Uh, it means lower APY of course! Today, the U.S. Federal Reserve slashed 50 basis points to a rate of 1.50%.

The stream of bank failures
This rate cut in a state of increasing financial turmoil may be a life preserver for the economy but the effects it has on savings accounts and their user may be negative.

Fears and worries
Here and there, everyone keeps expressing their concerns over the stability of banks. They do not care if their money is FDIC insured. They just don’t want to deal with the changing of names and accounts when a bank disappears. These fears and worries prevent the people from putting their money into the bank. Financial institutions have been known to provide a great level of trust and security among its account members. But, the economy has substantial changed the views of the people.

Lower rates means lower earnings from interest
All the high-yield savings accounts are susceptible to the impending reduced interest rates from their respective banks. Last year, we saw rates up to 6% and even more on CDs. Now, it seems that 3% may become the maximum.

But… DON’T FRET! KEEP SAVING!
While the reasons to refrain from putting money in banks are understandable, step outside the box and take a look. The economy is taking a slide and your money in savings contribute to the solution for these failing times. No financial institution is safe. So stop asking, “where should I put my money?” Put it somewhere with minimal risk and volatility. It may be in savings accounts, CDs, or low risk funds. Anything is better than nothing.

Don’t hide your money, let it grow.

Photo credit: TruShu

Behold, the notorious gateway to debt of a typical college student, the credit card. Student credit cards are known for having lower spending limits and high APR as a way to “control” spending. While that thought process might work, some students are oblivious to using it as a way to develop smarter spending habits.

I was very serious when I applied for my first credit card. I knew that a student credit card could put me into a hole of financial misery and I sought to learn as much as could before I applied for one.

• Be prepared to show proof that you are enrolled in school
  Student cards have their own benefits and perks because they are targeting the young adult population in school. Special offers and programs are just methods that credit card companies use to take advantage of the young and the inexperienced.

• Know the introductory rate period and the terms
  Usually, you’ll find that most credit cards have an introductory rate of 0% APR on purchases, balance transfers, and cash advances. The catch is the time that the rate is in effect. Regular cards often offer an introductory period of 12 months but for student credit cards, it is usually 6 months. For cash back cards, the cash back percentage usually drops after the introductory period also.

• Know the APR and terms after introductory period
  The APR for student credit cards have a big increase after the promotional periods. It is important to be aware of this rate. It also gives you a good reason to spend less and to pay of your balance in full. Don’t be surprised when the rate jumps and your rewards/cash back decrease.

These are the basics but young adults continue to disregard these fundamentals when filling in their credit card application. So… watch out!

Photo credit: austins_irish_pirate

Here are referral links to sign up for ING Direct Online Savings Accounts and Electric Checking Accounts that will give a bonus of $25 upon opening a new account with a minimum deposit of $250.

ING Direct is probably the most popular online bank with its easy-to-use web interface and excellent customer support. It is a great start to a steady financial future. You should have your account set up in minutes and start earning interest on your money.

Simply click one of the links in the box below to sign up (you can only receive ONE bonus per person):

ING Direct Online Savings
Referral #1
Referral #2
Referral #3

ING Direct Electric Checking
Referral #1
Referral #2
Referral #3

NOTE: If you try to sign up and there is an error or a message that the link has already expired/been used, choose another link or leave a comment with your email and I’ll refer you directly. For those who successfully open an account through one of the links, please leave a comment so that I can remove it.

Don’t have $250 to deposit? Then sign up here (I receive affiliate commissions).

Ever since I started learning more about personal finance, I always wondered what my credit score was. I check my credit report a few times a year for free but I never felt that paying to know my FICO score was worth it.

Two days ago as I was reading the posts of others in the personal finance blogging community, I came across a post at My Money Blog. Apparently, Equifax was offering free FICO scores to the first 10,000 responders. I already checked my credit report through Equifax, so I had an account with them already. Without hesitation, I jumped on the offer and had my FICO score shown to me shortly afterwords. Equifax gave me a score of 728, which mean I had “VERY GOOD” credit. Although it was considered very good, I only scored higher than 51% of U.S. consumers. This isn’t a bad score for a 21-year-old college senior.

My first credit card was opened in January, which means I have a short revolving account history. I also have around $7000 of debt from student loans that were opened 3 years ago.

I follow many of the practices for maintaining good credit. I strive to pay more than just the minimum but I usually pay off the total balance on the credit card. I’ve never used over 30% of my total credit limit.