As families battle problems related to the faltering economy, financial analyst David Caruso answers some questions from WBZ viewers:
‘Curious’ Question 1: With the feds cutting interest rates, why haven’t banks cut interest rates on credit cards? – Lenny in Watertown.
“It’s because they don’t have to. I’m sorry but people don’t shop around for credit card rates. They use it when they need it and they go through it. But if you look at the dynamics of the economy there are two things that the markets look for. No. 1, what the Feds are doing, because the Fed has been taking the lead, lowering rates and hoping the rest of the market will catch up. That’s in their favor, so rates should be going down under normal circumstances. The problem is when you talk about supply and demand you also talk about risk. And the risk is when you are having a tougher time, you’re less likely to pay (credit cards) off. Credit card companies have the most riskiest debt – it’s unsecured. So it’s a mix of the risk and the Fed.”
‘Curious’ Question 2: My home, like everyone else’s, has declined in value. I am curious why my real estate taxes continue to climb. – Laurie in Beverly
“We kind of forget that it’s been the last two years that we’ve taken the biggest hit in market values. But if you think about what’s happened, if you look at the five years before the last two years houses have sometimes doubled and tripled in value. So the assessment values have actually continued to be lower than the market value. And the question I ask is, if you look at your assessed value would you sell a house for that? In most cases people wouldn’t. They think it’s worth more.”
‘Curious’ Question 3: I’m curious if the economy will ever improve. – Jeremy in South Dartmouth
“I’m happy to be in this building when the market is up 550 points. So that’s a good sign, and the market’s testing right now. Yes, it will end. I guarantee you it will end. The problem is I can’t tell you when. The market is like a 3 year old right now, and it’s testing, testing, testing. Today was actually a very positive test. It went down to those old lows and then we went back up again. I promise you it will end. I will not give you a date.”
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