Credit-card companies 'sticking it to' Canadians with high fees, retailers say

http://www.cbc.ca/canada/story/2008/09/11/credit-fees.html

Summary:
This article is mainly about the rising rate for credit cards. Last year, the transaction fees for credit card companies reached $4.5 billion, and are collecting extra miscellaneous fees from customers. The Retail Council of Canada launched a campaign called" Stop Sticking It to Us," in order to call on the government to weigh in on credit card fees. The council estimates nearly $2 of every $100 Canadians spend using credit cards goes directly to the issuing banks. Most of the money comes from so-called "interchange fees" which is calculated as a percentage of the transaction. Also, personal credit card fees increased from 1.6% to 1.7%, while business fees increased significantly. However, the credit card companies respond that interchange rates are reasonable.

Connection:
Obviously, the connection between this article and chapter 14 is credit cards. Credit cards are used in our society that we can consume without cash. However, the credit card company does not provide free services. The credit card companies charge transaction fees or annual fees to the cardholders, and interest on advanced of cash given to them and interest on overdue balances on the cards. An annual fee is charged to each merchant. Cardholders don't get full value for the gross amount of the credit card slips while discounts are taken off the credit card slips deposited by the merchants. This article talks about transaction fees and so-called "interchange fees" which is an extra charge of the credit card nowadays in Canada.

Reflection:
After reading this article, I'm amazed by how the whole business world is affected by the global economy comes down. Looking back to my previous two blogs, they all talk about how the economy crashes brings down the business. Credit companies have been using different ways to get payments in on time by giving higher rate and strickter rules for late payments. Credit companies higher the transaction fees, while some companies hoping economy would come back so they don't have to waste confidence in consumers from using credit cards especially it's near Christmas, the season of consuming. I think that companies should have lower the rate at this point of the time to increase credit card usage, but the situation is ver hard now for the companies when they're facing bankruptcy. I hope the economy would come back, for the benefits of both business and consumers.

Sale signs up early as consumers cut back

http://www.financialpost.com/story.html?id=878065
Summary
The article I read is about the early discount of retailers before Christmas in order to attract to customers due to fear of the stock market. Many retailers are watching the economic crunch with the same mixture of horror and dread gripping consumers and wonder whether shoppers will stay away in droves during what is traditionally the busiest shopping period of the year between Thanksgiving and Christmas. Marketers are focusing on value over style across every category. And at a time of the year when sale signs are generally rare in retail store windows, they are abundant. Many big stores in Canada like Sears started to discount at the beginning of October and is running until Christmas.

Connection
The connection between this article and chapter 12 is the cash discount. A cash discount is a reduction of the amount of a bill if payment is made on or before the discount date stated on the bill. As stated, the purpose of a cash discount is to encourage the customer to pay promptly. Businesses offer discount to customers in order to increase sales. Although in this case, most of the sales is made instantaneously at the time of the purchase by cash or credit card. However, when an item needs to be delivered or an invoice is issued, cash discount occurs which also often happens in the busy Christmas time. Besides the discount, the terms of sale will also be changed as discount takes place. Almost all the term of sales of a business will be changed during the sales period which may favor the customers.

Reflection
After reading this article, and compare this article to the previous article in chapter 11, I’m amazed by how the stock market can affect a business’s routine. To keep the business running, retailers have to make discounts. And now, the discounts which usually take place in Christmas and the time people spend most money on are happening now. Sears introduced the Budget Relief Price Drops sale, which is smart. On the other hand, the limit of discount has increased, retailers made the due date from 60 days to 30 days to operate the money properly. Consuming is a big part of the impulse towards the economy. So, increase consuming may bring back the stock market which is good for both the business and consumers.

Oil falls on downturn fears

Summary
The article that i read is about the recent oil price falling as a series of rescue moves by polivy makers around the world failed to lift fears the global economy was heading for a meltdown.On Wednesday oil hit a 10-month low of 86.05 in US and the oil hit an all-time low in some countries globally. Although the oil rate cut made by the financial policy makers was to try to lift the stock or credit markets, the moves failed as the IMF said the world economy was set for a major downturn with the US and Europe either in or on the brink of recession. However, gasoline stocks rose 7.2 million barrels to 189.8 million barrels last week.

Connection
The connection between this article and chapter 11 is the concept of merchandise business. First of all, the gas producer, which is the wholesaler sells the low price oil to the business, and the business sells them to the public in low profits. When the cost of goods sold is close to the purchase price, it determines the gross profit. Due to the low gross profit, expenses may not be covered and come up with a net loss. Also, the business uses the perpetual inventory system to get caught up with the stock market instead of the inefficient periodical inventory method.

Reflection
The falling of oil also brings down the purchases price from the business. However, this is also depends on the running of stock markets. Investors tend to sell stuff with a higher price and buy stuff in lower price later or in the next fiscal period, but if the stock markets turn around, the higher price the company sells will be the higher price purchases. This can possibly make a company fail to short sell all the inventories, which comes up with a net loss and is always fatal for the companies. Like the situation of the Lehman Brothers and the purchase of Merril Lynch. Although the financial makers tend to throw out money to bring back the stock markets so that businesses can gain back the loss as well as the profits, the investors still need to be worried about the next stock market which maybe another big turn around. Even if the stock market is being brought up, the huge amounts of difference between the selling price and purchase price during the oil decreasing period is very hard to gain back.

http://ca.news.finance.yahoo.com/s/09102008/6/finance-oil-falls-below-88-downturn-fears.html