Stocks Rally On Fed's Rate Cut

Half Percentage Point Cut To Discount Rate Helps Boost Trading As Dow Closes Up 230 Points

(CBS/AP)  Stocks soared Friday after the Federal Reserve did what Wall Street was clamoring for and cut its key discount rate a half percentage point. The move quelled investors' credit worries at least for the time being and sent the Dow Jones industrials up about 230 points.

The Fed — which had resisted lowering rates despite weeks of market volatility, and instead added nearly $120 billion in liquidity into the banking system — cut its discount rate to 5.75 percent from 6.25 percent. The central bank acknowledged that the stock market turbulence that has pulled the Dow by hundreds of points a day was posing a risk to economic growth.

"People were kind of baiting the Fed into doing something, and finally they did," said Philip Dow, managing director of equity trading at RBC Dain Rauscher. "The playground monitor finally showed up, and it showed someone cares and someone is bringing rationality into the market."

But the central bank made no mention of lowering its target for the federal funds rate, which has stood at 5.25 percent for more than a year. The fed funds rate determines the rates that banks charge each other, while the discount rate only covers loans the Fed makes to banks. Many strategists believe the market won't settle down until the Fed lowers the fed funds rate target, considered a more significant benchmark.

If the market doesn't get that rate cut, Friday's gains may not stick, especially since it's likely there will be plenty more news in the coming days and weeks of further troubles in the lending industry. Any mention of problems at subprime lenders or funds that invested in mortgages has sent stocks skidding, and so have worries that tighter credit will stanch the flood of takeovers, which sent Wall Street to new highs earlier this year.

Still, the Fed made it clear this wasn't the only step it would take if the volatility continued. In its statement, the Fed said it "is prepared to act as needed."

According to preliminary calculations, the Dow Jones industrial average surged 233.30, or 1.82 percent, to 13,079.08.

Since its midday low on Thursday, the Dow has recovered more than 500 points, reports CBS News correspondent Anthony Mason. All three major indexes—the Dow, the NASDAQ and the S&P 500—are back in the plus column for the year.

Trading was still volatile throughout the day, with the Dow rising more than 320 points in early trading, giving up more than half those gains, and then gaining steam once more. However, the blue chip index stayed in positive territory the whole time. The Dow is more than 6 percent below its record close of 14,000.41 reached July 19, and fell more than 1 percent for the week.

The Standard & Poor's 500 index rose 34.65, or 2.46 percent, to 1,445.92, and the Nasdaq composite index rose 53.96, or 2.20 percent, to 2,505.03.

Bonds slipped as stocks rose, with the yield on the benchmark 10-year Treasury note rising to 4.67 percent from 4.66 percent late Thursday.

Traders who bet on how the Fed might alter rates expect the central bank will lower the benchmark fed funds rate at its next meeting on Sept. 18. Some investors are hoping for a cut in that benchmark rate even sooner.

"If the cut in the discount rate succeeds in restoring confidence, then perhaps there is no need for the Fed to cut rates at the Sept. 18 meeting," said John Lonski, chief economist of Moody's Investor Service. He added, though, that the key line in the Fed's statement Friday was its willingness to take more steps to prevent market volatility from harming the economy.

"That means the Fed is prepared to make a rate cut if stability doesn't come," Lonski said.

Gains were seen in all sectors of the stock market, but financial stocks, which have been battered by the growing problems in mortgage lending, saw particularly heavy buying. Dow component JPMorgan Chase & Co. rose 3.4 percent, while Merrill Lynch and Lehman Brothers rose more than 6 percent.

The pummeled stocks of mortgage lenders also saw significant increases. The most actively traded stock on the New York Stock Exchange, and one of its biggest percentage gainers, was Countrywide Financial Corp. The home mortgage lender rose $2.48, or 13.1 percent, to $21.43.

Energy and industrial companies also strengthened notably. The biggest gainers among the 30 Dow companies were aluminum producer Alcoa Inc. and oil company Exxon Mobil Corp., which both jumped more than 4 percent.

Major European indexes recovered substantially after the Fed's announcement from steep declines in earlier trading. Britain's FTSE 100 rose 3.50 percent, Germany's DAX index rose 1.49 percent, and France's CAC-40 rose 1.86 percent.

In Asian trading, which closed before the Fed lowered the discount rate, Japan's Nikkei stock average had plunged 5.42 percent as the yen continued its climb against the dollar. The dollar briefly dipped below 112 yen for the first time in over a year, suggesting that some investors were taking their Japanese currency out of higher-yielding dollar assets.

The dollar was mixed against other major currencies. Gold prices jumped.

Advancing issues outnumbered decliners by about 7 to 1 on the New York Stock Exchange, where volume came to 2.48 billion shares, down from 2.92 billion shares.

The Russell 2000 index of smaller companies added 17.20, or 2.24 percent, to 786.03.

Crude oil futures rose 98 cents to $71.98 a barrel. Traders have been tracking the path of Hurricane Dean, which is threatening to head west into the Gulf of Mexico, where many oil installations are located.

[mudrose-2009]

Oh for pete''s sake, everyone get a grip and tell Chicken Little to stuff a sock in it.

[pete_in_az]

Decentralize banking.


http://www.zeitgeistmovie.com

[pollroller1]

mudrose, you are right on.
I just brought some stocks. This is a good time to get in the market.
I''m 70 years old and I''ve seen this happen over and over. The market goes up and the market goes down.

[v_1618]

WE ARE IN THE HANDS AND THE DOMINATION OF A
FEW CORRUPT PEOPLE WHO ARE THE OWNERS OF THE
INTERNATIONAL BANKS OR THE FEDERAL RESERVE
BANK. WHO MADE MONEY BACKING BY NOTHING WE ARE SLAVES
FROM THIS CORRUPT PEOPLE ....BUT TO KEEP
THEIR POWER THEY INVENT US ALL AROUND EUROPE
AND AMERICA THAT WE ARE IN WAR. TO KEEP THEIR
POWER MADE FROM NOTHING THEY ARE THE EVIL IN
THIS WORLD..LIKE HITLER FOR THE FEDERAL
RESERVE BANKS THE MOST LUCRATIVE THING !!!!IS WAR!!!
FORCES THE COUNTRY TO BORROW MORE MONEY AT INTEREST
THEY ARE THE MOST KIND OF THIEFS IN ALL TIMES OF
HUMANKIND. THE MONEY PAPER IS THE MOST ASTOUNDING
PIECE OF SLEIGHT OF HAND THAT WAS EVER INVENTED.
USURY IS THE MOST EVIL THING THAT MANKIND HAS INVENTED
IS THE DESTRUCTION OF ALL CIVILITATIONS.
USURY IS THE MONSTER AGAINST THE KINGDOM
OF GOD. AND THE U.N. IS MADE BY THE INTERNATIONAL
BANKERS. WHO CONTROL EVERYTHING AND CONTROL THE WAR
IN IRAQ AND IRAN SOONER. OUR RULERS ARE A BUNCH OF CRIMINALS
THE TRILATERAL COMMISSION IS THE WAY THAT ALL THE
PEOPLE AROUND THE WORLD WE''LL BE SOONER IN COMPLETE
SLAVERY UNTIL SOME REAL POWERS DEFEAT THIS EVIL ON EARTH.

[mudrose-2009]

mudrose, you are right on.
I just brought some stocks. This is a good time to get in the market.
I''''m 70 years old and I''''ve seen this happen over and over. The market goes up and the market goes down.

Posted by pollroller1

Love the moniker. Seems as if you roll with the punches. too. Enjoy the ride.

[oscarez]

The market is way over priced and out of control. People are pulling money out of there savings to invest in the stock market. Small amateur day traders are trying to get rich quick using on line trading and it is killing the stock market. If you are smart you will get out of the stock market and invest in bank CDs that are backed by the FDIC. Stability in the market will not return until George W Bush is out of office, the U.S. is out of Iraq and all the amateur day traders have gone broke.

[mudrose-2009]

As far as hedge funds are concerned, investors beware...I have no sympathy for hedge fund investors!
Posted by ozilot

I second it. See, there is always room for common ground. :)

[nyckate]

Mudrose - if you''re buying now it''s bargain hunting and you better be prepared to hold them for couple years - and you better be plenty liquid at the same time ...

Market insight: US economy left exposed to consumer recession (FT)

By David Rosenberg (North America Economist Merrill Lynch)

We could see the first consumer recession in 17 years in the first-half of 2008. The consumer is likely to take the brunt of the impact from the depressed wealth effect that comes from lower home and equity prices. Our worst-case scenario paints a picture of a perfect storm for consumers: a $130bn tax from petrol at $4 per gallon, a combined $3200bn in lost home values and equity portfolios.

But for the meantime we welcome a new economic phase %u2013 one where growth slows enough to generate declines in real per capita income and a rising unemployment rate. Looming Fed rate cuts will act as a buffer, but since there is nothing left to reflate, there will be no more easy fixes.

[nyckate]

pollroller1 - hope you''re keeping up with the FT and Economist -- remember - sometimes a bargain is just too good to be true!


"No economic expansion has relied more on credit and leverage than the one we have been experiencing since 2001. But it was always a matter of when, not if, this liquidity-driven bull market would run out of steam.

And run out of steam it has. The stresses to the system that started with the subprime mortgage upheaval have expanded not just into junk but also to high-grade corporate debt, to the prime mortgage sector and beyond the US border to hedge funds in Europe and Australia.

The economic impact of these stresses is likely to be far-reaching, with weaker gross domestic product growth, poorer performances by US corporates and a possible consumer recession. "

[prairiefox1]

BEING OVERWHELMED WITH DEBT USUALLY GOES BEYOND THE POINT OF NO RETURN!
THE FED,S BAND-AID FIX WONT LAST LONG AND THE DROP WILL CONTINUE!

[toldyouso21]

suckers, the "surge" like the other "surge" reflects reaction of a few to make a few bucks and ride the tide of the cut. After that, we will have the real picture. The real question is, if the market falls back off after this temporary feeding frenzy--what can the Feds do for an encore? LOL

[sjc_1]

They had to do this because the injection of cash could only go so far. The fact that they did this now and not in their September meeting shows how serious this matter is. The various financial organizations do not accurately know how many of these sub prime loans they have, which does not say much for their business practices. I hope they sort all of this out and make it known. But the idea of bundling loans and selling them has the effect of spreading the risk, but also spreading the uncertantly.

[downtowner97]

The fed rate cut is another irresponsible band-aid fix to keep the administration from being stoned to death in town square. They''re also printing dollars like confetti to pay off foreign loans. We''re doomed if all those dollars find their way onto the street.

Carter was right. He knows.

[drinuk]

Until we get the White House disinfected, the corporate crooks and conniving politicians locked up nothing will change. Until ordinary folk wake up and tell this lot to go shove it, they will continue to steal from us. This current regime are emulating even Nixon, the whole bunch stink to high heaven. We must not allow the Fed, Murdoch, Rockefeller, Gates or any of the Corporate Criminals to run this country any longer, they are causing far too much grief. They are elite scum.

[oscarez]

"The fed rate cut is another irresponsible band-aid fix to keep the administration from being stoned to death in town square. They''''re also printing dollars like confetti to pay off foreign loans. We''''re doomed if all those dollars find their way onto the street.

Carter was right. He knows."
Posted by downtowner97

You are right. Bush is printing $100 bills by the billions used for debt reduction and to fund the war. I''m sure the White House called the federal reserve for this rate cut.

[nicknae]

The Fed can not directly change the rate for overnight loans they are changed indirectly with the change in the discount rate which the Fed can control. So you should see a change in the overnight loans soon and the strategists should be focused on the discount rate.

[lochlan-2009]

"Bush is printing $100 bills by the billions used for debt reduction."
It will be interesting to see what China thinks about this rate cut and their, "nuclear option" as they called it (conveniently tucked deep away in the business section last week). Low interest rates and the printing presses working overtime, you don''t have to be a genious (luckily for the Admin. that sums up the majority of this country) to figure out where this is going. Sorry bond market, take it in the...

"Money is for nothin'', and your chicks for free."

[harp1963]

What a joke this counrty has become under the Bush Administration! What a mess the next administration is going to have.

[oscarez]

"Lowering rates at this point could send inflation out of control. If you think gas prices are high now just imagine if inflation were 5%. That, above all else, would hurt "the little guy."

Where you been dude? When you exclude every thing but the cost of cow dung from the calculation of inflation, as the government does, sure there is no inflation.

[condumism]

GOPig Barnacke cuts interest rates while wholesale inflation is climbing as fast as it did during the early 1980''s. The only beneficiaries here are BANKS, who don''t want to pay out 5% interest on savings accounts anymore.

NEVER FORGET: BARNACKE WAS APPOINTED BY GW BUSH! This clown Barnacke is out of his league, same as every other clown appointed by the worst presdident in US history.

HAve you seen all of the OBESE AMERICANS on the streets of the USA today? It''ll make you sick to your stomach!

[oscarez]

"Lowering rates at this point could send inflation out of control. If you think gas prices are high now just imagine if inflation were 5%. That, above all else, would hurt "the little guy."

Where you been dude? When you exclude every thing but the cost of cow dung from the calculation of inflation, as the government does, sure there is no inflation.

[nyckate]

Bush is going to do whatever it takes to prop up the market - he doesn''t care if it comes crashing down - so long as it doesn''t crash before the elections.

A Recession will hit the republicans very very badly at election time and Failure George has already done enough damage to them - so no matter the cost, no matter the end-result it''s all about politics and his legacy of course.

[mudrose-2009]

Bush is going to do whatever it takes to prop up the market - he doesn''''t care if it comes crashing down - so long as it doesn''''t crash before the elections.

A Recession will hit the republicans very very badly at election time and Failure George has already done enough damage to them - so no matter the cost, no matter the end-result it''''s all about politics and his legacy of course.
Posted by nyckate

Yeah, it''s gonna come crashin down before the election so all the little leftie turds can vote lefties in. Imagination gone wild. Enjoy the wet dream.

[nyckate]

oh wait - hey - what about all those tax cuts that were going to make a great market?? What happened George - you wrong - again??

[nyckate]

mudrose - hey sweetie - you were the morons fooled by King George time and time again- now we''re in a liquidity bull market with an economy fashioned around hugh credit and larger leverages -- and idiots like you thought George knew what he was doing? But the uber wealthy thank you morons for their tax breaks.

Didn''t you know that all he''s ever done in business is take each of his businesses right into bankruptcy? How the heck do you think he ended up in politics in Texas - all he''s ever been capable of doing is a no-nothing job with lotsa vacation -- he''s incapable of running a tea shop nevermind a nation - always was and always will be.

[pepperp1]

Didn''''t you know that all he''''s ever done in business is take each of his businesses right into bankruptcy? How the heck do you think he ended up in politics in Texas - all he''''s ever been capable of doing is a no-nothing job with lotsa vacation -- he''''s incapable of running a tea shop nevermind a nation - always was and always will be.
Posted by nyckate at 01:42 PM : Aug 17, 2007

Please that would require they be informed, look at the some of a mans character think, and not just chant the RNC sects talking points over and over and over and over again like poodle bots, silly question especially of dirt flower..Where is Greenspan...guess this proves he was right on again......

[nyckate]

pepperp1 - it really is mindblowing - those like mudrose touting a market that all experts are wary of -- like any of us would ever take advise from someone who thinks Bush is doing a good job anyway -- there''s no easier way to discredit yourself than to still be praising Bush!!

[vastr-wcon]

Yeah!

Happy days are here again!!!

BUY, BUY, BUY!!!!

---WHAT IDIOTS

[pepperp1]

pepperp1 - it really is mindblowing - those like mudrose touting a market that all experts are wary of -- like any of us would ever take advise from someone who thinks Bush is doing a good job anyway -- there''''s no easier way to discredit yourself than to still be praising Bush!!
Posted by nyckate at 02:14 PM : Aug 17, 2007

Amazing is it not, financial experts do not know where the source of the problem is yet; there is no visibility into those massive equity funds, and the economy for many homeowners is getting ready to take a large chunk out their perception of their worth, oh yes and gas and food up, what did Greenspan call it paper wealth falls, then consumers stop buying and the bills all come due, dominos. China now owns 133 Trillion dollars of our new debt and just last week threatened to release a financial nuclear option on the US dollar if Congress attempts to regulate their imports.

But the RNC kool aid sound bite bots, as usual, with their normal failure to think and summarize the totality of the situation, JUST KNOW BELIVE that their political sect leader Bush and his ten dollar tax cut made for a fabulous economy, dumb poodles.

[shanev137]

Surge, Plunge, Nose dive, Plummet.....you media losers really need to come up with some better DOW lingo.

It only went up 146 points.

[processor2]

When the stock market was going down, liberals were so happy.

Now that the stock market went up 250 points, liberals are mad again.

Proving, that anything that is bad for America, makes liberals happy.

[omega39-2009]

Now that the stock market went up 250 points, liberals are mad again.

Proving, that anything that is bad for America, makes liberals happy.

Posted by processor2

Thats right idiot, we are all secretly hoping for the days when we can stand in soup lines and all get into the lucrative business of selling apples.
Geez...

[fredgrad2000]

oh wait - hey - what about all those tax cuts that were going to make a great market?? What happened George - you wrong - again??
Posted by nyckate

Boy, definitely not an economist here; the market moves up and down; and is definitely up for the entire duration of the Bush presidency,which of course began in the Clinton/Gore recession (oh wait, you also probably believe that somehow within a month of being in office, Bush was able to create the economic conditions for the recession that occurred in 2001 too right?). The average investor if indexed to the Dow Jones is up 20+% since Bush took office, and that''s if the market stayed at where it closed on the correction yesterday. What do you think raising taxes would do, BOOST the markets!? Is that the answer; tax investment dollars at a higher rate again so that there is less incentive to invest? It''s called the money multiplier Katie, money invested does far more for the economy than the same amount of money just "spent", including spent frivolously by the government. Not to mention, if you are concerned with the libs having enough of your money to spend, every proper study shows that lower taxes incentivize work and investment; and therefore generate, in gross terms, more tax dollars.

[rsoxfan1123]

fredgrad2000-you are a classic data manipulist which is what we have been enduring formt his administration for 8 years. Take a look at the national debt which has now hit an all time high. clinton payed that debt nearly entirely off.
That republican debt will be put on our kids and grandkids. It''s analagous to using a credit card to buy all kinds of stuff and then telling everyone how well you are doing. you are either lying or stupid because either you know what I am saying is true or you can''t figure it out. Either way it''s scummy.

[fascistusa]

The US economy is rock solid.

BUY CHEAP STOCKS. Buy buy buy.

You''ll make a fortune. and get 6 pack abs. and your "certain member" will GROW!!

BUY!!!!!!!!!

For the rest of you : ZEITGEISTmovie.com.

[navyretired2]

"Bush is going to do whatever it takes to prop up the market - he doesn''''t care if it comes crashing down - so long as it doesn''''t crash before the elections.

A Recession will hit the republicans very very badly at election time and Failure George has already done enough damage to them - so no matter the cost, no matter the end-result it''''s all about politics and his legacy of course.
Posted by nyckate at 01:23 PM : Aug 17, 2007"

Do you honestly believe Bush was behind the British-controlled Fed making this move? Do some research on the "Federal Reserve System." It will open the eyes so to speak.

[navyretired2]

"Posted by george2221 at 12:16 PM : Aug 17, 2007"

Yep. The Brits in control of the Fed needed to bump their petty cash a bit, so they manipulated our markets a bit and WHALAA!

For those of you saying "the Fed" has done a great job, really have no clue about what the Fed is all about. It is foreign, international, big banking elite control of world money...they don''t care about Americans being able to pay their mortgages, until it gets to such a point they lose money on lending, then they play with the markets to protect their backsides and come out of it with a profit. The fact that they adjust interest rates to keep the stock market somewhat "steady" is simply to continue the illusion of economic stability, so they can get more of our money. Do the research yourself if you don''t believe me.

[andor3]

what do you know? more welfare handouts for the rich and big corporations. Suddenly they can borrow money for less than they charge on their loans.

It''s a good idea--somebody does something irresponsible (like make a questionable loan), and you reward them when it catches up to them. Let''s expand this--I say every person caught speeding should get $100 plus $10 for every mile over... This would make people understand that bad choices have consequences.

[nyckate]

NavyRetired2 -- umm - did you not know that our own Fed has injected $94 Billion this month alone?? And why do you think the Fed cut the rate?

Who acts on behalf of the Fed? Bernanke you say? the same Bernanke appointed by Bush as Fed Chairman?

Is there a global economy? Yes - does Bush know that? NO - what he knows about business couldn''t fill a postcard - he knows the way to bankruptcy court and that''s about it. BUT there''s no doubt that the Bush Neocon crowd know when to play politics with US - and in order to save GOP they can''t allow a recession now - so prop it up they will because they know a fallout will create a much slower economy.

[usayesterday]

This is a bandaid on a growing problem that will catch up to all of us very shortly. It''s not just the government, it''s not just us individuals, it''s everyone in concert...


...and it''s based on, revolves around, originates from...







GREED.





(www.zeitgeistmovie.com)

[nyckate]

fredgrad2000 - wow -- you are under the assumption that the average american has hundreds of thousands of dollars to invest - they don''t - this is the Big Boys playing at the market.

The 2001 Recession was over by Nov. 2001 and was deemed the shallowest in US history. So let''s not repeat Insanity Hannity factoids, least not outside your own little Bush World of Delusions, ok??? Try reading the FInancial Times, International Herald Tribute, The Economist. broadan your horizons.

Fact is even experts such as at Merrill Lynch see and fear a recession - especially given rising prices, stagnant wages and real estate market busts. But then again what do they know, right??? DUH

[hypnotoad72]

rsoxfan1123 - uh, Clinton balanced the budget. That does not mean he repaid all $6 TRILLION of it.

That having been said, at least Clitnon managed to get it under budget. Never mind departmental oversights (or lack of) that allows some groups to spend tens of thousands on a toilet or half a mil to mail two 20 cent washers, and other idiotic horror stories like those...

Oh, if the market does crash, it''ll take down the rest of the world with it. ANY president is going to want to prevent that because even their biggest supporters would suffer.

[missingamerica]

Ain''t it great?

This Administration''s version of government "for the people" will loan money to the monster financial institutions at 5.25%, but loan it at that rate to the "little people" who are losing their homes due to soaring mortgage interests rates?

Oh, heck no.

They still want you to pay your taxes and buy Savings Bonds (that pay 3.40% interest), of course.

[radiob-2009]

Fredgrad first off to you and everyone else that believes that a "president" has anything to do with economy does not know economics.
Second there are some great bargains available now that have withstood every recession we have had since 1987. Research buy on the old multiple PE''s and cash flow. 50% profit can be made from these levels on select stocks in less than a year.

[missingamerica]

Buy, buy, buy. You can always tell people that have a lot of margin debt.

[radiob-2009]

They still want you to pay your taxes and buy Savings Bonds (that pay 3.40% interest), of course.
Posted by ibsteve2u


Have you ever bought and traded stocks? How long have you been following the stock market?

Now as far as the part of your statement regarding home loans the national average is 7.76% and a wise investor with "good" credit can obtain the loan for less. Is this cheap compared to 4 years ago when national averages were around 5.125% no but is close to the "average" rate of the last 30 years.Never borrow more than you can pay for and "DO NOT USE CREDIT CARDS EVER"!

[toolmangler-2009]

"DO NOT USE CREDIT CARDS EVER"!
Posted by radiob at 07:15 PM : Aug 17, 2007

HiYa'' radio, I slightly disagree with you on an otherwise good post. I use 0% interest cards for purchases under $2000.00 and have them piad for within the 0% time period. (up to 18 months depending on the card used.) You are right on about not borrowing more than you can repay. Never borrow money that you do not have. People will say thats the only reason for borrowing but you know what I mean.

[mcv57]

Fake money, fake money, U.S. Reserve fund is worthless paper money. They got the charm of the ages. BORROW FOREVER (as long as we got the bomb).

[oakishpines]

to let a pet or a child run wild is a dangerous thing, for all my neighbors taught me to pick up stray pets and children and deposit them someplace civil where they may be chased through gardens and criticized to screaming and tears for naked lazy ignorant profane blemished tired hungry lusty bored scared sad or stray or for dancing, in a porno get sick tax world society, get well feed world songs rallied around sick beds drifting tens millions spore bloom weed dragon trail fickle first aid lunch farm cottage studio trail groups

i''d rather be dead than to live in this perverted freakish land of the daring grindets and the home of the shock and awe swingones

if i have to break all the bones in my body and put them all back for se x and pleasure just one more time cause some hikenswim nerfbus bump car camp n nap somebody feels like get''n frisky,

i swear find a cure for the common life


'' ... why go to war to save the world from folk that invest money and votes in non-charity and taxation at gunpoint? ... ''

[radiob-2009]

Posted by ToolMangler at 08:27

The majority of people do not know how to use credit cards "wisely" and instead end up using them as if they were "cash" that they had to spend.If a credit card is used wisely, paid off prior to any accumalation of intrest then they are fine for "occasions".I only use a debit/credit card that is directly tied to my bank account.