Posts tagged with "Federal Reserve"

Credit Cards illustration by Samantha Miduri for use by 360 Magazine

CardRatings Analyst Predicts Credit Card Landscape

The credit card analyst for CardRatings.com, a leading credit card review and comparison site, is releasing predictions for the next six months of the calendar year. Brooklyn Lowery researched how the pandemic affected the credit card industry in general and explains what consumers should expect in the coming months. She finds both positive and negative trends in her new analysis of “Mid-year update: Credit card trends to watch for in 2021.”

Travel rewards bonuses are booming: “Have vaccine, will travel.” We knew travel would return and, with it, mega travel rewards credit card bonuses. CardRatings is seeing highest-ever offers for perennial travel rewards favorites. Credit card companies seem to be competing for cardholders, so if consumers are considering travel rewards cards, now is the ideal time to apply. Bonuses are significant but may be for a limited time, even if they aren’t advertised as such.

“With most of the country returning to normal, Americans hit the roads and skies in record numbers over the July 4th weekend, and banks want to capitalize on that travel fever. We don’t predict a slowdown any time soon in travel nor in big travel rewards bonuses. As soon as one card announces its offer, a competing card announces its own. Expect this domino effect to remain at least through the end of the year.”

COVID perks remain: As Lowery predicted at the end of 2020, several credit card features and benefits designed to provide value during the pandemic are continuing as COVID restrictions lift. Her analysis finds a number of popular travel rewards cards are keeping everyday-geared benefits and features that were introduced during the economic shutdown.

“The credit card industry understandably held its breath during the height of the pandemic, waiting to see how the economy would fare and what existing customers would demand for cards in their wallets,” says Lowery. “Banks rolled out new features and benefits and customers responded positively, so banks are assessing what to keep long-term.”

Consumer credit card approvals slow and credit limits low: Anecdotal evidence suggests banks are continuing to exercise caution with card approvals and credit limits. As the economy has largely reopened, risk aversion has ebbed slightly, but it’s still common for consumers to wait for approvals or receive low credit limits. At this point, lending may continue loosening at a steady rate; that could depend on what happens with COVID variants and possible new restrictions going forward.

Small business credit cards bounce back: After 18 months of hardship, small business owners are receiving positive news – small business credit card approvals are bouncing back and businesses are having an easier time getting approved. Banks are marketing this card type again after largely stopping at the height of the pandemic.

Interest rates low – for now: Most credit card interest rates are shaped by the U.S. prime rate, and the Federal Reserve isn’t predicting a rate hike until 2023, so major changes in credit card interest rates seem unlikely for now. That said, issuers can increase interest rates apart from that federal rate and traditionally have done so as they introduce new features or benefits. Lowery believes the historically low interest rates will stick around for the next six months but predicts they’ll creep a bit higher in 2022 as banks continue rolling out new features and benefits to attract new cardholders. That means now is the time to pay down credit card balances.

“Peeking ahead to early 2022, I think we’ll see balance transfer offers make a comeback following the holiday season. Of course, everything here is dependent on COVID remaining under control and the economy remaining fully open. If any of that changes, all bets are off.”

Must-See Places in DC via Bike

By Lia Summers

Loop of the National Mall

The National Mall is the most popular attraction in Washington, DC for good reason. The iconic buildings, memorials, and greenery are breathtaking. Biking is one of the best ways to see the glory of the National Mall. Start at the 15th Street bike trail on the Northeast Side of the White House and follow 15th street past the Washington Monument. Stay on the sidewalk and go clockwise to view the National Museum of African American History and Culture, the Capitol, the Holocaust Museum, the Jefferson Memorial, and the George Mason Memorial to Ohio Drive. Continue on Ohio Drive and view the Potomac River, the Arlington Memorial Bridge and Arlington National Cemetery in the distance. Hang a right on West Basin Drive to see the FDR Memorial, MLK Memorial and the DC World War I Memorial. Hang a left onto Independence Ave to see the Korean War Memorial, the Lincoln Memorial and the Reflecting Pool and the Vietnam Memorial. Take Constitution Ave East and view the Federal Reserve, Constitution Gardens and the Lock-keeper’s House. Hang a Right onto 17th Street to get a close up view of the WW2 Memorial, the John Paul Jones Memorial and the Tidal Basin.

If you are feeling adventurous, cross the Arlington Memorial bridge on the North side into Virginia and cross to the West side of Jefferson Davis Highway to follow the trail to the Netherlands Carillon and a recently restored Marine Corps Memorial (Iwo Jima).

Another option is to take the South side path on the Arlington Memorial Bridge and merge onto the Mount Vernon trail. Take the scenic ride along the Potomac River to the 14th Street Bridge and ride East to land back in DC at the Thomas Jefferson Memorial.

Hains Point

Hains Point is the location where the Potomac and Anacostia rivers meet and the location of East Potomac Park. Now that the SW Waterfront has been redeveloped, there are beautiful views along the road that hugs the perimeter of the park. There are trees along the route including Weeping Willows, Horse Chestnuts, Buckeyes and the oldest section of surviving Yoshino Cherry trees on the National Mall. There are also several recreational activities in East Potomac Park including swimming, tennis and mini golf.

Pennsylvania Ave Capitol/LOC/SC

Head East from South Side of the White house to the center bike lane on Pennsylvania Ave to see the historic buildings on Federal Triangle, City Hall, the Old Post Office, the National Gallery of Art and the Capitol Building. Bike up the walkway around the Capitol to the see the East side, which is the front of the Capitol and where every presidential inauguration has been held until Ronald Reagan’s in 1981. Behold the beautiful views of the Capitol visitor center, the Supreme Court and the Jefferson Library of Congress on First Street. Bike North on First past the Senate Buildings to view Union Station.

Kenilworth Aquatic Gardens – Formerly known as Shaw Gardens, Kenilworth Aquatic Gardens is a historic water lily farm started by Walter and Helen Shaw Fowler. It is set in the Anacostia River Tidal Wetlands and is easily accessible on the Anacostia Riverwalk Trail North bicycle Trail. Water lilies bloom from early May to mid-September and enjoy the lotus seed pod heads for three seasons. Enjoy the beautiful marshes, bird watch, or have a picnic!

Anacostia River Trail South and Kingman Island

Starting at RFK Stadium there is a lovely bike trail that hugs both sides of the Anacostia River. This trail passes Kingman Island, several boating clubs, fishermen, and beautiful views on the West Side of the Anacostia River. Cross the Philip Souza bridge and go North on the West side of the river for a complete loop, or continue South on the East side to the Navy Yard.

Navy Yard/Nats Stadium

The Anacostia river trail ends on 11th St SE. You can then cross the highway to the Navy Yard boardwalk and continue along the Potomac River and several historic military memorials to the boardwalk at Yards Park which hosts several restaurants and Nats Stadium.

Mt Olivet Cemetery and the National Arboretum

Mt. Olivet Cemetery is an underrated attraction that features some of the oldest graves in the city. Most importantly, they allow bikes on their main roads! This iconic cemetery is one of the oldest in Washington, DC and features rolling hills, ancient marble headstones and elaborate family vaults. It’s also the final resting place of Lincoln Conspirator, Mary Surratt and White House Architect, James Hoban.

This is a challenging ride with many hills, so it’s ideal for an electric bicycle. Mt. Olivet Cemetery is located in Northeast Washington, DC off of Bladensburg Road. It’s best to drive and park at the cemetery before you ride. The National Arboretum is across the street from Mt. Olivet Cemetery. Enjoy 400 acres of gardens, a world-class Bonsai collection, and a stunning display of the Old sandstone Capitol columns.

politics, podium, flag, speech

COVID-19 Fed Policy

By Dennis Notchick, CFP

The United States is mired in its worst unemployment since The Great Depression of 90 years ago. Indeed, COVID-19 has stunted our once-robust economy in many ways.

But at the same time, there is this curious occurrence: Equity valuations in the S&P 500 and Nasdaq have hit an all-time high How does that happen with some of the worst economic conditions in our nation’s history?

One of the main reasons: Much of the money dispensed by the Federal Reserve during the pandemic isn’t trickling down to consumers and labor markets, but rather, it’s being reinvested in financial assets, inflating their value. This fresh injection of capital into the money supply can often lead to hyper-inflation for healthcare, housing, and other essential goods that are needed to sustain life. As an example, a recent report from the Employee Benefit Research Institute (EBRI) found a senior couple could need as much $325,000 to have a 90% chance of covering their out-of-pocket costs including Medicare premiums and prescription drugs.

The horrific economic effects of the pandemic have pushed the Federal Reserve to spend trillions of dollars since April in many different ways. They also used the playbook from the Great Financial Crisis and Great Recession of 2008 – low/zero interest rates in the corporate credit market – hoping that these rates would stimulate corporate spending, and in turn, spark employment.

But the forbidding economic environment in which we’re living renders that approach ineffective. Why? Ask yourself: Given the precipitous drop in consumer demand during the pandemic, why would corporations spend to produce goods and services if most customers are more likely to stay home?

So regardless of the amount of money the government prints to subsidize corporate credit markets, little if any corporate spending is on new employment. Instead, many businesses are stashing cash accumulated from government-subsidized bond offerings. This in turn paints a long road back to full employment, essential for the growth of GDP.

What does all of this mean as you are planning for your retirement in the midst of this uncertain time? It means you need to know how to minimize COVID-19’s impact on your retirement savings.

Given these factors, it’s all the more important for those near retirement or in retirement to consider these steps:

  • Update return expectations for bonds. The Federal Reserve has made it clear they will support credit markets with zero interest rate policies to 2022 and beyond.  Most investors in retirement have don’t have all of their assets in stocks, but say 50% stocks and 50% bonds.  If half of the portfolio has a lower return expectation, the total return of the portfolio may not be enough to keep up with inflation and the cost of living. Since many retirees are living well into their 80s and 90s, it’s important to revisit the stock-to-bond ratio to ensure you are giving yourself the best chance to keep up with the ever-rising costs of life over your retirement.
  • Diversify your stock portfolio. Adding new stocks to your portfolio for companies that haven’t been hurt by COVID-19 could help you adjust to market changes. The work-from-home movement was already underway, COVID 19 just accelerated it and there are many companies that are positioned well to take advantage.
  • Plan for higher taxes. With the trillions of dollars of national debt issued this year and moving forward to help stabilize the economy, most tax planners are preparing for higher tax rates in the future. It is critical to take advantage of the low tax rates now to reduce your taxes in the future.  While we can’t control the return of our investments, we can control the taxes.  Perhaps a small tax bill now will keep you from a large tax bill later.
  • Stay invested. Many portfolios got hammered in the first couple of months of the pandemic. But despite the uncertainty and volatility of these times, it’s advisable for pre-retirees to stay invested inequities. Staying invested is usually wise because history shows equity investments will recover in time, however it is more important now than ever to know what you own.
  • Review and re-evaluate. Current circumstances necessitate reviewing your entire retirement plan. Work with your financial advisor to adjust where needed. A job loss or other reasons for less income means you’ll fall behind on the savings rate you expected, and that could mean possibly delaying retirement. Spending less or working longer can help you recover some of the pandemic-related losses. As circumstances change, revisit your plan.

The pandemic may affect or push back the retirement plans you made several years ago, but take comfort in the money you’ve saved and know that you can regain some control of your plan with patience, careful thought, and wise action.

About Dennis Notchick, CFP®

Dennis Notchick, a certified financial planner for Stratos Wealth Advisors (www.dn.stratoswealthadvisors.com), has been serving high net-worth families and business owners since 2008. A certified financial planner since 2010, Notchick has worked with many well-respected firms on Wall Street and provides consulting on investment management, retirement planning, and holistic financial planning. He’s been published or mentioned in numerous online financial publications, including The Wall Street Journal, CNBC, and TheStreet.

Investment advice offered through Stratos Wealth Advisors, LLC, a Registered Investment Advisor. Financial services offered through Stratos Wealth Advisors LLC (“Stratos”), a Registered Investment Advisory Firm. The presentation of these topics is for general information only and is not intended to provide specific advice or recommendations for any individual. The information also does not intend to make an offer or solicitation for the sale or purchase of any product or security. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.