Free
Writing Prospectus
 Filed
Pursuant to Rule 433
 Registration
Number 333-142550
 
 
 
 CATERPILLAR
FINANCIAL SERVICES CORPORATION
 $8,000,000,000
 CAT
FINANCIAL POWERINVESTMENTSM
 VARIABLE
DENOMINATION FLOATING RATE DEMAND NOTES
 
 
 Recent
Developments
 
 On January 26, 2009, we announced our
2008 year end results.  Statistical highlights are set forth
below.  The quarterly results for 2008 and 2007 and the full year
results for 2008 are not audited, and the results are not necessarily indicative
of results that may be expected for future periods.  This information
should be read together with our consolidated financial statements incorporated
by reference in the accompanying prospectus and prospectus
supplement.  See also “Cautionary Statement Regarding Forward-Looking
Statements” in the accompanying prospectus.
 
 FOURTH QUARTER 2008 VS.
FOURTH QUARTER 2007
 (ENDING DECEMBER
31)
 (Millions
of dollars)
 
 2008
              
              
              2007
              
              
              CHANGERevenues
              
              $
              661
              
              
              $
              780
              
              
              
              (15
              %)Profit
      Before Tax
              
              $
              (10
              )
              
              $
              172
              
              
              
              (106
              %)Profit
      After Tax
              
              $
              13
              
              
              $
              113
              
              
              
              (88
              %)New
      Retail Financing
              
              $
              3,428
              
              
              $
              4,100
              
              
              
              (16
              %)Total
      Assets
              
              $
              33,082
              
              
              $
              29,429
              
              
              
              12
              %
 
 FULL YEAR 2008 VS. FULL YEAR
2007
 (ENDING DECEMBER
31)
 (Millions
of dollars)
 
 2008
              
              
              2007
              
              
              CHANGERevenues
              
              $
              2,999
              
              
              $
              2,998
              
              
              
              0
              %Profit
      Before Tax
              
              $
              505
              
              
              $
              728
              
              
              
              (31
              %)Profit
      After Tax
              
              $
              385
              
              
              $
              494
              
              
              
              (22
              %)New
      Retail Financing
              
              $
              15,879
              
              
              $
              14,074
              
              
              
              13
              %
 
 Fourth quarter and full year 2008
profit declines were principally due to (i) decreased net yield on average
earning assets, (ii) higher provision for credit losses primarily related to
deteriorating global economic conditions, (iii) interest rate volatility,
primarily in the fourth quarter, resulting in mark-to-market adjustments on
interest rate derivative contracts, (iv) increase in general, operating and
administrative expenses and (v) write-downs on retained interests related to the
securitized asset portfolio due to worse than expected losses.  The
fourth quarter decrease in new retail financing was due primarily to decreases
in the North America and Europe operating segments. New retail financing
for the year was $15.88 billion, an increase of $1.80 billion, or 13 percent,
from 2007.  The increase was the result of increased new retail
financing, primarily in our Asia-Pacific and Diversified Services operating
segments.
 
 Past dues
over 30 days at December 31, 2008, were 3.88 percent compared to 2.36 percent at
December 31, 2007.  This increase began with the downturn in the U.S.
economy and has spread to other countries.  Write-offs, net of
recoveries, for the year ended December 31, 2008, were $121 million (0.48% of
average retail portfolio) compared to $68 million (0.31% of average retail
portfolio) for the year ended December 31, 2007.  The increase in
write-offs is primarily attributable to North America.  The rate of
write-offs in 2008 as a percentage of average retail portfolio compares
favorably to the most recent period of economic weakness in
2001/2002.
 
 Allowance
for credit losses totaled $395 million at December 31, 2008, which is 1.44
percent of net finance receivables at December 31, 2008, compared with 1.39
percent at December 31, 2007.
 
 As
reported in our Form 8-K filed with the Securities and Exchange Commission on
January 26, 2009 (the “Form 8-K”), we and Caterpillar Inc. entered into
amendments of various credit agreements utilized primarily to support our
commercial paper programs that increase the upper range of interest rates
applicable to certain amounts that may be drawn under the credit facilities in
consideration of the lenders’ consent to our interest coverage ratio as of
December 31, 2008 and to Caterpillar Inc.’s consolidated net worth as of
December 31, 2008, each of which would otherwise have been below that stipulated
in the credit agreements.  This summary description of the amendments
to the credit agreements is qualified in its entirety by reference to terms and
provisions of the respective amendments filed as exhibits to the Form
8-K.  While we believe that none of the credit covenants to which we
are subject presently materially restrict our operations, our ability to meet
any one particular financial covenant can be affected by events beyond our
control.  We cannot provide assurance that we will continue to comply
with each covenant, particularly if we continue to experience challenging and
volatile market conditions as in the fourth quarter of 2008, and given that we
are required to measure our compliance with our interest coverage covenant on a
quarter-by-quarter basis. Any failure to comply with any of these covenants
could result in a default under our agreements.  Upon the occurrence
of certain defaults under our credit agreements, indentures and other treasury
programs, the lenders, trustees, or counterparties have the potential ability to
declare all amounts outstanding thereunder to be immediately due and payable,
and our lenders could terminate commitments to extend further credit under our
bank credit facilities.
 
 A number
of government programs designed to support the U.S. financial system were
implemented in 2008.  We believe there have been unintended
consequences of these programs that have affected us and other companies that do
not qualify to participate in them.  Some of our competitors have been
permitted to participate in certain of these programs, including the FDIC’s
Temporary Liquidity Guarantee Program, which has effectively created
below-market subsidized financing for those competitors and could continue to
negatively impact our ability to issue debt at rates that are comparable to
those offered by our competitors.
 
 The ongoing financial and banking
crisis accelerated in the fourth quarter of 2008 and has significantly impacted
economic growth around the globe.  We expect 2009 will be the weakest
year for economic growth in the postwar period.  We are expecting
recessionary conditions to persist in most of the world throughout the year,
with no growth in the world economy.  As a result, for 2009, we expect
our profit before tax to decline by about half as a result of higher liquidity
costs, such as costs for additional credit facilities, maintaining a higher cash
balance and higher borrowing rates, resulting in lower spreads between the cost
of borrowing and our lending rates.
  As we expect further weakening of the
global economy, we expect past dues and write-offs will likely be higher in 2009
compared with 2008.  In response, we increased the Allowance for
credit losses to $395 million, or 1.44 percent of net finance receivables at the
end of 2008.  Should economic conditions worsen beyond expectations,
additional increases to our allowance for credit losses may be
needed.  Furthermore, we have initiated several actions aimed at
reducing costs including employment reductions and other general, operating and
administrative expenses.
 
 PowerInvestmentSM
 
 Cat
Financial PowerInvestmentSM
 
 Strength
means power.  But when you make an investment in Cat Financial
PowerInvestment notes, strength also means:
 
 Value
–  Free checks with no monthly fees.
 
 Convenience
– An easy way to put your money to work – and an easy way to track it
online.
 
 Reliability
– You’re investing with a company you know and trust.
 
 Possibilities
– Earning power that could turn your dreams into realities.
 
 Return –
Great rates – our rates are set weekly to reflect current market conditions –
and no management fees.
 
 RATES
      EFFECTIVE for Variable Denomination Floating Rate Demand
      Notes
                as of February 23, 2009:
 Amount
Invested                                   Rate                          
Yield
 $0 -
$4,999.99                                           2.500%                      2.531%
 $5,000 -
$49,999.99                                  2.650%                      2.685%
 $50,000
and
Above                                2.800%                      2.839%
 
 For more
information call 1-800-233-2164, Monday through Friday, 7:30 a.m. to 6:00 p.m.
Central Time.
 
 Caterpillar
Financial Services Corporation has filed a registration statement (including
prospectus) with the SEC for the offering to which this communication
relates.  Before you invest, you should read the prospectus in that
registration statement and the other documents that Caterpillar Financial
Services Corporation has filed with the SEC for more complete information about
Caterpillar Financial Services Corporation and this offering.  You may
get these documents for free by visiting EDGAR on the web site at www.sec.gov.  Alternatively,
Caterpillar Financial Services Corporation will arrange to send you a prospectus
if you request it by calling (800) 504-1114.