Crisis sparks confusion, questions about personal finance
By Allison Linn
Here’s what you should know about how the crisis might affect your personal finances.
Consumer credit
For many Americans, the credit crunch that is a key factor in the current financial crisis has been a relatively abstract idea, affecting mainly large financial institutions. As the crisis unfolds, economists say we could start to see more of an impact on people’s everyday lives.
Consumers who are trying to borrow money for a new car or new home, for example, might find it harder and more expensive to get a loan. Some might find it tougher to get a new credit card, said David Wyss, chief economist with Standard and Poor’s.
People who already have credit cards likely won’t see much change, although Wyss said some credit card companies are starting to reduce credit lines for riskier clients.
“They’re getting tougher on who they lend money to,” he said.
Bethune said those conditions could get even worse now that the bailout is up in the air.
Business credit
Economists are watching closely to see if the credit crunch is going to make it harder for small- and midsized business owners to borrow money.
That, in turn, could crimp their ability to do business, leading to layoffs and affecting related businesses. It also could make it tougher for entrepreneurs to find money for starting new businesses.
Mortgages
The crisis on Wall Street shouldn’t have a direct impact on people who are paying their mortgages on time.
If you are seeking to refinance your mortgage or take out a second mortgage, however, you may find it to be more difficult, if not impossible, because of stricter lending requirements.
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