Debt consolidation loans will help you get out of debt at best and minimize the impact of debt on your life. Debt consolidation works by combining all your smaller debts into one larger loan at a much lower interest rate which means you are able to pay your debt off with much lower repayments. So, if the various debt consolidation options are such a magic wand why is it that so many people are left with the same debt burden two years later on?
The answer lies with the fact that debt consolidation treats the symptoms but not what caused the problem itself!
Debt consolidation will only work when combined with a willingness to change lifestyle habits, by that I mean spending habits, which, lets face it, is the root cause of any financial problem.
Many people fall into the trap of thinking that once they have rectified the problem or got it back to a level that it can be maintained easily again that they can revert back to how they were spending before. The trouble is they do not understand that the acquisition of a loan for the purpose of consolidation is not something they can do every time their finances get into a bad shape.
Often it is very difficult to acquire another loan for quite some time, not only that but many loans that are taken out for the purpose of consolidation are given so on the provision that no more debt is accrued on the debts being paid off.
There are many reasons that may have caused your debt; unexpected medical bills are one of the largest culprits along with student loans but if you are neither sick nor have student debt the truth of the matter is you are spending more than your income will allow you to.
The main reason that you are able to spend more than you earn is the ease that you are able to apply and be approved for credit cards. These seemingly infinite lines of credit allow the ‘buy now, worry about the cost later’; crowd to get into some seriously heavy credit card debt.
If the misuse of credit cards is the reason your debt has become unmanageable then the easiest way to avoid this after you have consolidated is quite simply to get rid of your cards completely and revert to using cash.
Many would argue that credit cards are useful in a cash emergency, which is a valid argument as long as your idea of an emergency isn’t a dress that is marked down or a new set of wheel rims that are an unmissable bargain! If this is an argument that you feel is valid the you could always get rid of all but your lowest interest card and ask a family member or a trusted friend to keep it for you to avoid any impulse spending.
You should think of debt consolidation as your last chance of getting your finances back in line but you need to remember that tackling what caused your debt and not just the symptoms will provide you with a true answer to your plight
Source
Monday, December 28, 2009
Tuesday, December 15, 2009
United States News - Get help with Bill consolidation loans , Get out of debt faster
Low interest bill consolidation loans can help people buried under a mountain of ever-increasing debt get back on their feet again. High rate credit cards, loans with fluctuating rates, and dozens of creditors sending monthly bills and demanding payments can frustrate the calmest of individuals. Reorganizing these debts debt consolidation programs with one solid rate and one monthly payment provides a way for many individuals to better manage personal debt. Rates are generally lower than the average rate of current bills. Installments are smaller, giving consumers the opportunity to use surplus funds to reduce debt even further. Low bill consolidation services are convenient and can give great hope to those in despair.redit card debt, student and car loans, as well as debt attached to high rates can all be consolidated into one account with a lower rate. Low rate credit card debt consolidation programs generally come in two types. Secured loans are based on collateral, an item that is used to ensure repayment of the amount borrowed. If the debtor defaults or doesn't pay back what is owed, the collateral is taken. Secured contracts generally come with lower rates because they are secured. Unsecured federal consolidation loans usually have higher rates but still lower than credit card rates. Without the security of collateral, individuals must have good credit to be approved.
The higher a consumer's credit rating, the lower rate he or she can qualify for or will get more amounts under debt settlement program. However, regardless of the loan type, low interest bill consolidation doesn't reduce personal debt. It simply combines debt under a lower rate that is more debt management for the consumer. Because payment terms are usually longer, even with lower rates and installments, the final payout amount could be greater than the initial pre-consolidated debt. Plus, some creditors will add additional fees to compensate for what they lose in lower interest or charge penalties for early payoff. In some cases, it could be worth a higher rate to avoid such penalties.
Source
The higher a consumer's credit rating, the lower rate he or she can qualify for or will get more amounts under debt settlement program. However, regardless of the loan type, low interest bill consolidation doesn't reduce personal debt. It simply combines debt under a lower rate that is more debt management for the consumer. Because payment terms are usually longer, even with lower rates and installments, the final payout amount could be greater than the initial pre-consolidated debt. Plus, some creditors will add additional fees to compensate for what they lose in lower interest or charge penalties for early payoff. In some cases, it could be worth a higher rate to avoid such penalties.
Source
Saturday, November 28, 2009
Credit Card Debt Consolidation
Typically, debt consolidation programs are debt repayment programs operated by non-profit organizations. They can consolidate most types of unsecured debts from major credit cards to personal and student loans. You choose the accounts you want to enter into the program when joining. Once enrolled, the company will contact your creditors to negotiate more favorable repayment terms on your accounts including a reduction in your interest rates and the elimination of late fees. You will then send that company one lump sum payment monthly which they will disperse to the creditors you enrolled on your account when joining.
The multiple options available to consolidate ones debts can be quite confusing, credit counseling programs, debt settlement, debt consolidation loans, bankruptcy are just a few options available today. Trying to find the best option to suit your current financial situation can be a difficult task.
Typically, Debt consolidation programs are debt repayment programs operated by non-profit organizations. They can consolidate most types of unsecured debts from major credit cards to personal and student loans. You choose the accounts you want to enter into the program when joining. Once enrolled, the company will contact your creditors to negotiate more favorable repayment terms on your accounts including a reduction in your interest rates and the elimination of late fees. You will then send that company one lump sum payment monthly which they will disperse to the creditors you enrolled on your account when joining.
Most so called debt consolidation loans are just home equity loans in disguise. They use the equity built up in your current home loan and use it to repay all of your unsecured debts. These types of loan options usually come with heavy application fees and can greatly extend the amount of time it will take you to pay off those debts. These loans also convert all of your current unsecured debts into on secured debt which is now backed by your home. If you fall behind on your payments you could risk losing your property.
Source
The multiple options available to consolidate ones debts can be quite confusing, credit counseling programs, debt settlement, debt consolidation loans, bankruptcy are just a few options available today. Trying to find the best option to suit your current financial situation can be a difficult task.
Typically, Debt consolidation programs are debt repayment programs operated by non-profit organizations. They can consolidate most types of unsecured debts from major credit cards to personal and student loans. You choose the accounts you want to enter into the program when joining. Once enrolled, the company will contact your creditors to negotiate more favorable repayment terms on your accounts including a reduction in your interest rates and the elimination of late fees. You will then send that company one lump sum payment monthly which they will disperse to the creditors you enrolled on your account when joining.
Most so called debt consolidation loans are just home equity loans in disguise. They use the equity built up in your current home loan and use it to repay all of your unsecured debts. These types of loan options usually come with heavy application fees and can greatly extend the amount of time it will take you to pay off those debts. These loans also convert all of your current unsecured debts into on secured debt which is now backed by your home. If you fall behind on your payments you could risk losing your property.
Source
Sunday, November 15, 2009
A debt payoff plan that works
If you want to stir up a hornet’s nest among personal-finance bloggers, declare that the debt snowball is far superior to the debt avalanche, or vice versa.
Most people won’t understand what the heck you’re talking about, but passionate adherents of either debt payoff method will spend hours honing their arguments and rebuttals.
Both approaches (which I’ll explain in a minute) have their advantages and drawbacks, but a fistfight over methods is the last thing you need when you’re sinking deeper in debt. You just want to know the best strategy for clawing your way out.
So here’s the short version: Any method can work if you free up enough income and apply it diligently to your debts. But if you want to craft the smartest payoff plan possible, you shouldn’t marry any single approach but instead create a plan that reflects your individual situation and types of debt.
I have some ideas about how best to do that, but let’s define some terms before we go further:
* Using the debt snowball approach, you order your debts by size and pay off the smallest first, on the theory that quick wins will keep you motivated. You throw as much money as possible at your chosen debt while paying the minimums on the rest. When the targeted debt is gone, you apply the same payment plus the minimum to the next debt, and so on.
* The amount you apply to your targeted debt grows as you pay off each bill, and you pack together those little victories to make a big dent in what you owe. This method is touted by personal-finance guru Dave Ramsey and his many enthusiastic followers.
* With the debt avalanche method, you pay off your debts by interest rate, tackling the highest rates first. The term was popularized by blogger Flexo at Consumerism Commentary, although the method has been applied for years by financial planners and others. The avalanche is the mathematically superior approach because you will pay less interest and can get out of debt quicker.
* A third method, the debt snowflake, can supplement the other strategies. When you snowflake, you look for little ways to trim your expenses. Brown-bagging it today? If you were “snowflaking,” you would apply the $10 you’d saved on lunch directly to your debts, either the same day or at the end of the week (hopefully combined with other little snowflakes of savings).
* Finally, because we’re getting all chilly, I’ll coin a new phrase: debt calving. A glacier calves when a big chunk of ice shears off its face, typically landing in the water with a big splash. Debt calving is when you get a big windfall and throw chunks of it at your debts.
Before you start freezing out your debts, though, you need to take a closer look at what you owe and create a plan. Here’s what you do:
List all of your debts
You need an inventory of everything you owe. Go through your bills and pull copies of your credit reports (get free access annually at AnnualCreditReport.com) to make sure you don’t miss any accounts.
Don’t forget to include:
* Credit cards.
* Store cards.
* Gas cards.
* Personal loans.
* Retirement plan loans.
* Life insurance loans.
* Federal student loans.
* Private student loans.
* Mortgages.
* Home equity loans or lines of credit.
* Business loans.
* Auto loans.
* Boat loans.
* Other vehicle loans.
* Medical debt.
* Debt consolidation loans.
* Collection accounts.
* Payday loans.
* Pawnshop loans.
* Title loans.
* Overdraft balances.
For each debt, you’ll need to note whom you owe, how much you owe, the current interest rate and the minimum payment.
You can typically find the interest rate of a loan on your monthly statement or by calling your lender to ask. Calculating interest rates for payday advances and overdraft balances is tougher, but you can figure your annualized interest rate is in the triple digits, so these should be at the top of your payoff list.
Negotiate for lower rates
Lower interest rates will help you get out of debt faster, so you want to check the possibilities for getting better rates on each of your debts. Some ideas:
* Consider balance transfer offers, personal loans or peer-to-peer lending. You might be able to get a better credit card interest rate using a balance transfer offer, although you have to do the math. Fees for these offers usually increase the debt you’re transferring by 3% to 4%, so the interest rate break needs to be big enough and last long enough to offset the fee.
* You can find offers at CardRatings.com, Bankrate.com and CreditCards.com. Also check into personal loans from your bank or credit union or a loan from a peer-to-peer site such as Prosper or Lending Club. The rates on these loans are typically fixed, unlike credit cards rates, which can soar to 30% or more.
* Consolidate federal student loans and choose the longest possible repayment term. Consolidation will fix your rate if it’s variable and may allow you more than the usual 10 years to pay off your balance. The more debt you have, the longer the repayment term you can choose. (See “Consolidate your student loans now.”)
* Stretching your loans over 15, 20 or 30 years will lower your monthly payment for this good debt so you can throw more money at your toxic debts. Once higher-priority debts are paid, you can speed up your student loan payments.
* Use home equity or retirement plan loans with care. You may be able to lower your interest rates by using these loans to pay off other debts, but you’re also putting your wealth at considerable risk. For more, read “The 3 worst money moves you can make.”
Categorize your debts
Divide your debts into “good,” “neutral” and “toxic” piles. There are those who believe there’s no such thing as good debt, but financial planners know that certain obligations can help you get ahead.
Video: Embracing a budget
A reasonable amount of mortgage debt, for example, will improve your net worth over time as the home gains value (it will eventually, you know). Federal student loans and business loans, in moderation, can help you boost your lifetime income.
These loans have other things in common: The interest rates are often low and typically deductible, further reducing the costs of carrying this debt.
Your goal with good debt should be to pay it off, but not until you’ve tackled your higher-priority debt.
Toxic debt should be your priority. Toxic debt comes with high or variable rates and includes credit card debt, payday loans, title loans and pawnshop loans.
Neutral debt is debt that isn’t necessarily toxic but that isn’t helping you get ahead either. It typically includes vehicle loans, fixed-rate personal or debt consolidation loans, and retirement plan loans.
Medical debt is a special case. If you’ve worked out an affordable repayment plan with a hospital or other provider, you can classify it as neutral debt. If you’ve signed up for a high-interest loan or provider-supplied credit card to pay it off, it probably belongs under toxic debt.
Private student loans can be tricky to prioritize as well. This debt can help you increase your income, which can make them seem like good debt, but private loans tend to come with higher interest rates than federal loans, and the interest rates are variable. In most cases you’ll want to place them at the top of the neutral debt pile or the bottom of the toxic pile — something to be paid off immediately after your nondeductible credit cards, payday loans and other bad debt.
Prioritize your debts
Now that you’ve sorted your debts, start with your toxic pile and identify the highest-priority debt, which is typically going to be the debt with the highest interest rate.
There are some exceptions. You may want to:
* Target maxed-out credit cards. If you have a card that’s at or near its limit, consider paying that down first, even if it has a favorable interest rate. Maxing out your cards can trigger higher rates and torpedo your credit scores. How far you should pay it down isn’t an exact science, but in general you’ll want to get your balances below 75% of your limits.
* Pay off a small bill if you need a quick win. If you’re really overwhelmed by your debts, knocking out at least one bill can give you the motivation to keep going.
* Consider accelerating a retirement-plan loan if your job is at risk. Retirement loans typically have low, fixed rates, which means they needn’t be a priority — unless your job is shaky. Most plans require you to pay back 401k and other retirement plans quickly after you leave your employer, or the balance you owe becomes a withdrawal and triggers a fat tax bill.
Remember, you’ll pay the minimums on all your other bills so you can throw as much as possible at your priority debt. Once that debt is paid off, you take the same payment and apply it to your next-highest-priority debt.
Craft your plan
You can use this debt reduction calculator to choose your approach (lowest balance or highest interest rate) for your toxic debts. It will allow you to try out different scenarios so you can see how a few more dollars, or a different repayment order, would affect how soon you’d be of debt.
After your toxic debt is dispatched, you may want to switch to other priorities, such as building up your emergency fund and saving more for retirement. When those bases are covered, you can start working on your neutral debt and then your good debt.
Of course, you’ll have to find the money to pay down these debts. This might be a good time to review the information at MSN Money’s “Managing your budget” Decision Center.
Before you start throwing any extra money at your bills, try to be realistic about whether your plan could work.
If your toxic debt totals half or more of your current income, or it would take you more than five years to pay it off, you might be better off considering other methods, including credit counseling, debt settlement or bankruptcy.
Implement your plan
If your plan is realistic, put it into place. An online bill payment system can allow you to set up your payments and quickly transfer extra funds where you want them to go. Remember:
* Don’t add to the pile. Stop charging. If you absolutely need to use plastic (for business travel, for example), use a card that you can pay off in full when the bill comes.
* Find a community for support. Debt repayment takes time, and the support of others in the same situation can keep you going. Read MP Dunleavey’s “The real key to being debt-free.”
* Review your minimums monthly. Credit card minimums can change if your interest rate changes. Even if your rate stays the same, your minimum may gradually drop over time if you don’t add to your debt. Consider automatic debits, which allow the credit card companies to take the correct minimum payment monthly from your checking account.
* Don’t forget to snowflake. Continue to look for little expenses you can trim, and set up transfers so the saved money is applied to your debt.
* Calve your way to financial freedom. Apply at least half of any windfall (tax rebate, refund check, inheritance or bonus) to your highest-priority debts. These big chunks can cut the time you stay in debt.
Source
Most people won’t understand what the heck you’re talking about, but passionate adherents of either debt payoff method will spend hours honing their arguments and rebuttals.
Both approaches (which I’ll explain in a minute) have their advantages and drawbacks, but a fistfight over methods is the last thing you need when you’re sinking deeper in debt. You just want to know the best strategy for clawing your way out.
So here’s the short version: Any method can work if you free up enough income and apply it diligently to your debts. But if you want to craft the smartest payoff plan possible, you shouldn’t marry any single approach but instead create a plan that reflects your individual situation and types of debt.
I have some ideas about how best to do that, but let’s define some terms before we go further:
* Using the debt snowball approach, you order your debts by size and pay off the smallest first, on the theory that quick wins will keep you motivated. You throw as much money as possible at your chosen debt while paying the minimums on the rest. When the targeted debt is gone, you apply the same payment plus the minimum to the next debt, and so on.
* The amount you apply to your targeted debt grows as you pay off each bill, and you pack together those little victories to make a big dent in what you owe. This method is touted by personal-finance guru Dave Ramsey and his many enthusiastic followers.
* With the debt avalanche method, you pay off your debts by interest rate, tackling the highest rates first. The term was popularized by blogger Flexo at Consumerism Commentary, although the method has been applied for years by financial planners and others. The avalanche is the mathematically superior approach because you will pay less interest and can get out of debt quicker.
* A third method, the debt snowflake, can supplement the other strategies. When you snowflake, you look for little ways to trim your expenses. Brown-bagging it today? If you were “snowflaking,” you would apply the $10 you’d saved on lunch directly to your debts, either the same day or at the end of the week (hopefully combined with other little snowflakes of savings).
* Finally, because we’re getting all chilly, I’ll coin a new phrase: debt calving. A glacier calves when a big chunk of ice shears off its face, typically landing in the water with a big splash. Debt calving is when you get a big windfall and throw chunks of it at your debts.
Before you start freezing out your debts, though, you need to take a closer look at what you owe and create a plan. Here’s what you do:
List all of your debts
You need an inventory of everything you owe. Go through your bills and pull copies of your credit reports (get free access annually at AnnualCreditReport.com) to make sure you don’t miss any accounts.
Don’t forget to include:
* Credit cards.
* Store cards.
* Gas cards.
* Personal loans.
* Retirement plan loans.
* Life insurance loans.
* Federal student loans.
* Private student loans.
* Mortgages.
* Home equity loans or lines of credit.
* Business loans.
* Auto loans.
* Boat loans.
* Other vehicle loans.
* Medical debt.
* Debt consolidation loans.
* Collection accounts.
* Payday loans.
* Pawnshop loans.
* Title loans.
* Overdraft balances.
For each debt, you’ll need to note whom you owe, how much you owe, the current interest rate and the minimum payment.
You can typically find the interest rate of a loan on your monthly statement or by calling your lender to ask. Calculating interest rates for payday advances and overdraft balances is tougher, but you can figure your annualized interest rate is in the triple digits, so these should be at the top of your payoff list.
Negotiate for lower rates
Lower interest rates will help you get out of debt faster, so you want to check the possibilities for getting better rates on each of your debts. Some ideas:
* Consider balance transfer offers, personal loans or peer-to-peer lending. You might be able to get a better credit card interest rate using a balance transfer offer, although you have to do the math. Fees for these offers usually increase the debt you’re transferring by 3% to 4%, so the interest rate break needs to be big enough and last long enough to offset the fee.
* You can find offers at CardRatings.com, Bankrate.com and CreditCards.com. Also check into personal loans from your bank or credit union or a loan from a peer-to-peer site such as Prosper or Lending Club. The rates on these loans are typically fixed, unlike credit cards rates, which can soar to 30% or more.
* Consolidate federal student loans and choose the longest possible repayment term. Consolidation will fix your rate if it’s variable and may allow you more than the usual 10 years to pay off your balance. The more debt you have, the longer the repayment term you can choose. (See “Consolidate your student loans now.”)
* Stretching your loans over 15, 20 or 30 years will lower your monthly payment for this good debt so you can throw more money at your toxic debts. Once higher-priority debts are paid, you can speed up your student loan payments.
* Use home equity or retirement plan loans with care. You may be able to lower your interest rates by using these loans to pay off other debts, but you’re also putting your wealth at considerable risk. For more, read “The 3 worst money moves you can make.”
Categorize your debts
Divide your debts into “good,” “neutral” and “toxic” piles. There are those who believe there’s no such thing as good debt, but financial planners know that certain obligations can help you get ahead.
Video: Embracing a budget
A reasonable amount of mortgage debt, for example, will improve your net worth over time as the home gains value (it will eventually, you know). Federal student loans and business loans, in moderation, can help you boost your lifetime income.
These loans have other things in common: The interest rates are often low and typically deductible, further reducing the costs of carrying this debt.
Your goal with good debt should be to pay it off, but not until you’ve tackled your higher-priority debt.
Toxic debt should be your priority. Toxic debt comes with high or variable rates and includes credit card debt, payday loans, title loans and pawnshop loans.
Neutral debt is debt that isn’t necessarily toxic but that isn’t helping you get ahead either. It typically includes vehicle loans, fixed-rate personal or debt consolidation loans, and retirement plan loans.
Medical debt is a special case. If you’ve worked out an affordable repayment plan with a hospital or other provider, you can classify it as neutral debt. If you’ve signed up for a high-interest loan or provider-supplied credit card to pay it off, it probably belongs under toxic debt.
Private student loans can be tricky to prioritize as well. This debt can help you increase your income, which can make them seem like good debt, but private loans tend to come with higher interest rates than federal loans, and the interest rates are variable. In most cases you’ll want to place them at the top of the neutral debt pile or the bottom of the toxic pile — something to be paid off immediately after your nondeductible credit cards, payday loans and other bad debt.
Prioritize your debts
Now that you’ve sorted your debts, start with your toxic pile and identify the highest-priority debt, which is typically going to be the debt with the highest interest rate.
There are some exceptions. You may want to:
* Target maxed-out credit cards. If you have a card that’s at or near its limit, consider paying that down first, even if it has a favorable interest rate. Maxing out your cards can trigger higher rates and torpedo your credit scores. How far you should pay it down isn’t an exact science, but in general you’ll want to get your balances below 75% of your limits.
* Pay off a small bill if you need a quick win. If you’re really overwhelmed by your debts, knocking out at least one bill can give you the motivation to keep going.
* Consider accelerating a retirement-plan loan if your job is at risk. Retirement loans typically have low, fixed rates, which means they needn’t be a priority — unless your job is shaky. Most plans require you to pay back 401k and other retirement plans quickly after you leave your employer, or the balance you owe becomes a withdrawal and triggers a fat tax bill.
Remember, you’ll pay the minimums on all your other bills so you can throw as much as possible at your priority debt. Once that debt is paid off, you take the same payment and apply it to your next-highest-priority debt.
Craft your plan
You can use this debt reduction calculator to choose your approach (lowest balance or highest interest rate) for your toxic debts. It will allow you to try out different scenarios so you can see how a few more dollars, or a different repayment order, would affect how soon you’d be of debt.
After your toxic debt is dispatched, you may want to switch to other priorities, such as building up your emergency fund and saving more for retirement. When those bases are covered, you can start working on your neutral debt and then your good debt.
Of course, you’ll have to find the money to pay down these debts. This might be a good time to review the information at MSN Money’s “Managing your budget” Decision Center.
Before you start throwing any extra money at your bills, try to be realistic about whether your plan could work.
If your toxic debt totals half or more of your current income, or it would take you more than five years to pay it off, you might be better off considering other methods, including credit counseling, debt settlement or bankruptcy.
Implement your plan
If your plan is realistic, put it into place. An online bill payment system can allow you to set up your payments and quickly transfer extra funds where you want them to go. Remember:
* Don’t add to the pile. Stop charging. If you absolutely need to use plastic (for business travel, for example), use a card that you can pay off in full when the bill comes.
* Find a community for support. Debt repayment takes time, and the support of others in the same situation can keep you going. Read MP Dunleavey’s “The real key to being debt-free.”
* Review your minimums monthly. Credit card minimums can change if your interest rate changes. Even if your rate stays the same, your minimum may gradually drop over time if you don’t add to your debt. Consider automatic debits, which allow the credit card companies to take the correct minimum payment monthly from your checking account.
* Don’t forget to snowflake. Continue to look for little expenses you can trim, and set up transfers so the saved money is applied to your debt.
* Calve your way to financial freedom. Apply at least half of any windfall (tax rebate, refund check, inheritance or bonus) to your highest-priority debts. These big chunks can cut the time you stay in debt.
Source
Thursday, October 15, 2009
New Rules Governing Credit Terms Go Into Effect This Month
BREMERTON —
They call or drop by her credit-counseling office in a steady stream.
They are distraught. Collectors are dogging them, and they desperately need help to consolidate and pay off their bills.
While their problems might have lots of causes — maybe they’re suffering under a subprime home loan — credit-card debt is often part of the mix, according to Barbara Mascarin, operations director for the nonprofit American Financial Solutions.
She is hoping new credit-card consumer protection rules help. They were signed by President Obama in May and go into effect this month through February 2010.
“I think that people maybe will not get into so much trouble,” Mascarin said. Her staff of about two dozen often set up debt management plans for clients, and within three to five years, many clients are back on track.
Under the new protections, consumers will have to be more than 60 days behind on payments before credit-card companies can raise interest rates on balances. And, credit-card companies will have to revert to previous, lower rates if consumers pay minimum balances on time for six months.
Credit-card companies also have to give 45 days’ notice and an explanation to consumers before they change their rates.
The rules also will make it much harder for credit-card companies to issue cards to people younger than 21. Soon, applicants younger than 21 will have to prove they have the ability to pay off debt, or a parent will need to co-sign.
“If you’re a student, it will be hard to get a credit card,” said Mascarin, whose own daughter was heavily solicited by credit-card companies while a student at the University of Washington. She later canceled cards she realized she didn’t need or want.
Credit-card companies are changing terms on millions of credit card accounts before the law takes effect, according to the Los Angeles Times. At least two are changing fixed rates to variable rates.
“The credit card companies are trying to find their way around it,” Mascarin said.
But they’ve also taken steps to help firms like American Financial Solutions assist more people. This spring, the nation’s 10 largest credit-card companies agreed to provide more affordable debt management plans and hardship programs for consumers.
“These new concessions are really making a big difference,” she said.
Those who come to her office have an average card debt of $13,000. Usually it’s some big life change — a job loss, divorce or death of a spouse — that has caused them to pull out the cards and start using them for daily expenses like groceries. One man that American Financial Solutions helped had gone through a divorce and charged up $90,000 in card debt, she said.
“One of the biggest things is medical problems,” Mascarin said.
On average, they have eight credit cards, including some from the big companies and a smattering of retail cards.
The immediate advice they get is to put down the cards.
Her firm works with credit-card companies to lower rates, cut penalty fees and buy time for the consumer neck-deep in debt.
Not everyone can be helped. For those who can’t, the next step is bankruptcy. That path has become so common in this recession that American Financial Solutions began pre-bankruptcy counseling for clients in February. About 70 troubled clients get it a month.
But those who can be helped get a heavy dose of financial literacy, through counseling, classes and learning materials. The Bremerton-based company currently has 25,000 clients around Puget Sound and throughout the nation.
Mascarin wishes financial literacy were taught in schools, long before her clients got to this point.
“If you have to take a class on your state history, good grief, you should have to take a class in managing your money,” she said.
But if that’s not going to happen right away, it’s up to parents to teach the kids, she said. If you do a family budget, show them how. Show them how you balance your checking account. And explain credit cards to them, and how to use them.
But for those who cards helped get them into trouble, there may be help.
“It’s not the end of the world,” Mascarin said.
Source
They call or drop by her credit-counseling office in a steady stream.
They are distraught. Collectors are dogging them, and they desperately need help to consolidate and pay off their bills.
While their problems might have lots of causes — maybe they’re suffering under a subprime home loan — credit-card debt is often part of the mix, according to Barbara Mascarin, operations director for the nonprofit American Financial Solutions.
She is hoping new credit-card consumer protection rules help. They were signed by President Obama in May and go into effect this month through February 2010.
“I think that people maybe will not get into so much trouble,” Mascarin said. Her staff of about two dozen often set up debt management plans for clients, and within three to five years, many clients are back on track.
Under the new protections, consumers will have to be more than 60 days behind on payments before credit-card companies can raise interest rates on balances. And, credit-card companies will have to revert to previous, lower rates if consumers pay minimum balances on time for six months.
Credit-card companies also have to give 45 days’ notice and an explanation to consumers before they change their rates.
The rules also will make it much harder for credit-card companies to issue cards to people younger than 21. Soon, applicants younger than 21 will have to prove they have the ability to pay off debt, or a parent will need to co-sign.
“If you’re a student, it will be hard to get a credit card,” said Mascarin, whose own daughter was heavily solicited by credit-card companies while a student at the University of Washington. She later canceled cards she realized she didn’t need or want.
Credit-card companies are changing terms on millions of credit card accounts before the law takes effect, according to the Los Angeles Times. At least two are changing fixed rates to variable rates.
“The credit card companies are trying to find their way around it,” Mascarin said.
But they’ve also taken steps to help firms like American Financial Solutions assist more people. This spring, the nation’s 10 largest credit-card companies agreed to provide more affordable debt management plans and hardship programs for consumers.
“These new concessions are really making a big difference,” she said.
Those who come to her office have an average card debt of $13,000. Usually it’s some big life change — a job loss, divorce or death of a spouse — that has caused them to pull out the cards and start using them for daily expenses like groceries. One man that American Financial Solutions helped had gone through a divorce and charged up $90,000 in card debt, she said.
“One of the biggest things is medical problems,” Mascarin said.
On average, they have eight credit cards, including some from the big companies and a smattering of retail cards.
The immediate advice they get is to put down the cards.
Her firm works with credit-card companies to lower rates, cut penalty fees and buy time for the consumer neck-deep in debt.
Not everyone can be helped. For those who can’t, the next step is bankruptcy. That path has become so common in this recession that American Financial Solutions began pre-bankruptcy counseling for clients in February. About 70 troubled clients get it a month.
But those who can be helped get a heavy dose of financial literacy, through counseling, classes and learning materials. The Bremerton-based company currently has 25,000 clients around Puget Sound and throughout the nation.
Mascarin wishes financial literacy were taught in schools, long before her clients got to this point.
“If you have to take a class on your state history, good grief, you should have to take a class in managing your money,” she said.
But if that’s not going to happen right away, it’s up to parents to teach the kids, she said. If you do a family budget, show them how. Show them how you balance your checking account. And explain credit cards to them, and how to use them.
But for those who cards helped get them into trouble, there may be help.
“It’s not the end of the world,” Mascarin said.
Source
Monday, September 28, 2009
Lenders search for alternatives to loan proposal
As legislation that would dramatically remake the student loan industry speeds its way through Congress, private lenders are pushing alternatives to maintain a grip on some portion of the multibillion-dollar business.
President Barack Obama wants to overhaul the student loan industry by cutting out private lenders that offer subsidized loans while expanding the government’s role in lending directly to students. The changes could cut into profits at student loan giants Sallie Mae, Nelnet and others that have benefited from government backing in the $90 billion-plus market for student loans.
The industry is in the middle of a major push, with some prominent Democratic lobbyists on its side, to stall momentum for the Obama plan. The House Education and Labor Committee passed the reform bill by a 30-17 vote, with two Republicans in favor. The bill likely will head to the full House soon after the August recess.
As industry stakes its strategy on cost and efficiency grounds, private firms and members of Congress are clashing over budget estimates for the administration’s proposed changes.
Industry groups latched onto an estimate from the nonpartisan Congressional Budget Office (CBO) requested by Sen. Judd Gregg (R-N.H.) that showed under high-risk scenarios the House bill would save $47 billion over 10 years.
That is far less than the $87 billion that would be saved under standard scoring according to the CBO estimates. Rep. George Miller (D-Calif.), chairman of the Education and Labor Committee, has pointed to that figure to sell the lending bill.
The administration and Democratic supporters want to use the savings to help pay for expanded Pell Grants to low-income students.
Sallie Mae is supporting an alternative that the company argues is more efficient than Obama’s plan. Representatives from Sallie Mae met with lawmakers on Monday to discuss the proposal. The plan has not yet been scored by the CBO or introduced as official legislation.
Martha Holler, vice president of corporate communications at Sallie Mae, said the plan would save as much as or more money than the House bill. A bipartisan group of senators and House members have submitted the alternative plan to the CBO, according to a source.
“We meet all the president’s objectives, achieve the same level of savings, and do so in a manner that preserves competition, innovation and low loan default rates,” said Conwey Casillas, managing director of public affairs at Sallie Mae.
The student loan community Proposal includes risk-sharing provisions requiring student loan servicers to pay 3 percent back to the federal government if a loan defaults. It also contains a consolidation and extended repayment plan to allow borrowers to have more options to manage debt incorporating consolidation as a term of servicing contract, as opposed to an origination fee.
The lender has spent $1.8 million on Washington lobbying in the first half of the year, while its employees and political action committee have contributed $6.3 million to federal lawmakers over the last decade. Sallie Mae is also relying on the Podesta Group, a major Democratic lobbying firm, and Jamie Gorelick, a former deputy attorney general in the Clinton administration, to make its case.
Kevin Bruns, executive director of America’s Student Loan Providers, said the CBO’s recent analysis of the administration’s proposal should give lawmakers pause.
Source
President Barack Obama wants to overhaul the student loan industry by cutting out private lenders that offer subsidized loans while expanding the government’s role in lending directly to students. The changes could cut into profits at student loan giants Sallie Mae, Nelnet and others that have benefited from government backing in the $90 billion-plus market for student loans.
The industry is in the middle of a major push, with some prominent Democratic lobbyists on its side, to stall momentum for the Obama plan. The House Education and Labor Committee passed the reform bill by a 30-17 vote, with two Republicans in favor. The bill likely will head to the full House soon after the August recess.
As industry stakes its strategy on cost and efficiency grounds, private firms and members of Congress are clashing over budget estimates for the administration’s proposed changes.
Industry groups latched onto an estimate from the nonpartisan Congressional Budget Office (CBO) requested by Sen. Judd Gregg (R-N.H.) that showed under high-risk scenarios the House bill would save $47 billion over 10 years.
That is far less than the $87 billion that would be saved under standard scoring according to the CBO estimates. Rep. George Miller (D-Calif.), chairman of the Education and Labor Committee, has pointed to that figure to sell the lending bill.
The administration and Democratic supporters want to use the savings to help pay for expanded Pell Grants to low-income students.
Sallie Mae is supporting an alternative that the company argues is more efficient than Obama’s plan. Representatives from Sallie Mae met with lawmakers on Monday to discuss the proposal. The plan has not yet been scored by the CBO or introduced as official legislation.
Martha Holler, vice president of corporate communications at Sallie Mae, said the plan would save as much as or more money than the House bill. A bipartisan group of senators and House members have submitted the alternative plan to the CBO, according to a source.
“We meet all the president’s objectives, achieve the same level of savings, and do so in a manner that preserves competition, innovation and low loan default rates,” said Conwey Casillas, managing director of public affairs at Sallie Mae.
The student loan community Proposal includes risk-sharing provisions requiring student loan servicers to pay 3 percent back to the federal government if a loan defaults. It also contains a consolidation and extended repayment plan to allow borrowers to have more options to manage debt incorporating consolidation as a term of servicing contract, as opposed to an origination fee.
The lender has spent $1.8 million on Washington lobbying in the first half of the year, while its employees and political action committee have contributed $6.3 million to federal lawmakers over the last decade. Sallie Mae is also relying on the Podesta Group, a major Democratic lobbying firm, and Jamie Gorelick, a former deputy attorney general in the Clinton administration, to make its case.
Kevin Bruns, executive director of America’s Student Loan Providers, said the CBO’s recent analysis of the administration’s proposal should give lawmakers pause.
Source
Tuesday, September 15, 2009
With Credit Card Rates on the Rise, CreditLoan.com Suggests Consumers Now Consider Debt Consolidation
Utilizing a debt consolidation loan, the consumer can take payments from a few credit cards, all with their own interest rates, and combine them into one payment at a single rate. The benefit to this, in addition to having just one payment to make instead of a few, is that the payment will be lower. It is important, however, that the consumer calculate the interest and fees on all their accounts to determine if the cost of the bundled loan is actually less than the separate payments. Balance transfers are a good option too, though rates could change at any time and new purchases will be charged at a higher rate. Evaluating your options is key.
Daniel Wesley, CEO of CreditLoan.com, says, "Right now, credit card companies can raise interest rates even if the consumer has a late payment on an entirely different account. Any negative changes in their credit report can trigger interest rate hikes across the board." He goes on to say, "Debt consolidation is not for everybody, so we suggest evaluating your options first before making the final decision. We offer great advice on our blog, and provide up-to-date information to help consumers manage their finances."
Creditloan.com suggests taking advantage of payday loans. Such loans are easy to acquire. The borrower often does not have to go through a credit check and is approved right away. Home equity loans are another option. The interest rates are much lower, however, if payments cannot be made, the borrower risks losing their home as a result. Regardless, borrowers are better off weighing all options before making a decision on how to reduce their debt.
"When people are in serious debt, they tend to seek quick solutions," said Wesley. "At CreditLoan.com, we provide a portal offering expert advice on how people can reduce and manage debt, as well as solutions by bringing borrowers and lenders together. Financial recovery can be long and difficult and we try to clear up the misconceptions on debt consolidation and personal finances the best we can."
About Creditloan.com
Founded in 1998, Creditloan.com is a website designed around the educating of consumers on a range of personal financial issues. The content-driven site includes a range of expert advice on topics such as bad credit loans, mortgage/refinancing loans, credit cards, student loans, credit reports and repair, and more. Articles are added daily and distributed via RSS feed. Content is always fresh and unduplicated.
Source
Daniel Wesley, CEO of CreditLoan.com, says, "Right now, credit card companies can raise interest rates even if the consumer has a late payment on an entirely different account. Any negative changes in their credit report can trigger interest rate hikes across the board." He goes on to say, "Debt consolidation is not for everybody, so we suggest evaluating your options first before making the final decision. We offer great advice on our blog, and provide up-to-date information to help consumers manage their finances."
Creditloan.com suggests taking advantage of payday loans. Such loans are easy to acquire. The borrower often does not have to go through a credit check and is approved right away. Home equity loans are another option. The interest rates are much lower, however, if payments cannot be made, the borrower risks losing their home as a result. Regardless, borrowers are better off weighing all options before making a decision on how to reduce their debt.
"When people are in serious debt, they tend to seek quick solutions," said Wesley. "At CreditLoan.com, we provide a portal offering expert advice on how people can reduce and manage debt, as well as solutions by bringing borrowers and lenders together. Financial recovery can be long and difficult and we try to clear up the misconceptions on debt consolidation and personal finances the best we can."
About Creditloan.com
Founded in 1998, Creditloan.com is a website designed around the educating of consumers on a range of personal financial issues. The content-driven site includes a range of expert advice on topics such as bad credit loans, mortgage/refinancing loans, credit cards, student loans, credit reports and repair, and more. Articles are added daily and distributed via RSS feed. Content is always fresh and unduplicated.
Source
Friday, August 28, 2009
Unsecured debt consolidation loans with bad credit - Debt freedom without risking your collateral
Unsecured debt consolidation loans do not have collateral against the loan like other types of loans. The debt consolidation loan has many benefits one of them is that it will not require you to own large property for you to get the loan. On secured consolidation loans, they require you to place your house or other large property against the loan. In this case, failure to pay back the loan would result to the loss of your home or property.
The loan will enable you get rid of creditors bothering you. It is much simpler to manage your finances since you only have a single installment to pay. When you have many debts, you have several installments that you need to repay each month. You may find yourself unaware of the amount of installments required for each creditor therefore proving more difficult to handle than a single consolidated loan. When you are faced with a problem, you can just make one call instead of having to call a whole line of creditors.
A consolidated loan will generally help increase your credit score when you are able to pay the required installments on time. You can finally save money in the budget for any emergency fund and take care of the future for it guarantees financial security.
Unsecured debt consolidation loan is beneficial to mostly consumers who are able to make minimum monthly installments. It is also suitable for other forms of business depending on the core aim and status of the business itself. With the current mayhem in the situation of the economy globally, an unsecured debt consolidation loan would sure come in handy.
If you are bankrupt and stressing because you are not in a position to meet monthly obligations. Then you badly need a loan and the unsecured consolidation of debt is the option for you.
By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meets your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.
Source
The loan will enable you get rid of creditors bothering you. It is much simpler to manage your finances since you only have a single installment to pay. When you have many debts, you have several installments that you need to repay each month. You may find yourself unaware of the amount of installments required for each creditor therefore proving more difficult to handle than a single consolidated loan. When you are faced with a problem, you can just make one call instead of having to call a whole line of creditors.
A consolidated loan will generally help increase your credit score when you are able to pay the required installments on time. You can finally save money in the budget for any emergency fund and take care of the future for it guarantees financial security.
Unsecured debt consolidation loan is beneficial to mostly consumers who are able to make minimum monthly installments. It is also suitable for other forms of business depending on the core aim and status of the business itself. With the current mayhem in the situation of the economy globally, an unsecured debt consolidation loan would sure come in handy.
If you are bankrupt and stressing because you are not in a position to meet monthly obligations. Then you badly need a loan and the unsecured consolidation of debt is the option for you.
By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meets your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.
Source
Subscribe to:
Posts (Atom)