For many, many years, American consumers have been having a love affair with their credit cards. Everything has been purchased on credit and when bills arrived, a minimum payment would make them go away. It was a great way to live way above your means and many enjoyed this new found freedom. Suddenly, the current credit crisis hit the entire country. Credit card companies are lowering credit limits at the same time they are increasing interest rates and establishing new requirements for their customers. Many people are no longer eligible for the lines of credit they had in the past and are suddenly in the position of trying to pay off these very high debts. No one expected this crunch to really happen, yet here it is.

One way the consumer is fighting back is by turning back to good, old-fashioned cash as a means of payment for purchases. More and more people are trimming their expenses and only purchasing the items they can afford to buy with cash or debit cards. This could be the beginning of a whole new trend that will, in the long run, make our economy healthier and our citizens more prudent spenders. Only time will tell if this tendency will continue, but for now, many have reverted to paying for purchases with cash instead of the often misused credit card.

With banks hesitating to make loans and many people unemployed and needing to borrow money to survive, there is a relatively new alternative available. Companies are forming and introducing peer to peer loans. In some cases, the loans are being given by relatives or friends. In others, the companies are putting together funds from several groups to support the loans requested. Although this is a new source of loan money, it is rapidly becoming popular and competing with banks for the funds people need to borrow.

Companies such as Virgin Money USA are arranging this type of loan. With family members borrowing from one another, they draw up formal documentation that furnishes a profitable rate to the lender while the borrower is paying less than if he received a loan from a local bank. Although this is a new type of lender, they are rapidly becoming very popular. People who are unemployed or have poor credit are turning to these companies for help in their time of need. Interest rates are based on the borrower’s credit history and current salary, but funds are available and there is a willingness to assist.

Of course there are risks associated with peer lending, but the risks are based on individual criteria. There are also many who are considering lending money from their IRA accounts. Payments and interest are made directly to the IRA. The current loan rate far exceeds the current CD rate, so the possible risk is justified by the increased interest rate.

Which card should a person use? Is it more beneficial to use a credit card or a debit card? These are questions many people are asking themselves as they are concerned with their credit reports and eligibility for low cost loans. The answer depends on your current circumstances.

If you can afford to pay off your balance each month, then you should go ahead and allow the credit card company to finance your purchases for the first 30 days. If, however, you carry a balance on your credit card, then it would be a good idea to switch to using your debit card and not increase the balance on your credit account. This way you will not be adding to your total debt amount. Caution is always advised when using a debit card because nothing is easier than forgetting to enter a debit transaction. If that happens, you could find yourself overdrawn and incurring very expensive charges on your account. This is the last place that you would want to be.

If you find yourself struggling with a tight budget and know that you are not a great record keeper, the best thing you can do for yourself is to begin paying for purchases in cash. Although this can often be difficult, you will be well aware of how much you are spending and that in itself will help you to avoid spending more than you can afford.

We are in the middle of an economic crisis and this is certainly not the year to splurge on unnecessary holiday gifts.  Of course you want to give gifts to close family and friends, but be realistic and stay within your predetermined budget for each gift.  Do not be an overshopper.

People who splurge at every opportunity are generally those who are using shopping as a means of dealing with other issues in their life.  Some of the reasons people shop extensively are as follows:

Many believe that shopping will bring them happiness.  It makes you feel good while you are making the purchases, but later you realize that these purchases did not, in fact, make you any happier than you were before.

Some shop to feel better or more secure about themselves, or use shopping to avoid dealing with other areas of their personal lives.  It is sometimes the method used to improve a mood, express anger, relieve stress, and feel more in control.

Compulsive shoppers respond to various triggers.  Sometimes it only takes a sale to make them respond, whereas, other times it can be ads on television or magazines or even depressing weather. 

Aftershocks from shopping sprees can be devastating.  People find themselves in extreme debt owing everyone money and unable to meet payments.  Some forego a retirement fund just to keep shopping.  Often they must fend off creditors and many must actually seek bankruptcy protection.

It is impossible to put off shopping altogether, but obsessive shoppers must avoid their known triggers and be faithful to a plan of budgeting for their next shopping trip.  They must make a list of purchases to be made and stick to it at all costs.  When a habitual shopper has the urge to go shopping for no specific reason, they need to find something else to do that they enjoy.  Consider visiting a friend, going for a hike, taking a walk on the beach, or enrolling in an interesting class.  Whatever a person really enjoys should become the substitute in their life for compulsive shopping.

Banks have all sorts of rules and policy guidelines to clarify what they can and cannot do for their customers.  It was recently discovered that some banks in Sweden actually had age limits for older adults.  Depending on the type of loan they were seeking, restrictions were placed at different levels.

When the general public discovered that the banks were discriminating against the elderly, there was a public outcry for a change in the rules.  Apparently some banks believed that anyone over the age of 70 was ineligible for an unsecured loan.  This decision was based on the risk factor that said someone at that age is going to die or become seriously ill shortly and the bank did not want this risk exposure.  After all, this risk increases with age.  After the general public began protesting this policy, the bank relented and said that their new policy would be that age alone could not be a reason for rejection for loan purposes. 

Congratulations to the general public for taking on the banking industry and winning a round. 

Retailers are having a difficult time surviving in the current economy. Sales are very slow and fraud is increasing rapidly. A reaction that many are having to the current atmosphere is to limit returns of merchandise. There is, however, a way to get your money refunded even after the retailer has turned you away.

If your purchase was made by credit card, especially, silver, gold, and platinum cards, many credit card issuers offer their customers return guarantees. If you can prove through your statement that you purchased the item and show that the store refused to accept your return, the card issuer may offer you a refund in exchange for the item. Many of these refunds are good up to $250 per item and will last for 90 days after purchase.

Many card issuers offer extended warranties for items purchased with their card. Check the fine print in your agreement and see if your card offers this advantage. You would not want to purchase an extended warranty from the store if you are already receiving one free from your credit card issuer.

Another advantage to using your credit card for purchases is that many card issuers offer coverage for stolen or damaged goods. Whether there was a theft or accident, you may well be able to be reimbursed for damaged or stolen merchandise within 90 days of purchase. Some cards, for example, offer as much as $1,000 per item in the event of damage or theft.

An additional advantage to credit card purchases is that many offer price protection to their customers. Furnish proof of a sale price along with your original receipt and your card company may well refund the difference up to $250 within 60 days of purchase.

Credit card companies will always represent you in a dispute when furnished with the necessary documents to prove your case. My experience with this particular benefit has been excellent over the years with several different credit card companies.

Millions of retirees and disabled veterans still have not applied for their stimulus payment from the government. This is money that all of these people could put to good use but they are not filing for the payments. They could use it to pay the rent, purchase food or possibly pay for their health insurance premiums or medicine. Many are probably not aware that the money is waiting for them. Some don’t even know the program exists. We have millions of people in this country that can’t read or write. Unless told by another, how would they know of their eligibility for this financial windfall?

A single person is entitled to a minimum payment of $300, and the maximum is $600. Married couples are eligible for from $600 to $1,200. Anyone who has received at least $3,000 in Social Security benefits or veteran benefits can apply. There are specific railroad retirement benefits that might qualify a retiree, along with those who were eligible for the earned income credit last year.

If you know of anyone who might be missing out on this opportunity, please contact them and let them know that the deadline is quickly approaching. The filing deadline is October 15, 2008 and I would hate to see someone in need not receive this payment.

When a person is considering retirement, there are many decisions that must be made. What is the right age? Can I afford to pay my expenses and still maintain my current standard of living? Am I old enough to be eligible for Medicare? Will I, like many others before me, have to return to work to make ends meet? This is the time to carefully examine your finances and determine if you can afford retirement.

One of the main sources of most retiree’s income is their social security checks. This amount will fluctuate depending on your age at retirement and your earnings up to that time. Social Security has been mailing annual estimates to everyone for a number of years. They are, however, estimates and cover just early retirement, full retirement age, and retirement at age 70. Should you want to retire at some point in between these years, you would have to guess at what your social security income would be.

In an effort to help retiree’s make a sound financial decision, the Social Security Administration recently went online with a Retirement Estimator. This allows workers to see what their expected levels of payments will be for all possible retirement ages. This estimator is available at www.socialsecurity.gov/estimator. After you provide specific personal information, the system can calculate your benefit based on your retirement date and current earnings. It will also provide information as to how these payments will change if your earnings increase or decrease. Before making the decision to retire, it is important that you have a realistic view of your finances versus expenses.