ACC12: Chapter 14 Article

http://www.usatoday.com/money/industries/banking/2008-11-09-bank-credit-card-interest-rates_N.htm

Summary

“Why banks are boosting credit card interest rates and fees,” is an article written by Kathy Chu and Byron Acohido from USA TODAY. It starts off with a small story about a guy name Tommy Newsom. Tommy Newson gets his credit card bill and is shocked that interest rate has doubled. He asked a customer rep and was informed that the law allowed his bank to double the interest rate. Tommy states, “The bank is just looking for a reason to maximize profits.” It isn’t just Tommy’s bank that has increased the interest rates and penalty fees on credit cards. Many banks are increasing their interest rate and penalty fees for credit cards to increase revenue because of mortgage-related losses in the economy. Also, “selling off credit card debts has given banks a powerful incentive to raise card fees and penalties.” Securitization is another reason why banks have increased interest rates, but banks have denied the relationship between securitization and increased penalties. Securitization has caused some credit card companies to take riskier loans.

Connection

The connection I made between chapter 14 in the accounting textbook and the article, “Why banks are boosting credit card interest rates and fees” is credit card charges. The bank doesn’t provide free service for credit cards. They charge fees and interest to earn revenue from credit cards. The bank charges transaction fees, annual fees, interest on advances of cash given to them and overdue balances on the credit cards. The main fee that connects the textbook and the article is interest on overdue balances. The article is mainly about the increase in credit card interest rates. When the bank increases the interest on credit cards, they earn more money.

Reflection

I agree that banks should increase the interest on credit cards because of their losses in mortgages, but I don't think nearly doubling it is reasonable. At a time when the household budgets are bad, it’s giving consumers a harder time to pay their bills on time. I think families with tight budgets shouldn't be using credit cards. The interest is going to cause them to pay a lot more and the debt is just going to increase if not paid on time. If possible, I think consumers that are on a tight budget should just use cash. Credit cards maybe convenient, but can cause financial hardship for people and give more revenue to banks.

ACC12: Chapter 12 Article

http://news.bbc.co.uk/2/hi/uk_news/magazine/7668139.stm

Summary

The article, “High Street – Discount Store” from BBC news is about a discount store owned by a man named Peter Gallagher. Peter’s discount store, Shirley Market, had been getting ready for the busiest time of the year for his small business, but noticed that some of his biggest customers for fireworks weren’t around this year. His prices had increased but he’s profit remained the same. Even with all the talk about recession, Peter thinks his store will do fine. Peter says that his business has recently attracted more upmarket customers and stated that, “The person who wouldn't usually shop in this kind of place. The type of people who would usually shop at John Lewis. They're coming in and looking for things like tin openers."

Connection

The connection I made between chapter 12 from the accounting textbook and the article from BBC news are synoptic journals and cash discounts. When some people think of small business like Shirley Market, they might think of synoptic journals. A synoptic journal is a multicolumn journal designed for small businesses. A small business like Shirley Market would probably use a synoptic journal. Since Shirley Market is a general discount store, I presume that there is some sort of cash discount involved. Shirley Market would probably pay their bills as soon as possible so they can get the cash discount and sell their products for a cheaper price.

Reflection

I think small general discount stores like Shirley Market would want to receive a cash discount on their bills. If they got a cash discount on their bills, they would be able to sell their products at a cheaper price without losing profit. I think the recession is causing people to not waste money on unnecessary and expensive things like fireworks and buy at cheaper stores like Shirley Market. I hope the economy won't be in recession for a long period of time and people learn not to waste money on useless things that they aren't going to use.

ACC 12: Chapter 11 Article

http://lfpress.ca/newsstand/Business/BusinessMonday/2008/10/06/6990796-sun.html

Summary

The article I read was written by Norman De Bono, a writer from “The London Free Press.” His article is about the trucking industry in North America and the brunt caused by U.S.’s economic slowdown. The decrease in truck sales and production indicates that an economy isn’t doing well. It is expected that fewer trucks will be needed to ship goods since Canadian businesses are being tugged downhill by the U.S economy because they are heading toward recession. As a result of the slowdown freights are shrinking and workers are being laid off. Factors that will maintain the slowdown are new emission standards, rising cost of fuel, rising value of loonies in Canada, and reduced fleet sizes. Some experts say that the North American trucking industry will start to recovery in late 2009 or early 2010.

Connection

The connection i made between chapter 11 of the accounting textbook and the article written by Norman De Bono are the freight-in figure and merchandising businesses. Freight-in is the delivery charges on incoming merchandise. The North American trucking industry will probably have to increase their delivery charges because of the decrease in revenue and the increase in the cost of fuel. If the freight-in figure increased, it would cause merchandising companies that need a delivery for there purchases to earn less revenue or raise their prices on their merchandise. In conclusion, if the trucking industry is doing poorly the economy is affected by it.

Reflection

Experts say that a recovery may happen in late 2009 or early 2010. I think it would take longer than that for the trucking industry to start recovering. With the U.S economy heading toward recession, I believe it would take more than just one year, unless the new president makes some good decisions. With the new emission standards and the rising cost of fuel, I wouldn't be surprise if a North American trucking company goes bankrupt. I think most small trucking business will take a great loss in sales before a recovery will start. I hope this situation will get better as soon as possible, because many people are getting laid off.