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We’re “borrowing” this topic from our friend Mitch over at TopFinanceBlog.com. While Mitch’s latest post is titled “Why I Say Credit Scores Are Worthless,” we’re taking a somewhat different approach.

Banks and credit card companies have been jacking up interest rates and fees (if not simply canceling cards) more and more these days — sometimes without warning — as they prepare for the new business landscape that will be created by Congress’ upcoming credit card reform.

The release following the conclusion the Fed’s Federal Open Market Committee (FOMC) meeting today revealed the Fed’s plans to begin winding down one of their many facilities (emphasis added):

…the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.

Our prediction for the future of mortgage rates as well as our interpretation of the minutes from the Federal Open Market Committee’s (FOMC) last meeting were confirmed yesterday in a speech delivered by an FOMC member.

Federal Reserve Bank of Atlanta President Dennis Lockhart, also a voting member of the FOMC, said “Certainly we have low interest rates today” and “I would expect that to continue for some time.”

According to the latest issue of HSH’s Market Trends Newsletter, “Short Week, Lower Rates,” the factors that once caused rates to rise sharply have eased off for the moment.

“A few weeks ago, mortgage rates flared higher, climbing from still-economic-emergency levels. The rise came amid what was interpreted to be signals of an improving economic outlook, the potential for inflation, pondering over what the Federal Reserve and Treasury would do and rampant government spending, among other factors.”

As expected, the Federal Open Market Committee (FOMC) announced that the target for the Federal funds rate will remain between 0-0.25% “for an extended period.” The FOMC also reiterated their commitment to spend up to $1.25 trillion on Fannie and Freddie mortgage-backed securities in order to keep conforming rates inside their current range.

Our “prediction” post this morning speculated on whether or not the FOMC would discuss a possible exit strategy. In exactly the same language as their release after the April meeting, today’s statement said, “The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.”

Do Americans spend more when they pay with cash — or with plastic? When are banks allowed to raise your interest rate?

To find out the answers to these questions and more, take the credit card IQ test. Eileen AJ Connelly of the Associated Press assembled a 10-question quiz which will test your credit card knowledge as well as gauge your credit score.

1. What’s more important for your credit score?

The Federal Reserve announced plans yesterday to employ several new and ongoing strategies designed to keep interest rates low and stable for at least the next few months.

We predict that the Fed’s commitment alone to spend up to another $750 billion on Fannie and Freddie mortgage-backed securities could help keep conforming rates stable through year’s end.

For lenders and borrowers alike, the rules for purchasing a mortgage have changed. Today’s market conditions have done away with below-prime borrowers, and have forced qualified borrowers to adopt new strategies.

Paying up-front points isn’t necessarily a bad thing:

The holidays didn’t keep mortgage borrowers too busy to deluge lenders with applications. Most were for refinance, unsurprisingly, but the Mortgage Bankers Association reported a decent amount of interest in purchase mortgages as well, noting that “The refinance share of mortgage activity decreased to 82.9 percent of total applications from 83.2 percent the previous week.” Which means that the pace in homebuying is picking up… very slightly.

Unfortunately, a lot of would-be refi borrowers are getting a rude reality check:

Last week when mortgage rates took a nose dive, financial news outlets across the country contacted HSH Associates for commentary and rate quotes concerning the steepest rate drop since February. In the past week, HSH has been quoted 12 times by major news sources — six alone on November 26 — the day after the conforming 30-year fixed rate dropped 29 basis points.

Be sure to click on and read the “HSH in the News” page of our blog, located in the top right-hand corner of the home page. The page is filled with links and clips of financial news articles from a variety of trusted sources.