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Personal Finance Blog By MoneyRates - January 2008

The Bank Rates They Are A-Changin'

January 31, 2008

By MoneyRates Team | Money Rates Columnist

The Fed has walloped the United States with massive rates cuts of 125 points in a 10-day span on the realization that the U.S. economy is in a recession. The Fed noted the slowdown in the housing market and labor market as contributing to the economic malaise. The prime rate, which banks use as their target lending rate, is now set at 6.00% and rates on home equity loans, credit cards, and variable-rate mortgages will benefit consumers with lower monthly benefits.

Banks have lowered their deposit rates across the board from 30-days to 10-years with 5.00% rates on CDs or money markets now a memory. A notable to the rate-lowering mania is OneUnited Bank which has held their savings rate at 5.30% since May 2007 without a single rate cut. Customers of OneUnited Bank say thank you! The other way to find over 5.00% on a deposit account is through the intro offers from EverBank on checking or money markets or the Reward Checking Bank Accounts which are still paying as high as 6.25% for customers willing to meet the monthly requirements.

Economists are looking at 2.00% as the most likely floor for the Fed Funds rate which would mean that the 4.50% rates that are still available on bank depost accounts may turn into 3.50% rates by summer. It is our best guess that the leading online banks will keep their rates specials over 4.00% to generate enough consumer interest, despite the level of the Fed Funds rate. This will not be the case for local bank rates which will fall in accordance with Fed policy. 2008 may turn out to be the year that we see the widest gap between local bank rates and online bank rates.

Borrowers are again seeing mortgages rates below 6.00%, but this time the lending standard shave increased and only borrowers with FICO score of over 650 will see the best rates. Mortgages rates can move quickly based on economic reports so consumers holding out for the absolute lowest rate in this cycle may be playing a dangerous game.

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So You Want to Help?

January 31, 2008

By MoneyRates Team | Money Rates Columnist

We have received a few e-mails recently about how to help support our daily blog. Good to know you don't blame us personally for the lower interest rates on your investments (although we will take the credit for your lower payments on credit cards and home equity loans). Supporting The Savings Investor is pretty simple. We don't have a PayPal account or anything fancy like that. Just click on an advertisement occasionally and that should keep the lights on. You might even find a deal you like.

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Second FDIC Bank Failure of 2008

January 28, 2008

By MoneyRates Team | Money Rates Columnist

No real reason for alarm but three weeks into 2008 and we already have two FDIC-insured banks which have failed and been placed in receivership by the FDIC. Douglass National Bank joins Miami Valley Bank as the two bank casualties. The last few years have been very quiet for the FDIC as shown below:

2004 FDIC Bank Failures (4)

2005 FDIC Bank Failures (0)

2006 FDIC Bank Failures (0)

2007 FDIC Bank Failures (3)

Of those failures the only major bank to bank was NetBank, a high-profile online bank whose deposits were assumed by ING Direct, however banking experts are predicting at least five more bank failures this year with at least one more major bank failure. As always the best advice is to maintain strict diligence in keeping deposits below $100,000 per single depositor and open and maintain at least one contigency checking account for liquidity purposes. Online banking customers who would like to keep use various banking resources and rating services to monitor the health of their bank can refer to the money-rates.com Bank Ratings page for updated information.

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IRS Refund E-Mail Scam Circulating the Internet

January 24, 2008

By MoneyRates Team | Money Rates Columnist

An e-mail which appears to be an e-mail from the IRS with instructions on how to claim a tax refund is poliferating around the internet. The e-mail appears to be sent from Service@irs.gov with a link to a cloned IRS website. The intent is to steal social security numbers after a visitor completes the refund request on the site which looks exactly like the IRS site, but is actually a Russian website and not the government site visitors are expecting. The e-mail is likely to confuse some taxpayers during this tax season and with the tax rebates politicians have promised pending. Pass on this alert to friends and family!

The text of the scam e-mail is posted below:

After the last annual calculations of your fiscal activity we havedetermined that you are eligible to receive a tax refund of $129.72.Please submit the tax refund request and allow us 3-9 days in order toprocess it.A refund can be delayed for a variety of reasons.For example submitting invalid records or applying after the deadline.To access your tax refund, please click here.

Best Regards,
Tax Refund DeparmentInternal Revenue Service

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College Savings through the Upromise Program

January 23, 2008

By MoneyRates Team | Money Rates Columnist

The Upromise program allows registered users at upromise.com to earn cash back for college savings by shopping online at participating vendors. The list of participating companies numbers in the thousands and includes travel companies, real estate companies, restauraunts, grcoerys stores, and retail stores. Cash earned can be deposited directly into a registered 529 plan. The cash rewards vary by vendor, but are based on a percentage of sales price. A few companies and their current payouts are listed below:

Grocery stores (1% to 5%)
Coldwell Banker (up to $3000) and Century 21 (up to $3,000)
Avon.com 5%
Macys.com 3%
JCPenney.com 3%
Brooks Brothers 3%
Bestbuy.com 2%
Apple 1%
Walmart 1%


Citi Upromise World Mastercard



The Citi Upromise credit card gives cardholders 1% college savings everywhere they shop as well as extra college savings on thousands of restaurants meals, grocery store items, and drugstore items. The card has no annual fee and no limit on the amount of college savings that can earned. The current APR on balances is 13.24%.

Upromise Review

The Upromise program has a simple online registration process including registering credit cards to be linked. Signing up an account makes a lot of sense for consumers who are planning on using their credit cards for monthly expense whether or not they pay off the balance. For anyone planning a vacation or buying real estate property, the college savings earned can be quite significant. Not every 529 college savings plan is eligible to be linked to their Upromise college savings rewards, but consumers can open up more than one 529 plan per child and Upromise plans on continously adding more 529 plans to their program. Parents can easily earn hundreds of dollars a year (and even thousands of dollars) towards their children's college savings by using Upromise program.
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