What the Wall Street Crisis Means for You
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AP
How 8 Changes Will Impact You
Politicians, economists, columnists and bloggers have offered numerous stark predictions about how the current financial crisis and government bailout will affect average Americans. But the truth is that Wall Street's crisis, which kicked off September 15 with the fall of Lehman Brothers, Merrill Lynch and AIG, is already affecting Main Street.
Click through our gallery to see our list of eight ways your finances are already being affected by the current financial meltdown.
First Up: Change No. 1 -
Stockbyte
Credit Card Limits Reduced
Even if you have a high credit score and a blemish-free payment history, your credit limit may have been cut. American Express recently cut the credit for 10% of its cardholders, but most banks have reduced credit limits for some customers since last summer. If you are making a big purchase or use your credit card for unplanned expenses, be sure to check your limit. There are big penalties for going over it.
Next: Change No. 2 -
AP
Student Loans Yanked
It's not just banks and mortgage lenders that are suffering. The student loan industry is in crisis. Private lenders are going under and some state agencies and large banks, including Bank of America and Wachovia, have stopped issuing student loans. Some schools are being more forgiving on payment schedules as students scramble to secure funding. Call the student aid office for help, but expect less favorable terms than prior years.
Next: Change No. 3 -
Thomas Lohnes, AFP / Getty Images
Money Market Mutual Funds Safer
To stave off investor panic after one prominent money market fund "broke the buck," or posted a small decline in value, the government has promised it would cover any losses. Not all funds are covered in the new program, so check with your fund company if you are worried. With this added protection, money market funds are now just as safe as bank savings accounts.
Next: Change No. 4 -
Tim Boyle, Getty Images
More Incentives to Open Bank Accounts
One result of the credit crisis is that banks are trying their darndest to attract more deposits. Chase is currently offering $125 (at least in New York City) to open an account with direct deposit. Citibank is beefing up its "Thank You" rewards program. Refer a friend, and Bank of America will give you both $25. Remember, low fees and high interest on savings are more important than one-time incentives when choosing a bank.
Next: Change No. 5 -
Cassandra Shie, AOL
Easier to Get a Loan With Good Credit
Don't forget, even in the current crisis, banks want to stay in business. So they are continuing to make loans to borrowers with with good credit records and plenty of assets. There are good deals on home equity lines of credit and businesses have found short-term loans easier to come by since the bailout talks began.
Next: Change No. 6 -
Cassandra Shie, AOL
Harder to Get Loan if You Have Weak Credit
If you have a tarnished credit history, don't expect to get a loan any time soon -- even if you're willing to pay high interest rates. Banks continue to tighten their lending standards as the credit crisis deepens. If you need to rebuild your credit score, a good way to start is by using a secured credit card (one where you have cash in a bank account to back up purchases).
Next: Change No. 7 -
Tim Boyle, Getty Images
More Store Deals Ahead of a Weak Holiday
With the economy slowing and family budgets tightening, retailers are anticipating a tough holiday sales season ahead. So they are layering on the deals early. Black Friday, the day after Thanksgiving when the holiday shopping season kicks off, should provide a bonanza of deals. Consumer electronics will offer particularly good buys.
Next: Change No. 8 -
Investment Returns Are Down
The stock market has taken it on the chin in recent weeks. But sharp sell-offs on bad news have been followed by major relief rallies a day or two later. The worst thing you can do is panic and sell at the bottom. Instead, make sure your investments are diversified and use the upswings to sell some stocks if you realize now that you've taken on more risk than you can handle.
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Recent Comments
Sblon506 04:43:56 PM Oct 09 2008
u know all this madness needs to come to an end quick. i think that it is so crazy how we spened all this money on the war,and now i cant even get a loan for school. people what does that say to the furture for young person like me? i guess thats just my problem..... we do need change BIG TIME THIS PASSED 8 YEARS HAVE BEEN A MESS.
Naufrichtig 12:31:33 PM Oct 06 2008
Yes, people certainly have to start taking better responsibility for their spending habits, but why do our nation's banks give out loans and credit cards to so many people who do not have the means to repay them? It is the same liberal economic policies backed by the Clinton administration that caused our recent subprime mortgage meltdown. Bringing another liberal fool such as Obama into the White House will only further worsen the current scenario. Obama is going to tax everyone to death who makes over $42,000 per year. Try feeding a family on that. We are all screwed!
CHADCLAY720 11:03:45 AM Oct 02 2008
Why are Democrats and Bush so hell bent for a bail out? I think we need to let these outfits go broke, and investigate the members of congress and the administration that got kickbacks. CNN is reporting that Senator Chris Dodd will likely be indicted after the first of the year. Its going to make Stevens from ALaska look like a saint.
Merrellvllrc 11:53:15 PM Sep 30 2008
Credit cards area burden. you can live without them. It is hard to believe but people did and rasied families and grew old happy. remember credit cards means you don't have the money at the present to buy the purchase. They don't mean you can buy it and forget about the debt. It must be paid in 30 days or you get charged a higer price than if you bought the purchase with cash. I know you are seething. This nut thinks she is so smart. She is an idiot we know what she has said so poorly. then why is people so unhappy about oh the credit card is being top off. It is a good thing. If you don't have to have it right now don't buy it. You will find ways to live for the moment I bet. YOu will soon feel happy you didin't when you see you really lived afterall and you didn't put another debt due on yourself at the end of the month. The great feeling of I am free from that credit card debt every month will be worth it. You won't have as much strive in your life and probalby more fun too.
Fit4eternity1 11:41:29 PM Sep 30 2008
If your a slave to Credit cards its your own fault. Take responsiblity for your actions. You have a choice! Pay cash if you cant afford it . Dont buy it or put in on a credit card if you are willing to pay the interest charge.
SKI trips 09:44:47 PM Sep 30 2008
Who is maxisit65?I nice person living off of someone else misery. And to boot he works for a law firm. Who do you think were the architects of the sub prime fiasco. Get a real job running a trailer park
IrishScotandBrit 09:18:46 PM Sep 30 2008
Just don't use credit cards plane and simple. Just use your debit card for everything but be careful that somebody doesn't take your identity.
GaryRJAS 06:15:50 PM Sep 30 2008
ADeGraw722 04:31:56 PM Sep 29 2008 Report This! Zumawas,You better look further into what caused this mess before you make dumb comments about who is to blame for it.I KNOW, REAGANOMICS AND THE TRICKLE DOWN THEORY, TRICKLING IN MY SHOES. WHAT A FARCE, BIG REAGAN DEFICITS, COMPOUNDED BY BIG BUSH DEFICITS, THATS WHAT THE CREDIT CRUNCH REALLY IS. THE GOVT IS THE BIGGEST BORROWER OF MONEY THANKS TO THIS DAMN 9 TRILLION DEBT, DUE TO BUSH NOT WANTING THE RICH TO PAY A FAIR SHARE OF THE TAXES, EVEN THOUGH THE MIDDLE CLASS ARE FIGHTING HIS WAR.
Schw679 04:19:34 PM Sep 30 2008
I was always taught to pay as you go, but to keep one credit card, such as a Visa or Mastercard because they can be used most everywhere, in case of a major appliance breaking down, like a fridge or washer and you could replace it right away or for unexpected travel, in case of sudden death of a family member. And sometimes while raising kids expenses come up. But not to use it for something you simply want. Wants should be saved for and bought when you have the cash. I have lived this way my whole life. I don't owe a dime on credit cards at all. People need to take responsible for their own spending. This society seems to think the government is here to bail out evryone and anyone who doesn't act responsibly.
Geo345 03:58:32 PM Sep 30 2008
charge... charge.. charge... and dont pay it back........the government will bail the banks out.
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