Consumer Financial Landscape

In these tough economic times, consumers should be particularly watchful regarding their credit card spending. Many have seen their rates jump up to 25% or more, and their credit lines cut. The credit card firms are defending this practice since they have been hurt in the credit crunch over the last year. Help for consumers may be on the horizon though.

A bill to address these practices in the credit card business was on track for approval by the U.S. Senate with President Obama expected to sign it into law before the end of the month. Enactment of the legislation would mark the crest of a backlash rising for years against the card industry amid sudden interest rate increases, hidden fees and aggressive marketing programs that have angered consumers.

If enacted, it would be the first major financial regulation reform completed by Obama. The bill would limit, but not prohibit, card issuers' ability to raise interest rates on existing balances. It would require 45-day notice of most rate increases; limit rate increases for new accounts and prohibit certain kinds of fees.

In addition, the bill would require more disclosure of the terms of card agreements; require periodic review of a cardholders' interest rate and open the possibility of lowering it. Much of the bill would take effect 9 months after enactment. The bill does not include a cap on interest rates, nor does it bar lenders from issuing cards to college students.

These changes hopefully will lead Americans to be more aware of their spending and in particular more aware of their credit card rates and limits. If you are shopping for a new credit card, there are many great web resources. For example apply for credit card using this link.

"Sell in May, and go Away...?"

The oft-cited strategy for investors to "sell in May and go away" might be especially tempting this year. In spite of the market's spring rally, the outlook for the economy is still uncertain and stocks do traditionally lag from the Spring months on into mid-autumn. So why not sell stocks now and move into bonds? Simplistic as it sounds, the approach has actually produced reliable results with reduced risk for over 50 years! Since 1950, the Dow Jones average has an average gain of 7.3% from November through April compared to a mere 0.1% from May through October.

Of course, there is no guarantee that it will work in this year, especially coming off the roller-coaster ride that was 2008. However, for those investors who want fewer sleepless nights, and are willing to forgo some potential upside, this approach may make sense. Remember, though, to move back into stocks in October. Please contact our offices if you would like to discuss this approach and how it may make sense to your individual account.