Can Obama Make Sense of All This Debt?

Early Tuesday morning, the federal government announced a new, massive $800B program to buy up bad debt and pump money into the sagging credit markets. According to a NYTimes article entitled: “U.S. Unveils New Programs to Ease Credit,” the program would be structured as follows: "The Federal Reserve said that it would buy up to $600 billion in mortgage-backed assets from the government-sponsored mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE). The agency would also buy up to $100 billion in debt directly from the companies and up to $500 billion in mortgage-backed securities."

In addition, the Fed and the Treasury unveiled a different $200B package to help commercial lending (car loans, student loans, etc).

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U.S. Mortgage Rates Drop Most in Seven Years on Fed Debt Plan

Nov. 26 (Bloomberg) -- U.S. mortgage rates dropped by the most in at least seven years as a Federal Reserve pledge to buy $600 billion of debt succeeded where seven cuts in the central bank’s benchmark rate had failed.

The average rate for a 30-year fixed mortgage fell to about 5.5 percent after starting at 6.38 percent yesterday, according to Bankrate Inc. It was the biggest one-day drop in at least seven years, said Holden Lewis, of the North Palm Beach, Florida, publishing and research firm.

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New $800 billion rescue plan includes money for credit card debt

WASHINGTON — Treasury Secretary Henry Paulson, warning that "millions of Americans cannot find affordable financing for basic credit needs," announced a major expansion of the federal bailout on Tuesday — as much as $800 billion to make mortgages and consumer credit more available and affordable.

The government will buy up to $600 billion in mortgage-backed assets, and, in a separate action, lend up to $200 billion to investors who've bought securities backed by consumer loans such as credit cards, auto and student loans, in a bid to free up consumer credit.

Paulson, speaking at a Washington news conference, hailed the housing aid as "a very strong statement of support for the housing market....Mortgage spreads have...not come down as much as they might," he said, "but I would say mortgage financing has remained...available and it has not risen nearly as fast as the cost of other credit."

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Credit cards with the happiest users

If you hate your card company, it may pay you to check out the cards with the most-satisfied users.

Credit cards aren't created equal. Neither are credit card companies.

A recent consumer survey by J.D. Power and Associates recently confirmed what the credit-savvy already know: American Express makes its customers happier than any other issuer. "Happier" is relative, of course. The survey of nearly 8,000 consumers reported that AmEx scored 783 points out of a possible 1,000 when judged on five issues:

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How You Can Make Your Debt Consolidation Work for You

How do you define debt consolidation? Consolidation is the process of combining all unsecured debts into one account. Thus, instead of paying multiple debts-each with its own interest rate, the borrower can submit only one monthly payment with a single interest. Thus, the money you save from the additional interest costs can be used in paying off your original debt.

Many credit counseling services recommend consolidation on extreme cases of debt. If the borrower owes huge debts with different creditors, repayment can be very difficult unless the bills are consolidated. Nevertheless, this doesn’t mean that consolidation is always the solution to debt problems. A credit counselor must also suggest practical ways on how the borrower can be free from debts more easily.

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The Debt Diet: Ways to Trim Unsightly Bills

It's time to go on a debt diet.

Carrying around a few thousand dollars in credit-card balances may have seemed perfectly acceptable a few months ago. But in this financial crisis, it can be downright dangerous to your financial health. Credit-card companies are jacking up rates and fees, making it easier to fall deeper in the hole. And during a recession, when the possibility of layoffs looms larger and most of us feel increasingly vulnerable, debt becomes even more pernicious.

Unfortunately, even if you are determined to be more disciplined, paying off your debt can be just as slow and frustrating as trying to work off those irritating love handles. Just as we have to keep eating when we're dieting, we still may have to use our credit cards for travel and other needs.

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Checklist for Those on Debt Management Plan

When faced with serious debt problems, people run to credit counseling agencies for help. True, there are many reputable non-profit organizations that offer credit counseling and help on financial management. However, there are also many organizations that pretend to offer credit counseling but charge their clients with unreasonably high fees for their services.

The Federal Trade Commission (FTC) warns the public against such credit counseling agencies that claim to be non-profit but asks for unreasonable payment from their clients who are already swamped in debt. Some of these fake credit counseling agencies use deceptive tactics on customers who do not have any idea that they’re dealing with the wrong credit counseling agency.

What is a Debt Management Plan?
For instance, some credit counselors may advice consumers to enroll into a debt management plan. With a Debt Management Plan, the consumer will be submitting a monthly payment to the credit counseling agency. The agency in turn, will divide the payment and distribute it to different creditors. It is true that creditors can give lower interest rates and even waive penalties for those who are paying through a debt management plan.


Read full article: Checklist for Those on Debt Management Plan


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