When the drug program began in 2006, Humana's premiums were among the cheapest. Humana, Mr. Noland said, has provided the most cumulative value for its drug-plan members, saving them an average of $4,900 on drug costs during that time and that the premiums are still in line with rivals.

The drug plans are heavily subsidized by the federal government and are offered through private insurance companies. Insurers will begin advertising their plans Oct. 1, and the six-week enrollment period starts in mid-November.

It's unclear how the price increases will affect the market. Medicare beneficiaries tend to select a plan and stay with it, and the market is highly concentrated.

"Medicare Drug Premium on Rise" [Wall Street Journal]
(Photo: Getty)

The similar price increases, coming at similar times, Kohl said, "is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace."

Kohl noted in the letter that the top four carriers combined have over 90 percent of the U.S. market, and wants the carriers to provide information on

• how their pricing structures differ from their competitors;
• the factors that led to their decision to raise prices;
• a comparison of text message pricing to other wireless service pricing;
• the utilization of text messaging over the past three years.

"Congress questions high cost of texting" [Cnet: The Iconoclast] (Thanks to Brett!)
(Photo: Getty)

Cristy writes:

I am from Progressive and would like to respond to your posting titled "Why is Progressive Using 'Recent Military Service' to Determine Rates and Eligibility?"

First, I would like to apologize to Ceaser and anyone else who got the impression that Progressive uses military service to determine rates and eligibility. This is not true, but it's easy to see how Ceaser and others could have gotten that impression based on the language on our Web site.

The reason we would ask about military service is to make sure we are not unfairly charging a higher rate to service men and women who have had a lapse in insurance coverage.

If you've bought car insurance before, you know that most companies offer you a better rate if you have continuous insurance coverage, and it's the same with Progressive. But, someone who is deployed overseas without access to a car does not need insurance, so they may not have it. But we certainly don't want that to hurt them in terms of their rate. So, if a person had a lapse in coverage because they were in the military, we would offer them the same (better) rate they would have gotten if they had had no lapse in coverage. The majority of states require insurers to do this, but we do it voluntarily in all states regardless of whether it's required because it's the right thing to do. Please let me know if this makes sense; if not, I will try to explain it better!

As for the confusing language on our Web site, I'm very sorry about that and we are now in the process of getting it changed. That language is a disclosure about our comparison rating service, where we give you our rates and the rates of some of our competitors. The language is meant to convey that some companies may consider military service in rating, and if they do, it might make the rate we gave you for the other company inaccurate. But unfortunately, the way it's worded, it sounds like we may use recent military service as a reason not to offer insurance, which is not the case.

The last thing we want to do is make anyone in the military feel that we're treating them with anything less than the respect they deserve. We want to make sure we don't charge higher rates to people who don't have continuous car insurance coverage because they were deployed overseas. If you are in the military and have been deployed overseas, please make sure your insurance company or your agent knows this so that you are not penalized for not having continuous car insurance. Thank you for hearing me out, and again, I am sorry for the confusing language that led to this misunderstanding.

Cristy Cote
Progressive Public Relations

While searching for new car insurance on progressive and sadly other insurance carriers, figuring what the rate check would be I answered a few questions. Some questions asked were if I was currently in the military and in college, I am both. As an Iraq war Army vet I am currently going to school with the GI bill, and tuition assistance from the Air national guard, so I put that I am both a student and national guard.

Well before I used to call and verify information and just to see if anything was available if there was any sort of military discount available. As always I get told that the prices were low enough that not to require a discount, or that military discounts weren't available from the company, as in Progressive. Geico does give a military discount but their rates are so jacked up that there really isn't a discount, actually $300+ w/ military discount over my progressive, state farm, and sad to say allstate. Anyhow I come to the final page and in the fine print I see this:
 

Your rate may vary, or you may not be offered a quote, due to eligibility requirements (you may not qualify for that program), credit history, recent military service, or driving record (if your actual record is different than what you told us). If you have been assigned to your recent automobile insurance policy by the state, or if any of the drivers you listed requires proof of financial responsibility, your rate may be higher than those provided by this comparison service. [emphasis ours -Editor]

Now my question is this. With news that 1 in 5 soldiers coming back from Iraq have mental, health, PTSD issues, not to mention the suicide rate climbing among periods of deployments. Long term deployments having stress issues and coping when coming back. Could these news be used to proclaim that Military might be a higher risk therefore lets bend you over and take your money? I hope not but then again most of these companies don't care other than the bottom line. Any insight or help would greatly be appreciated.

Discover is the new cheerleader for penalty APRs and plans to asses rates of 31% on top of their $39 over-the-limit fee. Other creditors are rushing to get in on the action, too:

One Chase Platinum Visa offer indicates the cardholder's rate may increase if "you exceed your credit line." At Bank of America, a cash reward card contains the following provision: "Each time your ... account balance is over the credit limit, we may increase each of your account's Standard APRs up to the default rate. "

Getting hit with the default rate is a credit card user's equivalent of banishment - and it's a costly one. A consumer with a $10,000 balance and a 15 percent interest rate who pays the minimum payment each month would pay $2,800 in a year and still owe $8,598 on that balance. But a consumer paying 31 percent interest would have to cough up $4,047 to meet minimum balance payments during that same 12 months, and yet would fall farther behind, with a remaining balance of $8,891.54.

Remember, in that example, nothing has changed but the interest rate. (If you'd like to run your own nightmare scenarios, BankRate.com has a handy calculator).

New way to hike credit card rates [Red Tape Chronicles]
(Photo: samwilkinson)
PREVIOUSLY: Credit Card Companies Slashing Credit Limits

The Fed says:

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

While the cut was larger than the Fed's normal quarter-point moves, investors were initially disappointed that the central bank did not cut rates by a full percentage point.

The Dow Jones industrial average fell 100 points within two minutes of the Fed's mid-afternoon announcement but it then resumed climbing and was up nearly 200 points within the first half-hour after the announcement.

Fed Cuts Rates by 3/4 Percentage Point [Portfolio]
Fed Cuts by Three-Quarter Point, Suggests More Reductions Likely [Wall Street Journal]
Federal Open Market Committee Statement [FED]

She's also threatening to place caps on fees for SMS services and data plans if carriers don't cut their rates.

Compare that to the U.S., where as recently as last week a lone congresswoman had to ask three national carriers when they were going to honor their promise to pro-rate ETFs, and AT&T Mobility wouldn't even answer her.

(Thanks to Sanjay, who says that in France there are already some carriers offering per-second billing.)

"EU wireless regulatory body looks into mobile phone billing - European Commission wants per-second mobile phone billing" [IntoMobile]
(Photo: World Economic Forum)

As we look up at CNBC, the down is currently down 179 points. From the NYT:

"There can be no doubt that the timing of this morning's move is aimed at supporting global financial markets after yesterday's global equity meltdown," Joshua Shapiro, chief United States economist at MFR Inc., wrote in a research note Tuesday morning.

"At this stage, you can say there is panic selling in the market," said Kwong Man Bun, the chief operating officer of KGI Asia Ltd., a large Asian futures broker. "We don't think the Hang Seng index has found its bottom yet; the index will continue to go down and will only find its bottom when external markets — namely, the U.S. market — stabilize."

"I'm not going to close the door, but I'm not suggesting that anyone believes it has to be bigger" than the $150 billion figure already discussed.
...Perino said the White House is not proposing an even bigger economic package at this point, but she declined to rule one out, either. The sharp decline of markets in the United States and around the globe is tied in part to the perception that Bush's outlined stimulus package would not do enough to avert a recession.

Perino said the White House does not comment on daily fluctuations in the market. But she did say that people should have confidence in the underlying strength and long-term prospects of the U.S. economy.

"We are not forecasting a recession," Perino said. "Clearly there is a slowdown."

White House Flexible on Stimulus Plan [AP]
U.S. Markets Open With a Steep Fall [NYT]
(AP Photo/Richard Drew)

One thing I enjoyed, when you cancel your account through their website - there's a text field for "How Can We Improve"....but it's limited to 255 characters....I don't think they can really improve in only 255 letters. -Scott

"I don't know what planet you are from, but the marketing technique of "make the company richer at the expense of existing customers" does not translate well to consumers. I would understand a price hike for new customers, but to slap your current customers in the face with these OUTRAGEOUS prices is absurd. This is especially true when said consumers can get a drastically better deal from your competitor and they are still dropping prices. Have you thought about how your pricing plans compare with Netflix, your main competitor in the online movie rental industry? Its no wonder Blockbuster has lost so much money in the past quarter. Not to mention losing over half a million customers." -Kris

i just got this email from blockbuster, this sh#$ is getting rediculous?!? i was happy with my 14 dollar plan with unlimited trades, now im going to be paying 20 bucks a month for 5 trade ins and a lousy 4 movies a month? what a scam! -Chris

Your plan restructure took effect this summer and I received a notice that my rate and features would be grandfathered in and remain the same. I would not personally consider this rate hike part of that restructuring; several months have passed. I have subscribed to your service for a long time, since shortly after it started. Now I am about to leave. I understand the realities of business and appreciate your candor. The question is what are you willing to do to keep me as a customer? -Tim

Ugh. -Naomi

I have been using blockbuster online now for a few years and have been enjoying instore exchanges. Back in July they changed their subscription plans, but to my suprise i was grandfathered in under my old plan and was told i would not have to change my plan (at this time). Well last night was time. I got an email saying the price would go to 19..99 from 17.99 and only get a limited number of instore exchanges. Granted i probably use about an average of about 4 instore exchanges a month (some months i use 10 but some i use 1), but this might be the straw that breaks the camels back and send me BACK to Netflix. -Will

First they drop me from unlimeted in-store exchanges down to 5 in-store exchanges per month. The number 5 is idiotic...movies come 3 at a time in the mail...why not allow 6 in-store exchanges per month? At least then you could feel somewhat fulfilled by having 2 opportunities per month to exchange everything that you get in the mail - it's not what I signed up for in the first place, but I understand that you can't have unlimited everything. The biggest kick in the teeth is that when I follow the rules and make my 4th and 5th exchange in a month (turning in 3 envelopes, picking up two in-store excahnges) the in-store reps ALWAYS ask me why I'm not taking advantage of all 3 exchanges! I'm tired of explaining their own policy to them!

Now, after I get less than what I signed up for and have to do all the brainwork for their reps, Blockbuster has sent me a notice telling me they will be raising the price of my monthly fee $2 per month, from $17.99 to $19.99...so for the past few months, I was paying the same for less...now, I'll be paying more for less.

As I have explained to Blockbuster before, I am sorry that I signed up for their offers and made them so successful, but I won't do it anymore. I'm going back to Netflix ASAP. -Greg

I got a Christmas supprise from Blockbuster Online this morning. They sent me a E-Mail telling me how much I love them and hidden in the 3rd chapter was informed that they were so awesome that I was going to be able to pay them $2 more ($11.99) starting in a week.

What a great Bait and Switch. They make me realize that there store down the street is too expensive, then they make me switch to Netflix. At lease Netflix does not hold movies back when you exchange too many in a month. -Jeremy

They must be out of their damn minds.

I am switching to Netflix. -Bill

They say it so nicely, don't they... how many people do you think actually read this email? -MarkMan

Blockbuster is now trying to raise out rate by two bucks a month after sending an e-mail a couple months back telling us our service nor price was changing. They really know how to keep customers! I'm out of there! -Wayne

Good job Blockbuster!

Today's hearing will feature two panels. First, three aggrieved consumers will share their horror stories. Then, the presidents of Discover, Bank of America, and Capitol One will explain that the three consumers who just testified are not at all representative of average cardholders. Right.

The tears and lies start flowing at 9:30 a.m.
(Photo: samwilkinson)

9:25: Two choices for your viewing and listening pleasure: Video Link—Audio Link
9:34: And we're off. Levin has arranged for an interesting hearing. The first consumer we will hear from is Janet Hard. Janet is married to a steamfitter. She has a Discover card that jumped from 18% to 24% because her FICO score dropped. When Janet complained, the rate dropped to 21%. Discover's President will testify today.

9:37: Levin is most incensed by the retroactive nature of rate increases. Take a consumer whose debt jumps from 15% to 27%. That new rate applies not to new debts, but to all incurred debts.

9:41: Bonnie Rushing has two Bank of America cards. One is associated with AAA. Both cards had an 8% rate. BoA bumped the AAA rate from 8% to 23% because Bonnie's FICO score fell. It didn't matter that her payment history was perfect. Bonnie isn't sure why her FICO score dropped, but she thinks it may be because she opened a store-branded card at Macy's to receive an immediate 10% discount on a purchase, unaware that it would affect her FICO score.

9:43: When Bonnie received the rate-increase notice, she opted-out and closed her account. BoA tried to pressure her to keep the new, higher rate, but after she complained to state and federal authorities, BoA let her close her account. BoA's president will testify today.

9:44: Capital One raises rates by looking for accounts that haven't been bumped in three years—but they don't use FICO scores.

9:44: One consumer was hit by three rate increases in three months. Oftentimes the rates doubled or tripled. The consumer was able to reduce her rates by calling and fighting the credit card companies.

9:46: Levin: "If you shop with a credit card, as most consumers do, dangers lurk."

9:46: Most people don't realize that their FICO score drops even if they approach—not exceed, approach—their credit limit.

9:47: The Committee asked who determines a FICO score, who determines when a rate jumps because of a FICO score. The answer: computers.

9:47: Issuers don't know why a FICO score drops. They have four "reason codes," generic statements like: "balance grew too fast compared to credit limit," or "balance on bank cards is too low."

9:48: By law, consumers are entitled to know who supplies credit data. Even with this data, few consumers realize that a rate hike was caused by a lower FICO score.

9:50: When Janet Hard received her rate increase notice, she was told that it was because her balances were too high and her accounts were delinquent. When pressed, Discover couldn't explain which balances were too high, or which accounts were delinquent.

9:51: Levin does not want any increases for consumers who pay their bills on time. At least not retroactive increases.

9:53: Credit card companies have drop rates when the Subcommittee calls to inquire about an account.

9:55: Levin's solution is S. 1395, which would:

"bar companies from charging interest on debt paid by the due date, cap penalty interest-rate increases, prohibit interest from being charged on late fees or over-the-limit fees and prohibit late fees if a card-issuer delays crediting a payment."

9:55: Senator Norm Coleman (R-MN) is claiming that the nature has credit has changed. It used to be something you earned. Now, creditors are tossing cards like confetti.

9:56: It seems like a personal problem, but it has nationwide implications.

9:57: For background: Abusive credit card practices affect everyone. In a country of 300 million, we charged more than $1.8 trillion dollars on over 691 million credit cards in 2005. Back in the eighties, Americans charged about $70 billion per year.

9:57: Coleman argues that the democratization of credit has helped America, but it has been tainted by federal regulations that raise rates. Eh? Coleman asked credit card companies to regulate themselves so Congress can focus on something else. Apparently, his strategy of "Be Nice, Please" is working. Double-cycle billing is now a thing of the past. See, no federal regulation needed. "These are serious steps and constitute self-reform."

9:59: 'There is a competitive advantage to offering fair user-friendly offers.' Sure, but nobody does. At least he realizes that there still massive problems, with universal default and rate increases out of the blue.

10:00: Claire McCaskill (D-MO) argues that even lawyers can't understand credit card offers.

10:01: Creditors hate closing accounts. You can't call, or write on a bill that you want your account closed. You have to write a separate letter.

10:02: Senator McCaskill's mother wrote in that she wanted to cancel her credit card. That didn't stop them from sending her checks for the holiday season that would re-activate the card.

10:03: Excellent: McCaskill is calling credit card debt "The Next Subprime Disaster ^TM." She is absolutely right.

10:04: If the credit card companies won't stop financially raping Americans, McCaskill wants to break out some serious regulation.

10:04: Senator Tom Coburn (R-OK) has no opening statement.

10:05: Interesting: Levin is swearing in the witnesses. Most testimony is not sworn—there is simply no need. Lying to Congress is a felony that carries up to five years in jail.

10:06: Here is Janet Hard, the consumer with the Discover cards.

10:06: Janet is a registered nurse turned stay-at-home Mom.

10:07: She used credit cards to make ends meet, which is always a losing strategy. She figured that she could make boost her income when she went back to work when she stopped taking care of her kids.

10:07: She learned about the rate increases only after she realized that her payments were no longer reducing her debt at the usual clip.

10:08: Janet was initially told that the rate was increased because of a spot credit check. When she called to complain, Discover agreed that she was an excellent customer, but refused to drop the rates.

10:08: She also has an HSBC account, which accesses the same credit data. HSBC did not raise her rates.

10:09: She does not want to shirk her debts. She wants to be treated fairly. "We feel as though we've been robbed."

10:10: Onto Bonnie Rushing. Downsizing cost her a job and income security, but she never missed a credit card payment.

10:11: Still, the rate on her BoA AAA card unexpectedly tripled. Bank of America said that she had been sent a change in terms notice without responding, and so her rate was bumped. Bonnie could no longer refuse the rate or close the account.

10:13: Bonnie tries escalating to a supervisor, who offered to renegotiate the rate down from 23% to 21%, still much higher than the 7.9% Bonnie had enjoyed.

10:14: AAA intervened and was able to press BoA into accepting the original, fixed rate of 7.9%

10:15: A bank executive told Bonnie that the change was made because she was a "good long-standing customer whose business they did not want to lose."

10:15: Bonnie took her experiences with the call center very seriously. More than anything, she's upset that they treated her without respect, without realizing that she was a decent person who was trying to responsibly pay off her debts.

10:16: Onto Millard Glasshof, who has been retired since 1992. He's here with his wife.

10:16: In 1997 he received a MasterCard with Bank One. He originally agreed in 2004 to payoff a balance of over $5,000 at 14%.

10:17: In March 2005, Chase took over Bank One and bumped the rate to over 17%.

10:18: Millard had never missed a payment. Chase could not explain the increase.

10:19: He received a letter, which he didn't understand. He thought it said that his new payments were $111. He called to confirm, which Chase did. When he paid $111, Chase hit him with fees for insufficient payments.

10:20: After the Subcommittee looked into his situation, Chase miraculously dropped his rate to 6%.

10:20: Janet's original debt was over $8,000. She made only $500 in new purchases. Of $2,400 in payments last year, $1,900 went towards interest, not the principal.

10:22: Janet had no idea that her rate increase was triggered by her credit score. Her rates were dropped back to their original levels after the Subcommittee started asking questions.

10:23: Millard had $4,800 in debt. Last year he made no new purchases, but did pay $1,100 in interest and $200 in fees. He made $1,300 in payments and still owes $4,800.

10:24: Millard had no idea why his rate was increased.

10:24: He hasn't missed a payment in two-and-a-half years.

10:24: Chase says that an automated review of closed accounts, like Millard's, showed that his FICO score had dropped, triggering a rate increase.

10:25: Levin is really pissed that these rate increases are retroactive. More troubling, none of the consumers testifying realized that rate increases applied to past debts.

10:28: We remember a program we watched some years ago—it may have been Frontline's look into credit cards—when our favorite debt-expert, Elizabeth Warren, explained that credit cards are the only financial instruments that retroactively raise the price of goods after purchase. How would you feel if the guy at the electronics store knocked on your door, pointed to the TV in your living room, and said "By the way, that now costs $500 more. Pay up." We hadn't thought of it like that before, and it bothered us greatly.

10:32: It may have been this Frontline episode. Well worth watching.

10:33: Back to the hearing. Senator Coleman wants to know why the consumers didn't receive (or read) the notices from credit card companies.

10:33: Millard is arguing that he never read in any of his notices that his rate was increasing. That would have helped.

10:34: Janet thinks notices from credit card companies are deliberately misleading.

10:34: Coleman: "Do you know what the U.S. Prime Index is?"
Janet: "No, I do not."
Coleman: *stunned silence*

10:35: Coleman: "I'm trying to figure out what, if anything, we can do with notices." He thinks Janet was pretty much screwed from the start because of her debt levels. She had no hope. All her fault. "You may have been treading water, you may have treading for a long time."

10:36: We have an idea for notification, Senator. If a credit card wants to increase a rate, they should sent a notice. The notice should have two lines in massive fonts that show:

• Your Current Rate;
• Your New Rate

10:41: Senator McCaskill is reading the paragraph that raised Millard's rate. Nobody understands what she is saying.

10:41: McCaskill: Did you call after you received this letter and ask what you were supposed to pay?
Millard: Yes.
McCaskill: Did they send any confirmation?
Millard: No.

10:42: Ok, we want back and found Elizabeth Warren's statement:

Frontline: But they would say they're just making capital or money available to people in a convenient way.

Warren: Well, in a convenient way, and changing the price after people borrow it. You know, that's a heck of a deal. I don't know any merchant in America who can change the price after you've bought the item except a credit card company. After you have borrowed the $5,000, they can change the interest rate from 9.9 percent to 29.9 percent. I just don't know anyone else who can do that.

Hey, listen ... you make exactly the point that the credit card companies keep trying to make: "Hey, ... we don't make anybody take the money." And they're right; they don't hold a gun to anybody's head when they borrowed that money. But they did the much, much slicker way, and that is, they just put it all into contract papers. They put it all in clauses that people can't read. They put it all in things like "universal default terms" and "15 days to change the terms of this contract" and arbitration agreements that [say] "We will hold the arbitrator to see if we have abided by the terms of the contract." ... They have teams of lawyers to figure out just the way to write the contracts that will maximize the profits for the credit card companies and minimize the likelihood that any customer will quite figure out what has happened when he or she uses that credit card.

10:46: We think Tom Carper is giving a statement. He represents Delaware, where most of these credit card companies live. He's going to ask the witnesses what they would do if they were credit card companies. This should be good.

10:50: Carper: Is it not unreasonable to raise rates when a customer's risk increases?

10:51: Oh, he's talking universal default, the most evil and hated practice where a credit card company boosts your rates because you didn't pay a late fee owed to the library. Real fair and equitable.

10:51: Holy shit, I can't believe this worked. Bonnie: "Credit card companies are businesses, they have obligations to their shareholders." Come on, Bonnie, realize you're getting played and hit back!

10:52: Bonnie walked into the trap, but at least she's arguing that she met all her debts and should not have been subject to a rate increase.

10:53: Levin comes back to argue that the increases are automated and unfair. "If it's a risk-based decision, isn't it weird that you were sent additional blank credit card checks in the mail?"

10:54: We like Levin's style. Rather than look over at Carper and say: "Dude, shut up," he's having every witness show that the rate increases had nothing to do with their risk profiles. Such a classy place, this Senate of ours.

10:57: Coleman's back with a hypothetical. He's asking if anybody would have a problem if they could no longer use their credit card and pay off the debt at the existing rate.

10:57: Nobody does.

10:58: Bonnie: "No, that's how a contract should work."

10:58: Carper is arguing that that current disclosure laws force banks to offer just that.

10:59: Bonnie: "No, they said I could not do that. Point-blank, 'No.'"

11:00: Carper: Did you look for new credit cards?

11:00: Witnesses are confused. Why would they look for new cards?

11:01: McCaskill wants to know if anybody was warned that using a credit card to pay off another card carries separate charges.

11:01: Nope, nobody knew.

11:01: The witnesses are dismissed.

11:02: *Cue ominous music, summon industry representatives*

11:04: The representatives have also been sworn in.

11:04: Here is Roger Hochschild, President and CEO of Discover.

11:04: He's going to talk about pricing policies.

11:04: Pricing is based on each customer's risk profile. "We make every effort to ensure that a customer can manage the credit we give them."

11:05: It's because credit cards are different than other loan products. Each transaction is a new loan, and they're responsible to make sure each loan is paid.

11:05: Now he's going to talk about all the background work they to do to set a base APR.

11:06: "We decline more applicants for credit than we approve." Really?

11:06: They don't solicit high-risk customers or offer them special products like balance transfers. They even reach out to people who seem like they might be in trouble before their accounts are delinquent. Wow, what a great company.

11:07: "The risk associated with some accounts rises over time." It's just like automobile insurance, see? If you get in an accident, your rate increases. Not crazy, just reasonable.

11:08: When they raise rates, they give customers the option of closing the account and paying off the debt at the current rate.

11:08: Their philosophy is to "Do The Right Thing." Just like Spike Lee.

11:09: Onto Bruce Hammonds of Bank of America, who sounds like he has the entrails of the poor caught in his throat.

11:09: "We constantly monitor our customer's behavior." And you folks worry about government.

11:10: 9%-10% of customers refuse higher rates, close their accounts, and pay off the debt at the old rate.

11:10: Risk-based pricing is good for consumers, says the largest bank in the country.

11:11: Ha! Customers who are re-priced often adopt better financial practices. Right, that's what happens, BoA. Don't feel free to provide data.

11:12: Bank of America is arguing that they are a friendly bank, even friendlier than Discover.

11:13: "Customers like our policies." "We listen to our customers. I personally have spent hundred of hours listening to our credit card customers."

11:13: "If any of us are wrong, the market will tell us." (By crashing.)

11:14: Onto Ryan Schneider of Capital One. Repricing is an "essential tool."

11:15: He just argued that credit cards are not like car insurance. Hear that, Mr. Hochschild?

11:15: "Capital One shares your concerns." Awww.

11:15: They have just one policy that governs repricing. See, just one policy, which means consumers are safe.

11:17: Consumers need to miss a payment by more than three days twice in a year before they are repriced. Capital One does not look at bounced checks or FICO score shifts. They also don't use universal default, which actually is a very good pro-consumer policy.

11:18: Levin's first question to Discover: What happened with Janet?

11:20: Roger doesn't want to talk about it, because it's personal. But he will, anyway.

11:20: They used a "holistic approach" to her account. He just called her a liar and said she missed payments.

11:21: Levin is asking about her payment history.

11:21: Roger agrees that she was repriced even though she made all her payments over the course of a year. She was charged no late fees.

11:22: Ah, Roger is complaining about one late payment from March 2004.

11:22: Other than that, she was on time. What a terrible customer.

11:24: Levin is asking why Discover won't agree to limit their use of universal default.

11:25: Roger: "Not using a cardholder's behavior on other accounts is like taking the battery out of the smoke detector."

11:26: Levin: "It's not important to Citibank? It's not important to Chase?"

11:27: Levin is lecturing BoA about the basics of fairness, calling them financial bullies. "Why should [your customer] be penalized because of some outside activity, which never happened—that she didn't know of—why if it's good enough for major companies like Chase and Citibank, why should you at Bank of America continue that practice?"

11:29: Bruce of BoA: Because their risk increases! "We have a responsibility to the safety and soundness of the institution."

11:29: He disagrees with McCaskill, credit isn't like the subprime sector—but would be if they lost the ability to reprice based on consumer risk. See what he did there, hijacking her argument?

11:31: Uh-oh, Bruce is angering Chairman Levin. In his testimony, Levin argues that BoA boosted Bonnie's rate because she was getting closer to her debt ceiling, even after they sent her checks that if used, would bring her closer to her debt ceiling. Bruce is hedging, saying it wasn't really the checks, it was other things, like um, you know, stuff. Levin does not seem convinced.

11:34: Senator Coleman wants to know if credit card companies can improve the way they give notice.

11:35: Regulation Z will already change the appearance of bills and rate change notices. Credit card companies supported the new regulations, in part, to escape from stricter action from Congress. That strategy might not work out.

11:37: Coleman: when you buy a car, you can compare to several others. Credit card companies are similarly different, with varying policies on rate increases, opt-out, etc. How can consumers judge the different policies?

11:38: Let's see how the companies cloak their notices as something other than legalese.

11:38: Capital One sees the onus on Regulation Z to make notices clear.

11:39: BoA agrees, but it's not easy because consumers want rewards and bonuses, and he doesn't know how to keep up. And if consumers dislike BoA, they can go to any other competitor.

11:39: Discover thinks it's great (not dangerous) that consumers have more than one card, because they can shift their business based on how companies satisfy their needs.

11:41: Discover: "Credit cards are excellent tools for the middle class."

11:43: McCaskill wants to know why it seems that the behavior the companies encourage is the behavior they use to indicate risk.

11:44: She wants to know how her mother (oh, it's personal) was charged $9 interest by a credit card company that owed over $200. How could she be charged interest by a company that owes her money?

11:45: Discover apparently has a guide to using credit wisely on the internet. McCaskill is not pleased with this answer.

11:46: She wants to know at what point they stop sending checks to people approaching their credit limit.

11:48: Nobody has an answer. It's based on risks, not the credit line. "If the risk is up, we stop sending checks."

11:48: McCaskill's mother was obviously a high-risk card-holder, with lots of cards, lots of debt, but she still gets checks.

11:49: All three state they don't use credit scores as the sole basis for raising any rate.

11:51: Good, McCaskill wants to see BoA's data that consumers pay more after their rates are raised. "That seems mighty counterintuitive."

11:51: The credit card representatives breathe a sigh of relief as they are embraced by the soft easy questions of Delaware Senator Tom Carper.

11:52: Now they get to talk about how much they care about consumers. They love us, they really do, and they constantly strive to keep us educated.

11:55: Carper: Do any regulators tell you how to manage risk?

11:55: Now everyone gets to point to Office of the Comptroller of the Currency as the source of meaningful federal regulation. Hmm, let's scroll through the archives to see how past editors might characterize those meaningful regulations:

The Currency Comptroller routinely goes double-dildo with national banks to undermine states' consumer protection laws.

11:57: Carper with a hardball: "What stops me from taking my business to another creditor? Because I get offers everyday."

11:58: Everybody: Nothing stops you!

11:58: This is what preachers know as "call and response."

12:01: Discover had no clue that they lowered a witness' rate. It certainly had nothing to do with the hearing. Know how? Because otherwise Discover's President would have known before this morning.

12:02: He does seem to know an awful lot about why her rate dropped, you know, for someone who didn't know her rate fell.

12:03: Contradiction alert: Roger just said that any factor in the risk model could affect her risk profile, and that a credit score, by itself, could affect her rate. Let's go back to 11:49:

All three state they don't use credit scores as the sole basis for raising any rate.

Can anyone reconcile the discrepancy in this sworn testimony? Bueller? Bueller?

12:07: Levin wants to know about opting out.

12:09: All agree that it requires a proactive notice from a consumer.

12:11: Levin wants to know why people shouldn't be able to opt-out at any point if they stop making payments and just put the card down.

12:12: His scenario: someone doesn't understand the opt-out notice and just says "the heck with this company," without making new purchases.

12:12: Discover: If they do not opt-out, right, they are charged the higher rate.

12:13: BoA: Yep.

12:13: Levin: "That strikes me as manifestly unfair."

12:14: Levin wants to know if Hammonds of BoA is troubled by Bonnie's rate increase from 8% to 23%.

12:16: Hammonds: Well, everyone used to pay 19%.

12:16: Levin: Did her story trouble you?

12:16: Hammonds: Sure, sure. But I do believe we made the right risk decision.

12:17: One of the highest indicators of risk is constantly making the minimum payments.

12:18: BoA discourages customers from making minimum payments. Behind the scenes, not say, by printing any warnings on the bill.

12:22: Levin is bringing the hearing to an end, but is reminding consumers that credit card companies do not treat their customers fairly. Several pieces of legislation are in the pot, and Levin will make sure the issue stays on the Senate agenda.

12:30: If you want to learn more about the inner workings of credit cards, we highly recommend that you watch Frontline's documentary on abusive credit card practices. We also caution everyone as we roll into the holiday season, please use your credit card responsibly. Don't take on debt you can't afford, and don't ever let anything stop your from paying off your credit card in full every single month.

The plan, as always, is to give customer service one chance to provide they help they're supposed to provide, and then to manage the situation so that you end up in the hands of executive-level customer service—usually by calling a corporate number and trying to speak directly to an executive.

At that point, he's usually transferred to Escalated Customer Service. "Here you tone down your act and say you can't believe that the company treats consumers this way and that there are other companies that want my business," says Sweet. "Always remember to be nice here."

The next step is the same every time. "They will say they need to look into it and will get back to you," he says. "They always do. I figure it's during this time that they look at your account and see how much money they will lose if you go elsewhere. That is why I assume that having perfect credit with them is important."

"Interest rates for U.S. Treasury securities have been drifting lower this month over market concerns that the housing slump and stress in the credit markets could slow future economic growth," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, interest rates for fixed-rate mortgages had room to slip lower this week."

That news is sure to make somebody happy.

Mortgage Rate Drops to 6.1% [Wall Street Journal]
(Photo:Scott Abelman)

So, thanks to your amazing help my Comcast problem was fixed immediately. Not only did they apologize but I received free installation as well as money credited to my account. I can not think you enough for your help. You, the consumerist, are my new hero.

(Photo:cmorran123)

PREVIOUSLY: "Comcast Flat-Out Calls Me A Liar'

About a week ago, I called 1-800-Comcast. I'd just across the country, from Michigan to Oregon (go Ducks), and after a couple days of not having decent internet access or TV, it seemed my choices were either 1) blow up my apartment and take everyone with me, or 2) call Comcast. I chose the latter. This was, in hindsight, a mistake. The woman I spoke to on the phone originally was nice, and helpful. A good customer service representative. She set up our installation appointment and the packages I wanted with no trouble. Because this was a new installation, she told me I'd be getting discounts on the services I chose for 6 months ($19.99 cable internet and $14.99 cable TV). They scheduled the installation date for Tuesday, November 20th.

On the 19th (Today), I called them to confirm the installation the next day, like you do in these situations. The man I spoke to informed me of something interesting: 1) That the prices I was given for the cable TV, internet, and installation were going to be much higher than I was told ("that's what the computer says"). Naturally, I was a bit upset about this. I'm a student, I just moved 2,000 miles away from home, and I don't even have a job here, yet. Every dollar counts.

So, I took issue with this, as any red-blooded (also, broke) person would, and his rationale was that I must have simply gotten confused, called the wrong number (how wrong can you dial 1-800-COMCAST?) or was just lying to him. So, as of today, Comcast has, in addition to trying to screw me with higher-than-quoted prices, called me a liar when I wouldn't just go with their "well the computer says" line. I'm very angry, as one might expect.

I've reported this incident to their system, but what are the odds they'll even respond? So, now I'm sending this to you, Consumerist. Help me.

Commenters, what should George do?

UPDATE: George writes:

So, thanks to your amazing help my Comcast problem was fixed immediately. Not only did they apologize but I received free instillation as well as money credited to my account. I can not think you enough for your help. You, the consumerist, are my new hero.

(Photo:taberandrew)

In general, those with loans get relief, those with savings get less.

Savings Accounts
Most banks take their lead from the Fed and are already starting to cut rates. High interest savings accounts closely follow the Fed; CDs and money market accounts have been reluctant to cut rates to stay competitive: "Savers are benefiting from the shaky credit markets, even as the Fed cuts rates. That's because banks are still looking to CDs and money-market accounts as a way to bring in funds, according to [Greg McBride.]"

Credit Cards
Variable rate interest cards are tied to the prime rate, which is in turn pegged to the Fed funds rate. Even though rates have dipped slightly, do not carry a balance on your credit card. Pay it off every single month, without fail.

Home Equity Loans/Lines of Credit
Home Equity Loans: No savings for you. Home equity loans usually come with fixed rates, and are not affected by rate shifts. Future borrowers may see a slight rate reduction as local banks respond to local conditions.

Home Equity Lines of Credit: So-called HELOCs are tied to the prime rate. Enjoy your savings.

Mortgages
Fixed-rate mortgages are tied to the 10-year Treasury note, not the Fed funds rate. These mortgages shift in response to long-term trends, not short-term rate adjustments.

Regular ARMs that reset annually are usually tied to the 1-year Treasury note, and may see some relief: "A borrower with a 5/1 ARM who five years ago started with a 5.3% loan, for example, will likely see a reset to 6.75% this year. Before the Fed's moves in September and today, that adjustment might have been to 7.5% or more."

Option ARMs are the sticklers responsible for the subprime meltdown. They are tied to the LIBOR, the London Interbank Offered Rate, upon which the Fed has no direct impact.

Assessing the Impact of the Rate Cut on Consumers [SmartMoney]
(Photo: Elsie esq.)

According to Bair, there are still $300 billion in ARMs set to reset before the end of 2008, so the problem can't be ignored.

Merrill Lynch estimates that if home prices decline by just 5 percent, a quarter of subprime loans may enter default, resulting in losses of almost $150 billion.

Fix Rates To Save Loans [NYT]
(Photo:woodleywonderworks)

Another article uses a side-by-side comparison that really shows the disparity: "Using credit scores is likely to mean that 64 percent of African Americans, 53 percent of Hispanics, 38 percent of non-Hispanic whites and 34 percent of Asians would pay higher premiums the FTC said."

The practice was questioned at a House hearing on Tuesday, although it's not clear whether anything useful was accomplished—the news reports have the usual routine of partisan soundbites that fall predictably on either side of the issue. California, Hawaii, Massachusetts and New Jersey have banned credit-based pricing, while many other states have passed laws that limit the extent to which insurers can rely on it.

"Credit-Insurance Link Debated" [Associated Press]

RELATED
"Congress looks into credit based auto insurance rates" [McClatchy]
"Caution! The secret score behind your auto insurance" [Consumer Reports]
(Photo: Getty)

Cubic Telecom's MaxRoam card does still offer better rates than the major carriers, but this whole story sounds an awful lot like a CEO has been trying to manipulate a well-known technology columnist into providing great free publicity. Writes Pogue,

Overall, though, I feel a bit manipulated, since the primary virtue of the Cubic phone was its low rates. I'm not exactly sure how the problem could have been avoided—in 20 years of reviewing tech products, nobody has ever deliberately misled me on hard facts like prices—but I thought you should hear about it from me.

"Setting the Record Straight on Cubic Telecom's International Rates" [New York Times]

The change comes after Sprint was recently sued by the Minnesota Attorney General for violating Minnesota's Consumer Fraud Act and Deceptive Trade Practices Act by unfairly extending the contracts of hapless consumers.

"..The company has tricked consumers into unknowingly extending their contract simply because they made a basic change to their plan," said MN AG, Lori Swanson.

Verizon is proud of itself:

"Verizon Wireless once again demonstrates that our number one priority is delivering the most customer-friendly wireless experience in the U.S. marketplace. Our commitment to our customers is why we lead the industry in customer loyalty and why more customers use the Verizon Wireless brand than any other," said Jack Plating, executive vice president and chief operating officer of Verizon Wireless.

Don't run out and change your plan now, though. The new policy goes into effect on Oct 7.

New Contract Policy Gives Verizon Wireless Customers Added Flexibility in Choosing Calling Plans (Press Release) [PR Newswire]
(Photo:Jay Adan)

Yet another reason to go with unlocked cell phones, or to ask your mobile carrier to unlock yours: a small Irish company called Cubic Telecom has created a $40 sim card that works in most phones built in the past 4-5 years, and that will let you make and receive calls anywhere in the world for rates that are 50 to 90% lower than current telecom rates.

One example: a 20-minute call from the Bahamas to the U.S. costs $60 on T-Mobile, but with this SIM card, the same call would cost $5.80. You can also request free local phone numbers in other cities, so you can give out your Paris or Sydney number, then go buy a copy of Wallpaper and pretend you're a jet setter.

Now for the drawbacks: your calls will be carried over Internet connections, so you can expect lower audio quality and slight delays. And oddly, domestic rates are fairly expensive, so you wouldn't want to use it to replace your current domestic plan. However, if you're a frequent traveller, this can save you hundreds of dollars very quickly—or finally give you a way to keep in touch with friends, family, and co-workers on your limited budget.

"A Cellphone Without Borders" [New York Times]

RELATED
MaxRoam from Cubic Telecom

Non-conforming loans include the troubled ARM loans as well as "jumbo" loans. Jumbo loans are those mortgages over $417,000.

One of the goals of the Fed's rate cut was to "unstick" the jumbo loan market. Will it work? Who knows... What we do know is that it doesn't necessarily mean that mortgage rates are going to drop. In fact, according to Bankrate, they've already dropped and now are rising again. Bankrate explains:

So why did mortgage rates go up this week, instead of heading down? Mortgage rates got ahead of the Fed, that's all. Two months ago, the benchmark rate on the 30-year fixed was 6.82 percent. Not long after, investors started to get clued in that the Fed really might cut short-term rates — and mortgage rates have fallen in six of the nine weeks since then.

How much did rates fall since that mid-July peak? Last week, they had fallen 54 basis points. This week, the Fed cut short-term rates by 50 basis points, and the 30-year fixed went up 4.

In other words, both the federal funds rate and the 30-year fixed have fallen by identical amounts in nine weeks. The Fed was just catching up.

Mortgage rates rise slightly [Bankrate]
(Photo:decaf)

The $179 rate for a room at the Hyatt Regency was listed as "average" because it was 28 percent more expensive than rates at that hotel on the same date in past months, according to Farecast. It was also 13 percent more than recent Friday-to-Monday stays at the same hotel.

It's no secret we like Farecast, and we're excited by this new transparency into hotel pricing. But the Times points out that the service won't tell you the cheapest rate in a city, because it doesn't compare rates between hotels in a given area. It does, however, tell you where the rate falls in the history of the hotel in question, and since hotel rates are often tied to occupancy rates, it's possible you can use the rankings to make guesses about crowding:

"A city showing a cluster of hotels as "not a deal" could indicate there is a convention in their part of town, which some travelers might want to avoid."

"Finding Bargain Rooms at a Glance" [New York Times]

RELATED
www.farecast.com
(Photo: Getty)

Hell, Mr. Martin probably thinks his cable bill is too high.

According to USAToday, Martin is going after "tying," a practice broadcasters use to bully cable companies into carrying more channels on basic cable. More channels (think ESPN 8 "The Ocho") mean higher cable rates, says Martin. He thinks curbs on tying will help stop cable bill increases for consumers.

"The problem for consumers is that they have to pay higher rates for a bunch of channels they may not want or watch," Martin says, "Cable TV rates have continued to rise above the rate of inflation. I'm hopeful that this would help control the rate of increase of cable rates."

The cable companies are with Martin on this one.

Cable operators have tried to get around tying for years, says Matt Polka, president of the American Cable Association, which represents hundreds of small cable TV operators. "At a time when (cable consumers) are screaming for choice, there is none, largely because of consolidation and control of content."

Polka says programmers also use ownership of broadcast networks and stations to force "carriage" of channels. ABC is owned by Disney, NBC by General Electric (GE), CBS by Viacom and Fox by News Corp (NWS). All have cable arms that create new channels regularly.

Cable operators are required to carry all local TV stations, but federal rules let broadcasters pick how they want to be paid: Cash or carriage of their company's cable channels.

Polka says programmers typically set the cash price so high that operators have little choice but to agree to take their channels. Recently, they've even started to demand support for their websites, he says.

Martin says that under the bar on bundling that the FCC plans to examine, programmers would have to sell channels individually. "You can't tie the channel in any way. ... If you only want one channel, you shouldn't have to take 10 or 20."

Tying also has a less-obvious downside for consumers: It allows big programmers to pack cable TV with their channels, leaving less room for channels from other providers.

FCC puts 'a la carte' cable on the menu [USAToday]

Bankrupt Delta Air Lines was the first to raise fares last week on flights within the continental United States. The move was quickly matched by rivals.

"This represents the second broad-based domestic increase, out of four attempts this year," said JP Morgan analyst Jamie Baker in a research note.

By Sunday, the top five U.S. airlines all had raised fares.

Airline fare hike survives the weekend [USAToday]
(Photo: Marike79)

"I guess the thing that bothers me is, the service is bad and rates keep increasing," said Alan Letofsky, one of many customers who recently received a notice from Comcast saying they would need a digital-cable box to keep HBO, which telecasts The Sopranos. "We just don't want to give any more money to Comcast."

Letofsky, of Haverford, has a digital box on one of his sets, but analog service on the other two. To keep HBO on all three sets, he said, he would have to pay an extra $9.90 - $4.95 each for two boxes - per month. He already pays $83.05 for Comcast cable.

He said he would switch to another cable company if he could.

HBO move riles some Comcast customers [Philadelphia Inquirer]

More inside.

T-Mobile has not officially announced the change, but a Consumerist insider called and confirmed the changes with a T-Mobile CSR. Here is his report:

• Confirmed text message rate changes in June. Texts are going up 5 cents (to $.15) and MMS is coming down $.10 (also to $.15).

• [The CSR] seemed to imply that because of the decrease in MMS cost, they were NOT considering this a violation of Terms of Service (but he also seemed baffled that I'd heard about the rate change to begin with).

• This only effects regular rate plan users. If you have purchased bundles of text messages (ex: 400 text messages for $4.99/month), the rate will not increase. Also, he said that if you currently have such a bundle and they decide to raise the total cost of the bundle ( e.g., 400 text messages for $5.99/month), you'll be grandfathered in and your bundle price will not go up.

• This information is NOT on the site yet, but will probably go up in the http://www.t-mobile.com/Company/PressReleases.aspx?tp=Abt_Tab_PressReleases">"news" section.

• Letters are going out about this now to all subscribers, either with your bill, or if you don't get a bill, by regular mail.

Since T-Mobile is lowering the price on their MMS messaging, this situation is a little different from previous txt messaging increases. However, we don't see why you shouldn't be able to terminate your contract. Let's look at T-Mobile Terms & Conditions:

Changes to the Agreement or Charges. EXCEPT TO THE EXTENT PROHIBITED BY LAW, IF WE: (A) INCREASE THE CHARGES INCLUDED IN YOUR MONTHLY RECURRING ACCESS RATE PLAN, OR (B) MODIFY A MATERIAL TERM OF OUR AGREEMENT WITH YOU AND THE MODIFICATION WOULD BE MATERIALLY ADVERSE TO YOU, WE WILL NOTIFY YOU OF THE INCREASE OR MODIFICATION AND YOU CAN CANCEL THAT SERVICE WITHOUT PAYING A CANCELLATION FEE (WHICH IS YOUR ONLY REMEDY) BY FOLLOWING THE CANCELLATION INSTRUCTIONS IN THE NOTICE. IF YOU DO NOT CANCEL YOUR SERVICE BY FOLLOWING THOSE INSTRUCTIONS, OR YOU OTHERWISE ACCEPT THE CHANGE, THEN YOU AGREE TO THE INCREASE OR MODIFICATION, EVEN IF YOU PAID FOR SERVICE IN ADVANCE. IF THE NOTICE DOES NOT SAY HOW LONG YOU HAVE TO CANCEL, THEN IT IS WITHIN 14 DAYS AFTER THE DATE OF THE NOTICE, UNLESS A LONGER PERIOD IS REQUIRED BY LAW. EXCEPT TO THE EXTENT PROHIBITED BY LAW, CHARGES FOR PRODUCTS, SERVICES, OPTIONAL SERVICES, OR ANY OTHER CHARGES THAT ARE NOT INCLUDED IN YOUR MONTHLY RECURRING ACCESS RATE PLAN (SUCH AS DIRECTORY ASSISTANCE, ROAMING, DOWNLOADS, AND THIRD-PARTY CONTENT) ARE SUBJECT TO CHANGE AT ANY TIME WITHOUT NOTICE, AND IF YOU CONTINUE TO USE THOSE SERVICES, OR YOU OTHERWISE AGREE TO THE CHANGES, THEN YOU AGREE TO THE NEW CHARGES. VISIT OUR WEB SITE, RETAIL LOCATIONS, OR CALL CUSTOMER CARE FOR CURRENT CHARGES.

If you're really ready to cancel your T-Mobile service, put on your mean face and give them a call at 1-800-937-8997. Be ready for a fight! They're not going to let you go easily. They're going to give you a bunch of excuses. When canceling read the Terms and Conditions section pasted above to the CSR.

Let us know how it goes at tips [at] consumerist [dot] com. For information about other people who canceled their service based on txt message increases, check out:

Break Your Verizon Contract Without Fee, Thanks to TXT Msg Raise
Everything You Wanted To Know About Canceling Verizon But Were Afraid To Ask
Script For Escaping Verizon Contracts Without Fee, Based On Text Message Rate Raises

After Battle, Marie Escapes Verizon Contract

Consumerist In NYT For Cellphone Plan Escape Tricks

We'll update you with more info as we get it. —MEGHANN MARCO

(Photo: gordasm)

At least seven garages are charging for parking in 20-minute rather than 30-minute increments, and many of them are collecting their all-day rates for periods of less than two hours.
...
Getting in and out of a downtown garage in 20 minutes is possible — but just barely. A Globe reporter managed a 20-minute turnaround at 75 State St. only by racing from the garage to gulp down a drink at a nearby coffee shop and then racing back.

David Rich of Salem, heading down to the 75 State Street Garage in the elevator, said he has made it in and out of the garage in less than 20 minutes, but only if he's dropping something off in the building.

"If it's a normal consumer trying to go to Faneuil Hall or something, I wouldn't think it's possible," Rich said. "I'm used to paying $33. It's ridiculous, but I don't think it's unusual for the city."

Garages make it a faster race back to the car [Boston Globe]
(Photo: TunnelSlats)

A new "forever" stamp — good for mailing a letter no matter how much rates go up — was recommended Monday by the independent Postal Regulatory Commission. A forever stamp would not carry a denomination, but would sell for whatever the first-class rate was at the time.

For example, if the 41-cent rate takes effect, forever stamps would sell for 41 cents. If rates later climbed to 45 cents or more, the price of the forever stamp would also go up at the counter or machine, but those purchased before the change would still be valid to mail a letter.

Postal panel wants 2-cent stamp hike [BusinessWeek]
(Photo:Maulleigh)

Ever since the Democrats took control of Congress last fall, investors have worried that the government might start trimming the largesse it gives educational lenders such as Sallie Mae. On Jan. 17, the House of Representatives passed legislation that would trim rates on need-based subsidized federal student loans by 50% over five years. The Senate has yet to move on the measure, but President Bush weighed in Feb. 5 with a proposed 2008 budget that aims to bolster grant funds, partly with a huge cut for federal loan subsidies. Stunned Wall Street players quickly unloaded shares of lenders such as Sallie Mae.

"We don't believe the government would be doing taxpayers or students any favors by killing off the industry, so we expect that there will eventually be some compromise." The cuts, if approved, would likely effect students who take out loans after July 1, 2007.—MEGHANN MARCO

Borrowed Time for Student Loans? [BusinessWeek] [Photo: Sarah Brown]

If the stated rate is 5%, and you put in $100, how much do you get after a year? You might say $5, but thanks to the magic of compound interest, it's actually $5.13. Multiply that by more time, bigger principal, and the difference could be huge.

AllFiancialMatters has the magic formula and a little more explanation.