Markets Weak/australia Strong?

Markets in the US fell, Asia was lower, and Europe was weak as doubts continued over the US treasury's $US700 billion bailout plan.

The Dow was down 161.52 points, or 1.47%, at 10,854.17. The Standard & Poor's 500 Index was off 18.87 points, or 1.56%, at 1188.22 while Nasdaq was down 25.64 points, or 1.18%, at 2153.34.

Worries about the economy saw the US dollar rise again most currencies, especially the euro and the Aussie which traded around 83.10 US cents, down around a cent in a day.

Gold fell $US11 an ounce to around $US897; oil dropped more than $US2.50 to just over $US106.70 a barrel and copper lost 11 US cents to end at $US3.14 a pound in New York.

Our market was off more than 1%, according to the overnight futures market and the ASX/200 could start around 70 points down this morning.

In new York BHP Billion and Rio Tinto shares were weak as analysts saidf iron ore exporters would get smaller than expected price rises next year.

Rio's American depositary receipts fell the most since at least 1990, losing 13% to $US289.14 and BHP's ADRs slipped 5.2% to $US61.77.

General Electric was the biggest drag on the S&P 500, falling more than 4%, after Goldman Sachs cut the company's profit outlook. GE's fall also hit the Dow. GE had itself added to the uS anti-shorting list.

Downgrades also hurt Bank of America shares, off 2.5%, while energy company shares fell as the price of oil retreated.

More details were made public with US Congressional hearings starting overnight in Washington, but Wall Street didn't like the debate and delays..

Treasury Secretary, Hank Paulson, President Bush and Fed chairman Ben Bernanke all urged Congress to swiftly approve the plan.

Chairman Bernanke warned that the US economy would contract if the plan was not adopted and adopted quickly.

But there are concerns the Democrats might try to ram through one off pork barrel deals or attempts to control banking salaries, while some Republicans have expressed doubts about the whole idea.

Comments from the head of the Senate banking Committee, Senator Dodd didn't help sentiment.

He said this morning government economic rescue plan was "not acceptable" in its current state.

"A lot of reservations have been expressed this morning by Democrats and Republicans on this matter," said Dodd, a Democrat, speaking after Paulson and Federal Reserve chief Ben Bernanke testified in Congress.

"What they have sent to us this is not acceptable," said Dodd. "This is not going to work."

Wall Street tumbled more than 160 points after hearing that, going from being slightly up, to well down on the day.

European stock-index futures dropped with Dow Jones Euro Stoxx 50 Index futures off 1.9%

National indexes decreased in all 18 western European markets. London's FTSE 100 lost 1.9%.

Asian markets ended the sharp two day rally on those doubts about the Paulson plan.

The MSCI Asia Pacific Index (excluding Japan) fell 1.9% with financial shares the big fallers.

stocks fell around the region, except in South Korea, Taiwan and Malaysia. Markets in Japan are shut for a holiday.

China's CSI 300 index dropped 3.8%. Hong Kong was off 3.9%.

The Australian share market lost 1.9%, ending the two-session rebound, as doubts grew about whether the $US700 billion ($A840 billion) US financial bailout package would work.

The ASX 200 index ended down 97 points, or 1.9% at 4923.5, after rising 4.5% on Monday.

Australian shares traded lower as regulators announced exemptions to the ban on short selling and detailed proposed legislation to better control it.

At the close the All Ordinaries was down 92.4 points, or 1.8%, to 4957.7.

BHP Billiton fell $1.80, or 4.5%, to $37.90, Rio Tinto dropped $2.76, or 2.5%, to $108.24 and Fortescue Metals shed 64 cents, or 9%, to $6.51.

Banking led the way down with the ANZ losing $1.11 to $18.04, the Commonwealth Bank 38 cents to $44.22, the National Australia Bank 44 cents to $23.86 and Westpac 20 cents to $24.50.

Retailers were mixed, with Harvey Norman adding one cent to $3.51, Woolworths dropping 52 cents to $27.01, Wesfarmers retreating 57 cents to $31.18 and David Jones falling one cent to $4.39 ahead of the release of its full year results later today.

Media was mixed, with Consolidated Media Holdings adding three cents to $2.75, Fairfax falling 13 cents to $2.85, News Corp shedding 71 cents to $15.78 and its non-voting shares losing 70 cents to $15.51.

Telecommunications provider SP Telemedia lost one cent to 14 cents after reporting a full year loss of $18.93 million following debt write-offs, and cut its earnings guidance for the new year.

It's part of the Washington Soul Patts group whose 61% owned subsidiary New Hope Corp losing six cents to $4.40 despite forecasting significant earnings growth this year and delivering a rise in annual profit to $90.68 million

Santos added 17 cents to $18.70; Woodside dropped a cent to $56.99 and Oil Search lost nine cents to $5.53.

The spot price of gold was higher was trading at $US891.30 an ounce by late yesterday, up $US20.15 on yesterday's local close of $US871.15 an ounce.

Gold miners were stronger, with Newcrest adding $1.34 to $26.84, Lihir 12 cents to $2.77 and Newmont 16 cents to $5.15.

Telstra was the most traded stock on the market, with 42.05 million shares changing hands, collectively worth $172 million. Its shares rose 16 cents to $3.98.

And in a report issued this morning, the International Monetary Fund says Australia is well placed to withstand the credit crunch.

In particular, the report notes that IMF "Directors welcomed the support that prudent fiscal policy is providing for monetary policy."

The IMF Executive Board considered that Australia's banking system remains resilient, with stable profits, high capitalisation and few non-performing loans.

This was evident in stress tests undertaken by the IMF and presented in their report, which showed that Australian banks are able to absorb 'extreme' shocks.

The IMF considers that the outlook for the economy is more uncertain than usual due to large countervailing forces impacting on the economy, with the commodity boom providing a substantial stimulus and the global downturn exerting a contractionary effect.

IMF staff forecast that real GDP growth will moderate as required to bring underlying inflation back within the RBA's target range.

On an annual basis the IMF consults with the Australian authorities, private sector economists and academia to provide an independent and comprehensive assessment of Australia's economic performance.

This forms part of its program of economic consultations with all IMF member countries.

IMPORTANT: AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decisions.

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What You Should Know About Interest Rates

For all people shop around for the best rate, there are few who have taken the time to sit down and add it all up. After all, why would you bother? The answer is that understanding just how interest rates work can help you see how important small differences in rates and payment amounts can be.

Interest Rates are Compound.

It is important to remember that what you owe is compounded - that means you pay interest on the interest you owe from the month before. That means that if you're paying 2% per month in interest, you're not paying 24% per year - you're actually paying 26.82%. Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing.

A Thought Experiment.

Here's a question: would you rather have $1 million, or $10,000 in a savings account earning 20% per year in compound interest?

Well, let's see how that $10,000 would grow. After 10 years: $61,917. 20 years: $383,375. 30 years: $2,373,763. 40 years: $91,004,381. 50 years: $563,475,143.

So after fifty years, you'd have over $500 million?! Well, not so fast. Of course, you have to take inflation into account - if we say inflation is 5%, then that money would have the buying power that $10,732,859 does today. Still, that's not a bad return on your investment of $10,000, is it?

That's the power of compound interest, and the way the credit card companies make their money (it's also the way pensions work, and the reason the prices of things seem to rise massively as you get older). Be very, very afraid of compound interest. Or, of course, you could start saving, and be very glad of it?

Compound Interest Adds Up.

Let's work through an example on a more real kind of scale. Let's say you have an average unpaid balance of $1,000 on a card at 15% APR.

You will owe $150 in interest for the first year you borrow. However, this amount is then added onto the balance, and interest is charged on that. The second year, you'd owe another $172.50, for a total of $1322.50. It goes on, with totals like this: $1,520.88, $1,749, $2,011.35.

After just five years at 15%, you'd owe double what you borrowed. And after 10 years, you'd owe four times what you borrowed! Bet you weren't expecting that. If you let something like that carry on for long enough, you'll end up paying back that credit card for years afterwards, paying back what you borrowed many times over and still not clearing the debt. Most people don't work this out, and feel that the payments must simply be their fault for spending too much money to begin with.

One Percent of Difference.

One more thing. You might think there's not that much difference between a card that charges 15% APR and one that charges 12% APR. Let's see the difference the lower rate would make to that $1,000 borrowed for five years. Remember, after five years at 15%, you owed $2,011.35.

At 12%: $1120, $1254.40, $1404.93, $1573.52? $1762.34 after five years. So you've saved $249.01 from that 3% difference in APR - in other words, you've paid almost 25% less interest.

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Home Equity Loans The Best 2nd Mortgage For Financing Home Improvements

Tired of looking at those avocado green kitchen appliances? The wood paneling and shag in your family room? The worn fiberglass tub enclosure in the guest bath? Home improvement is sweeping the country. Approximately half of fixer-uppers are do-it-yourself, while the other half is contractor driven.

So how do you decide when to move or stay around, when a home remodel is a good idea or not?

?The American Homeowner Foundation estimates the total cost of moving to be at least 10 percent of your home's current value. In other words, if you can make things right with your home for less than 10 percent of what you could sell it for, it makes sense to stay put and fix it up.?

There's a couple of ways for you to start the transformation of your home. If you have enough equity built up for the total cost of the project, a traditional home equity loan might work for you. Benefits of home equity loans often include a better interest rate. You might even lower your mortgage payment while increasing the value of your home.

For the do-it-yourselfer working toward several small projects, a home equity line of credit allows flexibility. The lender basically sets up a line of credit based upon the equity in your home. The, issues you checks or a credit card to draw from the account as you need the cash.

Simply make sure refinancing your home makes financial sense says Lori Vella a senior banking executive. "Improving your home is almost always a smart investment, especially in this rate environment. Just make sure you'll be in the home long enough to recoup the cost of refinancing," says Vella.

A 2004 survey by Remodeling Magazine compares construction costs to likely return on investment (ROI) at resale. RM sent surveys to 20,000 appraisers, sales agents, and brokers. Those industry insiders generating 356 responses (a 1.78% response rate).

The RM survey shows minor kitchen remodels do the best, returning 92.9 percent of your investment, followed closely by new siding at 92.8 percent. The survey also lists bathrooms, attic bedrooms, deck additions and family or sun room add-ons as lucrative investments. Most of those remodels returned 80% to 90% for the home owners.

A home remodel is one of the best ways to improve the value of your home. Financially speaking, a home-equity loan could allow you to lower your mortgage payment, lower your interest rate, and when the remodel is said and done add thousands of dollars to your net worth.

Don?t forget to check with your local utility company if you want to improve the energy efficiency of your home. Most offer an energy efficient mortgage program.

If purchasing a fixer-upper is what you looking to do. HUD has a 203(k) program designed to finance both the purchase of the home and the remodel costs in one easy mortgage. Most mortgage lenders offer access to the HUD 203(k) program.

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How To Get The Best Student Loan Rate Possible

Getting the lowest student loan rate possible can be rather tricky. There are so many different ways that you can get funding for school, you really have to do some digging to find out how to get the best rate. In the end, you may have little choice in the matter.

Part of your student loan rate is going to be based on the current average interest rates. If you have student loans from previous terms and interest rates have dropped, you may consider refinancing or consolidating those loans to take advantage of the lower student loan rate. However, you do not want to do this with subsidized loans, as you will suddenly become responsible for paying the interest on these if you consolidate or refinance them in any way other than through the Department of Education.

The Department of Education does offer some direct loans and direct consolidation loans. The problem with getting these loans is that you have a set interest rate of 8.5 percent. In recent years, 8.5 percent is much higher than the average interest rates. Basically, it's not a good deal unless you have such bad credit that your interest rates are over 9 or 10 percent, which is unlikely.

Your credit does play a role in your student loan rate, especially if you are getting private loans. The better your credit, the lower your interest rates will be. That is just common sense. However, there are other factors that may be taken into consideration, such as current income, expected income after graduation, cosigners, and overall credit history. In other words, there is much more involved in determining the student loan rate than just your credit score, which is used in other types of interest rate configurations.

In the end, the only way to get the best student loan rate is to do your research into every possible loan source and choose the one that you qualify for that has the lowest interest rates and finance charges. You should also consider other factors in your decision, however, because the lowest rate doesn?t necessarily mean the best loan for you.

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How Credit Works

In order to acquire and maintain access to credit, one must have a working understanding of how credit works - namely, how credit scores are established and tracked by the three major credit bureaus.

Inquiry Myths

As discussed in "The Larry Rule," people who repetitively apply for credit are viewed with suspicion by the credit agencies. However, there are some caveats to the Larry Rule. First, multiple inquiries for the same purpose - shopping for the best deal on a home loan, for example - count as just one inquiry. Secondly, it is never harmful for you to check your own credit report - only applications for credit (not mere inquiries) count against you. Third, and most importantly, inquiry data is only kept on file for six months. So in other words, the Larry Rule has a six month statute of limitations.

The exceptions to the Larry Rule outlined above are all good news for consumers. Unfortunately, not everything contained in this article is so pleasant. For example, you may believe that your permission must be given in order for someone to check your credit. Unfortunately, this is a myth, except where it applies to employers. A potential creditor, an insurance company, a landlord, or virtually anyone else can access your credit report without your permission.

Credit Repair Myths

Many people believe that paying off debts immediately improves their credit score. Unfortunately, this one of many credit repair myths. While a paid debt is marginally preferable to an unpaid liability, the truth is that missed payments and past delinquencies are still ugly marks on your credit report, and simply paying off an old debt may not improve your credit score by even one point.

The good news is that late payment and old delinquency information will disappear after seven years. But the idea that all negative information is wiped out after seven years is another credit repair myth. The truth is that Chapter 7 Bankruptcy stays on your record for 10 years, and unpaid judgments can potentially remain on your credit report forever.

Another popular myth is that the act of closing your Credit Cards is good for your credit score. This myth is perhaps the most painful, as many people who close open accounts have difficulty opening new ones in the future. The truth is that open, active, and up-to-date accounts help your credit. Unused credit capacity (i.e. available credit) is a positive factor in determining your credit score.

Credit Counseling Myths

Credit counselors and debt management services have received a bad name over the years, and much of the negative publicity has been deserved. It is, for example, a myth that you can simply pay a company to "fix your credit." Any firm that claims to perform this hands-off service should be avoided.

But there are good, reputable credit counseling and debt management services who truly do help people. And despite the myth that using such a service inevitably hurts your credit, the truth is that many of these companies are able to reduce their clients' debts and maintain or improve their credit scores at the same time. When considering a credit counselor, look for firms that have these dual goals, not companies that focus solely lowering your liabilities.

Sincerely,

James

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Solving Your Debt Problems With Debt Consoliation

Merging all unsecured debt into an individual loan and consequently bringing down the overall rate of interest and subsequently the number of payments each month is the purpose of debt consolidation. It is a crucial step, which assists debtors nullify the much graver measure of announcing Bankruptcy. In the long-term it will repair your credit, even though it isn't instant.

A debt relief organization is more likely to make payments on time than an over-burdened consumer and because of this creditors are usually more willing to make such arrangements. Your monthly payments become simpler to deal with, you have more spare cash each month and you don't have to juggle all those debts. With this approach, you don't have to concern yourself about coping with each payment separately.

There are several ways of breaking out of a debt trap. Either by joining a credit consolidation program, which advises on credit counselling, or employing debt consolidation, which refreshes current finance. An interest and charges freeze on the debtors outstanding accounts is the most crucial purpose of the management companies obligations and a continuing duty is to ensure that creditors continue this freeze during the term.

The fact that you are obligated to pay just one payment once you have negotiated with your debtor as an alternative to paying multiple instalments monthly for all the debts you have collected is the most beneficial part concerning debt consolidation. Put plainly, debt consolidation is a method of combining many debts together, taking out additional loan to pay them off, and then managing the consolidated debt. The prime function is to accomplish debt reversal by more beneficially addressed smaller interest rate loans.

Applying for a secured loan by using assets, such as a house or car as collateral, is an option, thus assuring you of lower interest on whatever loan you take out. Secured debt consolidation is a way to consolidate debt when you have security to pay for the loan you are borrowing such as real estate. Securing a debt with property such as a home or car will get you a lower rate through an assured loan using the property as collateral.

Debt consolidation is an ideal solution for you if debt burden is out of control and you do not want to declare Bankruptcy. An undischarged bankrupt will not be able to seek or obtain credit without first advising the proposed lender of their Bankruptcy. One problem with Bankruptcy is that it is one of the biggest negatives that you can have on your credit history.

The most beneficial procedure for your private fiscal matters would be better served by finding a certified professional consultant who is available to lead you in everything that is involved. There are many reputable companies who can offer advice and business debt help. Many people are also looking to consolidate debt online because they're short on time and money. Debt consolidation counselling is also available from various administrations that are associated with government organisations.

Probably, one of the most popular ways to get rid of debts and the most effective solution is debt consolidation. Relieving the headache of burdensome debt by any means puts you back in control of your life.

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It Will Get Worse Before It Gets Better

The depth and length of the global recession now underway will be the key determinant of how shares and other financial assets perform this year.

Compared to the 1930s, the global policy response this time around has been far more positive and far quicker, so a re-run of the Great Depression is very unlikely.

AMP Global Investors' chief economist, Dr Shane Oliver says its early days and the financial crisis is continuing but some key signposts to global economic recovery are showing tentative signs of improvement.

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It is obvious the global economic situation is bleak.

The key problem last year was the financial crisis. Given ongoing bank problems this is clearly still with us, but this year the key problem will be the economic fall out.

The US, Europe and Japan are now contracting in a synchronised fashion and this, along with a gathering slump in the emerging world, is likely to make it the worst global recession in the post war period.

The Australian economy is also being hard hit and looks destined for recession.

The OECD's leading indicator is plunging at its fastest rate ever.

Talk of not just recession but depression has become common place as evident in the next chart.

The key to when shares and other growth oriented financial assets get back on to a sustainable rising trend will be the depth and duration of the global recession and a big driver of this will be the global policy response.

The Policy Response

The financial crisis and the synchronised global economic slump that is still unfolding is unprecedented.

But so too has been the policy response by governments all around the world. This has focused on:

? A rapid reduction in interest rates with rates falling to near zero in the US and Japan, to record lows in the UK and falling sharply in other countries including Australia.

? Fiscal stimulus including spending increases and tax cuts with a massive mix of tax cuts and extra spending soon to be announced in the US.

? Unprecedented measures to stabilise the financial system. These vary by country but include providing loans to financial institutions, providing funds for credit markets and buying private sector securities such as mortgage backed securities, injecting capital into banks, insuring some banks against additional losses on their bad debts, the provision of guarantees over bank borrowing and, in some countries, bank lending.

More measures are on the way with the US now looking into a comprehensive way to remove toxic debt from banks? balance sheets.

The question is will it work? This raises several issues.

Very different to the 1930s

One criticism of the policy response to date has been that it has been too slow and inconsistent. Interest rates weren?t cut quickly enough and the US response has seemed haphazard at times.

However, these problems partly reflected a combination of uncertainty about the size of the problem and the Bush Administration's ideological bias against intervening in free markets.

The latter problem is likely to be removed by the more pragmatic Obama Administration.

But the policy response in the last year has been far more positive than was the case in the early 1930s as the Great Depression unfolded when:

? US interest rates were in fact initially raised and only started to fall aggressively in 1933 and never reached zero despite consumer price deflation.

This time around US interest rates have reached zero in just over 12 months after the share market peak.

? Fiscal policy was initially tightened in the early 1930s in the US reflecting an obsession with balancing the budget and there were no ?automatic stabilisers? such as unemployment insurance.

Even when the New Deal arrived after Franklin D. Roosevelt became president in 1933 fiscal stimulus was modest amounting to just 1% of annual GDP compared to what is now being proposed by President Obama with over $US800bn spread over two years equating to 2.7% of annual GDP.

? In the 1930s over 5000 US banks went bust taking their depositors? savings with them as there was no deposit insurance or government guarantees over bank borrowing.

This led to a massive collapse in the US money supply and was a major contributor to the severity of the Depression.

Now having learned the lessons of the Depression governments have been bending over backwards to prevent losses to depositors and to prevent an implosion in the financial system.

Won?t the monetary expansion just create inflation?

Some fear that by pumping cash into the financial system central banks will simply create inflation. This is unlikely.

Narrow money supply measures have increased largely reflecting increased bank reserves.
But to get inflation we need the banks to lend more, so that broader credit measures increase and we need people to start spending in excess of the economies? capacity to produce.

So far, while the increase in reserves has boosted narrow money measures, banks are leaving them on deposit at the Fed, broader money supply measures have picked up but not by much, credit growth is still negative, and spending in the economy is contracting such that excess capacity is rising.

Until demand picks up there is no reason to worry about inflation. In fact the big concern is more likely to be deflation.

When demand does pick up then the Fed and other central banks will need to reverse their policy stimulus, but they seem well aware of this.

Will the deficit financing just push up bond yields?

Every time there is a recession and public sector budgets shift into large deficits as is occurring now there is concern that it will boost inflation and that the increased supply of bonds will boost bond yields. Both fears are misplaced.

Expanding budget deficits don?t cause inflation or higher bond yields in economic downturns because they are offsetting an increase in private savings as private consumption and investment are slashed.

The Japanese experience in the 1990s was a classic example of this ? the budget deficit and public debt blew out but inflation turned into deflation and bond yields fell below 2%.

Why not let market forces just run their course?

A more fundamental criticism from free market ideologues is that market forces should be left to run their course so as to cleanse the system of past excesses.

In other words, after the good times of the boom we now all need to suffer!

This was the approach to economic management prior to World War Two and it resulted in regular wild swings in economic activity and unemployment.

The trouble with this approach is that it can cause massive economic pain.

Sure, the 1930s depression unwound the excesses of the 1920s but this came at a big cost to society and much of the pain was borne by innocent people ? ordinary workers who lost their livelihoods as unemployment rose above 20% and ordinary people who lost all their savings in bank failures.

It also runs the risk that the people on the receiving end of the pain will decide that capitalism is not for them possibly leading to more extremist fascist or socialist governments.

As such a 'do nothing? approach is not politically acceptable to most governments.

Are there any signs it is working?

Given the ongoing losses in global banks and the latest slide in bank shares it is clear that the financial crisis is still with us.
However, were it not for the capital injections into banks and guarantees over bank borrowing, the situation today would likely be far worse.

More fundamentally though there have been some signs of improvement. Focusing mainly on the US situation, which is the key in all this:

? The gap between interbank lending rates and government short term borrowing rates has fallen sharply from levels in October.

The gap between corporate borrowing rates and long term bond yields has also fallen, albeit only tentatively. See chart below.

Mortgage rates in the US have fallen over the last two months from around 6.5% to around 5%.

This in turn has seen a huge increase in US homeowners refinancing their mortgages to lower fixed rates, which is normally a precursor to stronger consumer spending.

? Consumer confidence measures are showing tentative signs of stabilising in the US and in Australia.

? Chinese money and credit growth have recently started to pick up again.

? There are some signs of stabilisation in global trade, as indicated by the Baltic Dry Freight index (a measure of shipping costs) which has stabilised after a 90% fall.

To be confident that economic recovery is definitely on the way a range of other signposts need to turn positive including: a slowing in the pace of US house price declines, an easing in bank lending standards and an improvement in credit growth.

However, the fact that some indicators have turned a bit more positive is a good sign and consistent with our expectations for a global economic recovery from later this year and/or through 2010.

Conclusion

The global policy response is absolutely necessary in providing a counterweight to the global financial crisis.
More action is needed in the way of fiscal stimulus and measures to get banks lending again and this looks to be on the way.

The economic news will likely get worse before it gets better and this will ensure a volatile ride for investors in the short term.

But there are signs that the policy response is helping. And this provides some confidence that growth will start to stabilise/improve later this year and through 2010, which would be consistent with shares getting back onto a sustainable recovery path this year.

IMPORTANT: AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decisions.

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Credit Card Use Tips And Suggestions

A credit card is an amazing financial product that can provide you with a lot of benefits if you use it properly. Unfortunately if used wrongly it can also produce much harm and damages. As you can see, as any other financial product, these are only an instrument for achieving certain goals. It is the actual use that you give to that instrument what will eventually produce benefits or damages to your credit and financial life. Following are some tips on how to use them smartly to avoid the drawbacks while taking advantage of the benefits they provide.

Shop Around Before Signing Anything

Do not go for the first offer you receive. Actually do not apply for any credit card you are offered. Instead, shop for one that suits your needs and desires. Check the interest rates, the fees, the credit limits and other variables you are interested in before agreeing on any product.

Keep Your Balance Within Reasonable Levels

Never max out your accounts, it is important to follow this tip because by ignoring it you may end up buried deep in debt due to the accumulating interests. You may wonder what a reasonable level is. Anything below 60% of the credit limit is optimum. Anything reaching the 80% becomes risky and requires immediate attention.

Control Your Purchases

You should keep all the receipts for two reasons: It will help you compare the balance with the purchases to make sure that no unauthorized transactions are registered and it will also help you objectively analyze your purchasing behavior to see if you overspend or exceed the number and quality of purchases that you planned to make.

Protect Your Personal Info

Your personal information should be sacred. Unfortunately, there are many unscrupulous people out there preying on those who need financing and apply for or use these products. Therefore, you should try to keep your personal information from being exposed and thus, you should avoid sharing your credit card number and code with merchants whose security levels you have not confirmed.

Try Not To Pay Only The Minimum Payment

This would lead you to debt accumulation and conspire against financial and credit health. Instead, try always to pay the whole balance and if you are forced to pay less than that, make sure that you pay higher sums whenever possible. Also, if you see that you are currently not being able to afford the payments, immediately reduce your spending. If you cannot increase the amounts you destine to reduce debt, this is the only other way to keep it at bay.

Do Not Keep Too Many Credit Cards

It is best if you do not keep too many open accounts because this jeopardizes your finances adding available credit to your credit report and if the lines of credit are maxed out, the situation will be even worse. A reasonable number of cards will depend on your income but for average earnings two Credit Cards are more than enough. However, remember not to close accounts altogether because this can damage your credit too. Try to keep old accounts (they provide you with a longer credit history) and close only one account at a time (every 6 months) if you have too many of them.

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Job Losses Tell Us It?s Going To Get Worse

There is one overriding message from the jobs bloodbath of this week.

That is: this slowdown is going to be long, hard and tough and things are going to worsen.

Indeed US brokers Merrill Lynch now says it thinks estimates for 2009 profits for US companies are still too generous, that earnings are going to be lower.

Brokers already believe that December 2008 quarter earnings will be down 28%, so Merrill Lynch's warning should be seen as a pointer to the future.

Anyone thinking it's going to be a quick exit/rebound later this year, or even in 2010, had better think again.

The 100,000 job cuts that echoed around the world on Monday came from retailing, cars, heavy manufacturing, light manufacturing, technology, finance, insurance, technology and more.

On top of the cuts from the likes of BHP Billiton the week before, Intel and Microsoft, the trail of losses is mounting rapidly, day by day as employers, who have tried to keep staff on for as long as possible, are forced by plunging profits, to chop and chop deeply.

Companies reported badly damaged 4th quarter earnings in the US and Europe and used these profit slumps as the basis for the jobs cuts: Texas Instruments, Caterpillar and ING for example (it was bailed out by the Dutch government for a second time with a deal to takeover dodgy real estate assets and keep lending to the economy).

The IMF saw the US economy contracting 1.6% this year, with the euro zone shrinking 2% and Japan 2.6%. Media reports said the Fund, later this week, would reveal world growth for this year 0.5% at best. Next year an optimistic 3%.

Overnight the Japanese economy okayed a modest stimulus package of about $US75 billion and the German Cabinet signed off on a 50 billion euro package. The UK Government revealed a $US4 billion-plus assistance package for its car industry.

The aim of these packages is to try and slow the downturn and keep as many people as possible in jobs.

Companies in the US and Europe chopped more than 90,000 jobs Monday that also saw the Iceland government collapse, General Motors chop more factories as sales slump, and America's second biggest cardboard processor collapse with $US5.6 billion in debts.

Around 80 000 jobs were cut in the US, the rest in Europe.

A survey of private sector economists in the US had bad news: they see the slump as worsening. (Source)

The survey found that companies will lay off more workers and hoard more cash in the next 12 months. A large majority of the 105 economists polled believe the country's gross domestic product will continue to sink in 2009.

Respondents to the survey were getting more pessimistic about the macroeconomic outlook. "78% of respondents expect U.S. real GDP to be lower in 2009 than in 2008."

"NABE's January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," said Sara Johnson, a NABE economist.

Nearly half (47%) of surveyed economists said overall industry demand was falling, compared with 35% who said so in the October survey.

"Just 10% of respondents said profit margins were rising, compared with 52% who believe they are falling. And 38% of economists said capital expenses are falling, up from just 15% in October.

"Over half expect real GDP to fall by more than one percent this year, and only three percent project growth of over one percent.

"Falling profit margins outnumbered rising margins five-to-one among respondents? firms?the worst reading since 1982.

"Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further.

"With market prospects deteriorating, firms slammed the brakes on capital spending in the fourth quarter of 2008; the percentage of firms reducing capital expenditures (38%) was the highest in the history of the survey."

The survey found that a majority of those replying said credit conditions hurt businesses, as customers had less leverage to buy discretionary products. 78% of respondents said tightening credit conditions affected customers, and 52% said the credit crunch directly hurt businesses in their industries.

Rapidly deteriorating global market conditions are hammering business profits.

"For the fourth consecutive quarter, reports of falling profit margins (52% of respondents) outnumbered reports of rising margins (10%). This was the worst result since the spring of 1982.

Job losses accelerated in the fourth quarter, producing the worst survey result in 17 years. Some 44% of firms cut payrolls, while only 14% added workers.
"Looking ahead, 39% of companies plan to reduce payrolls over the next six months, while 17% plan to increase employment. Only the services sector continues to create jobs."

If anything, that explains why so many big and small companies are now cutting jobs, more than a year after the US economy officially slipped into this recession. Business conditions have become so fraught, thanks to the credit crunch and drought, that they have no alternative.

With US first time jobless claims running at more than half a million a week for the past two months, there's no let up in the flow of bad news for US workers, and increasingly employees in Europe and Japan.

US unemployment looks certain to surge from the December level of 7.2%, even as thousands of workers stop actively searching for the few jobs that are there.

But there was some rare good news from the battered US housing sector with the National Association of Realtors reporting a 6.5% rise in the number of pre-owned houses sold in December: 4.74 million unit annual rate. Economists had expected a 4.40 million unit pace.

The US Conference Board said its index of leading economic indicators rose 0.3%: economists had expected a fall of the same size.

However, the realtors' report also had the now familiar bad news with the median national home price in the US down 15.3% in December from the same month of 2007, the largest fall on record.

The financial crisis claimed Iceland's Prime Minister Geir Haarde who announced the resignation of his government after months of protests over economic policies that brought the country close to Bankruptcy.

A coalition of Green and leftwing parties is expected to win the election later this year, which could provoke tensions between the country, the banks and the IMF. The Social Democrats will form a new Government in the meantime.

But Canada will spend $US5.7 billion on infrastructure over the next two years and officials said Canada will run budget deficits totalling $US53 billion over the next two years.

And the Norwegian government presented a $US2.87 billion fiscal stimulus package to prevent a surge in unemployment. It is dipping into its state-owned wealth fund to help bolster spending, as is Singapore.

But it was the toll of job losses that staggered observers: construction equipment giant Caterpillar axed 20,000 places worldwide to cope with plunging sales. Its big Japanese rival, Komatsu warned of a 15% drop in sales and a 42% plunge in profit in the year to March 31.

New York-based drug maker Pfizer announced it would acquire its rival Wyeth for $US68 billion ($A104 billion), and then announced it would chop the combined workforces of the two companies by 19,000, or 15%, and its own global workforce by 10%, or 8,000 jobs. It's halving dividend to help finance this big deal. Investment banks will carve up $US207 million from this mega-merger.

Texas Instruments reported a big fall in 4th quarter profits, and plans to shed up to 3,400 jobs. And still in technology, an American union reckons IBM, which last week reported better than expected 4th quarter profits, is readying itself to chop at least 2500 jobs soon. .

General Motors dropped an extra 2000 jobs at two US plants as it continues restructuring. US telecom operator Sprint Nextel said it would cut 8000 jobs, or 14% of its staff, and top US home improvement retailer Home Depot is culling 7000 employees across America.

The big Dutch financial services group, ING, has obtained more help from its government to stay alive and is sacking thousands of people, as is the huge Philips lighting and technology group.

All up, ING and Philips are shedding around 13,000 people from their businesses worldwide to try and cut costs as sales and demand slump faster than expected.

And Corus, the big Anglo-Dutch steelmaker is cutting 3,500 jobs around the world, some 2,000 of them in Britain, due to a sharp fall in demand for steel.

The company is Europe's second-largest steelmaker now owned by the Indian company, Tata which is struggling to keep Jaguar Landrover alive in Britain..

Another major US company has collapsed: the Smufit-Stone Container Corp, a cardboard packaging giant and one of the world?s largest paper recyclers, has gone bust in the US with $US5.6 billion in debt. It was unable to service amid a slumping economy and demand for its products.

The company, which is based in the US but was founded in Ireland, filed for Chapter 11 protection in the US: besides the $US5.6 billion in debt the company had $US7.5 billion in assets. 24 subsidiaries or affiliates also sought protection. It had net sales of $US7.4 billion in 2007.(Source)

Smurfit-Stone, based in Chicago is North America?s second- largest maker of corrugated packaging, and has 22,000 employees in the US, Canada, Mexico and Asia.

In Britain two retail chains selling shoes went bust overnight and their listed owner, Stylo, was suspended from trading.

Barratts Shoes and PriceLess became the latest British chains to go into administration, putting the jobs of around 5,00 people at risk. The 400 stores in the two chains will remain open for now.

They join fashion chains, Dolcis, Stead & Simpson and Faith which have all gone into administration. Woolworths has closed, at a loss of 30,000 jobs and the home improvement group, MFI has failed. The UK children's retailer, Adams has shut, while furniture retailer, Land of Leather is a failure.

And a sure sign of the damage the credit crunch is doing to business can be seen from the 72% plunge in 4th quarter operating earnings for American Express.

The credit card giant said quarterly profit from continuing operations hit $US238 million, down from $US858 million in the same quarter of 2007 (Source).

American Express received a $US3.4 billion from the US Treasury's bank bailout fund earlier this month as surging consumer defaults forced it to set aside more reserves and the market for bonds backed by credit-card debt froze.

The company has chopped 7,000 jobs, frozen management salaries and cut other costs to try and save $US1.8 billion a year. For the year earnings fell 32% to $US2.8 billion.

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Mortgage Rates Defy Expectations

The 30 year rate fell from 5.07 to 5.06 this week. This is the 3rd week in a row where interest rates have either fallen or stayed flat.

The 15 year rate stayed flat at 4.39. The 5 and 1 year arms were mixed with the 5 year arm falling slightly from 4.03 to 4.00 and the 1 year arm rose from 4.22 to 4.25. Below are rates from the weeks from Apr 01, 2010 to Apr 29, 2010 and rates from October 15th (6 months ago).

Apr 29, 2010
30-fixed 5.06 15-fixed 4.39 5 ARM 4.00 1 ARM 4.25

Apr 22, 2010
30-fixed 5.07 15-fixed 4.39 5 ARM 4.03 1 ARM 4.22

Apr 15, 2010
30-fixed 5.07 15-fixed 4.40 5 ARM 4.08 1 ARM 4.13

Apr 08, 2010
30-fixed 5.21 15-fixed 4.52 5 ARM 4.25 1 ARM 4.14

Apr 01, 2010
30-fixed 5.08 15-fixed 4.39 5 ARM 4.10 1 ARM 4.05

Oct 15, 2009
30-fixed 4.92 15-fixed 4.37 5 ARM 4.38 1 ARM 4.60

So the market has made me a liar. I thought we were going to see some volatility in interest rates over the month of April. Instead rates have stayed remarkably flat. Besides the week of April 8th mortgage rates stayed between 5.06 and 5.08. At 5.06 we are also near 4.93 which is the lowest mortgage rate seen thus far in 2010. This is kind of surprising since we have been expecting to see rates increase over the last month.

So rates are one thing but it's also informative to see actual mortgage payments. We took today's rates and using our mortgage calculator we determined the rate for a 200k mortgage. We also did the same thing with rates from April, 15 2010 and rates from October, 15 2009.

Apr 29
30-year $1080.98
15-year $1518.76
5-year ARM $954.83
1-year ARM $983.87

Apr 15
30-year $1082.21
15-year $1519.78
5-year ARM $964.07
1-year ARM $969.88

Oct 15
30-year $1063.88
15-year $1516.73
5-year ARM $999.16
1-year ARM $1025.28

So as we can a mortgage payment today is pretty similar to what we saw 2 weeks ago. In fact mortgage payments only decreased by 11/100 of one percent.

So what is going to happen moving forward? It's hard to tell. The predications that the government not putting resources into buying mortgage backed securities could steal lead to more up and down fluctuations in mortgage rates but we have certainly not seen that this month.

Overall I think that rates are either going to stay roughly flat or rise drastically. There is simply not that much room for them to fall. Rates are currently 5.06. The lowest they have even been is 4.71 (which we saw in 2009) and the highest was above 15 percent. So what is our advice? Basically if you are planning on getting a loan I would do it sooner rather than later. Also I would lean for a 30 year rate instead of an arm because we expect rates to be higher in 1 to 5 years than they are today.

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