econ 4-22-08 - Josh Mittleman 22722963 Boston,...

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Josh Mittleman 22722963 Boston, Massachusetts 4-22-08 Econ 104 Boston, Massachusetts is one of the major cities in the United States . It is the largest city in the New England area, and is also considered the economic and cultural center of the New England area as well . The population in Boston is about 600,000 people, and that number jumps much higher if you include people that work in the city or people that live in neighboring suburbs . Boston has many colleges and universities within it and is thus considered a hub of higher education . These schools play a major role in the economic situation within the city . They employ many people and bring in many larger, high-tech industries so that many people want to work in Boston . It is estimated that students in college and high school in the city account for about $5 billion annually to the economy . That is a major portion. Between the time of March 8 th , 2008 and now, April 22 nd , 2008, there have been many changes in many different areas of the economy . During the beginning of this time period, the Fed induced rate cuts . To most people this is a good sign as it gets more money into circulation and people spend more . In this instance though, there was an abnormality . Some credit card companies increased rates for consumers with credit cards. Most variable-rate credit cards are tied to the prime rate . The prime rate has decreased 2 .25% down to 6%. Credit card companies have decided to lower some rates, but only for certain people . This group includes people with a credit score over 700, mostly. People with riskier, or higher risk credit, people who have had 2 or more late payments, or people who have had any defaults all saw increased rates (Source 1) . According to Bank of America spokeswoman Betty Riess, "When we review individual accounts for risk, we take into account a customer's performance with us, as well as external credit criteria -- such as taking out numerous loans, using substantially all the credit available to them or defaulting on loans to other lenders . In cases where we ultimately raise a customer's rate based on this analysis, we notify them in advance . They can then call or write us if they want to reject the new rate, and pay off the outstanding balance at the original rate (Source 1) .” This quote came a few days after Bank of America raised most credit rates, with some going up as much as 28%! Basically she was trying to play damage control and show that there are many factors that go into the decision as to whether or not a persons credit rate will go up, and it is not just based on
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This note was uploaded on 10/06/2008 for the course ECONOMICS 104 taught by Professor Crocker during the Spring '08 term at UMass (Amherst).

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econ 4-22-08 - Josh Mittleman 22722963 Boston,...

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