Smart Borrower Blog

Archive for April, 2010

Fed Rate Kept Near Zero – Low Rates Available Online

Yesterday, the Federal Reserve Board (the Fed) announced that it would keep its key interest rate near zero despite its optimistic outlook on the labor market and the economy overall.  Informa Research Services, a subsidiary of Informa plc (LSE: INF), suggests consumers use online rate tables and national averages to monitor rates while awaiting the Fed’s next move. Many speculated the Fed would indicate a rate increase in the coming months in their statement today.  Instead, they maintained that “economic conditions… warrant exceptionally low levels of the federal funds rate for an extended period” (Source: www.federalreserve.gov). Since it is nearly... more »

Card Spending is Up, and Visa is Reaping the Profits

The numbers for the fiscal second quarter are in and the verdict is: people are spending more money on their cards. This is good news for the global economy and great news for the world’s largest payment network Visa Inc. Visa’s Chief Financial Officer Byron Pollitt told reporters on a conference call that spending on debit or credit cards increased 15 percent in the first three weeks of the second quarter compared with one year earlier. An article on BusinessWeek’s website quotes him as saying debit card purchases jumped up by 22 percent and credit card transactions rose by 7... more »

Student Loan Reform Leads Sallie Mae to Cut 2,500 Jobs

Sallie Mae, the nation’s largest student loan lender, has announced that it will be cutting a total of 2500 jobs–1200 of which will be before year’s end. Sallie Mae’s Killeen, Texas service center and Sallie Mae’s Panama City, Florida service center will both be shutting their doors. The remainder of the cuts are yet to be determined but are scheduled to take place sometime during 2011. According to Sallie Mae the cuts are part of the company’s forced restructuring due to new student loan reforms. Just recently congress ended the FFELP program (Federal Family Education Loan Program) which had... more »

Inspectors Find Lenders Abusing Small Business Lending Program

Somebody’s in trouble! Government watchdogs came out with a report Wednesday that says private lenders have been misusing or at least poorly using funds from the Small Business Administration. The SBA was granted $730 million in February 2009 to provide additional funding to small businesses to help the economy recover and has received another $305 million in money extensions since the program ran dry in November. But the inspector general for the SBA says private lenders have made very weak loans and have been using too much of the money for executive pay. Inspector General Peggy Gustafson told the House... more »

Big Banks See First Quarter Profits: Loan Delinquencies Are Diminishing

Could the financial crisis be taking a turn for the better? Some think so with many large banks seeing better than expected first quarter profits. After two years of ups and downs, many banks are hoping that the positive start to 2010 will continue. While banks might not totally be out of the woods just yet, they are making some great gains. It seems there might be a glimmer of light at the end of a dark tunnel. Profits across the board can be partially attributed to less loan delinquencies. Citigroup, the bank hit the worst by the financial... more »

Auto Loan Rates Hit Record Low

Led by incentives from rebounding automaker Toyota, the average rate on U.S. auto loans fell dramatically in March, according to auto data tracker Edmunds.com. In March, the average rate dropped to 4.4 percent, down from 5.3 percent in February. On a yearly basis, the rate fell even more significantly from 5.8 percent in March 2009. The current average is the lowest on record since the beginning of the Edmunds.com survey in 2002. “Low interest financing is compelling for consumers because those who qualify often enjoy greater savings than they would get from a cash-back offer,” said Jessica Caldwell, senior analyst... more »

Are Interest Rates On The Rise?

According to an article today posted on cnnmoney.com, interest rates could be on the rise. Home loans, car loans and credit cards could start costing more in the very near future. With the economy starting to recover consumers should be thinking ahead and know that their future borrowing needs could become pricier. During the current economic recession, rates have been lower than many people have ever seen in their lifetime. How have rates managed to stay so low for so long? The highest impact on current lending rates has been determined from the Federal Reserve’s federal fund rate. The... more »

Consumer Borrowing Slows, Credit Delinquencies Fall

From the latest set of market data, it looks like the economy and the jobless rate are still making consumers wary of spending and using credit. The Federal Reserve reported that total consumer credit dropped in February by a seasonally adjusted $11.5 billion to an annual rate of $2.448 trillion. That represents the 12th decrease in 13 months and is a much worse decline than the median expected drop of $700 million by a Bloomberg survey of economists. Revolving debt, including credit cards, fell by 13 percent on an annual basis, roughly by $9.4 billion, accounting for the largest decrease... more »

SBA Stimulus Funding Receives Its Third Extension

Last week President Obama signed a bill that will extend an SBA stimulus program through the end of April for business loans. This is the third extension to the program which ups the guarantee on certain small business loans to 90% and reduces and/or eliminates loan fees for small business borrowers. This extension included another $40 million dollars and is expected to help fund another $1.4 billion in small business loans. SBA administrator Karen Mills said, “Thousands of small businesses across the country have taken advantage of these Recovery loan enhancements to get the capital they need during these... more »