New Stimulus from Federal Reserve
MALVEAUX: Just about an hour ago, Wall Street got the news it was looking for. There's going to be a third round of stimulus from the Federal Reserve. The Fed says it will buy $40 million of reserves a month. It will likely keep interest rates low until 2015. Alison Kosik has been watching all the moves before the New York Stock Exchange. So what does it mean?</s>ALISON KOSIK, CNN CORRESPONDENT: What the Fed is eventually doing, Suzanne, is taking risk in the form of mortgage debt off the banks shoulders, so it's going to go ahead and take $40 billion a month off of its own balance sheet, give that cash right to banks, take that mortgage debt off of their shoulders in hopes of pushing interest rates lower and incentivizing the banks to give out loans. In all of this, the consumers out there, the businesses out there, they have got to want to take out loans as well, so it's got to come both ways. Also the Fed promised to keep interest rates lower until 2015 instead of 2014 -- Suzanne?</s>MALVEAUX: So what's trader reaction to today's news?</s>KOSIK: The reaction is strong. The Dow right now is up 156 points. You know, we are back -- or at least stocks are back up to levels for the Dow that we haven't seen since December of 2007. That was right before the recession began. So this is what investors have been expecting. They have been expecting it since June. They have been bidding up stocks since then. So this comes as no surprise. Still, you've got investors buying in. We are watching bank shares, anywhere from 2 percent to 4 percent higher right now -- Suzanne?</s>MALVEAUX: Do we think this is going to actually boost the economy, another round of stimulus?</s>KOSIK: And that really is the money question, because there are two schools of thought. Critics say, you know what, interest rates are already low and you don't see a lot of loans being handed out. You don't see a lot of consumers out there and businesses taking out loans. Many question how this is going to help. Also there's a confidence issue, as far as businesses go. You know, what is going to make them want to take out a loan when they are feeling like the economy is not on solid ground? Also there's a lot of uncertainty involving the fiscal cliff. What are tax policies going to look like as of January 1? That can't give businesses much incentive either. What you'll find is, this discussion, even after the Fed made this move, the discussion is still going to turn to Congress and whether or not Congress will act on this fiscal cliff -- Suzanne?</s>MALVEAUX: Alison, thank you. President Obama and Mitt Romney say they have plans to shrink the U.S. debt, but there are problems with both the plans. We have details up next.</s>POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Hey there, everyone. Today on the "Help Desk" we're talking about the best way to tackle your credit card debt. A lot of people have this issue. Joining me this hour, Donna Rosato and Ryan Mack. Donna, this woman told me, when I talked to her, that she has $4,000 in debt. So take a listen to her question.</s>UNIDENTIFIED FEMALE: If you've got multiple credit cards, you know, what's the best way to work out a plan where you can pay it off?</s>MALVEAUX: Yes, I think she's wondering which do I pay off first?</s>DONNA ROSATO, SENIOR WRITER, MONEY: That's right. Well, there are two schools of thought on this. Generally it's better to focus on the highest rate card and pay that down as quickly as possible because you'll pay less interest over time and, of course, you want to keep paying the minimum payment on your other ones.</s>HARLOW: Right.</s>ROSATA: But a lot of people get a psychological boost by paying off the smallest balances first and just getting rid of them. That's very motivating. But the best plan is whatever makes you stick to it. Whichever one helps you, then that's the most important thing, just pay those cards down.</s>RYAN MACK: You know, this question is important because it amazes me how few people actually write the debts on paper so they can see exactly what the debts are and see exactly what the interest rates are. Before you pay a cent, call each one of those credit card companies and be aggressive. Call them three or four times --</s>HARLOW: Try to negotiate.</s>MACK: Lower those interest rates. See if you can get more money in your pocket.</s>HARLOW: A lot of people don't want to look at it --</s>MACK: Right.</s>HARLOW: But it's not going to go away. It's going to get worse.</s>MACK: I keep on saying that it works.</s>HARLOW: Absolutely. Guys, thank you. If you've got a question you want our experts to tackle, just upload a 30-second video with your question to ireport.com.