How to Get Out of Debt With the Get Out of Debt Guy » interest rate

What Are My Options For Getting Bank of America to Lower my 27.99% Credit Card Interest Rate? – Chris

Steve Rhode — Thu, 28 Oct 2010 21:26:48 +0000

“Dear Steve,

My situation concerns Bank of America. Last november BoA lowered my limit from 16000 to 15000. at the time my balance was around 14700.

When my minimum payment hit me it sent me over my new limit and defaulted me and I was charged with a 27.99% interest rate. The extra interest fees i was paying sucked up the remainder of my savings that I had to pay off my minimum until february. DId i mention i was in college at the time?

I have a good payment record with BoA. But i basically ran out of money after January and could not make my february payment. I just got employed amd i am making about 2100 a month, and i live with my parents and i have a car note.

I would like to get this down as soon as possinle but so much of my payment is interests. usually 350 in interest. WHAt can I do?

I am young I don’t want a closed account on my record. And i am trying my best to pay them. I recently paid 1530 to be current with my account.

I have called several times and they keep insisting that i have to have 6 months of on time payments for my account to go under “review”. 6 months to be considered for review and i have been with them since 2003 ! I am out of options. I heard they black list people and close accounts arbitrarily and i dont want that to happen to me. Please tell me my options, I have intent to pay in bulk each check but with 350 going to interest it will take a while.

My balance was 15800 last sat and i now its down to 14300. my new minimum payment will likely be about 500. of which 350 is interest. please please help me.

Given my situation what are my options in getting BoA to lower my 27.99% interest rate?

Chris”

The Answer:

Dear Chris,

It is unfortunately true that all of the actions Bank of America has taken are permitted and legal under current U.S. regulations and they are most likely in accordance with your cardholder agreement.

I know you don’t want Bank of America to take your credit card away or close your account on you but that is a possibility that exists for every credit card you and everyone else carries. The credit card and the account are your liability to repay but not your property. You get to use the account and pay Bank of America high interest rates at the whim and discretion of Bank of America.

I have heard some recent stories about Bank of America reducing interest rates to as low as 0% for people that are in financial hardship. The problem here is that as long as you are current on your account, you won’t have any of those programs offered to you. Plus you don’t have a great story to support you claim of hardship. It’s not like you just gave birth or lost a leg or something like that.

The banks position will be that you will need to quit school and work more to pay them. Yes, I know that is a sucky position but the belief of creditors is that as long as you are able to work to meet your obligation to them, you should. Everything else be damned.

The irony is that if you wanted to get special reduced rates you need to fall behind on your account by 30 to 90 days and that will hurt your credit and postentially get your account closed. You could also enroll in a debt management plan for reduced interest rates right now, but you risk a mark being placed on your credit report and the account closed as well.

So if you want to keep your credit clean you will need to make at least the monthly minimum payment that Bank of America wants to extract from you until the review period.

I hope you understand that the moves by the banks to increase interest rates is more about an opportunity for them to increase profit they make than about some cosmic reason. It certainly appears that the limit reductions and instant rate increases have been a seemingly intentional trap to trip up many and they got you.

And one last point, you could have been a great customer with them for twenty years, it doesn’t matter. You are only as good to them as your last payment. Being a good customer for a long period of time gains you now bonus points with the bank. If they want to squeeze you, they will.

Steve

I Would Like to Consolidate My Debt, However I’m Having a Difficult Time Finding Someone Who Will – Laurie

Steve Rhode — Thu, 29 Jul 2010 23:42:44 +0000

From How to Get Out of Debt

“Dear Steve,

I am current of all of my debt. Do not have any past due debt. I do have about 25,000 in credit card debt and would like to consolidate, however am having a difficult time finding someone. Also, my main problem is that I have a Bank of America card fo 12,000 that they just raised my interest rate to 24.99%. I have called and ask them to lower it and they won’t even work with me. Any suggestions?

Laurie”

The Answer:

Dear Laurie,

There are two reasons Bank of America raised your interest rates. The least acceptable reason is because they can. The terms and conditions you signed when you took out the card allow them to raise you rates without much notice at all. The second reason they did might be because your credit report is showing signs that you are becoming a higher credit risk.

If you have not looked at a copy of your consolidated credit report recently then you should. A consolidated credit report, with credit score, will show you all three credit bureau reports and explain exactly why your credit score is what it is.

The most realistic solution in your situation would be to look into participating with a debt management plan to see if the debt management company can get you lower interest rates and a lower payment. Click here for debt management information. Through a debt management program they should lower your interest rate to around 7%.

Big Hug!

@GetOutOfDebtGuy

What You Need to Know Before You Refinance Your Home to Pay Off Debts

Amanda Miller — Tue, 08 Jun 2010 03:48:28 +0000

From How to Get Out of Debt

Consolidating your debt with the equity in your home can be a terrific money-saving strategy. The interest rate may be much lower than you’re paying on your other bills and, if you itemize on your tax return, you can usually deduct the interest you pay – making the effective rate of the loan even more attractive.

But what seems like a smart strategy can turn into a tragedy — even resulting in the loss of your home — if you’re not careful.

Here’s how to make a debt consolidation loan work for you.

First, get an idea of how much equity you have in your home. While a lender will want to get an appraisal of your property before approving a loan, you can do your homework by talking to a couple of local real estate professionals who can give you a ballpark estimate of your home’s value based on comparable home sales in your area. (Be aware: a real estate professional may quote a high price, in an effort to get you to list a sale with her.)

You’ll also want to get a copy of your credit report to make sure everything is up-to-date and accurate, and to make sure you are aware of any problems that may cost you more in terms of the interest rate or fees.

Since a mortgage lender will review a copy of your report from all three major credit reporting agencies, you should do the same. You can get a consolidated credit report from GetOutOfDebt.org.

Once you have information on your home’s value and your credit situation, you can consider whether a home equity loan or refinancing your mortgage makes more sense. Here are the pros and cons of each:

Tapping Home Equity:

With a home equity loan, you borrow a fixed, lump sum amount and pay it off in equal payments. With a home equity line of credit, you borrow up to the total amount for which you are approved, whenever you need it. As you pay down the loan, that money you paid off will again become available for you to use. Either type of loan can be referred to as a “second mortgage.” Approval is often quick – a couple of weeks at most – depending on how busy lenders are.

Some lenders will allow you to only borrow up to a total of 80 percent of the appraised value of your home, minus any amount you owe on your first mortgage. Other lenders, however, will allow you to borrow 100 percent or more of your home’s value, minus your first mortgage. (You may pay a higher interest rate or fees for these higher “loan-to-value” loans.)

Although any amount above the value of your home is technically unsecured, I urge you strongly not to borrow to the hilt against your home. If any unforeseen circumstances come up, forcing you to sell your home, you may be unable to command the price you need to pay off your loans and may face foreclosure.

Refinancing:

Another popular option with many consumers is to refinance their first mortgage and take cash out to pay off other bills.

For example, let’s say your home is worth $150,000 and your mortgage balance is $80,000. You may be able to refinance that $80,000 loan with a loan for $120,000 (or more) and use the difference to pay off your other debts. (Forget about taking a vacation with some of your mortgage money, though. That’s going just a little too far.)

The main attraction in going this route is that you may be able to get a lower payment and interest rate than with your current debts, or even a home equity loan. That’s because, in most cases, you’re stretching the debt out for 30 years.

The downside is that by refinancing your mortgage, it will take you longer to pay off your house and it may be more expensive in the long run than you realize. That’s because you’ll essentially be starting over again with your mortgage.

If you currently have 24 more years of payments on your mortgage, for example, you’ll now add six more years to that. By the time they’ve paid for their mortgage, most people have paid for their house two or three times over! So think carefully before you stretch out your house payments.

If you are considering refinancing to include your debt and your new loan will total more than 80 percent of your home’s value, you may be required to pay private mortgage insurance, or PMI. This can easily add $100 or more to your monthly payment and it is not tax deductible. So, even with a lower interest rate on the refinanced loan, you may pay more. Be sure to consider PMI and the total cost of your loan when you are weighing your options.

The biggest drawback to using a home equity loan or a new mortgage to pay off debt is the added risk you take if you can’t make the payments.

If you can’t make your payments on your credit cards, your account will be turned over to collections, and (much later) you may eventually be sued for repayment of these debts.

If you miss a few mortgage or home equity loan payments, however, you could literally lose your house. Please think carefully before taking that risk.

Other Alternatives

Before you put up your home as collateral for your loans, think about your options.

Can you consolidate your debt onto a low-interest credit card?
Will your local bank or credit union give you a low interest rate, unsecured debt consolidation loan?
Do you have cash value in your life insurance policy you can leverage to pay off debt?
Have you tracked your expenses to find places where you can cut back?

The more desperate you are to get a loan, the easier it is to make poor choices.

When interest rates are attractive, many people rush to borrow or refinance. Think carefully of the implications to ensure you make the most of all your options.

Should I Lease My Next Vehicle?

Amanda Miller — Wed, 02 Jun 2010 02:53:50 +0000

From How to Get Out of Debt

Searching for that perfect car or truck is not such an easy task anymore. Every auto dealer has a special deal just for you — and that deal is not all that easy to understand. Before you go shopping for your next vehicle, think about whether you want to lease or buy and make sure you understand both options. What you are likely to find is that the decision comes down to what kind of person you are and what habits you have.

Leasing vs. Buying a Car

How do I decide?

WHEN YOU SHOULD LEASE

If you drive less than 12,000 miles/year.
Many auto leases require you to pay for each additional mile over a certain limit. That mileage limit is usually between 10,000 and 12,000 miles per year.

If you plan to keep your vehicle for 3 years or less.
Many auto lessors offer leases with terms of 24 and 36 months, and this can be an attractive feature to people who don’t usually keep their car that long before they trade it in for a new one.

If you want lower payments and/or lower down payments.
Leases usually contain lower down payments and have lower payments compared with auto loans of similar terms. This is due to the fact that an auto loan usually amortizes a larger portion of the car’s value over the repayment period of the loan.

If you prefer newer vehicles.
Leasing a car may save you some money if you usually trade in your car to buy another every few years. Leasing might be something you should consider if you think having a car payment is just a fact of life and you plan to get a new car every few years.

If you keep your car well-maintained.
A usual provision in an auto lease is that you agree to keep the car well-maintained and in good running order. If you are lousy at doing that, it will cost you at the end of the lease; the car will probably not be worth its residual value and you will be required to make up the difference.

WHEN YOU SHOULD BUY

If you drive more than 12,000 miles/year.
If you drive more than the annual mileage limit required by the lease, you may want to compare the cost of buying the car to the estimated total leasing cost. If you drive a lot of miles over the mileage limit, you will probably be better off buying the auto.

If you plan to keep your vehicle for 3 years or more.
If you usually keep a car or truck for a longer period of time than the lease term, compare the cost of buying the vehicle at the end of the lease to buying the auto now instead of leasing it. In many instances, if you plan to purchase the auto at the end of the lease, buying now can make more sense financially.

If you like the idea of owning your car.
Auto leasing is most comparable to “renting” your car. If you don’t like the idea of renting your car and it is important to you that your car is yours, then you are probably a good candidate for auto ownership.

If you like the idea of eventually paying off your car.
Being debt free is always a good goal to have, and being without a car payment can be a reality if you buy instead of lease. Many leases do, however, contain purchase options to buy the car once the lease expires. By that time, though, you have already put a lot of money into a lease that could have been used to purchase the car in the first place.

If you like the customized look.
If customizing your new car is what you had in mind, you definitely should consider buying. Changing the appearance of a leased vehicle alters the value and this may prove to be costly at the termination of the lease.

An Up-Close Look at Leasing

Before you can make an informed decision to lease a vehicle, you must know and understand the terms of the lease. Leasing contracts include some complicated language which I will define here in simpler terms.

When you lease a car, you will have a negotiated vehicle price, which is the total price at which you agree to lease the car. You will pay a down payment up front when you sign the lease agreement and take possession of the vehicle. The amount that you agree to “finance,” (i.e. the negotiated vehicle price plus any options, minus the down payment) is the Adjusted Capitalized Cost, or the Net Cap Cost.

To determine how much the lease will cost you each month, you need to know a host of other terms, including the residual value, the lease or rent charge, the money factor, the monthly lease rate and the monthly depreciation.

The Residual Value is how much the auto will be worth at the end of your lease term. The Lease Charge, or Rent Charge is like the interest rate on a loan. The auto lessor charges you a monthly fee to lease the vehicle to you at the terms specified in the lease. The Money Factor is the lease or rent charge divided by 24.

All of the above terms are used to calculate the Monthly Lease Rate, which in turn, makes up part of your monthly lease payment. The monthly lease rate is the Net Cap Cost plus the Residual Value, multiplied by the Money Factor.

The Monthly Depreciation is also figured into your monthly lease payment. The monthly depreciation is the difference between the Net Cap Cost and Residual Value, divided by the term of the lease.

Accordingly, your Monthly Payment will be the Monthly Lease Rate plus the Monthly Depreciation.

The last few terms that you may encounter when leasing a vehicle are:

Your lease may contain a provision for a Security Deposit, which may be refundable if specified in the lease terms. This deposit is similar to a Security Deposit that a landlord would hold for a residence. If any damage occurs to the property that is specified in the lease, the lessor would be entitled to part or all of the Security Deposit.

An Acquisition Fee covers the administrative costs of the lessor, such as the cost of obtaining a credit report, verifying insurance coverage and processing the application and lease agreement.

If you understand and know the terms discussed above, you will be able to make an informed decision about whether you want to lease or buy a car.

An Up-Close Look at Buying

One of the most important things about buying a new car is understanding your financing options. There is a huge variety of financing options out there — there’s your auto dealer’s financing package, as well as those of your local bank, credit union and finance company. No matter whose financing package you take, you need to understand what kind of deal you are really getting how much you are really paying and how much the vehicle is really worth.

The Loan-to-Value ratio is what most lenders use to determine how much to lend you. If your new car is valued at $20,000, a lender may insist that you have a loan-to-value ratio of 80 percent, or $16,000. You would have to make a $4,000 down payment and the lender would agree to finance the rest.

One of the pitfalls of buying is that your car loses value the minute you drive it from the dealership. The value that your car loses over time is called “depreciation.” Different types of cars depreciate at different rates. A car that has a record of lasting longer than other cars on the road will probably have a slower depreciation rate and be worth more at any given time than a car with a reputation of being a “clunker.”

The other big issue when buying a car is your interest rate, which varies widely among different lenders. Shop around and get the best rate before you agree to buy a vehicle so that you can make an informed decision, rather than being at the auto dealer’s mercy to accept its financing package.

The Argument for Leasing

In general, leasing is a good option for people who have little money in their pockets and/or can only make small monthly payments on a car, and for people who find that they buy a new car every three years or so.

Lower down payment

Leases traditionally require less money down than purchasing a vehicle. If you are looking for a car with little or no money in your pocket, you could take advantage of some leases that advertise little or no money down.

Lower monthly payments

Monthly lease payments are usually lower than monthly loan payments for the same term.

If you buy a car every three years

Leasing is a great option for people who find that they buy a new car every three years or so. For example, as Figure 1 (below) illustrates if you lease a car valued at $20,000 and obtain a new 36-month lease whenever the previous lease expires, you end up spending $42,320 over a 10-year period. If you choose to buy the same vehicle every three years, using the old vehicle as a trade-in, getting financing for 36 months each time and putting down a 20 percent down payment, you would spend $64,512 over the same period. In this example, if you buy the car you would spend 52 percent more than if you were to lease the car. It should be noted that these values are estimates comparable to today’s market. Accordingly, if you find that you buy a new car every three years or so, leasing may be a better option for you.

If you don’t need the advantages of a car lease, for instance, the lower down payment, lower monthly payments, and if you don’t buy a new car every three years, then it is a better financial decision to buy a vehicle.

If you buy and keep a vehicle, you would eventually pay off your car loan. You could save those extra funds that you were paying monthly on the car loan for emergencies, a child’s education, your retirement or even to pay for your next car in cash.

The advantages of buying are illustrated in Figure 2 (below). Three consumers are shown in the graph. One buys a car valued at $20,000 with 36-month financing at 8.5 percent. Once this consumer pays off his loan, he deposits the monthly car payment amount into a mutual fund that follows the Standard & Poor’s 500 index (which has averaged approximately 15 percent over the last 10 years).

The second consumer leases the same car for 36 months. He pays a $1,000 down payment, with $850 due in acquisition and title fees. This consumer then exercises a purchase option on the lease for 36 months. When he pays off the loan, he also deposits the same amount as the first consumer into the same mutual fund.

The third consumer leases a new vehicle every three years without exercising any option to purchase. All leases have the same terms as described for the second consumer, and all three cars have the same value.

In this example, the first consumer (the buyer) amasses $74,300 over a 10-year period. The second consumer (who leased, and then bought) saves $34,940 over the same period. The third consumer (who continued leasing) spends a total of $42,320 in this amount of time.

Shopping for the Best Deal

Whether you decide to lease or buy a vehicle, be smart while looking. Here are some tips on how to get the best deal.

Shop ‘til you drop

Shop around before negotiating so that you know (1) what price other car dealers want for the same vehicle (use pricing guides or services to see the invoice prices for the vehicle — don’t just look at the retail sticker on the car); and (2) what financing terms are available for leases or auto loans. You don’t have to sign a lease, loan or purchase agreement on your first visit. Don’t let a salesperson pressure you if you aren’t ready to make a final decision.

Ask the dealer to explain anything that you don’t understand. Also, don’t fill out a lease application until you are ready to sign the final documents. Each application you complete may generate an inquiry on your credit report. Many lenders and lessors view too many credit inquiries as a negative factor when evaluating your credit profile.

Negotiate the best price

The price you negotiate on any vehicle is the starting point in determining the cost of leasing or buying your car. Have a maximum price that you want to spend for a car. Don’t let the dealer talk you into a price that doesn’t fit into your spending plan.

Tell the dealer whether you intend to lease or buy

This can save you lots of time.

Get the proper value for your trade-in

If you are trading in your current vehicle, get an estimate of its value from a used car dealer, financial institution or Kelley Blue Book before visiting the auto dealer.

If you decide to lease, ask about gap insurance

Gap insurance is insurance that will protect you against any “gap” in coverage between the value of the vehicle when you return it and the residual value as stated in the contract. This coverage may also provide provisions regarding theft or accidents. This is especially useful coverage in open-end leases (leases where you can be held liable for any difference in value). In closed-end leases, you may still be liable for this difference. Read the lease agreement carefully to find out exactly what your liability would be upon lease termination.

Know your early termination options in a lease agreement

Find out when you are allowed to terminate your lease, if at all, and how much it will cost you. This simple question can stop future headaches if, for some reason, you need to get out of your lease agreement.

Only lease for a term that is within the manufacturer’s warranty period

This will save you from paying for repairs to a leased vehicle after the manufacturer’s warranty expires. When you lease make sure that you are protected by the manufacturer’s warranty. If the warranty has not been assigned to you, you may be responsible for the cost of repairs.

Consider leasing a vehicle that has a high residual value

The higher the residual value, the lower the cost of the lease may be. However, any purchase options contained in the lease will probably have a higher price tag. Vehicles that last longer are the most likely candidates for having higher residual values.

When Your Lease Is Over

Once the term of your lease has expired, you have a choice to make. Here are the options that are usually available:

Return the car to the dealer

If you don’t plan to lease another car or want to negotiate with another dealer, you can simply return the vehicle to the dealer. There may be charges at lease-end, like a termination fee, excessive mileage charges or charges for excessive wear and tear.

Purchase the vehicle

The lease may contain a provision to purchase the vehicle at lease-end, with the purchase price usually being set at the residual value. If you have taken good care of the car, it may be worth more than the residual value, making this option a good deal for you. If the car is in bad shape, compare the cost of turning in the car to buying the vehicle.

Negotiate a new deal with the dealer

If the car is worth more than the residual value, use the equity in the car to negotiate a lease on another car. You always have the option to lease another car, but you may not always have the extra value, greater than the residual value. Use this to your advantage if you find yourself fortunate enough to be in this position.

Sell the car and pay off the residual value

If the lease has an option to purchase, as many leases do, and if the car is in good condition, then you could exercise the option to purchase first and then sell the car yourself. This could work in your favor if the car has held its value well and the residual value is less than the amount you could sell it for.

Lease Payments

Everybody has good intentions when entering a lease agreement, but financial hardships can befall even those with the best intentions. If you can no longer afford to make your lease payments due to such a hardship, consider the following:

Ask the auto lessor for the options under your lease for early termination

It is usually wise to be up front and honest with your auto lessor and to let him know about your hardship. The lessor may be able to offer you other options that will help you.

Ask the auto lessor if you can sell the car to pay off the lease

If the car is in good condition, you may be able to advertise the vehicle at a price that would pay the termination costs of the lease. Ask your lessor how much the termination cost would be, and make sure you ask the lessor if this option is available before you sell the car.

Ask the auto lessor about a substitution of the leased vehicle

If you just can’t afford the auto you have leased but are able and willing to lease a car of a lesser value, ask the auto lessor about substituting the auto you have for another auto that will produce a lower lease payment. In some instances, your auto lessor may be willing to do this only if you terminate your current lease and apply for another one.

Ask the auto lessor what the total cost would be to return the car before the lease termination date

Obviously, there will be some kind of charge associated with this. However, these charges may be less than trying to make your remaining lease payments.

Ask the auto lessor about an extension of the lease or deferment of the lease payment

The auto lessor may be willing to renegotiate the lease over a longer period of time to lower your payment amount. In a few cases, your auto lessor may agree to defer your lease payment; this would depend entirely on your situation and the willingness of the lessor to work with you.

Find out if your lease is assumable

If your auto lease contains an assumption clause, you may be able to find someone who would be willing to assume, or take over, the payments on your auto lease.

If you decide to lease

If leasing looks like the right decision for you, make sure you know your rights regarding auto leasing in your state. Check with your state’s consumer affairs office to find out exactly where you stand.

Before you lease or buy

However you decide to get behind the wheel of your next vehicle, the most important thing you need to consider is whether you can truly afford it. It may feel great to drive out of the showroom in a fancy new car or truck, but you’re not going to look quite so fancy if a few months down the road the repo man comes looking for you.

Take a good, hard look at your monthly spending plan. (If you don’t have a spending plan, you definitely shouldn’t be looking to buy or lease a new vehicle at all.) What can you comfortably afford to pay each month for an auto? The key word here being “comfortably.” Just because you get a new car, doesn’t mean the rest of your life goes on hold. All those other expenses are still going to come up and you have to make sure you can afford your new pride and joy as well as pay the rent or mortgage, buy groceries, clothes etc. And don’t forget the insurance. Auto insurance can easily run into hundreds of dollars every month.

If you do your sums and it looks like you’d be coming up short every month with a new vehicle payment, don’t make the mistake of trying to stretch your spending plan to make the car fit in. You’ll regret it sooner than you think. Instead, consider a good, used vehicle for now and try and put away a little every month towards your dream machine. That way, when you do get into the driving seat, you’ll be certain that nothing can spoil your enjoyment further down the road.

How to Get All the Cheap Credit You Want

Amanda Miller — Sun, 30 May 2010 15:42:47 +0000

From How to Get Out of Debt

Today, the average person pays between 16 and 17 percent on credit card balances. While interest charges may seem low when you look at the monthly charge on your statement, over the long run they can really add up. In fact, the average person can put a hundred bucks or more in his or her wallet just by getting a lower rate on a credit card or two.

If you’re carrying a big balance, you can save even more. Here’s how much:

So what are you waiting for? Following are some strategies that will help you get all of the cheap credit you want.

Just Ask

A survey done a few years ago found that about half of the people who asked their current credit card issuer for a lower rate, got one. Most credit card issuers have many different programs, some of which may carry lower rates. But if you’re paying a higher rate they probably won’t tell you about the lower ones unless you ask.

Call and tell your card issuer you’d like to remain a customer but you’re going to have to leave if you don’t get a program with a better rate. Give the customer service person a break and be friendly. If you don’t get an immediate “yes,” don’t let that discourage you. Ask to talk with a supervisor or call back another time. (For this strategy to work, you should be paying your bills on time each month.) You might want to sweeten the pot by offering to transfer balances from another card.

Go Fishing

There are some 20,000 credit card programs available today. With that many, you should be able to find at least one that will offer you a good deal. A couple of sources you may want to try: cardtrak.com and bankrate.com. It can be confusing to sort through so many different programs, but it can be well worth it. If you’re confused about whether to choose a low fixed or low variable rate, keep this tidbit in mind: in most cases, a credit card issuer can raise the rate on a fixed card as long as you’re given 15 days advance notice. So that means a fixed rate may not necessarily be better if interest rates in the economy go up!

Open The Mail

You’re flooded with credit card offers, right? While some may well qualify for the “junk mail” category, occasionally there are a few gems. Look for a low introductory rate that applies to balance transfers until they are paid off, convenience checks that offer a good rate without a high fee or simply a straightforward low rate. If you’re considering a card with a low introductory rate that’s only good for a few months, make sure that the “permanent” rate is also attractive or you’ll be scrambling to find a new card in a few months.

One more thing to watch out for: due to recent changes in the law, “pre-approved” credit card offers aren’t always what they seem.

If you respond to one of these offers, the issuer can create a secret list of additional qualifications that can be considered before it actually gives you a card. So, if you say “yes” to a pre-approved offer, you may still be turned down based on those other criteria. Essentially, this means that “pre-approved” is really just pre-selected, not pre-approved.

Improve Your Score

You’ll have the best chance of qualifying for the credit you want if you have a good credit score. Credit scores are simply a way that lenders evaluate applications.

While every lender is different, there are generally some things you can do to improve your score: close accounts you don’t use; make sure you have at least a couple of major credit cards paid on time for the last 18 months or more; submit no more than four or five credit applications in any six-month period and avoid late payments or other negative information.

Consolidate

You may be able to lower your costs by consolidating some or all of your debt. For example, you may be able to transfer more expensive credit card balances to your cards that have cheaper rates. Or, you may find that a home equity loan or a margin loan against your investments offers a better rate than you’re currently paying. Other options can include loans against retirement plans or life insurance policies. Be very, very careful here. Many people fall into the trap of consolidating their debts and then running up new balances.

This strategy will only work if you are committed to paying off your debts as quickly as possible. So don’t blow it. Make sure you have good control of your spending, and a written plan for becoming debt-free in three to five years.

If You’re Turned Down for a Low-Rate Card …

First, realize you’re in good company. Most issuers turn down at least 50 percent of new applications, and the rejection rate for some with rock-bottom rates can be much higher — even 90 percent. Now that you’re feeling a little better, take a good hard look at that rejection letter. Do you understand the reasons listed for turning you down? Are they clear? Do they apply? If not, call the credit card company and ask for a clear, specific explanation. That way, you’ll know what you need to do to improve your credit before you apply again.

If you have been turned down, get a copy of your credit report. It’s free if you ask for it promptly. And it’s very important to check to make sure it’s accurate and up-to-date. Information about how to order it will be listed on the denial letter. You can also order a consolidated credit report, containing information from all three credit bureaus. You can also order a consolidated credit report, containing information from all three credit bureaus, at GetOutofDebt.org online.

I Am 60K in Credit Card Debt And They Are Raising My Interest Rates. – Teresa

Steve Rhode — Sun, 25 Apr 2010 02:44:45 +0000

From How to Get Out of Debt

“Dear Steve,

I am in 60k in credit card debt. All payments are current but am reaching the point where the payments could start slipping. I’m receiving notices from the credit card companies that terms are changing. With this kind of debt, I could be in real trouble soon. I need one payment and then cut up the credit cards.

Teresa”

The Answer:

Dear Teresa,

Most likely what will happen is that your interest rates will get jacked up to the max and you will no longer be able to afford your payments.

I’d suggest that you enroll in a debt management program right now to get your rates down to the lowest levels that the creditors will offer. If that is not sufficient for you to get by then a more drastic solution may be necessary. Check the debt management option and come back and let me know if that works for you.

Unfortunately the raising of interest rates by credit card companies, in turn raises minimum payments which just makes it impossible for you to make payments. If the creditors lowered your interest rate instead you would not have this problem.

Creditors are stupid, what can I say?

Big Hug!

@GetOutOfDebtGuy

Bank of America is Charging Me 27% on My Credit Card. – Melinda

Steve Rhode — Fri, 02 Apr 2010 22:34:12 +0000

From How to Get Out of Debt

Melinda

“Dear Steve,

I made late payments a couple of times on my Bank of America Visa card. Now my interest is at 27% on $11,000.00. I cannot afford the payment minmum that they require.

Should I try to talk them into lowering my interest rate back to a something more reasonable? Does that usually work?

Melinda”

The Answer:

Dear Melinda,

You can always call and beg for a lower interest rate. The worst they can say is no. What concerns me most about your question is that you can’t afford the new minimum payment. If they don’t lower your interest rate you are slowly headed for trouble here.

You may want to consider contacting a debt management company and enrolling in a debt management plan (DMP) to get your interest rate lowered. Just be aware, while this will lower your interest rate, the card will probably be closed and it could hurt your credit report a bit. But then again, what are the options, sinking into a slow financial death on a payment you can’t afford?

Big Hug!

@GetOutOfDebtGuy

Recent Searches for Debt Advice

Steve Rhode — Mon, 25 Jan 2010 21:47:30 +0000

From How to Get Out of Debt

I thought you might be interested in some recent search requests from visitors. It helps to give you a snapshot of what is on the minds of people looking for help.

hide phone number from debt collectors

how to get out of deebt

experts advice on getting rid of debt

better management of credit rating and poverty

Bank of America Class Action

can i transfer my house to my wife if I am going bankrupt

cant make car payment

free government grants to pay debt

can my debt be eliminated cuz of depression?

can i lower the interest rate on my lease

charged off debt collection

consolidate credit card without filing bankruptcy

how to protect your assets from judgment creditors

debt consolidation married

how to get out of mortgage debt fast

can i file bankruptcy if i’m been suit for a credicard debt

will his debt become my debt

As you can see, people are suffering from a wide range of debt worries.

Credit Counseling Seen as Little Help in Bankruptcies

Steve Rhode — Thu, 07 Jan 2010 21:16:41 +0000

From How to Get Out of Debt

Such a great article on the failure and total waste of time that pre-bankruptcy credit counseling is and always was under the 2005 bankruptcy reform farce.

Many credit counseling groups supported the mandate of pre-bankruptcy credit counseling because they incorrectly thought it would funnel income generating customers into their debt management programs. It was the wrong assumption then and it is still the wrong mandate to continue.

Counseling seen as little help in bankruptcies Columbus Dispatch, OH - 4 hours ago Transferring credit-card debt to a card with a zero percent interest rate offer, for example, is nearly impossible for someone with delinquent payments. …

Click Here for Credit Card Debt Help

Source: Counseling seen as little help in bankruptcies – Columbus Dispatch

Lower Your Car Payment. Skip It, Lower Your Interest Rate and Get Cash Back

Steve Rhode — Sat, 26 Dec 2009 17:51:18 +0000

From How to Get Out of Debt

Here is a little financial tip that I’ve used in the past but I keep forgetting about. Refinancing an existing auto loan to lower interest rates and monthly payments.

I just got an email that a client was instantly approved for an auto loan refi and that’s good news. You see when this particular person bought their car their credit score and credit report was less than perfect and interest rates were higher. However, in the mean time they have worked hard to improve their credit score and rates have dropped.

One advantage of the auto refinancing process is that it allows you to skip a car payment and get extra cash!. Plus, your interest rate can be much lower.

People that are perfect for an auto loan refinance are those that have a good credit score but can see some financial belt tightening coming in the near future. By reducing the car payment it gives you more breathing room each month. And behind the rent or mortgage payment, the car payment is usually pretty steep.

Now if you refinance you car loan it doesn’t mean that you can’t keep sending your current monthly payment to pay it off even earlier, it just means that if the economy caused you some financial pain that you could fall back to a lower monthly payment without being in default. And once things improved, you could resume your accelerated repayment schedule.

I’ve done this myself in the past. I had purchased two cars at the same time, what was I thinking? Last time I ever buy a new car. Then a couple of years latter the interest rates had dropped. By refinancing them both I lowered my combined monthly payment by some $350 and saved 3% on the interest rate. Hey, if I don’t have to pay more, why would I want to? Seriously, look into refinancing your auto loan now.

I Just Got My Job Back, and I Am Playing Catch Up on My Bills. – Nicole

Steve Rhode — Wed, 01 Apr 2009 09:02:45 +0000

From How to Get Out of Debt

“Dear Steve,

I just got my job back, and I am playing catch up on my bills.

Between my husband and I, we have about $2800 in credit card debt. I tried calling to get my interest rate lowered, but all they said was when an offer comes aound that you qualify for, then we will lower your apr. I am paying 31% on my credit card, and my husband’s card turned from a $300 credit limit to a bill for $800. His card has not been used in more than 3 years. How can I get the interest rate down?

Nicole”

I Did Not Realize That the Interest Racks Up on a Credit Card Bill. – Susan

Steve Rhode — Tue, 31 Mar 2009 00:54:35 +0000

From How to Get Out of Debt

“Dear Steve,

I did not realize that the interest racks up a credit card biil like it does. One late payment (about 1 hour late) has made my interest go up to astronomical proportions. I haven’t used my card in over a year. I pay regular payments, my bill goes even highr with each payment. I have probably charges about $1,200 over 5 years but my bill is over 4,000!

How can I possibly pay this credit card off? It’s like I am not even paying anything on it every month because the balance NEVER goes down. The card company said I could hve it paid off in 5 years if I paid $300 a month. Who can make that kind of payment? I am sacred to death that I will never get this thing paid off!

Susan”

One in Three Consumers Spanked By Their Credit Card Companies

Steve Rhode — Mon, 02 Mar 2009 21:21:33 +0000

From How to Get Out of Debt

San Francisco, CA – March 2, 2009 – According to a new survey for National Consumer Protection Week (March 1-8) from Credit.com, a third (33.7%) of consumers say their credit card company has made one or more of the following changes to their credit account:

Increased their interest rate 15%
Increased their minimum payment due 11%
Changed their due date 9%
Lowered their credit limit 8%
Reduced their rewards program 8%
Closed their account 7%

“Despite efforts to get credit flowing again to consumers, for many, the exact opposite is happening,” said Adam Levin, chairman of Credit.com. “Even responsible consumers are discovering that a lowered limit or a closed account can impact their credit score for years. It is critical that business, government, public interest organizations and the media work together to significantly improve and expand credit and financial help and education.”

This national telephone poll was conducted for Credit.com by GfK Custom Research North America from February 20-22, 2009. A total of 1,004 interviews were completed, with 524 female adults and 480 male adults. The margin of error is +/- 3 percentage points for the full sample and higher for subgroups at a 95% level of confidence. – Credit.com

Dayna Can’t Afford to Keep Her Car Or Get Rid Of Her Car, Even By Repossession

Steve Rhode — Sun, 16 Nov 2008 02:42:39 +0000

From How to Get Out of Debt

Dayna

“Dear Steve,

I have an upside down auto loan that I owe about $27,000 on a Mazda car and my monthly payments are $500 per month for 7 years with about 12.45 percentage interest rate. I am unable to refinance my auto loan because my credit is not that good and I owe too much debt.

I am trying to figure out options on how to lower this car payment or get rid of the car – since I am upside down- selling the car is probably not going to help. If I did not have the car, I think I would have enough money to get myself out of other credit debt I have.

Do you have any suggestions or can you help? I have no savings either and it is getting check to check for myself and my family.

What can I do to either lower my car payment or get rid of it without heavy penalties and repossessions?

Dayna”

The Answer:

Dear Dayna,

Sadly your situation is experienced by thousands and thousands of people each day.

It is a sad and unfortunate situation for which there are only a couple of good solutions. One solution is to do an auto loan refinance. But this depends on credit being available and you having a reasonable credit score and good credit. Doing an auto loan refinance in that situation can lower your car payment by extending your auto loan out for a longer period of time, but then again, your loan is already fairly strung out so it is doubtful if a lender would go further than seven years. At this point it is not going to do any more damage to your credit to see if you qualify for an auto loan refinance so click on the link and see what they’ll offer you.

The other solution is to sell the car and take cash that you have in the bank to pay off the remainder of the loan, after the sales price, to get a clean title to then transfer the car to the buyer. But then again, you don’t have any extra cash and that isn’t really a possibility for you either.

So what are we going to do here?

You probably need the car to get back and forth to work so we’ve got to prioritize your other credit debts. If those debts are credit cards or unsecured loans then the most logical thing to do is to look into a debt management program to see if they can reduce your payments on that credit, or stop paying it altogether.

If you stop paying it and you think your financial situation is going to improve in the next few months, you can then go back and make a plan to repay your debt. If you don’t think you will be able to repay anything then you can consider bankruptcy now or wait until the collection pressure gets to be intolerable and then consider bankruptcy.

I wish i had better news for you but it is a tough situation to be in with few good options.

Big Hug!

@GetOutOfDebtGuy

The Answer:

Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up.

Steve Rhode — Thu, 13 Nov 2008 16:26:54 +0000

From How to Get Out of Debt

In this time of great economic worry and stress, Bank of America is sending out an offer they call their Clean Sweep^® – Bank of America^® Debt Consolidation Plan.

I thought it would be beneficial to take a close look at this offer and use it to help educate readers about what to look for and how the marketing message and reality can be two completely different things.

Once we finish reviewing this offer you will find that rather than a great tool to help you to get out of debt, the offer actually encourages you to use the line of credit to go even further into debt.

“Or think about taking that well-earned vacation or remodeling your kitchen. Then request any amount up to $50,000.” – From debt consolidation offer.

The Debt Consolidation Offer Envelope

It was the envelope that caught my eye and made me wonder. I could see from the back of the envelope that the mailer was from Bank of America but the front had some interesting statements:

One Phone Call
One Predictable Monthly Payment
One Fast Way
to help you get out of debt.

Bank of America CleanSweep Offer Envelope

Of the marketing inducements made on the envelope I knew that only one of the four items was probably true, “One Phone Call”. The rest were probably very stretched statements at best or just simply outright deceptions.

The envelope says “One Predictable Monthly Payment” but the details on the inside tell me that the interest rate offered is variable and can be adjusted regularly and go way up.

“We may adjust your APR on a monthly basis due to changes to the Prime Rate.”

“Repayment term and payment amount are estimates which may change if, for example: your APR changes, you make late or partial payments, we access fees, you enroll in Credit Protection, or you take additional advances.”

So how can my monthly payment be predictable if the interest rate is variable and we already know that the Prime Rate will almost certainly go up from the low today? It would be ridiculous for Bank of America to say that the supporting fact for their statement is that the monthly payment can be predictable because they have a formula to calculate it.

The statement is obviously designed to make you believe that it will be a fixed monthly payment in the enclosed offer.

Is the statement “One Fast Way” true? I’m honestly not sure because while taking Bank of America up on their offer by filling out a few lines or calling them might get you approved fast, it would be a bold stretch of the imagination to say that this loan will get you out of debt faster unless you are currently being charged much higher interest rates.

The issue here is that when we get to the stuffer inside the envelope you will see that Bank of America is advertising an 8.99% interest rate but they also say that the rate could be up to 21.99% interest.

It is likely that the higher interest rate will be extended to someone that has a poorer credit report or a lower credit score. That means that for the person that might already have higher interest rates because of their credit, then they will most likely get an initial interest rate that is higher, or up to 21.99%.

Making a blanket statement that taking advantage of the Bank of America CleenSweep debt consolidation plan is going to get you out of debt faster is grand hyperbole. There is no way of knowing if you would even get out of debt faster even with the initial minimum APR since the rate is variable rather than fixed and it is impossible to predict what changes to the interest rate will be during the period of repayment.

The bolded statement “to help you get out of debt” is a wish at best. Taking advantage of this offer does not mean that you will get out of debt. in fact, if you use the credit to pay off other debts then rather than getting out of debt you are simply trading one debt for another.

I am sure that Bank of America would argue that by taking advantage of this variable interest rate offer that is subject to penalty interest rates of 27.99% and other fees and charges, that it is possible for someone to get out of debt. Yes, but not until the entire loan is repaid, and at what total cost?

The Debt Consolidation Offer – Front

Below you will see the top part of the front side of the Bank of America CleanSweep Debt Consolidation Plan offer.

Debt Consolidation Offer Front - Top (Click image for larger.)

Let me first start with the asterisks and referenced statements and then we’ll get to specific statements made in the offer.

Next to the statement “A loan amount up to $50,000″ there is an asterisk that refers to the following clarification.

Approved accounts will have a credit line between $500 and $50,000 based on creditworthiness.

Next to “..pay off high interest rate debt” there is an mark that refers you to this statement.

We may prohibit use of this account to pay off or pay down any account issued by FIA Card Services, N.A.

FIA Card Services is the name taken by MBNA when it became a subsidiary of Bank of America. So this means that even if some of your debt is debt now owned by Bank of America, they may prevent you from paying a debt off owned by Bank of America so this offer can’t be used to shift just any debt. Does this mean that even though I might have a higher interest rate debt with Bank of America that they’d prevent me from consolidating that debt into this offer, why yes it does.

So let’s turn back to the offer again. On the left we see a series of bullet points that Bank of America wants to draw your attention to.

Even though this offer is sent in the guise of being a debt consolidation plan and a prudent financial tool to help you to get out of debt, let’s look twice at one bullet point in particular.

Use The Money As You See Fit

So while you may be approved for up to $50,000 you don’t actually need to use the money to get out of debt or reduce your liabilities, you are being openly told that you could use the money to go further into debt.

So this statement and inducement does not make this offer a benevolent gesture by Bank of America to help the consumer to better handle their finances in these troubled times. It is designed to allow Bank of America to also extend even more debt, to get you further into debt, even though it is called a debt consolidation plan and promoted on the envelope to help you get out of debt.

I’ve highlighted some of the statements on the front that got my attention. Let’s look at those.

Bank of America CleanSweep Offer (click for larger image)

“There’s never been a faster, easier way to get the extra cash you need to help pay off high-interest debt or to use however you decide”

That is just a blatantly false statement. The majority of credit offers sent can be approved over the phone in a short amount of time. How is this offer faster?

“…for a loan up to $50,000.”

So how is it that I’m getting out of debt by swapping one loan for another and we now from looking at the asterisk that our approved credit limit may be as low as $500.

“Or think about taking that well-earned vacation or renovating your kitchen.”

Here we are back to the encouragement to not use this credit offer to get out of debt but in fact to do just the opposite.

“APR increases or additional advances will lengthen term or increase payments.”

So this isn’t even close to being a fixed monthly payment debt reduction offer if when the APR changes, which it will, it will cause my payments to increase and the repayment period to become longer. There isn’t anything that is set in stone that I, as a consumer, could depend on to judge what my monthly obligation would be under this credit offer, even though there is a large and nicely presented table. The table is irrelevant to the final terms and interest rate fluctuations over the life of the loan.

“All payment amounts and terms above are estimate based on an APR of 8.99%. Your APR may be higher.”

If 8.99% is the best interest rate to be offered then the majority of people taking advantage of this offer will have a interest rate higher than 8.99%. Think about it like this, only the select group, the best credit people will actually get the best interest rate. So all the rest will get a rate between 8.99% and 21.99%. If the majority of people will get a rate higher than the interest rate used to calculate the repayment table, it make the figures used in the table inaccurate and not representative for the majority of new customers. I wonder what percentage of people that receive this offer will actually get the 8.99% rate? Logic would make me believe that that number will be the minority of all acceptances.

Bank of America CleenSweep Repayment Table

“…the U.S. Prime Rate applicable using this formula was 5.00% and the APR range was 8.99% to 21.99%. We may adjust your APR on a monthly basis due to changes to the Prime Rate. For approved accounts, we also reserve the right to change your APR, fees or other credit terms at our discretion. Additionally, if you fail to pay your minimum monthly payment by its Payment Due Date on any two occasions within 12 consecutive months, we may increase your APR up to a Default APR of 27.99%, which will no longer be variable.

I hope you saw what I consider to be on of the most important statements made in this offer, we also reserve the right to change your APR, fees or other credit terms at our discretion.

When you take Bank of America up on this offer, you are giving up all control and all future certainty to what this offer will cost you over the life of your repayments. There is nothing that is fixed or predictable about this offer, even though that is what is promoted. Let me be clear, Bank of America is clearly stating that they can change everything about this agreement at any time and for any reason and you will be bound by those new terms.

“You will pay a 3% transaction fee on each advance (minimum fee $5; there is no maximum)”

If you were approved for the entire $50,000 then you would have to pay a fee of $1,500 to consolidate your debts into this offer.

Bank of America CleenSweep Application

I must point out a critical and very important part of this part of the application.

The Gotcha

“BY SUBMITTING THIS APPLICATION I AGREE TO THE CONDITIONS ON THE REVERSE SIDE OF THIS FORM AND TO BE BOUND BY THE TERMS OF THE ACCOUNT AGREEMENT, INCLUDING ARBITRATION, WHICH WILL BE DELIVERED TO ME BEFORE USING THIS ACCOUNT.“

This simple little statement could be the subject of an entire article in itself. An unsophisticated or desperate consumer in debt may simply take advantage of what appears to be a predictable monthly payment debt consolidation loan to get out of debt.

But this offer and application does not contain all of the terms of this loan and you won’t get those terms that you will be legally bound to or see them until you apply for the account and are approved. How can anyone make a fully informed decision about the merits of this debt consolidation loan offer without seeing all the terms?

Credit card companies have been under a lot of heat about their binding arbitration clauses in the credit card agreements. If there is a dispute under this agreement and you challenge it the case will not be handled by the court, but by an arbitrator appointed by the creditor. For more information about the unfairness of arbitration and the reality of fair and accurate representation of the consumer, read Banks vs. Consumers (Guess Who Wins).

In the interest of actually finishing this review I’m going to skip reviewing the very short application part of the front of this offer and move onto the back. In a future review I’ll concentrate on the application part of another credit offer.

The Debt Consolidation Offer – Back

The back of the offer consists of two parts. The top part is a continuation of the marketing message and the bottom half contains mostly terms and some marketing messages. The top half is below.

I’m already getting weary of pointing out all of the inconsistencies of this offer but here are some more.

“If you like, we can pay your others creditors directly, deposit the funds right into your checking account, or send you blank checks to use as you please.”

So now we learn that not only can we use the debt consolidation offer to take a vacation but that Bank of America will even send you blank checks to use as you please, and not just to get out of debt or to consolidate your debt or to lower your payments. If you take on new debt through this offer, your overall debt payments actually go up.

“The funds have a reaccess feature, so you can ask us to “refill” your account up to your available credit line over and over as you pay it off.”

I’m confused how a loan marketed as a plan or way to get out of debt, really gets you out of debt if you can just keep adding to the loan as you pay it off.

The bottom half of the back contains more of the same terms and conditions that I’ve already covered above. so in the interest of actually being able to end this article. I’m going to skip it for now.

Summary

Bank of America promotes its CleenSweep debt consolidation offer as a way to get out of debt with one predictable monthly payment. A quick examination of the offer easily shows us that the intent of the offer is not to get us out of debt, but to in fact encourage the extension of more credit and cash to use how we see fit to use it. Maybe even for drugs, gambling, compulsive shopping or some other purpose that is not in our best interest.

The idea that this offer will actually be as shown to the majority of people who apply is very suspect. The majority of people will not be able to repay their debt in accordance with the repayment table shown and there is nothing fixed about the monthly payment when the terms, fees, and APR can be changed at will by Bank of America.

In fact, the repayment table is completely misleading, false, and inaccurate even for the most qualified of applicants. The table shows a monthly repayment amount for 96 months, that’s eight years. There is no recorded time in the history of the prime rate where it has held the same interest rate for anywhere near that time period.

Prime Rate Historical Graph

If we look at the prime rate adjustments over the last eight years you can see that the rate today, the rate that the repayment chart is based on, is at the bottom of the prime rate trends. That means that there is a significant chance that both the prime rate and your “fixed and predictable” monthly payment will rise during the period of repayment and be neither fixed nor predictable.

This offer appears to be nothing more than a ploy to push more credit to people that might be concerned about their current financial situation, looking to consolidate their debts or get a grip on better managing their financial situation. However, almost everything about this offer does none of that.

My vote about this offer – Avoid It.

Expect Tidal Wave Of Limit Reductions and Credit Card Closures to Hit Before Christmas

Steve Rhode — Mon, 03 Nov 2008 17:50:42 +0000

From How to Get Out of Debt

Yesterday I wrote about a little old hardware store that had noticed an increase in card purchases over cash. That’s not a good sign if people are using plastic more for routine things and especially in this environment of credit card issuers reducing credit limits, raising interest rates and closing cards.

You see, the credit card issuers are getting freaked out that more people are going to start using the cards when they can’t afford it. Shocking! I guess that’s okay when you can limp along and make the monthly minimum payments but otherwise it is a bad thing.

The credit card message has been “use the card, use the card, use the card” but that pendulum is swinging to “don’t use the card, don’t use the card, we’ll take that card”.

Apparently this trend is not limited to just the United States or just hardware stores. A story in India noted:

Usage of plastic money is increasing with times but at the same times it is also increasing the worries of credit card companies. In September 2008, the transactions done through credit cards went up by nearly 20% against the previous month. Normally this would be a reason to cheer for the card companies but presently it has become a cause of concern.

The credit card companies are worrying because they think that rising usage of credit card may also result in higher number of defaults among these users.

If all of this is true, which it is, retailers are going to be hating life this holiday season as credit card issuers start closing cards to avoid even higher losses. Without available cash or loose credit, consumers won’t be able to go overboard on holiday spending.

I’m thinking we need a joust between banks and retailers. Wouldn’t that be fun to watch?

Video Comment

Is Debt Consolidation a Viable Debt Solution For Unsecured Debt?

Steve Rhode — Thu, 30 Oct 2008 04:27:40 +0000

From How to Get Out of Debt

It seems like every day the question of debt consolidation comes up and I think it is starting to drive me a little crazy. Some where in the human DNA is a gene that makes people think that when you have problems paying your bills that debt consolidation is the natural debt solution.

If I had my choice I’d rather make the bills magically vanish. I’d rather have that little leprechaun on the Lucky Charms box come and make my debt magically disappear. Debt consolidation does not do that. Instead, debt consolidation just wraps your debts into a new obligation.

It isn’t even possible to get a debt reduction from debt consolidation. The best debt consolidation program in the world is not going to consolidate your debts into a smaller balance. You’ll still owe what you owe. The only way to reduce your monthly payment would be by paying off your debts with a debt consolidation loan, typically a loan using your home as collateral.

If you default on your new debt consolidation mortgage, the bank will take your home and you will lose your roof. The consequences from defaulting on a debt consolidation mortgage refinancing are pretty severe so just know what you are getting yourself into before you sign on the line.

Borrowing money to pay off your debts may allow you to lower your monthly payment but that does not lower the amount you owe. Let’s be clear about that. The reason your payment may be lower is because the interest rate is lower and the length of time to repay the loan may be longer as well.

The most realistic ways to eliminate credit card debt quickly is if you happen to come into a windfall of money, like winning the lottery or inheriting money after the death of a loved one. I’ve seen both of these things actually happen and people have managed to get out of debt completely.

It’s really hard to time a lottery win or the death of a rich relative to your desire for a debt consolidation loan so don’t hold your breath waiting for that to happen.

Source: Is Debt Consolidation a Viable Debt Solution For Unsecured Debt?

Is Consolidating Debt the Way to Go? – American Chronicle

Steve Rhode — Wed, 29 Oct 2008 05:38:10 +0000

From How to Get Out of Debt

With so many ads on TV and the Internet proclaiming debt consolidation as the answer to financial difficulties, it´s no wonder many people assume it must be the ideal debt solution. The reality, however, is that many misconceptions surround the seemingly simple notion of consolidating credit card debt. In fact, consolidation will not necessarily reduce or even secure a fixed interest rate, and may not expedite your debt relief at all.

Services proposing to consolidate your debt will recommend the following: place several of your debts into the same account, so that you only have to make one single payment each month. What debt consolidators don´t tell you is that this process may not only make no impact on your total debt amount, but it could also prolong the term of your loan.

Is Consolidating Debt the Way to Go? American Chronicle, CA - 21 minutes ago … the debtor to discharge their debts by filing for payday loans in recent years, offering some contrast to the get-out-of-debt ads we´re bombarded with. …

Click Here for totally free debt help, advice and answers.

Read the rest here: Is Consolidating Debt the Way to Go? – American Chronicle

How to Get Out of Debt With the Get Out of Debt Guy » interest rate

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The Answer:

The Answer:

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Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up.

The Debt Consolidation Offer Envelope

The Debt Consolidation Offer – Front

The Debt Consolidation Offer – Back

Summary

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