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…
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:
STUDENT LOANS
This year’s college grads are coming into a tough job market, no doubt about it. But because of a law that Congress enacted in 2007 – the College Cost Reduction and Access Act – they – and many other student borrowers – are going to see a little help with their loans.
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If your debt is overwhelming you, my first suggestion is always to contact the National Foundation for Credit Counseling. They can very often hook you up with a member credit counselor, who will put you on a debt management plan that allows you to pay off your debt within three to five years.
I mentioned this a few weeks ago, and dljimerson left the following comment:
In my case, I went to NFCC, filled out their requested info on CC bills etc (I owe about 50K in CC and car payments). I am unemployed and have been for months now, blown through whatever savings I have and unemployment covers the bare minimum to sustain life. The response from NFCC was I should seek legal assistance – which means bankruptcy. NFCC sure didn’t help me with their DMP plan. What else can I do? Is a bankruptcy my only option?
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