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Credit card use is making a comeback

admin — Fri, 16 Dec 2011 22:41:18 +0000

Consumer spending over the last three quarters of 2011 has shown a reversion to credit card use over debit card. Silvio Tavares, senior vice president at First Data, which processes card transactions for 4.1 million merchants, notes that “Consumers have spent the last couple of years de-leveraging and reducing credit card use, but the past month — and since April — they’ve been using their credit cards more and are starting to return to pre-recession buying.” The first quarter of 2011 saw an 8.2% increase in credit card use, followed by a 9% increase in the second quarter and a 10.6% increase in the third quarter. On the other hand, debit card use increased by 9.6%, 8.3%, and 5.9% in quarters one, two and three respectively. On black Friday alone, credit card use jumped 7.4% from the same day a year ago.

A major contributing factor to the rise in credit card use is that the banks are encouraging consumers to switch from debit to credit. Credit card use is more profitable and cost effective for banks compared to debit/checking accounts. To get consumers to make the switch, credit card mailings have increase 85% since early 2010, and many of these credit card offers come with new perks such as rewards points, miles, or cash rebates. The number of credit cards offering such perks has increased over the past two years from 6 out of 10 of the credit card offers in 2009 to 8 out of 10 credit card offers today.

Analysts believe that an increase in credit card offers will continue to intensify as debit cards become less cost-effective for banks. Banks have started to raise checking account fees and charge debit card usage fees, all of which is part of the attempt to get consumers to switch to credit cards. Although consumers will not be charged with the same usage fees on their credit cards, Bill Hardekopf, CEO of LowCards.com warns consumers to pay off their balance each month because the interest payments will be much greater than any new debit card fee.

Source:

Blake Ellis, Credit card use is on the rise, http://money.cnn.com/2011/12/05/pf/credit_card_use/index.htm?iid=SF_PF_LN (accessed 12/7/11)

Denny Hecker may have hidden assets

admin — Fri, 16 Dec 2011 22:39:50 +0000

While the once large auto business network owner Denny Hecker serves out his 10-year sentence in the Duluth Federal Prison Camp, bankruptcy trustee Randy Seaver is on the search for hidden assets. Randy Seaver, assigned trustee in handling the bankruptcy estate of Denny Hecker, believes that there are hidden assets and the persons may have been aiding and abetting Hecker while he in prison. To begin his search, Seaver has asked for permission to question several people close to Hecker and his wife Christi Rowan-Hecker.

David Leibowitz, a bankruptcy expert from Chicago believes this is a bit of a fishing expedition on Seaver’s part, but contends, “Seaver obviously feels there’s a fish in the water here.” Leibowitz goes on the mention that this activity is consistent with the aggressive manner in which Seaver has handled the case. Seaver has sought to speak with Hecker’s second wife Sandra Hecker, Hecker’s former lawyer John Neve, as well as and Barbara Tourville, George Johnson, and Molly Jensen, all of whom have allegedly put money in Hecker’s prison accounts and have been assisting him in business and financial matters.

Rowan-Hecker, who married Denny via telephone back in March, recently was released from a federal prison in Illinois to a halfway house in Minneapolis where she will finish out her 14-month sentence for bankruptcy fraud. This is a typical procedure for inmates nearing the end of their sentence to be transferred to a halfway house for the last one to six months of their sentence. During this time at the halfway house, Rowan-Hecker will be assisted in finding a job and helping her return to society.

Source:

MaryJo Webster, Hecker trustee seeks hidden assets; Rowan released to Minnesota halfway house, http://www.twincities.com/business/ci_19489778 (accessed 12/9/2011)

President Obama’s Health Care Legislation has a date with the Supreme Court

admin — Fri, 09 Dec 2011 21:41:58 +0000

In March of 2010, President Obama signed into law the Affordable Care Act. The Affordable Care Act is the highly controversial health care reform law. This Act is said to be one of the signature accomplishments of the President. Since the Act was signed into law, 26 states have filed suit in federal courts around the nation challenging the constitutionality of the Act.

That big-ticket provision of the Act that is being challenged is the “individual mandate” that requires nearly all Americans to purchase a minimum level of health insurance. The Supreme Court recently agreed to hear two major questions: 1) whether the “individual mandate” provision is unconstitutional; and 2) whether the entire law must be invalidated due to the centerpiece provision which is the “individual mandate.”

Both advocates and adversaries of the Act have serious concerns regarding the constitutionality of this Act. The federal government reported that last year approximately 45 million Americans were without health insurance. As a result of uninsured Americans, the federal government sites $43 billion in uncompensated medical costs. On the other side of the aisle, arguments have been made that the health care law has not lived up to its promises and actually is creating a substantial burden on small businesses. Opponents of the Act also contend that the Affordable Care Act unconstitutionally reduces individual freedoms.

The Supreme Court will begin to hear oral arguments in late February or March, and a ruling is expected by June. The result undoubtedly will influence the political debates in this presidential election year.

Source:

Bill Mears, Supreme Court takes up challenge to health care reform law, http://articles.cnn.com/2011-11-14/politics/politics_health-care_1_oral-arguments-health-care-reform-law-affordable-care-act?_s=PM:POLITICS (accessed 11/15/2011)

Nigh shift workers are at greater risk for Type 2 diabetes

admin — Fri, 09 Dec 2011 21:39:39 +0000

In a two decade long study, 177,184 women between the ages of 42 and 67 were followed as part of the Nurse’s Health Study. One of the remarkable findings of the study was the increased likelihood of developing type-2 diabetes as the result of periodic night shift work. Nurses who worked periodic night shifts for three years or less were 20% more likely to develop type-2 diabetes than those who only worked days. Those who worked periodic night shifts for at least 20 years were at even greater risk for developing type-2 diabetes at the rate of 60% more likely than those who only worked days.

Doctor Frank Hu, a professor of nutrition and epidemiology at the Harvard School of Public Health notes that although the increased risk is not huge, it is still substantial enough considering one-fifth of the workforce has some rotating night shift work. The increased risk is not attributable solely to the hours you work but may result from the side affects that are associated with periodic night shift work. Doctor Hu contends, “Irregular work hours tend to disrupt the body’s circadian rhythms (also known as the “body clock”), which play a critical role in maintaining healthy blood-sugar metabolism and energy balance.” This internal clock influences our ability to metabolize certain foods at certain times. Thus if you go on a late night raid of the refrigerator, the enzymes needed to turn high-fat foods into energy may not be alert enough to handle the barrage, and result in those calories ending up as fat rather than fuel.

David Earnest, Ph.D., states that, “In the past 25 years, we’ve focused a lot on lifestyle issues such as maintaining a healthy diet and avoiding a sedentary lifestyle. But regardless of whether you’re a shift worker or not, that may not be enough to avoid these health issues.” The study is not conclusive as to how much night shift work affects the risk of type-2 diabetes, but there is considerable evidence that periodic night shift work shows some increased risk of type-2 diabetes. There are a combination of factors at play including family history, diet, weight, smoking, and exercise. Now periodic night shift work may be another factor to add to that list.

Source:

Amanda Gardner, Night shift work may raise diabetes risk, http://www.cnn.com/2011/12/06/health/night-shifts-diabetes-link/index.html?hpt=hp_t2 (accessed 12/8/2011)

Nigh shift workers are at greater risk for Type 2 diabetes

Source:

Amanda Gardner, Night shift work may raise diabetes risk, http://www.cnn.com/2011/12/06/health/night-shifts-diabetes-link/index.html?hpt=hp_t2 (accessed 12/8/2011)

U.S. Postal Service Close to Bankruptcy

admin — Tue, 20 Sep 2011 22:36:37 +0000

The U.S. Postal Service has been struggling financially. Patrick R. Donahoe, the postmaster general, has stated that if Congress does not take action the agency will not be able to make a $5.5 billion payment this month and may be forced to shut down this winter. Recently, the Postal Service has proposed cuts to eliminate a deficit that will rise to $9.2 billion this year. The proposed cuts include ending Saturday delivery, closing 3,700 locations, and laying off 120,000 employees.

The financial problems can be attributed to lower revenue and increasing costs for the Postal Service. Fewer people and businesses are utilizing post office services, largely because of increased Internet usage. Additionally, the Postal Service has contractual obligations to its employees, including no-layoff provisions, which have resulted in increased costs. Labor costs account for 80% of the Postal Service’s expenses, compared to 53% at UPS and 32% at FedEx. Postal Service employees also receive better health benefits than other government employees.

The Senate Homeland Security and Governmental Affairs Committees will consider the Postal Service’s situation this week. Democrats and Republicans have been unable to reach an agreement on a solution. If the Postal Service does miss the $5.5 billion payment due at the end of September, an emergency will not immediately occur. However, in early 2012, the Postal Service will be unable to pay for its operations and will have to shut down.

Source:

Steven Greenhouse, Postal Service on Verge of Going Broke, Shutting Down, http://www.msnbc.msn.com/id/44396682/ns/business-us_business/#.TmUMDzuF4ro (accessed September 5, 2011).

Information About Credit Scores

admin — Tue, 20 Sep 2011 22:34:34 +0000

According to data from Credit Karma, the average credit score in the United States is 666. The current trend for lenders is that a credit score of 660 is needed to obtain a mortgage, car loan, or credit card. Approximately 40% of Americans have a credit score lower than 660. This means four out of ten consumers will likely be denied credit or pay high interest rates. This illustrates the importance of credit scores. New federal regulations have increased consumers’ access to their credit scores. However, many think the new regulations do not go far enough. Here are a few things to know about credit scores.

You may have the right to see your credit score for free. If you are denied credit or are forced to pay higher interest rates because of your credit report, you are entitled to see your credit report for free. However, this regulation does not apply to all consumers, only to those who are denied or given high interest rates.
The threshold for obtaining credit is always changing. Previously, a credit score of 660 was considered a good score. During the recession, a score of 720 or 750 became the new standard. Lenders also focus on credit history and other credit details when deciding whether to lend.
Track your credit score. Credit scores change, so it is not enough to just check your score once. Monitor your credit score to see how decisions affect your score and identify areas where you can improve your score.
Do not be surprised if your credit score varies. There are many different credit score models used by lenders. Focus on risk factors, such as amount of debt, number of accounts, and credit use, because improvement in risk factors will likely improve your score no matter what model is used.

Source:

Justine Rivero, 4 Things to Know About Credit Scores, http://money.msn.com/credit-rating/4-things-to-know-about-credit-scores-forbes.aspx (accessed August 24, 2011).

Will Social Security Checks Be Paid If Debt Ceiling Is Not Raised

admin — Fri, 29 Jul 2011 19:07:08 +0000

Will Social Security Checks Be Paid If Debt Ceiling Is Not Raised

Around 28 million Americans are expecting to receive their Social Security checks on August 3, and 27 million are expecting their checks later in August. However, if Congress does not reach a deal to raise the national debt ceiling by the deadline of August 2, it is unknown if Social Security checks will be sent out. President Obama has warned Americans that the federal government may not be able to pay Social Security beneficiaries if a deal is not reached.

This is one of the few times Congress has failed to raise the debt ceiling when it has become necessary. Therefore, it is unclear what will happen if the debt limit is not raised by August 2. It is clear that the government will not be able to pay its bills in August. Estimates claim the government will be $134 billion short by the end of August.

Some have suggested that Social Security should use money from its trust fund to pay beneficiaries in August. However, Treasury Department officials do not support drawing from the trust fund. The trust fund holds IOUs, not actual money, that would have to be redeemed by the Treasury Department. Many Americans disagree and believe that President Obama can use the trust fund to make Social Security payments if necessary.

Source:

Tami Luhby, Debt Ceiling: Will I Get My Social Security Check?, http://money.cnn.com/2011/07/28/news/economy/debt_ceiling_social_security/index.htm?iid=HP_River (accessed July 29, 2011).

Singer R. Kelly Named In Foreclosure Suit

admin — Fri, 22 Jul 2011 17:33:31 +0000

Robert Sylvester Kelly, better known as R & B singer R. Kelly, is facing foreclosure on his home in Olympia Fields, Illinois. J.P. Morgan Chase Bank filed the $2.9 million foreclosure suit against R. Kelly last month. It appears that R. Kelly has not lived in the home since early last year. Kelly has not made any mortgage payments on the house since June 2010. The 11,140 square foot home is located near Chicago and was built in 2000. The home includes six full and seven half bathrooms, and a four stall garage.

The foreclosure suit is not the first of Kelly’s legal problems. He was acquitted of producing child pornography in 2008. Additionally, Kelly’s former manager reportedly sued him last month for $1 million in unpaid commissions.

Source:

R. Kelly Facing Foreclosure on Chicago House, http://marquee.blogs.cnn.com/2011/07/13/r-kelly-facing-foreclosure-on-chicago-house/ (accessed July 18, 2011).

Popular Restaurant Chains May Be At Risk For Bankruptcy

admin — Wed, 06 Jul 2011 19:38:43 +0000

According to new research, popular food chains Denny’s, Wendy’s and Domino’s may be in danger of going bankrupt. TheStreet.com ranked restaurants’ chances of going bankrupt by their Altman Z-Score. The score is based on financial information from each company, and predicts the likelihood of bankruptcy within two years. TheStreet has been using their scoring system since 1968, and they claim to have a 72% rate of accuracy in predicting bankruptcies two years before the filing.

Denny’s is the restaurant most at risk for bankruptcy, according to the most recent ranking. Wendy’s/Arby’s came in second, and Domino’s Pizza was fifth. Additionally, DineEquity, which operates Applebee’s and IHOP, ranked fourth on the list. Other restaurant chains, including Sbarro, Perkins and Marie Callender’s, have already filed for bankruptcy this year.

Source:

Pete Kenworthy, Report: Denny’s, Wendy’s and Domino’s Among Restaurants in Danger of Bankruptcy, http://www.abcactionnews.com/dpp/news/national/wews-report-dennys-wendysand-dominos-among-restaurants-in-danger-of-bankruptcy1309574048690 (accessed July 3, 2011).

Regional Bank President Wants Tax Reform To Lower Debt

admin — Wed, 06 Jul 2011 19:35:45 +0000

Narayana Kocherlakota, president of the Federal Reserve Bank in Minneapolis, recently suggested a change in the U.S. tax system to discourage debt growth. High consumer and bank debt lowers the stability of the economy. This makes economic trouble, like what occurred in 2007 through 2009, more likely.

Currently, the tax code encourages debt by allowing taxpayers to take advantage of interest deductions. Consumers are encouraged to incur mortgage debt and banks are encouraged to take on debt for financing. Kocherlakota urged Congress to reduce the deduction for mortgage interest and reduce the interest deduction for corporations. This would reduce the incentives for people to take on debt that destabilizes the economy.

Officials are attempting to avoid another economic downturn. President Obama signed a bill last year that gives the Federal Reserve the power to supervise financial institutions whose failure could cause an economic crisis.

Source:

Vivien Lou Chen, Fed’s Kocherlakota Calls for Tax-system Changes to Discourage Debt

Growth, http://www.bloomberg.com/news/2011-06-27/fed-s-kocherlakota-calls-for-tax-systemchanges-to-discourage-debt-growth.html (accessed June 28, 2011).