I may have lost faith in Wall St., but today I regained faith in Congress.  The House shot down the $700 billion bail out… and I could not be happier.  And you wanna know why… Ok, but first let me lay the groundwork just in case…

The gist of the bailout plan

HR 3997 would have allowed the Secretary of the Treasury to establish the Troubled Asset Relief Program.  This program would have been allowed “to purchase and to make and fund commitments to purchase, troubled assets (shaky mortgages and mortgage-backed securities) from any financial institution.”

My president, our president decided that it would be a good idea to use $700 billion of our tax dollars to save the finance industry.  He wanted to buy shaky mortgages and mortgaged-backed securities.  We all know what a mortgage is, but…

What is a mortgaged-based security?

It is sort of like a bond… an IOU.  Potential homeowners go to banks to apply for a home loan.  The bank issues the mortgages.  And then, the bank pools the loans into neat little packages and sell them on the market.  The people who buy these neat little packages receive interest and principle payments every month whenever the homeowners pay their mortgage.  In essence the investors are lending the money to homeowners and expected to receive payments every month.  The bank’s role in this is as the middleman.  For its services of connecting the buyer and lender, the bank receives a service commission.

Plain English…

Ok I got 10 friends who need a hundred dollars each.  They all ask me if I can loan them the money.  I shell out the $1,000 at 15% and get them to sign an IOU.  Then I turn to my friend Joe Blow and I say look Joe, buy these IOUs from me for $1,000. And when my 10 friends pay the bill, I’ll send you all the principal ($1,000) and interest ($150).  All I want is a small services fee of $2.

So I make $2 and Joe gets $148.  However, Joe now assumes all the risk.  If any of the friends don’t pay the bill, it is Joe who will be shafted, not me.

The problem with mortgage-backed securities

Generally, there is no problem.  Most times mortgage-backed securities are a safe bet.  Yeah, there is some risk involved, but usually not much.  The way it works is that the IOU is secured by an asset… the house.  The house is appraised by the bank, the applicant has adequate income to repay the loan, and the bank verified the homeowner’s financial credibility.

But… What happens if the house is over-valued, if the applicant overstates his ability to repay the loan, and if the banks did not adequately qualify the mortgages?

So here enters the problem…

Well what happens is… that those mortgage-backed securities are worthless and investors will lose a lot of money.

Lately, investors have been taking a lot of losses on these mortgage-backed loans because the mortgage pools are filled with subprime products, foreclosed properties, soon to be foreclosed properties… just a mess of worthless assets.  (I’m not really sure if “assets” is the right word to use here because asset implies value.)

Who are these investors?

Mortgage-backed securities are big business.  And because of the perceived low risk, many entities buy them…banks, hedge funds, pension funds, mutual funds.

Alright now back to why I am glad that this bailout was voted down.

The bailout would have rewarded corporations for bad behavior

The bailout would have alleviated the mortgage risk exposure of financial institutions (and only financial institutions).  Aren’t these the people started this mess in the first place?  Financial institutions were being careless and greedy.  They knowingly exposed themselves to subprime lenders in order to increase short term profits.  Not only did these financial institutions give money to those with questionable financial credibility, but they also engaged in other greedy and deceitful behaviors.  They overvalued houses so that they can issue first and second mortgages.  They came up with all these colorful ways to qualify borrowers… balloons, no interest mortgages, one year ARMs, etc. They made stupid choices in order to fatten their pockets, but it backfired.

I hate to get on the Harper story again, but just think about this… JP Morgan Chase loaned a family a half a million dollars.  The borrowers… a house wife and a home security alarm installer (not wealthy people).  The loan was secured with a house that cost almost a million dollars to build (the house was a free gift from Extreme Makeover: Home Edition).  At one point the family was trying to sell the house for $950,000.  It did not sell.  Why… because regardless of how much the house cost to build… a house (or anything else for that matter) is only worth as much as someone is willing to pay for it.

The house is in Lake City, GA.  The median income in Lake City $38,000, the median house value, $125,000… both less than the medians for the state of Georgia.

Now granted I don’t know much about the neighborhoods in Lakeland, GA… but the Harper’s old house was ummm… a dump (I’m not trying to be ugly, but it was).  The dump was torn down and replace with a mansion.  Great!

But if the Harper’s old house was a dump… then chances are that the houses around it are dumps too.  What sane person with a million dollars or even a half a million dollars would buy a mansion that was surrounded by dumps? I know if I had that kind of money to spend on a house, I would not be looking to buy a mansion that sits in the middle of dumps.  I would want a mansion that is surrounded by other mansions.

No matter now much it costs to build, nobody is going to buy that house for so much money.  The house is not worth a half a million, it is only worth what someone is willing to pay. 

Location, Location, Location - that is what the realtor says.  I am no realtor and I understand that.  So why would JP Morgan Chase value that house at a half a million dollars plus.

Anyway, the family could not repay the loan and it went into foreclosure.  The house went up for auction.  I am not sure what it sold for, or if it even sold at all… but either way, that was a horrible business decision on JP Morgan Chase’s part.

Taxpayers should not have to foot the bill for the bad decisions of borrowers and lenders.

The federal government has never come to my rescue when I did something stupid.  So why should they help stupid… (greedy) banks? And anyway a bailout out does not solve the problem.  It is just a band aid.  Bailing out banks just frees them to go out and make more bad decisions.  So way to go House!  I think you all really voted for the people on this one.

Friday as I was getting ready to go to work, I heard a brief comment on the local news about Washington Mutual being sold to JP Morgan.  They did not mention much else… just that simple one liner. As soon as I got to a computer, I went to CNBC.com to see what was going on.  And OMG!  What was going on was a mess! That one liner definitely did not suffice to explain the gravity of what happened.

Washington Mutual… the WaMu Whoo Hoo… gone! What the @#%$?!?!

A 120 year old bank disappeared over night.  According to what I hear… this is the biggest banking failure in history.  This seems like a bit of déjà vu.  I could have sworn I heard the same story last week, last month.  It seems that everyday… we are seeing the “biggest failure in history”.  How many more “biggest failures” can we endure?

Really people, I must be sleeping.  I am going to wake up any day now and realize that the collapse of the financial industry is a bad dream… a horrible nightmare.  But sadly, I know that I am not sleeping and no pinch is going to cure this mess.

So what happened to WAMU?

Basically, Kerry Killinger, former CEO of Washington Mutual, was paid more than $10 million dollars a year to run the bank into the ground.  And he did a great job.  A bunch of bad judgments and greedy decisions later… WaMu no longer Whoo Hoos.

Killinger left WaMu in utter ruin earlier this month.  Towards the end, he tried to redeem his egregious mismanagement by resigning his position as Chairman of the board, raising capital (TPG raised $7 billion dollars - $2 billion of their own money), laying off employees, and restructuring business lines. And to be honest, I thought his attempts to save WaMu might actually work.  (But boy was I wrong!) Apparently using bicycle patches to fill a gigantic hole ain’t enough to keep the Titanic from sinking.

But what finally took the stern under… since the fall of AIG, Lehman Brothers and Merrill Lynch on September 15^th, WaMu customers withdrew nearly $17 billions dollars in deposits.  The run on the bank rendered it virtually insolvent.  And as we learned from the recent descend of Indy Mac, for a bank… no liquidity means the feds will be arriving soon to put it out of its misery.

The FDIC came in, took over Washington Mutual, sold it to JP Morgan for $1.9 billion dollars… it was all a rather seamless transition for accountholders.  But for WaMu stockholders, for WaMu bondholders, for TPG who had just invested $2 billion dollars in WaMu… well they are up the creek without a paddle.  Or to describe it more accurately, the value of their portfolio is as deep as Atlantic seafloor… (Yeah…  chilling with the Titanic.)

But seriously this is the one thing that really bothers me about WaMu’s downfall… stockholders and bondholders got screwed.

You see… When you buy a company’s stock, that means you are buying equity… ownership in the company.  For WaMu shareholders… holding equity in a company that no longer exists means you are left with nothing.  The value of the stock… $0!

And… When you buy a company’s bonds… that means you are giving the company a loan.  The bond is like an IOU.  For WaMu bondholders… having bonds from a company that no longer exists means that the paper it is written on has more value than the bond itself.  The value of the bond… $0!

And just because you may own individual WaMu stocks and bonds… don’t think this will not impact you.  It will.  Many institutional investors, such as pension funds, mutual funds and other banks and insurance companies, owned the majority of WaMu stocks and bonds.  These pension funds are in charge of our retirement security.  These mutual funds are a part of our 401Ks… our children’s 529 accounts! If you have any money invested anywhere… then odds are you held some stake in WaMu’s success or failure.  And because WaMu failed, the value of your assets dropped.

And aside from the financial impact, the psychological impacts are more far reaching.  If consumer confidence wasn’t completely shot before, you can be guaranteed that it is now.  Consumer confidence measures how consumers feel about the current and future state of the economy.  When consumer confidence is low, then people stop spending (which contributes even more to the economic depression) and start stockpiling money… just in case.

But this situation is different in that consumers no longer feel confidence in the finance industry.  This means that instead of stockpiling money in savings accounts, folks feel more security with stockpiling it under their pillows.  And when people began taking their money out of banks… well you know what happens next (IndyMac, WaMu).

The whole thing is cyclical and as it  continues the problem gets worse.

I, for one, tend to be an optimist.  And I am certainly a strong believer in free enterprise and the ability of the market to correct itself.  But even I, with my typically rosy outlook, am getting worried.  I keep looking for the plunge to end, but the end is nowhere in sight.  Every time I think it can’t get any worse. ..  it gets worse times 2.  I just hope that WaMu will be the last to sink, but for some reason I feel that the dominoes have just begun to fall.

It seems that my son and I have the same conversation every week.  He is 14 now and he has this fixation with driving.  Even though it is 2 years away, he has already told me what he wants for his 16^th birthday… a Jaguar.  It just tickles me how easy it is for my children to make plans for my money.

My response to the Jaguar thing… it’s not happening.  I don’t even drive a Jaguar.  His response… but momma you said you want your children to do better than what you have.  Kids are funny.  You see how they conveniently twist words to make it suit their needs… wants.

Yes… of course I want my children to have more than I have… more happiness, more joy, more career success, more riches… every parent wants that for their child.  But I have to explain to him that I want him to have more than me on his dime… not mine.  I want him to have a better job or make more money than I do so he can afford to buy a Jaguar if he wants one.

Me buying a 16 year old boy a Jaguar, while I am in a Camry… ain’t happening, kiddo!

Anyway, I told him that I would possibly buy him a car but under certain conditions.  I pay the car note and he will pay the insurance.

Insuring a 16 year old male driver is like taking on another mortgage.  It ain’t cheap.  But I figured that by making him pay the insurance he can be more responsible and conscious about his actions.  He will be able to see how his actions have consequences: If he makes good grades, his insurance premium goes down…If he gets a ticket or gets into an accident, his insurance premium goes up… etc.

These are things that he can control.  And when you are financially responsible for the consequences of your actions… you tend to do things a little differently.  However, if I were paying the insurance premium, he would never see the results of his good or bad behavior.

My son does not like the compromise.  He says he cannot afford to pay insurance because he does not have a job.  Well… at 16 he will be legally able to drive… and at 16 he will be legally able to have a job.  So this works out well… he will have a car to drive to work to earn money to pay for that car.

So I told him… while he is searching the web… looking at all these pictures of Lamborghinis and Aston Martins and fantasizing about how cool it would be to drive up to school in an extravagant car… he also better start looking for job applications so he can pay for that car.

A good job for a teenager is being a Subway sandwich artist.  I am kind of partial to Subway.  For one, I like the food.  But working there should not be as laboring as at other fast food chains.  His clothes would not smell like dirty grease.  He would not have to stand in a hot kitchen.  Plus, he will be able to have a flexible schedule.  That way he can work around school and other activities.

I directed him here.  I told him to print it out, and 2 years from now bring it to the local Subway.

The Navy Federal Credit Union offers excellent benefits to its more than 3 million members. Navy Federal has been around since 1933 and as of today holds over $34 billion in assets and $23 billion in member savings.  The credit union offers a wide array of financial services and great rates on its products.

Auto loans

Refinance your auto loan and get $100.  And what makes the deal even more attractive… the interest rate on used car loans are as little as 4.75% for 36 months.  The average right now is 7.14%.  At this rate, the savings can add up quick.  Also if you are in the market for a new car, you can get a great rate through Navy Federal.  The new car loan rate is as low as 3.75%.  That is about half of the national average.

Mortgage loans

Navy Federal offers an excellent rate on home mortgage loans.  The 30 year fixed rate is 5.375% with .75 points.  The going rate everywhere else… 5.97%.  That may not seem like much of a difference, but .6% makes a huge difference on a $500,000 or even $200,000 loan. And if you use a RealtyPlus approved agent to help you search for and buy your new home, you can get a rebate of up to $5,050 (depending on the purchase price).  This rebate also works if you use a RealtyPlus approved agent to help you sell your home.

Certificates of Deposit

Navy Federal offers 4% on its one year CDs.  With the declining market, it can be comforting to know that your money is guaranteed to earn 4%.  But the best part… you only have to make a minimum deposit of $100.  Most CDs required much higher minimums of $1,000, $5,000 or even $10,000 or more.

Credit Cards

Navy Federal issues several different credit cards. But two I like the most… the Platinum Visa and the nRewards Visa.  There is no annual fee for either card. And the credit limit can range from $1,000 to up to $50,000.  The APR on the Platinum is 7.9%. The APR on the nRewards card is 8.9%. Plus you can earn 1% back on every purchase made with the nRewards card.

Free Seminars

Even with all of the great products and low rates, the thing I like most about Navy Federal is that they offer free seminars to it members.  The seminar usually last 1 to 2 hours and center around different financial topics that are very useful.  They regularly host home buying seminars.  But other seminars focus on investing, estate planning, retirement planning, and taxes.

In addition to those few that I have mentioned, Navy Federal also provides services for small business and investment and insurance services. However, the only way you can benefit from what Navy Federal has to give is to become a credit union member. Until recently, membership was limited to only those with an affiliation with certain branches of the military.  However as of May of this year, membership eligibility has been expanded to include all branches.  So to join the Navy Federal Credit Union, you must be a civilian or non-civilian employee of the Department of Defense, be a Department of Defense reservist or be enrolled in a officer candidate program.  Else you must be a family member of anyone who fits into one of these categories.

Unfortunately, I am not eligible to join.  But if you are, you should seriously consider giving Navy Federal a shot.

Hi Everyone,

Here are the carnivals that we participated in last week. Enjoy!

- Carnival of Personal Finance #170 (The Famous Last Sentences Edition) was hosted by The Personal Financier and you can find our post entitled Automakers Attempt to Mollify My Gripe About SUVs with Incentives listed there.

- Finance Fiesta #16 (The Devote Your Life To Money Edition) was hosted by Our Four Pence Worth and you can find our post entitled Expedia Coupons & Travel Deals listed there.

- Money Hacks Carnival #30 (The Fall is in the Air Edition) was hosted by On A Quest To Be Debt Free and you can find our post entitled Jet Blue’s $7 Dollar Pillow Fee listed there.

- Festival of Frugality #143 (The Celebrity Edition) was hosted by Living Almost Large and you can find our post entitled Golden Corral Coupons & Deals listed there.

- Carnival of Money Stories #77 (The American Classics Edition) was hosted by My Daily Dollars and you can find our post entitled Bad Health Insurance, No Insurance? How to Manage Anyway. listed there.

Have you guys ever watched Jon and Kate Plus 8?  It is a semi-reality type show that comes on the TLC channel.  The cameras guide the audience through the life and times a couple (Jon and Kate Gosselin) plus 8 - (8 children a set of twins - age 7 and a group of sextuplets - age 4)  Needless to say… 8 children under the age of 10 all in one house… every minute is filled with adventure, joy, mayhem!

I am not really interested in spying in on the lives of others.  I have enough adventure, joy, mayhem within my own family.  But every now and then, I check out an episode of Jon and Kate Plus 8… and each time I tune in I love it.

There is a similar show that comes on the Discover Channel.  Meet the Duggars - 17 children and one on the way.  Ok I have nothing negative to say about the Duggars.  They seem to be a very happy, well adjusted family.  But in the cynical words of my DH… they are just a little too kipper to be believable.  How can everything be so happy, so orderly, and so peaceful in a house of 17 kids?  I just don’t see it.  Now granted the Duggars kids are spread out over 18 or 20 years (and all of the Gosselin kids are still kids)… But still… things can’t be that kipper with 17 kids, a man and his pregnant, hormonal woman in one house.

The Gosselins seems to be a bit more real.  I especially like the sit down chats with Jon and Kate.  They tell it like it is.  Their world does not seem sugar coated.  They disagree, they complain, they agree that having so many kids is not easy… yet it is also obvious that they love and enjoy their children and love each other.

Anyway, the other day my daughter and I were watching an episode of Jon and Kate Plus 8 and she asked me would I like to have 6 babies at one time.  Well that one was easy to answer… Absolutely not!  Then she threw me a curveball.  She said what would I do if she was part of sextuplets.  Uhhhh… yeah cute.

**sigh** I had to be honest with her.  I said baby, I love you but… (yes there is a but…) if your were a part of a sextuplet, I would have to give you and all of your brothers and sisters away.

My daughter got a little bothered by my response.  I guess she was expecting a difference answer.  I tried to cajole her by telling her that she would not be away, away.  I have a huge family.  My grandmother had 13 children… 10 girls and 3 boys.  I would give one baby to 6 of my aunts as an early Christmas present.

That may sound un-motherly, but 6 babies… at one time… seriously folks, I would go insane.  The babies would be better off with my aunts than with a mentally unstable me.

Fortunately… for my sanity… this was only a hypothetical question.

My hat goes off to the Gosselins… cause there is no way I could do it.  I really would go nuts.

… and broke.  Imagine the cost to feed and diaper 6 babies.  Pampers make it little easier though.  They have a special savings offer especially for the parents of mutiples.  And here are some other ways to save on Pampers:

Discounted prices at Amazon

Free shipping on Pampers Swaddlers

Pampers coupons at thecouponclippers.com

Pampers Gifts to Grow

Enter to Win Free Pampers

Pampers coupons at EBay

Other Promotions from papmers.com

Everyone has heard the big financial news of this week.  Bank of America acquired the troubled Merrill Lynch for $50 billion dollars. With this acquisition, Bank of America as upped it ranks as the biggest and largest everything… brokerage, mortgage lender, credit card issuer, bank. For just about every segment in the finance business… Bank of America is now the biggest.  They can easily be called thee monopoly of the finance industry.

Is this good…?  Is this bad…?

Ok I am going to tell you all my opinion… but first I must preface this with a disclaimer.

Neither am I nor have I ever been a big shot corporate executive.  And actually… I have no desire to be one.  It is too much responsibility and stress. And there too many people sneering down your back waiting for your next screw up.  Even with the millions in compensation, the loss of peace and sanity is not worth it to me.

Anyway, my opinion about Bank of America’s situation is entirely that of an outsider.  I am just the little man (woman) at the bottom of the totem pole who has something to say.

With the being said… I would like to present you all with a scenario. (I like to put things in simple terms so that I can get a better perspective.)

Ok for a moment… let’s pretend my name is America and I have a 10 year old Honda Accord.  It runs ok for now.  I have had a break down here and there.  But the mechanic had to put some patches on it and it is still rolling (for now).  And even though I get a clicking sound here and a clacking sound there, it gets me to where I need to go.

Now enters my friend… let call her Merrill.  Merrill has an Accord too.  Her car has also had some break downs here and there, the mechanic tries to put on a few patches… but the patches do not work.  As Merrill drives away from the mechanic shop, the wheels fall off and the engine drops to the ground.

So Merrill calls me (America) and says…

“Hi, my good ole’ buddy, America!  How are you today?…

Barely surviving yourself, huh? Yeah… good, good!…

Look America, I need a favor from you.  I am having problems with my little jalopy.  The wheels are gone, the engine is gone… all that is left is a shell of a car… and even that has dents and scratches…

No silly, I don’t need a ride.  What I need is for you to buy this jalopy from me for… umm… $50 billion dollars.

No, I am not kidding.  Seriously, $50 billion for a shell of a car is a bargain. You ought to jump on this deal while it is hot.  I’ve got three other people lined up waiting to buy it, but since you are my friend… I am making the first offer to you.”

My response… Yeah Merrill, I think I’mma have to pass on this one.  My little Accord is not in the best shape.  It’s getting me to where I need to go, but just barely.  I still hear a lot clicking and clacking coming from the transmission.  I need to get my car back to pristine running condition before I can take on your jalopy.  Thanks for thinking of me, but no thanks.  But, hey, maybe we can do lunch next week.

You see where I am going with this.

No PFA, I am not opposed to mergers and acquisitions.  It is usually a good thing because it creates opportunity and synergy.  But what opportunity does Bank of America have here?  The opportunity to add nearly $6 billion dollars of subprime assets to its portfolio.  Ain’t enough synergy in the world makes to make this a good deal.

About the card

The Starwood Preferred Guest® Credit Card is issued by American Express.  It is a reward card that allows you to earn Starpoints that can be redeemed for stays at any participating Starwood hotel or resort.

The basics

• Variable APR of 14.99% for purchases, 2.9% introductory purchase APR for first 6 months
• 19.99% for cash advances
• When initiated within 30 days of opening the account, 2.9% APR on balances transfers for 6 months
• $45 annual fee
• 20 day grace period on purchases
• Late fee:  $19 for balances under $400, $38 for balances of $400 or more
• $35 over the limit fee
• 3% transaction fee on cash advances ($5 minimum and no maximum)

The perks

• Earn one Starpoint for every dollar worth of purchases
• Earn 10,000 bonus Starpoints on your first purchase within one year of opening the account
• Earn 15,000 additional bonus points when you spend $15,000 within the first six months of opening the account
• Transfer points to the frequent flyer program of over 30 major airlines
• Earn double points  when you use the card at participating Starwood hotels and retail locations
• Use points to get free room upgrades at participating Starwood hotels and resorts
• No blackout dates
• Annual fee waived for the first year
• Includes travel insurance of  up to $100,000 accidental death or dismemberment
• Account management tools include online account access year end summary that allows you to sort charges by merchant, category, and date.
• Comes with emergency services such are card replacement and Global Assist.  Global Assist will help with medical, legal, financial, lost luggage, and more when you travel more than 100 miles from home

You will like this card if you enjoy stays at Starwood hotels - Preferred Guest, SPG, Starpoints, Sheraton, W, Four Points, The Luxury Collection, St. Regis, Westin, and Le Meridien.

You won’t like this card if you are unable to pay the entire balance of the card at the end of each month.  At 14.99%, interest charges can add up quickly.

Credit card review

The Starwood Preferred Guest® Credit Card from American Express allows you to earn points on your everyday and not-so-every purchases.  The points can be redeemed for overnight stays at any of the 860 participating Starwood locations.

I have got to be honest.  Ever since I fell in love with the beds at the Westin hotel, I have been kind of partial to Starwood locations. So… I really like the thought of earning a free stay.

However, unless you are a big spender, it may take awhile to earn a stay.  It takes about 2,000 points to earn a free night.  And at the swankier Starwood properties, a room can run 35,000 points.  That’s a lot of points, but earning the 25,000 bonus points can get you closer to the free luxury stay.

Though I bask in the thought of a free night at the Westin, there are a few things about this card that gives me reservation.   I have this thing about interest rates that are higher than 10%… I don’t like them.  So as you can imagine, a 14.99% interest rate makes me cringe.  But if the balance is paid in full each month… then it’s not so bad.  I also don’t like annual fees.  There are too many other cards out there that don’t charge an annual fee.  Also, the rewards are limited. The points can only be used at Starwood hotels.  What if I wanted to stay at the Hilton… well then I guess I’ll just be out of luck.

Overall rating

I give it 3.5 out of 5 stars.

Apply for the Starwood Preferred Guest® Credit Card from American Express here.

About the card

The Advanta Platinum Business Card with Rewards is issued by the Advanta Bank Corporation.  It is a reward card that allows you to earn points that can be redeemed for cash, plane tickets, Visa gift cards or other items.

The basics

• Variable APR of 7.99% for purchases (prime plus 2.74%, with a minimum of 5.25%)
• Variable APR of 7.99% of 19.99% for cash advances (prime plus 2.74% or 14.74%, depending on creditworthiness)
• Fixed APR of 7.99% for balance transfers
• 3% transaction fee on balance transfers and cash advances ($5 minimum and no maximum)
• No annual fee
• No grace period on balance transfers and cash advances
• Grace period on new purchases when current and previous statements are paid in full
• Late fee:  $19 for balances under $150, $39 for balances of $150 or more
• Over the limit fee:  $15 for balances under $501, $29 for balances between $501 and $1,001, $39 for balances of  $1,001 or more

The perks

• Earn one point for every dollar in purchases
• No limit on the number of points that can be earned, but unused points expire after 36 months
• Points can be redeemed for cash with a minimum of $50 per redemption (1,000 points equals $10)
• Points can be redeemed for airline tickets (You can get a $400 round trip ticket for 25,000 points, plus a $15 redemption fee.)
• 0% introductory APR on balance transfer initiated within the first 15 months ($90 maximum transaction under this offer)

Credit card review

The Advanta Platinum Business Card with Rewards from the Advanta Bank Corporation is a reward card that allows you to accumulate points that may be redeemed for cash, plane tickets, gift certificates or other merchandise. Overall the card has reasonable terms and conditions and great introductory offers.

Under the introductory balance transfer offer, you get 0% APR for 15 months.  However, Advanta does stipulate that incoming transfers can only come from other business accounts.  So if you were planning to transfer a balance for a personal or individual account, then sorry… no can do.

The card offers a flexible reward program.  Points can be redeemed for just about anything.  But unlike most reward cards, unused points expired after 36 months.  What do you do if your points are about to expire and you do not have enough accumulated to redeem?  Well… Advanta allows you to purchase points in increment of 1,000 for $10.  That way can buy enough points to cash out before your existing points expire.

The Advanta Platinum Business Card with Rewards has a tolerable APR of 7.99%, which is relatively low for a reward card.  However, the minimum finance charge per billing period is $1, which is double the average minimum finance charge for most cards.

On the face, the Advanta Platinum Business Card with Rewards appears to be a good card… low purchase APR, tier structured late and over the limit fee, cash advance APR can be as little as 7.99% (well below the norm).  Although the terms and conditions appear favorable, I noticed that some cardholders have accused Advanta of playing bait and switch games and poor customer service.

Overall rating

I give it 4.5 out of 5 stars, but if what the cardholders say is true… then I only give it 1 star.

Apply for the Advanta Platinum Business Card with Rewards from the Advanta Bank Corporation here.

September 15, 2008 was a sad day on Wall St.  Yesterday, three well respected, heavy hitters died.  Lehman Brothers, AIG & Merrill Lynch were all taken out in one foul swoop.

As I reminiscence about the better days, I can hardly hold back my tears.

The Lehman Brothers… high hopes, big dreams and endless optimism.

One of the world’s largest investment banks, Been around over 158 years, Managed over 280 billion dollars in assets, 30,000 employees, named one of Business Weeks best performing companies in 2008… as of yesterday BANKRUPT.

I can remember when AIG just a baby waddling around, trying to make his way to the top of the finance world.

One of the world’s leading insurance corporations, been around 41 years (the baby of the group), over 100,000 fulltime employees, made it to number 10 on the 2007 Fortune 500… One foot in the grave, the other on a banana peel.

Merrill Lynch, ahhh… Merrill, there are so many things I can say about Merrill.  He was the tenacious, strong willed… the driven type.  There was never an obstacle he could not overcome.

Another one of the world’s largest investment banks, been around over 94 years, 60,000 employees, Fortune 500 company… and as of yesterday SOLD to Bank of America.

The Lehman Brothers, AIG & Merrill Lynch each had their own methods, but they all had the same goal… to be industry leaders in the world of finance.  And they were the leaders… and this is why I am deeply saddened by their untimely demise.

The collapse of these three highly respected mega giants has got me seriously thinking about the poor state of the US economy.

What is the cause of this economic crisis?

Yeah, we all understand that the market must correct itself every now and then, but these current economic conditions are unheard of. We are living through the most massive market collapse since the Great Depression.  And why?

Well there have been several major events that lead to this.  The one that gets the most attention is the real estate market.  Call it incompetence, call it greed… but for whatever reason bankers were handing out loans to anyone who walked in the door.  This was their dastardly attempt to milk consumers and increase the bottom line…. And the plan backfired.

Even if you overstuff a money bag, it will start busting at the seams.  Eventually, the bag will have to give way and all the money will start flying out.  But the bankers gave no regard for the eventual consequences.  And my goodness… what a destructive consequence it has been?  Financial institutions are crumbling all around us.  And not just the little local bank in Podunk, KY… no I am talking HUGE - everybody knows their name - institutions are being chopped at the knees… one after another, falling all over each other… it is like they are in a competition to see who can hit the ground the fastest… and the hardest.

And what else contributed to this crisis… the unveiling of creative accounting that exists to create an illusion of financial stability.  Believe me folks, creative accounting is alive and well.  In the midst of the crisis, executives are doing everything they can to make their companies appear stable.  I do not see how Lehman Brothers can be on the Fortune 500 list a few months ago and bankrupt today.  It just sounds fishy to me.  But in the end… it will all come to light (Enron).

Another contributing factor… a loss of investor confidence.  With all the trickery, lies and deceit… how can and why would investors be optimistic?  I, for one, have lost complete confidence in those companies I once admired and respected.

The culmination of all of this has resulted in the worse financial crisis in history.

The government has made some modest attempts to save the economy…  brokering deals between drowning institutions (Merrill Lynch) and damn near drowning institutions (Bank of America), coming to the rescue of Fannie Mae and Freddie Mac, insuring billions of losses from deposit accounts. But is it not just the financial markets that have us in a rut… our own federal government is in a four billion dollar… no, I am sorry… I mean four hundred billion dollar deficit!  With a $400 billion dollar deficit already, the Iraqi war that seems as if it will never end, rising unemployment rates, and the domino effects of bank failures…  how many more hand outs can the feds afford to give?

Can the economy be revived?

The economy will fixed itself.  It has no choice… eventually it will hit the bottom and the only place to go is up.  By the time the market rebounds it would have shaken off all of the dead weight… no more greedy executives, no more careless boards of directors,  more accountability, and  many new lessons learned from those companies that did not make it.

This massive market correction is a test.  The survival of the fittest… and in the end… the best of the best will be revealed…  badly damaged and bleeding all over… but stronger, more learned and ready to propel back to the top.