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DEBTSMART(r) EMAIL NEWSLETTER {ISSUE 1} 
ISSN 1538-6740
Copyright (c) 2001 Press One Publishing. All rights reserved.

TO SUBSCRIBE to email newsletter click below: http://www.debtsmart.com/cgi-pl/issue01.cgi?24 

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CONTENTS

->Note from the Publisher

->Mortgage Rates

->Bankruptcy Law Changes by Scott Bilker

->Lower Your Interest Rates

->The True Cost of Annual Fees (Q&A) by Scott Bilker

->We need YOUR help--take the DebtSmart survey!

->DebtSmart(r) Tax Time Tip

->Special Deals for DebtSmart(r) readers

->What now? by Gary Foreman

->Advertising Opportunities

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NOTE FROM THE PUBLISHER by Scott Bilker

If you asked for the print version of DebtSmart(r) Magazine, and signed up by 2/7/01, then you should have received the Spring 2001 issue by now. Otherwise you can download a copy at: http://www.debtsmart.com/cgi-pl/issue01.cgi?13.

Please let me know how you like the print edition and/or the electronic edition. Send your comments to me at comments@debtsmart.com. The next issue of the print magazine is scheduled for Fall 2001, but that may change.

Also, save this email! It contains many links that you will find to be helpful.

Lastly, if you like this newsletter please forward to your friends!

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MORTGAGE RATES
On 3/20/01, Federal Reserve policy makers lowered the bellwether federal funds rate by 50 basis points. According to the Wall Street Journal issue on 3-5-01, people wanting to refinance may be losing if they wait for the Fed to aggressively lower interest rates.

In anticipation of lower interest rates, mortgage rates have already dropped to a 30-month low. Customers should refinance now while conditions are extremely favorable. Many borrowers can find 30 year fixed rate mortgages below 7%.

You can shop for a mortgage, and apply online, at: http://www.debtsmart.com/cgi-pl/issue01.cgi?0 

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LOWER YOUR INTEREST RATES! 
The best way, and the fastest way, to save money on debt is to lower your interest payments. And the only ways to do that are either to get your current bank to lower the rate or get a new credit card. Below is a list of cards that you may want to apply for to get that lower rate:

Capital One Platinum card has a 0% introductory rate and 9.99% fixed after that!
http://www.debtsmart.com/cgi-pl/issue01.cgi?1 

American Express Blue card has a 0% introductory rate for 6 months, after that a fixed rate of 10.99% with no annual fee.
http://www.debtsmart.com/cgi-pl/issue01.cgi?7 

AFBA Bank Introductory rate of 4.9% for 4 months, afterward a variable rate of Prime + 2.9%. Cards have no annual fee.
http://www.debtsmart.com/cgi-pl/issue01.cgi?11 

NextCard Rates as low as 2.99% Intro or 9.99% Ongoing APR. 
http://www.debtsmart.com/cgi-pl/issue01.cgi?4 

Everbank Everbank's Platinum Visa has a variable APR of Prime + 1.9%, and no annual fee.
http://www.debtsmart.com/cgi-pl/issue01.cgi?6 

Aria Best card is Aria Platinum 0% for the first 3 monthly billing periods ("Introductory Period"). After that, Prime + 0.99% variable, no annual fee.
http://www.debtsmart.com/cgi-pl/issue01.cgi?3 

Juniper Juniper cards have a 0% introductory rate for 5 months and afterwards variable rate as low as Prime + 7.49%.
http://www.debtsmart.com/cgi-pl/issue01.cgi?8 

Aspire Card Helps people who have had trouble getting credit cards from the major credit card companies because of past credit problems.
http://www.debtsmart.com/cgi-pl/issue01.cgi?10 

Sterling Bank Offers secured credit cards to help people build or reestablish their credit.
http://www.debtsmart.com/cgi-pl/issue01.cgi?9 

Future Card 18.6% and lots of other fees. READ their disclosure! This card is only good if you're desperate for credit. 
http://www.debtsmart.com/cgi-pl/issue01.cgi?2 

First Premier Visa Also 18.9% with but there are fees. Make sure you read their disclosure carefully before applying.
 http://www.debtsmart.com/cgi-pl/issue01.cgi?5 

Global 1 Visa/MasterCard "EZ to qualify" card. Offers unsecured credit to those who have had credit trouble in the past, including bankruptcy. But watch out for application fees of over $300! 
http://www.debtsmart.com/cgi-pl/issue01.cgi?12 

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BANKRUPTCY LAW CHANGES 
by Scott Bilker

I'm sure you've heard by now that there are many sweeping changes to the bankruptcy laws. The bottom line is that it is going to become more difficult to erase all debts in a Chapter 7 bankruptcy.

By more difficult I mean that people who have enough income to repay a percentage of their debts are going to be made to do so by filing for a Chapter 13. Also, everyone who wants to claim bankruptcy would first have to seek the services of credit and debt counselors. Plus there will be a cap of $125,000 of home equity that can be shielded by bankruptcy.

I can understand why such legislation may be needed to stop people who are taking advantage of the bankruptcy system however, I also believe that it's not all the consumer's fault. Someone did lend them the money, and encourage them to use it. I certainly believe the lender does bear some responsibility if they encouraged the spending with a letter that said, "go on vacation...write yourself a check...get your tax refund early and go buy something."

On the abuse side, there are people who have, in the past, taken full advantage of the laws. I've heard about people who built million dollar homes with unsecured credit and then claimed bankruptcy. This eliminated their debts and they were able to keep the house! What a deal! :)

There are always people who will take advantage of the system but I think our lawmakers need to be careful not to hurt people who are honest. The people who have lost their jobs and need to get a fresh start by claiming bankruptcy. The people who are doing their best but, at this time, can't make ends meet enough and must turn to bankruptcy protection.

Some would say that the law is just right...I'm not too convinced.

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THE TRUE COST OF ANNUAL FEES (Q&A)

Question Dear Scott,

Is it true that when you get a credit card offer that has an annual fee, it's not a good credit card? I have gotten some in the mail from Capital One and I would really like to get the 0% but I don't want to pay the annual fee. Are there credit cards out there with 0% intro that don't require an annual fee? If so can you name a few. Thanks I enjoyed your show on CN8...

Patricia

Answer Thanks for watching the show on CN8--glad you enjoyed it!

All that matters, the way I see it, is that the card can save you money. Just because there is an annual fee doesn't mean the card is bad. If the annual fee is $500 then I would say it's bad. You really have to do the math for your situation.

Say you had a 0% APR card with a rate that never changes. Sounds good doesn't it?

Say it has an annual fee of $29...not too bad. But say the credit limit is $200. Then the annual fee becomes expensive because even if you max out the card at 0% the $29 annual fee makes the APR go from 0% to 14.5%!

I really focus on the math and how to know the true cost of credit offers in my book, "Credit Card and Debt Management." It's so important to be able to uncover all these costs so you can compare credit offers.

Now say you had a $10,000 limit on a 0% APR for one year with a $100 annual fee. It sounds like an expensive annual fee but if you use the entire limit the TRUE APR for the first year is only 1%.

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Scott Bilker is the Editor and Publisher of DebtSmart Magazine and also the author of Credit Card and Debt Management. To learn more about the book click on http://www.debtsmart.com/cgi-pl/issue01.cgi?14 

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WE NEED YOUR HELP--TAKE THE DEBTSMART SURVEY!

We believe the surest way create the best magazine is to ask you what you would like to see covered in upcoming stories and what other products would improve your financial life.

So please go to: http://www.debtsmart.com/cgi-pl/issue01.cgi?15 and complete the question and answer form that will help guide our future magazines. No personal questions just your opinion on stuff.

DebtSmart(r) is your magazine and we will get answers to your questions. Put us to work by completing that survey right now--hey, it may be fun too!

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DEBTSMART(r) TAX TIME TIP

'Tis the season...the tax season. And many people are looking forward to getting that refund. If you expect to receive a big tax refund from year 2000 then give serious thought to paying off some debt with that money! Actually, you don't want to get a big refund because that means you gave Uncle Sam an interest free loan.

When you do find that you're getting too much back simply adjust your W-4's to reflect your true tax situation. The goal is break even-owe nothing, pay nothing. I know people that get $2,000 back and are excited because they think of it as a forced savings account. The truth is that if you owe $2,000 at 18% to credit cards you could save approximately $360.00 over the year by applying that tax overpayment toward your debts. And that's a real savings that you can take to the bank.

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SPECIAL DEALS FOR DEBTSMART(r) READERS 
Note: All items below are satisfaction guaranteed! If you don't like them, for any reason, within the first 30 days, then you'll get a 100% refund. Hey, it's not like anything here is expensive anyway. :)

"Credit Card and Debt Management" by Scott Bilker Special price of $9.95 for DebtSmart(r) subscribers (retail is normally $19.95). Best-selling book with 95,000 copies sold! Click on below link to learn more:
http://www.debtsmart.com/cgi-pl/issue01.cgi?16 

"30 Year Loan Worksheet" Only $5.00! This Excel spreadsheet allows you to quickly create many loan scenarios and you can cut and paste into many applications--a great tool! Click on below link to learn more:
http://www.debtsmart.com/cgi-pl/issue01.cgi?17 

"No Bills! Debt Elimination Program" by Tim Timmerman Your price is $19.95 (retail $40). This is really an office suite of four programs! They do everything from creating money-saving repayment plans to writing letters to creditors. Click on below link to learn more: http://www.debtsmart.com/cgi-pl/issue01.cgi?18 

"DebtSmart Loan Calculator" by Scott Bilker Your price $9.95 (retail $19.95). This program is a simple yet powerful loan calculator. It can even calculate the interest rate, which most other calculators cannot. For example, say you had a $3,000 used car loan for 3 years at 11% APR. The monthly payment is $77.54. Now lets say that for some reason you need to pay a $2 per month fee. Well, then you really are paying $79.54 and that makes the APR jump to 12.36%! You can find answers to all the numbers easily! Click on the below link to learn more:
http://www.debtsmart.com/cgi-pl/issue01.cgi?19 

"Low Interest Rate Special Report" by DebtSmart(r) Only $9.95! The lowest interest banks in the nation! This 12-page booklet is kept current by continuously calling all banks in the report. This up-to-date reference will save you time and money! Click on below link to learn more:
http://www.debtsmart.com/cgi-pl/issue01.cgi?20 

Many of the printed items above are available electronically. For list all offers click on
http://www.debtsmart.com/cgi-pl/issue01.cgi?21 

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WHAT NOW? by Gary Foreman

Question Dear Dollar Stretcher, Since the Fed lowered the interest rate what do I have to do to benefit? Do I need to contact each credit card company and just ask for a lower rate? I also lease a truck from Toyota. Would the same question apply? If you could answer this I would be grateful. Vince

Answer With interest rates at their lowest level in two generations Vince is hoping to benefit. And he's right. Lower rates do make life easier for borrowers. So what does Vince need to do to take advantage of the situation?

Let's look at his questions one at a time. First, his credit cards. Vince's cards will be one of two types - either fixed or variable rate.

A fixed rate card offers rates that won't change as other interest rates increase or decrease. The rate is set by the card issuer and agreed to by the borrower.

The other type of card is a variable rate credit card. The rate charged for outstanding balances will be tied to the prime rate. Vince should see any rate drops almost immediately.

How can Vince find out which type he has? He can check his original credit card agreement, his statement, or call the card issuer. Most cards are variable, but the only way to know for sure is to check.

Vince should transfer any open balances to variable rate cards. He'll also want to watch his statement to make sure that the rate has been lowered. That should happen automatically. But, if he doesn't see a lower rate in the next billing cycle or two, it wouldn't be a bad idea to call the card issuer to find out why the rate hasn't changed.

No matter what's happening with the rates, Vince can always try to get a lower rate by phoning the card issuer. It doesn't take much in the way of time or effort. Most issuers will not make changes. But a few will. He doesn't want to try monthly, but once a year wouldn't hurt. Vince is more likely to have success if he's been good about making his payments on time or if his credit file has improved.

There's another way that Vince can reduce the amount of interest that he pays each month. That's by reducing his credit card balance. He can do that whether the card issuer lowers his rate or not. Remember, he'll only pay interest on the amount of money that he's borrowed.

Vince's truck lease is a different matter. Auto leases are almost always based on a fixed rate. That means that the rate is fixed from the day that Vince drove it off the lot until the day that he makes the final payment.

He doesn't mention it, but Vince will find the biggest savings are on home mortgages. A one percent change in a $100,000 mortgage would save $68 per month. That can add up pretty quickly. Especially if Vince were to refinance at the lower rate and keep making the same monthly payments as before. He'd knock 10 years off of his mortgage.

Like most consumers, the new lower interest rates presents Vince with two choices. The lower monthly payments would allow him to spend a little extra each month. But Vince needs to be very careful not to increase the total amount he owes. If he does he'll be in for a nasty surprise when rates rise sometime in the future.

The other option would be for Vince to continue making the same payments that he is now. The extra amount over his minimum will be applied to reduce the amount owed. If he's comfortable with his present payments it's a great opportunity to repay debts without tightening his budget.

Lower rates do make it easier for borrowers. But they also present a danger. A payment that's tied to a variable rate account may be comfortable today. But when rates rise the payment will rise, too. So be careful not to make commitments that will be difficult to honor later. 
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Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website:
http://www.debtsmart.com/cgi-pl/issue01.cgi?22 You'll find hundreds of free articles to save you time and money. Visit Today!

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ADVERTISING OPPORTUNITIES
http://www.debtsmart.com/cgi-pl/issue01.cgi?23 

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DISCLAIMER/WARNING 
Press One Publishing and DebtSmart.com shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in DebtSmart(r) Email Newsletter. All responses to this email are the property of Press One Publishing and may be reprinting, posted, or copied unless otherwise notified when sent.