To SheSelz…who wrote:
I also am a customer of Chase. I have never paid late in 30yr. They have just raised my monthly minimum payment from 2% per month to 5% per month, an increase of 250%. My interest rate is fixed at 3.9%. After reading the previous blogs, I’m not sure if I should call them or not! Does anyone else have other reports on how they have been treated on this type of problem? Is this problem only been occurring with Chase or other banks as well. Obviously they found the loophole that I missed in all the fine print!
Before you resort to calling — and we’ll talk about that in a moment — I want you to try to think of this as a gift rather than a punishment (and I know it feels like a punishment, with a credit card this cheap, the temptation is to use it for all expenses you have to carry.) But let’s say you have $10,000 in debt on that card. If you pay it off at 2 percent a month — at the 3.9% interest rate without charging anything else — it’ll take you 55 months. BUT if you can come up with the $500 it takes to pay the 5 percent a month, you’ll get out in 21 months. And save a boatload of interest in the process.
What if you can’t? What if it’s impossible to come up with that $500 a month? You simply don’t have the cash and you don’t have a way to get it? Then you call and you tell them that and try to negotiate something in between. Understand, they may cancel your card as a result (that’s their prerogative) or only be willing to cut the minimum so far or say no. But it’s better for your long term financial health if you can rob from the various Peters in your life to pay this particular Paul.
Okay, so you don’t usually get a headline like that on a financial story unless it’s an out and out scam. Today is different. Two things I want to tell you about may actually help you get through this month (and those following) feeling less squeezed than in the months before.
1. 125% Loan To Value
One of the big frustrations I’ve heard about — from some of you indeed — in the attempt to refi a mortgage because you’re feeling squeezed by the payments is the inability to qualify for the Making Home Affordable plan. As originally drafted, it was tough. Your loan not only had to be underwritten by Fannie or Freddie but you could owe no more than 105% of the appraised value of the home. Due to the fact that people overborrowed to such a great extent and home appraisal values had fallen similarly, that was a high bar to scale. Well, it’s been revised. Now you can owe up to 125% of the appraised value. CNBC covered the story pretty comprehensively here. The bottom line: If you’ve tried and failed, try again.
And note: Mortgage rates fell again this week. The 20-year-fixed rate loan is back at about 5.3%. More…
MONEY 911
This is an ongoing debate, and the answer, of course, depends on individual circumstances. But on this morning’s Money 911, we hashed it out for Susan, a caller from Michigan. Watch the video for more:
Last week I appeared on Today to join Forbes Editor Bill Baldwin (one of my former bosses) discussing a story from his shop about things you should buy before the recession ends. Essentially, these are things where prices have fallen because of lack of demand. But as the economy improves, they’re expected to go right back up.
I started fishing around and found some deals that weren’t on his original list. If you are one of those people who have already stocked the emergency cushion, maxxed out the 401(k), gotten the health and life insurance you need, feel your job is secure AND you STILL have money to spare, look no further: More…
MONEY 911
The segment from this morning’s Today - which you can watch on the video below - is heavy on the mortgage advice, including information on how to refinance without blowing your budget on closing costs, and how to turn an interest-only mortgage into a fixed-rate.
The ink on the Credit Card Bill of Rights (officially the The Credit Card Accountability, Responsibility and Disclosure Act) is barely dry but banks have already figured out they stand to lose big bucks in lost interest and fees from consumers. Not surprisingly, they’re already figuring out how to make up that ground. Despite the fact that the new law won’t go into effect for nearly nine months, some of these fees/charges are already on the way – others you should simply watch out for.
* Higher Checking Account Fees: We’re already starting to see some changes in this arena. In recent changes: Bank of America (BAC) will increase its monthly account maintenance fee on its MyAccess checking from $5.95 to $8.95 per month in June. In particular, customers who don’t maintain significant balances should be on the lookout for additional or higher fees.
* Higher Overdraft Fees: It is already common to see overdraft fees of $35 – sometimes $39 – when you spend more than you have in your account. You’re then charged interest on the amount of money you’ve essentially borrowed to cover your bad checks or debits. Watch out in particular for two new kinds of overdraft fees: A tiered overdraft fee which means that with each successive overdraft the fees go up. Nine out of the 16 largest banks also have sustained overdraft fees, which means if you don’t pay off the overdraft amount and the fee in full, an additional fee gets tacked on. Sometimes it’s a per day fee and sometimes it’s a flat fees.
These overdraft fees – many of which are charged on debit and ATM transactions — are particularly annoying because banks do something called “stacking the debt.” They program their computers to process withdrawals not in the order that you make them but by the largest first. So if the largest withdrawal takes you over your funds, you’ll then incur overdraft fees on all of the smaller ones. And very few banks, according to the Consumer Federation of America, limit the amount of fees they’ll charge you in a single day. So if you swipe at the dry cleaner, the supermarket, the hardware store and the movies in a single day, you could be looking at $140 in fees. Ouch.
What can you do about it? One suggestion: More…
I know, I know, Jon and Kate Gosselin filed for divorce somewhere near their Pennsylvania home today. Having been there and done that, I can say I sympathize. And I cannot imagine what it must be like to go through something so soul shredding in the public eye.
But I can also say there is hope out there. This morning, I gave a speech in Montreal to a room full of credit union executives and board members. I sat next to a man twice widowed. He had lost both wives to cancer, the first diagnosed when she was only 28 years old, the second within a year to lung cancer (and, yes, she never smoked.) He had a smile on his face as he relayed this story courtesy of his third bride, who was at home recovering from surgery. (She is doing well, we hear, and we’re very glad.)
The third bride, a woman named Mary, works in a jewelry store. Not a place to meet men, she says, though she met her husband there (but that’s another story for another day). Late last week a man in his late 20s walked into the jewelry store to pick out a diamond ring for his bride. He’d been saving for this day, he said, since he was in his late teens and put a quarter in a jar — to eventually buy a ring for the woman he’d eventually fall in love with. To that jar he added another quarter, and another, and another.
Over a decade later, he walked into this Wisconsin jewelry store and poured out — onto a glass counter that must have been plenty thick — enough quarters to pay for a $2700 engagement ring. We are told a picture is forthcoming. (We will post it when we get it.) And we wish the groom-to-be, his new bride, our storytelling friend and his third-wife Mary all the best.
We are still believers in love that lasts.
I’ve suggested haggling over everything from your cable bill to your cell phone plan, but what about your credit card bills? These days, credit card companies are wising up to the fact that they’re better off getting some money than no money at all, and they’re more and more willing to work with you if you’re behind on your payments. Recently, I was on Today to talk about the ins and outs of negotiating with credit card lenders. Here’s a video of the segment:
MONEY 911
Just came across this Money 911 segment from May 13th that was never posted, and thought I’d take a minute to share. Better late than never, right? And the advice is still as good as ever. Check it out:
This week’s question comes from Mark in Waukesha, Washington. He writes:
“We have a car loan, which will be paid off late this summer to early this September. We are considering getting rid of a 1998 Oldsmobile SUV due to gas prices. Is it a good time to buy a new vehicle or a used vehicle or should wait until auto industry quiets down?”
Answer: With the auto industry in turmoil, there are some exceptional deals out there if you’re looking buy either a new or used vehicle. If you plan to have your car loan paid off in the coming months, and you’re in otherwise good financial standing, it could potentially be a good time for you to take advantage of the deals available to consumers. More…
