Fed Cuts Rates by 50 Basis Points: Can It Go Below One Percent
Moments Ago Fed Funds Rate was cut to down to 1.00% bringing it down 50 basis points. It was expected as 25 basis was too low and 75 basis points were thought as too high.
This new kind of pushed Fed into corner. It is running out of Monetary options. few fiscal tools are left. It is very unlikely that Fed will lower the rates below One Percent. but some sources says that this option is still on tables. we did an article on Zero interest rate a few days back.
We at FLR don’t think that Fed cutting rate will ease the credit market. The current problem is about stinking balance sheets. Govt Bail outs Or Easy Credit from Fed can not do any thing but to inflate them by putting either equity or credit on these balance sheets. It does not take away the stink from the balance sheet. The problem with liquidity of commercial paper will not be solved unless all those toxic assets like sub prime credit are removed from them.
DOW and S&P 500 took a dip after rate cut. and 10 year bond yields rallied upwards….. watch Bloomberg for more details.
A Quick Guide to Credit Card Basics
Credit cards are a double edge sword. They can help make your life a financial heaven and hell depending upon how you use them. Following are some tips on using your credit cards wisely. The benefits of using your credit card wisely include but not limited to cash back, bonus points, airline miles and at best a great credit score. On the other hand if you decide to use them in an unwise fashion, you might end up in a mountain of debt.
Rule No. 1 is to pay off all you balance every month. You will have to pay interest on your spending if you don’t do that and that interest rate is very tricky. It takes a lot of discipline to pay back balances on time. According to a recent report by Federal Reserve, Almost 40% of all house holds in America carry a substantial amount of credit card debt.
Protect Your Credit Score
Make all your payments before the date they are due. Late fees can pile up quickly as they are around $20 - $50. If you miss more than two payments that will automatically increase your interest rate to “Default Rate” (around 24% to 30%) . Late and missed payments also lower your overall credit ratings. That can trigger interest rates on other loans to go up as well as getting soft loans in future impossible.
Yet Another Personal Finance Blog
We all have to consider the option of taking a loan at some point in our life. All of us make some purchases in life that are once in life time decisions for most of us. Good collage and school education, a nice auto-mobile, a decent place to live and call home. Most of these carry a price tag which is well beyond the reach of an average person who has just started his independent life. Unless your parents are filthy rich or you have just inherited a fortune, you can not buy any of above items by paying cash. A normal person simply does not have this kind of ready cash early in his life. To lead a decent life, you need good school and collage education, a good ride and a home. These needs are immediate and we normally don’t have any choice but to seek loan from financial institutions and banks to fulfill those. We take school loans, collage loans, auto loans and seek home equity finance or mortgage to start our life.
