This post has been edited by Spectatrix: Jan 23 2008, 10:21 AM

[Spectatrix]

Savings rates at ING Direct and eTrade went down.

[impala454]

hyperinflation hyperbole!

ubiquitous uberinflation!

annoying alliteration!

It's buzzword bingo!

[jwttu]

Savings rates at ING Direct and eTrade went down.

yep this is killing my online MMA, maybe its time to switch

[Spectatrix]

yep this is killing my online MMA, maybe its time to switch

Who do you have it with?

I'm having a hard time finding a good place to stick my savings, especially given that my checking account gets 6.01% APY (up to 25k). With regular savings rates as volatile as they are now, I'm kicking around the idea of opening up a 6-month CD and just sweeping my accumulated "savings" (in the checking account) into it every time it rolls over.

[Hartmann]

I'm having a hard time finding a good place to stick my savings, especially given that my checking account gets 6.01% APY (up to 25k). With regular savings rates as volatile as they are now, I'm kicking around the idea of opening up a 6-month CD and just sweeping my accumulated "savings" (in the checking account) into it every time it rolls over.

That isn't a bad idea. Just read the terms of the CD carefully and make sure you understand how easy/difficult it is to get your money out.

[jwttu]

Who do you have it with?

I'm having a hard time finding a good place to stick my savings, especially given that my checking account gets 6.01% APY (up to 25k). With regular savings rates as volatile as they are now, I'm kicking around the idea of opening up a 6-month CD and just sweeping my accumulated "savings" (in the checking account) into it every time it rolls over.

I have my account with capital one online. When I started with them the APY was 5% but now with all these fed cuts its down to 3.5%.

I would change it to a higher rate account now but it looks like the fed may announce another rate cut so I'm gonna wait for all the dust to settle. I might also look into the CD option.

[Spectatrix]

I would change it to a higher rate account now but it looks like the fed may announce another rate cut so I'm gonna wait for all the dust to settle. I might also look into the CD option.

Ugh, another one? They've already cut 1.75% in the past 4 months.

I'm compiling some info on CD rates (6-month, non-jumbo). The best I've found thus far is WaMu's online CD w/ 4.85% APY.

[impala454]

No offense but you guys seriously sound like a bunch of old fogeys talkin about CDs and 4.85% APY. We're all young people, get your damn money in some stocks and funds. Sure it'll fluctuate more but you'll see much bigger gains in the end. CDs are for old people who've got $500k in the bank. When that time rolls around, the CDs you buy and turn over will pay the bills. Your CDs you're buyin now and turning over will buy you a new jacket or something.

[Spectatrix]

No offense, but you're one of the last people I'd take financial advice from.

It's good to have savings at various levels of volatility. My emergency fund and house fund are staying put in savings accounts or CDs. I want stable gains since I plan to buy a house in a couple of years. My IRA, on the contrary, is in very aggressive, very risky mutual funds. Once I've bought a house and aren't funneling most of my savings into that fund, I'll worry about playing around with the stock market.

This post has been edited by Spectatrix: Jan 24 2008, 01:51 PM

[2wolUTT]

I want some cookies, these Combos are too salty.

[Psykopath]

http://www.yahoo.com/s/791008



....wow.
They offer common sense advice that doesn't require a fable or riddle to know and understand, but then emphasize the "donate 10% to your church" aspect. Why not use that 10% to get yourself out of debt first??

This post has been edited by Psykopath: Jan 24 2008, 04:01 PM

[Hartmann]

http://www.yahoo.com/s/791008
....wow.
They offer common sense advice that doesn't require a fable or riddle to know and understand, but then emphasize the "donate 10% to your church" aspect. Why not use that 10% to get yourself out of debt first??

I actually very much agree with you. The Bible says it is wrong to live beyond or even at your means so getting out of debt is the first step to living below your means.

[impala454]

No offense, but you're one of the last people I'd take financial advice from.

Not sure why you have that impression of me but oh well. Perhaps you can explain to me why.

It's good to have savings at various levels of volatility. My emergency fund and house fund are staying put in savings accounts or CDs. I want stable gains since I plan to buy a house in a couple of years. My IRA, on the contrary, is in very aggressive, very risky mutual funds. Once I've bought a house and aren't funneling most of my savings into that fund, I'll worry about playing around with the stock market.

Well then you're already doing what I suggested anyways . You didn't mention that. All I've ever seen you talk about on here is your 4% APY this and that. Aggresive mutual funds' positions are typically 75-100% stock positions.

[Spectatrix]

Not sure why you have that impression of me but oh well. Perhaps you can explain to me why.

Your advice on credit cards, mostly.

Well then you're already doing what I suggested anyways . You didn't mention that. All I've ever seen you talk about on here is your 4% APY this and that. Aggresive mutual funds' positions are typically 75-100% stock positions.

I talk about the 4% stuff on here because my shorter-term savings are what I deal with day-to-day (well, not quite that often, but you get the point). I don't worry so much about my IRA because that's long-term (40+ years) supplemental retirement funds and I'm content to let it sit and go crazily up and down like it's prone to. I don't deal with the stock market otherwise (yet) because I have more near-term concerns and not *that* much liquidity.

[impala454]

Your advice on credit cards, mostly.

Which was what? that carrying a balance on a 0% interest card is good? I still stand by that 100%

I talk about the 4% stuff on here because my shorter-term savings are what I deal with day-to-day (well, not quite that often, but you get the point). I don't worry so much about my IRA because that's long-term (40+ years) supplemental retirement funds and I'm content to let it sit and go crazily up and down like it's prone to. I don't deal with the stock market otherwise (yet) because I have more near-term concerns and not *that* much liquidity.

But if you have an aggresive IRA you are invested in the stock market.

[Spectatrix]

Yes, the carrying a balance thing. Like I said before, your credit report and credit score don't differentiate between carrying a balance and paying off the card every month. Granted, if you only put $50 on your card each month, you're not going to build credit very quickly. Putting a high balance on a card can be good whether you pay it off at the end of the month or pay it down gradually (obviously you wouldn't want to do this unless it's at 0% interest). But most important is simply paying your bills on time and not maxing out your cards.

But if you have an aggresive IRA you are invested in the stock market.

Which is why I said I don't deal with the stock market otherwise.

This post has been edited by Spectatrix: Jan 24 2008, 05:13 PM

[impala454]

Yes, the carrying a balance thing. Like I said before, your credit report and credit score don't differentiate between carrying a balance and paying off the card every month.

Of course paying bills on time is what it's about. But so is available balance and past history. If for two years you buy something for $125 once a month and pay it off, you'll get nowhere near the credit as if you carried $3,000 over 24 months at 0% interest. It's all about taking risks. If you've never bought something expensive on some type of credit or loan before, how does the lender know you're good for that $100,000 home loan? I'm apparently bad financial advice though so no need to answer that question.

Which is why I said I don't deal with the stock market otherwise.

Well that's not what I was talking about. I personally don't buy and build a stock portfolio either. All I was getting at is that people our age need to be putting more money into riskier investments, and through the past few posts it's obvious that you are, which is good. I was dissing the CDs because I think they're pretty lame for young people. Tying up $5000 in order to make a couple hundred IMHO is pretty worthless. Especially when regular old savings accounts are in the 4%+ range anyways and you can do whatever you want with your cash then. But again, I'm apparently bad financial advice.

[Spectatrix]

If you've never bought something expensive on some type of credit or loan before, how does the lender know you're good for that $100,000 home loan?

Payment history. As in, whether you pay on time or are late. I'm not trying to troll you or anything, but if you have a credit report handy, go take a look at it. For revolving credit, they show credit limit, max balance, current balance, and most recent payment. For installment accounts, they show the loan amount, monthly payment, and most recent payment. As far as the lender is concerned, previous installment accounts are a good gauge because they know you've been making at least the minimum monthly payment, but the revolving accounts don't give enough information for them to determine much about your payment history (other than late or not). If your credit reports have shown differently, I'd be interested to know.

This post has been edited by Spectatrix: Jan 24 2008, 06:42 PM

[Spectatrix]

I was dissing the CDs because I think they're pretty lame for young people. Tying up $5000 in order to make a couple hundred IMHO is pretty worthless. Especially when regular old savings accounts are in the 4%+ range anyways and you can do whatever you want with your cash then.

The reason I was considering CDs is because I am finding rates that are higher than regular savings rates (though not by much) and at least you get the rate locked in for X number of months. Reg savings have been spiraling down because the Fed is making rate cuts every other week.

I'm in no particular rush, though, so long as I'm under the max for the good interest rate on my checking. It would just be nice to have a separate account to earmark funds with, without losing out too much on interest. *shrugs*

[pysex]

Both of you are right.

Paying your bill MORE than the minimum payment rings very well with the credit companies.

Paying on time every month is a very very good thing.

Carrying balances (not high) on your cards is also VERY good.

The only problem with credit cards is that it takes a while to establish a good history. You have to have a history greater than 5 years before anyone considers you a low risk. Starting out with a car payment is the best way to go.


And DO NOT...I repeat DO NOT get a card say with a 5000 dollar limit and charge it up to 4500 and think that looks good in your history. That's actually a very big no no.


American Express is by far the best credit card company.

[Spectatrix]

AmEx has been good to me thus far. They gave me a card with a far higher limit than the paltry college credit card I had through Wells Fargo.

[impala454]

Payment history. As in, whether you pay on time or are late. I'm not trying to troll you or anything, but if you have a credit report handy, go take a look at it. For revolving credit, they show credit limit, max balance, current balance, and most recent payment. For installment accounts, they show the loan amount, monthly payment, and most recent payment. As far as the lender is concerned, previous installment accounts are a good gauge because they know you've been making at least the minimum monthly payment, but the revolving accounts don't give enough information for them to determine much about your payment history (other than late or not). If your credit reports have shown differently, I'd be interested to know.

I don't have a copy handy, but most of them I have seen will show "high balance" as well. usually over the previous year. No worries about trolling, it's a good conversation to have.

[impala454]

The reason I was considering CDs is because I am finding rates that are higher than regular savings rates (though not by much) and at least you get the rate locked in for X number of months. Reg savings have been spiraling down because the Fed is making rate cuts every other week.

I'm in no particular rush, though, so long as I'm under the max for the good interest rate on my checking. It would just be nice to have a separate account to earmark funds with, without losing out too much on interest. *shrugs*

It probably just depends on when you catch them. A quick search gives an example here: http://www.hsbcdirect.com/1/2/1/

Where they advertise a standard savings acct at 4.25%, and CDs at 3.2%. You probably save your money better than I do so locking up $5,000 for six months at a time may not be as big a deal to you as it might be to me.

[impala454]

AmEx has been good to me thus far. They gave me a card with a far higher limit than the paltry college credit card I had through Wells Fargo.

Seconded, amex is awesome.

[Hartmann]

The point of CDs is not to lock up your money but they're great for taking excess or extra savings and making a little cash on them while injecting investment dollars into the market.

[Spectatrix]

I don't have a copy handy, but most of them I have seen will show "high balance" as well. usually over the previous year. No worries about trolling, it's a good conversation to have.

Yeah I know, that's what I meant by "max balance". My point is that doesn't differentiate between a big balance that you paid off the same month or one that you made multiple payments on, so carrying a balance isn't necessarily beneficial as far as credit report/score is concerned. Now as far as your creditor is concerned, they might view that as incentive to give you a higher limit. *shrugs*

So summary:
1) Pay bills on time.
2) Don't max out your cards, but put a healthy balance on them from time to time.
3) If you have 0% interest, it might be best to carry a balance for a bit to coerce a credit limit increase out of your bank, but if not it's better to pay off the balance every month.
4) Don't have exorbitant amounts of available credit or more than 30% (approx) of your credit being used at the time you're applying for a loan.

Would you agree with all that, Impala?

[impala454]

Yeah I know, that's what I meant by "max balance". My point is that doesn't differentiate between a big balance that you paid off the same month or one that you made multiple payments on, so carrying a balance isn't necessarily beneficial as far as credit report/score is concerned. Now as far as your creditor is concerned, they might view that as incentive to give you a higher limit. *shrugs*

Right, it doesn't show for certain that you carried any balance. But if your high balance shows as $5,000, it's pretty obvious that you carried it and made the payments at least for a few months. If you paid off a $5,000 balance in one month, then you probably aren't that strapped for cash in the first place On the other hand if your high balance is $200 then you haven't shown them that you can handle a large loan amount over a long period of time. Can you "trick" them and save up $5,000, buy something on credit, then pay it off on the first bill? I dunno maybe (although you gotta be careful, some cards will add up 1/2 the month's interest bi-weekly). I'd just assume keep doin what I'm doin and buy something nice for myself on some 0% interest deal every now and then.

So summary:
1) Pay bills on time.
2) Don't max out your cards, but put a healthy balance on them from time to time.
3) If you have 0% interest, it might be best to carry a balance for a bit to coerce a credit limit increase out of your bank, but if not it's better to pay off the balance every month.
4) Don't have exorbitant amounts of available credit or more than 30% (approx) of your credit being used at the time you're applying for a loan.

Would you agree with all that, Impala?

Sure thing, but on #3, it doesn't really matter if you pay off a 0% interest card every month. Although most of the time 0% is just a deal for a fixed amount of time.

[Spectatrix]

Question for you, Impala: did your mortgage lenders give you a ballpark estimate for how much available credit is ok and how much is too much? I presume it depends partially on how big a mortgage you're trying to get, but some guidelines would be nice.

[impala454]

Question for you, Impala: did your mortgage lenders give you a ballpark estimate for how much available credit is ok and how much is too much? I presume it depends partially on how big a mortgage you're trying to get, but some guidelines would be nice.

My mortgage lenders didn't, but my vehicle loan people did. I don't recall exactly the number he gave me, but he said they tend to weigh the amount available as much if not more than the % available, if that makes sense. They also mentioned it is definitely a factor but not nearly as much as previous vehicle loan experience. Which kinda sucks when you get your first one .

The mortgage lender didn't give me a ballpark figure of what % is good, but she did mention that closing a bunch of accounts just before going to get a home loan isn't a good idea. She said if you wanted to get available balance down just lower your limit by a decent amount. I.e. maybe take a $10,000 limit down to $6,000 - 7,000. She said if you have a ton of accounts then yeah closing some is ok, but start with "store" cards first.

Most of this is no big deal to people like us. The dealership loan guy mentioned my credit "problems" (as I had called them, had about $3k on a card at the time) were laughably small compared to anything that would hurt a person getting a decent rate. He said the bad rates tend to start when people have $20k+ in revolving debt. He said he actually had a couple come in once with over $200k in combined revolving debt (like $150k for the wife and $50k for the husband ). The mortgage people had similar stories.

[Spectatrix]

Well I only have the one card (AmEx). I closed my Wells Fargo card even though I knew it would ding my credit score a little, just because I didn't want to deal with them anymore. Just paid off my car loan last month, never had a late payment on anything, and I'm not carrying a balance, so I'm doing good.

Just wanted to make sure that my CL wasn't too high before applying for mortgages a year+ from now. It's 8k currently.

[jwttu]

No offense but you guys seriously sound like a bunch of old fogeys talkin about CDs and 4.85% APY. We're all young people, get your damn money in some stocks and funds. Sure it'll fluctuate more but you'll see much bigger gains in the end. CDs are for old people who've got $500k in the bank. When that time rolls around, the CDs you buy and turn over will pay the bills. Your CDs you're buyin now and turning over will buy you a new jacket or something.

well that money is all i have right now, except a small amount in the stock markets. So I'd like to have in relatively liquid accounts and getting a decent return. Once i start getting a regular income I'll move to riskier investments.

[impala454]

Well I only have the one card (AmEx). I closed my Wells Fargo card even though I knew it would ding my credit score a little, just because I didn't want to deal with them anymore. Just paid off my car loan last month, never had a late payment on anything, and I'm not carrying a balance, so I'm doing good.

Just wanted to make sure that my CL wasn't too high before applying for mortgages a year+ from now. It's 8k currently.

Yeah you should do really well then. I got a pretty good rate and I bought my house before my truck.

[impala454]

well that money is all i have right now, except a small amount in the stock markets. So I'd like to have in relatively liquid accounts and getting a decent return. Once i start getting a regular income I'll move to riskier investments.

But CDs are not even remotely liquid... You're freezing up your money to get a small (albeit consistant)return out of it. The reason they can guarantee the rate for six months is because you're not allowed to touch it. You're essentially guaranteeing them assets at the same time. Just as a suggestion, you should check around or even with your bank to see what kind of interest rates you can get a regular savings account with. I think you might be surprised at the rates you can get, plus you have access to your money at all times.

[Hartmann]

Savings accounts are liquid but still have restrictions.

[impala454]

Some don't... depends on what bank you go to.

[Grif]

Here is a question: How do they look at it when you pay off a loan much faster than expected? Currently the only debt I have is about 2800 on a credit card (which I always pay off more than the monthly min) and my students loans (which all of my 4.5 years of school and housing was paid for by). Do they frown if I were to pay off the majority of my student loans very quickly, or would it be benificial from a creditor point of view.

Asking, cause one possibility Im looking at is living at home with mom and dad for free for about a year and putting the majority of whatever salary i get towards paying off my student loans as fast as possible.

[impala454]

Naw that doesn't look bad on your credit report at all. But you may want to check with your lender to be sure there's no penalty for early payoff/extra payments.

[Spectatrix]

It's good from the perspective of not having previous debt obligations, but otherwise it's neither good nor bad. Like Impala said, though, gotta make sure there's no pre-payment penalty. That's more common with mortgages, though, not so much for other loans (someone correct me if I'm wrong...)

[impala454]

Yeah school loans (at least mine, and a few other peeps I know) usually don't have early payment penalties.

[Hartmann]

Yeah school loans (at least mine, and a few other peeps I know) usually don't have early payment penalties.

My loan didn't have a prepayment penalty, but they did have something weird where if you paid more than the minimum payment, they moved up your payment date.

[jwttu]

But CDs are not even remotely liquid... You're freezing up your money to get a small (albeit consistant)return out of it. The reason they can guarantee the rate for six months is because you're not allowed to touch it. You're essentially guaranteeing them assets at the same time. Just as a suggestion, you should check around or even with your bank to see what kind of interest rates you can get a regular savings account with. I think you might be surprised at the rates you can get, plus you have access to your money at all times.

ya if i did put my money in a cd, I would save some of it to get me by until the cd matures. Obviously this isnt the best situation so I'm still looking at the rates on everything.

I'm at least gonna hold off on changing anything till after the next FOMC meeting to see what they are gonna with the interest rate. I might be better off keeping my money in my MMA for the time being. fyi the fomc meeting is the 29/30th of January

[kcroxyoursox]

Interesting about the house discussion stuff you guys are having.

Jason and I just got back from meeting with our mortgage lending company for the house we are buying. His advice to us was to keep all credit cards under a 2:1 ratio of credit limit to balance. Meaning on a $5000 limit card, carrying no more than $2500 on it. Also, he said that since it costs nothing to carry 0 balance on a card (unless you have an annual fee I guess), it was better to have a card with no balance than to close the account. Of course if you had like 20 accounts you should close a few of them.

Anyone bold enough to post their credit scores?

[jwttu]

Interesting about the house discussion stuff you guys are having.

Jason and I just got back from meeting with our mortgage lending company for the house we are buying. His advice to us was to keep all credit cards under a 2:1 ratio of credit limit to balance. Meaning on a $5000 limit card, carrying no more than $2500 on it. Also, he said that since it costs nothing to carry 0 balance on a card (unless you have an annual fee I guess), it was better to have a card with no balance than to close the account. Of course if you had like 20 accounts you should close a few of them.

Anyone bold enough to post their credit scores?

If its free i'll post mine, but i dont want to have to pay for it

[Spectatrix]

It's not free.

[James]

I'll post mine, but it's not so nice since I maxed a few 0% interest accounts out to make a little cash on the side...

729 atm. Before I maxed out, it was 739, which I guess isn't that good either. Ah well. These are Transunion credit scores.

[kcroxyoursox]

Mine is around 711. Trying to pay down my credit cards to have balances less than half the limits. That should bring it up about 10 points. Our finance guy said he's never seen someone with 850 (the max) and that being over 700, you're pretty golden unless you get into really heavy stuff.

[dauss]

Anyone bold enough to post their credit scores?

http://www.techsans.net/forums/index.php?showtopic=4266

[Spectatrix]

http://www.techsans.net/forums/index.php?showtopic=4266

Those weren't FICO scores.

[pysex]

Mine is 724 and the only negative effect I have is that my accounts haven't been open longer than 3 years. Like I said earlier...they like to see at least 5 years.

[impala454]

mine was 730something when I bought my truck in august 2006. 1.5 years of making truck + house + CC payments on time and no probs, its got to be pretty good by now.

[Spectatrix]

Another 1/2 % cut. Down to 3%. http://www.msnbc.msn.com/id/22916066/?GT1=10755

[impala454]

now if only the asshat mortgage companies would get with the new rates some time before they go back up