Debt Consolidation – Can You Negotiate with Your Credit Card Company?Written by Charles Essmeier
The average American household has nearly $10,000 in credit card debt, and many people are only able to make minimum payment of 2% of balance. Even 2% is $200, and by paying minimum payment, you could be paying on balance for decades before you finally pay it off. Since new legislation will make it more difficult to file for bankruptcy, it may occur to savvy debtors to try to negotiate a better deal with their credit card company in order to make it easier to pay off balance. Is this possible?
It might be possible, depending on your credit history, interest rate, and current balance. Your best bet, especially if you have a history of paying on time, is to simply call your credit card company and ask if they will lower your interest rate. They might, especially if you tell them that you got a better offer from another bank. If you have a history of paying late, however, they probably will not be willing to lower your interest rate. That’s unfortunate, since paying late has probably prompted credit card company to raise your interest rate in first place. Still, it’s worth a phone call; you may get lucky.
If you’ve been paying your bills on time, asking for a lower interest rate may be only option available to you. The credit card companies aren’t going to be too sympathetic to your financial
| | Debt Consolidation – Watch out for Payday LoansWritten by Charles Essmeier
Most any large city has a number of small shops offering payday loans. They’re often found in strip centers; sometimes they double as pawn shops. They have a simple business – they lend you money until your next paycheck. The system is pretty convenient; you write them a postdated check for amount you’re borrowing plus interest. On your next payday, they cash check and your loan is paid off. What many people who use payday loan services fail to realize is that interest rates charged by these firms are substantial, often reaching equivalent of four hundred percent per year!
The interest rates charged by payday loan stores varies from state to state, but a rate of 15-17% for two weeks is not unusual. This translates to 390-440% per year, which is a staggering amount of interest to pay on a loan. The lenders say that these amounts are fair, and are necessary to cover overhead associated with running a business and to account for a substantial number of borrowers who fail to repay loans. That may be true, but that high of an interest rate can turn “convenience” of a payday loan
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