1) Opening:
Hello and welcome to this week’s edition of Checks and Balances TV. Today’s

program is entitled, “Spring Cleaning: Get Your Financial House in Order!”

But first, let’s see how today’s news may impact YOUR financial future!

C1    2) Financial Headline:
The national average annual percentage rate (APR) on introductory credit

card offers moved up slightly, from a 5 -week stretch of 14.65%, to 14.67%.

Since the recession began in 2007, credit card rates have NOT stayed the

same for longer than 2 consecutive weeks.  At the same time, consumer debt

is on the RISE as well, according to the Federal Reserve. February marked

the BIGGEST month in NEW consumer debt, since June of 2008.

Ok, so what’s really going on here?  Let’s “check” the facts using our

Checks and Balances process.

C1    3) Checks:
Side
The national average annual percentage rate on introductory credit card

offers climbed to 14.67% at the end of last month, its first jump since

late February.  The move was sparked by a federal change in how credit card

companies can market their product to students. Due to the Credit Card Act

of 2009, and more specifically the NEW restrictions on HOW creditors can

interact with and market to students, some banks are NO longer offering

student credit cards.  As a result, the ‘top 100’ credit card companies

have undergone recent changes, as banks work to improve their marketing

efforts to conform to the new rules.

The national average APR has increased by just 3/10ths of a percentage

point over the last 6 months. The APR refers to the interest rates charged

on credit card balances on an annual basis.  However, this rate is applied

to an account that carries an outstanding balance EACH month.  The way an

APR is set has a lot to do with the Federal Fund rates.  Most credit cards

are VARIABLE rate credit cards, and most variable rates are tied to the

prime rate.  The prime rate is typically set at 3% ABOVE the Federal Funds

rate.  When the Fed rate increases, so does the prime, which leads to an

increase in APR.  The Fed, however, has NOT changed their rate in more than

2 years.

This stability must have given comfort to many consumers, as the Federal

Reserve reported an INCREASE in consumer debt for the 5th month in a row.

As of the end of February, consumer debt had INCREASED by 3.8% to $2.4

trillion dollars.  This INCREASE is due to long term purchases, for things

like cars or education. Revolving credit, however, such as credit cards,

have DECREASED for the 2nd month in a row.

Ok, so you may be asking yourself, “Matt, what does all of this really mean

to me?”  Now that we’ve “checked” the facts, let’s “balance” this news

using our Checks and Balances process to determine what action YOU should

take TODAY.

C1    3) and Balances:
Side
Thanks to the Credit Card Act of 2009, consumers are now given greater

warning when their APR is about to increase.  By law, credit card companies

must now give a cardholder 45 days notice, except under a few specific

circumstances, such as a change in the rate by the Fed, or when there is

delinquent activity by the cardholder.  In each of these scenarios, the APR

can change immediately. Outside of this, credit card companies are free to

change your APR at THEIR discretion, as long as they give you a little

advance warning.

When reviewing the numbers, the DROP in credit card debt would indicate

that consumers are paying DOWN their credit card balances.  However, the

INCREASE in consumer loan debt would suggest that consumers are becoming

increasingly more comfortable with making LARGE purchases.  For example,

auto sales have been VERY strong in recent months.  General Motors ended

2010 with its GREATEST profit in more than a decade, and is on track to do

even better in 2011.

 

Checks and Balances

 

However, some analysts believe that the recent DECREASE in unemployment,

combined with the sudden INCREASE in long-term loans, would suggest that

people have dropped OUT of the job hunt, making them NO longer “countable”

by unemployment standards, and have instead, taken out student loans to go

back to school. College enrollment numbers are the HIGHEST they’ve been in

more than 40 years, back when young adults went to college to AVOID the

draft into the Vietnam War.

Ok, so what’s the bottom line here?

C2    4) The bottom line:
The economy appears to be slowly improving; the Credit Card Act has made

banks more accountable to consumers when they intend to raise interest

rates; and the job market is beginning to stabilize – 3 factors that have

kept the banks, and the Fed, from making any sudden shift in interest

rates. Banks, who have been competing with each other to attract and retain

credit worthy customers during the recession, have held interest rates to

stay competitive with each other.  But, as the economy continues to

improve, more and more people will BECOME credit worthy again, and banks

will need to do less to attract NEW customers, and make MORE money.  So,

now is the time for Americans with GOOD credit to seek out or negotiate

lower interest rates on ALL of your loans. Shop around, like you would for

a new car, and find the LOWEST rates available, and then eventually, pay

OFF that debt!

C1         5) Matt’s Weekly Financial Tip, Tool, or Technique:
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And now for Matt’s weekly financial tip, tool, or technique…
With spring in the air, today’s financial tip, is on financial S.P.R.I.N.G.

cleaning! While it’s important to keep track of your finances throughout

the year, doing an annual clean-up will help you achieve financial freedom

and retirement success. Follow this acronym for the word “spring,” and your

finances should grow all year long!

S – Shred old financial documents: Spring is a great time to get rid of

those old pay stubs, financial records and documents that you’ve been

saving for years! Keep your tax returns, canceled checks, and any records

that support tax deductions for auditing purposes, and then get RID of the

rest! But remember, it’s important to SHRED, not throw away old financial

documents, to prevent your IDENTITY from being stolen!

P – Prioritize your expenses: With summer vacations and the holiday season

just around the corner, spring is a great time to cut DOWN on your

expenses! Look over your monthly bills and decide which ones are necessary,

and which ones you can REALLY live without. You’ll be surprised at how MUCH

money you can save by cutting back just a little!

R – Review your credit report: By federal law, you’re entitled to receive

ONE free credit report, from each of the three major credit bureaus each

year. Log on to annualcreditreport for your report, and then do a thorough

review of it. If anything on your report causes you concern, contact the

company directly to correct any inaccuracies or misinformation.

I – Investigate your insurance coverage: With all of the competitive

insurance providers out there today, now is a GREAT time to review ALL of

your current insurance policies, and make sure you’re still paying

reasonable rates. If you feel you’re paying TOO much, shop around, and you

may find some annual savings!

N – Negotiate your rates: Every year you should make it a priority to look

at EACH of your outstanding debts, and the interest rates you’re paying.

Contact your loan provider or credit card company, and negotiate a lower

rate, and if they don’t want to budge, talk to a few of their competitors

to see if you can strike a better deal.

G – Go over your estate plan: Another important aspect of financial spring

cleaning is reviewing your estate plan. If a marriage, divorce, birth or

death has occurred since the last time you updated your estate documents,

take action NOW to revise them accordingly.

By taking time once a year to do some financial spring cleaning, you will

be in good financial shape for the rest of the year!

C2    6) Today’s Poll:
Side     In this week’s CBTV poll, we’re asking Americans an important

question:
Which part of YOUR financial plan would benefit the most from a GOOD spring

cleaning?
Log on to answer this poll at ChecksandBalances.TV. While you’re there,

take part in “Your Voice Counts” and join in the discussion!

C2    7) On the Street:
Side    In our “On the Street” segment, we travel the country to ask

Americans what they think about an important financial topic or issue. For

this week’s show, we asked people their feelings about how EASY it is to

get into personal debt today.
Be sure to log on to our website to view their responses!

C2    Promo:
Side    And while you’re on the site, be sure to watch the newest episode

in our “Truth About Series,” which is available now! – It’s on, The Truth

About Bonds! You will learn the pros and cons… both sides of the coin on

this important financial product, so you’ll know if it’s the right

investment for you!

C1    9) Close:
And finally, remember that only YOU can control your financial future – you

CAN succeed… you just need confidence and determination.  I’m Matthew J.

Rettick from Checks and Balances TV.   Until next week, Dump Debt, Invest

Wisely, Believe in Yourself and Make it Happen!