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DebtSmart    

ISSUE #196

Email Newsletter  

  February 18, 2009  


Scott Bilker
Signature
Scott Bilker, founder of DebtSmart
  

Hi,

Here are a couple items...

Debt can be overwhelming. So overwhelming, in fact, that actions go to extremes. Many people have committed suicide over money problems, and I ran across a recent story of just that. This is a terrible story, and I'm sure it had to do with more things than just debt, but certainly, financial problems were part of the picture.

You know all those credit offers you get in the mail? Well, they're still coming. You have probably heard that mail delivery is down or that banks are pulling back on their marketing efforts, but I know at least one family that disagrees. 445 credit offers in one year!

Best,
Scott


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In This Issue

Cool Quote
Where did that fee come from?
STATISTIC: Spending and Account Balances in 2008
Be systematic about cutting your debt
Stop Eating Your Way Into Debt!
"Outraged and discouraged, I came across your website..."
Recession: a good time to negotiate credit card debt
Household Math™: Minimum Payment Balance
Frozen HELOC
Cable Bill High? Phone Costs Up? Now, Let's Talk
 

Cool Quote

"If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning."

--Andrew Jackson

More cool quotes from past issues


Where did that fee come from?
by Scott Bilker

Howdy Scott:

I am writing to you about a unique situation that occurred about two weeks ago, and I was wondering if anyone else you know of, and/or subscribes to your newsletter, might have had this happen to them.

I currently carry a VISA card from Compass Bank, which is based in the southeastern portion of the US. I have had the card for a number of years and rarely carry any sort of a continuing balance.

I decided I wanted to payoff the balance, which at the time was approximately $48.03. I had not received my statement yet, so I went ahead, typed up a letter, enclosed a check for the balance-in-full, and mailed it off to Compass Bankcard's payment address in Decatur, AL.

When I checked the Compass Bank website 10 days later, I noticed that the outstanding balance on the card was $1.00. The first thought that came to my head was that I misfigured the amount of the payment for balance-in-full. Upon further examination, the dollar had been billed to my account as a payment processing fee.

I immediately contacted Compass customer service and asked them exactly what the fee was for. The representative told me that, since I had not enclosed the remittance portion of my statement, there was an added $1.00 fee for processing the payment. I told the rep I was ready to close the account, since I considered this a money grab. She went ahead and waived the fee. I asked her to pass along a message to her supervisor that there should never be a transaction fee for processing a payment.

Any thoughts?

John

 The Twin Cities of Minnesota

Finish reading the article


STATISTIC: Spending and Account Balances in 2008

Looking across spending as a whole in 2008, a phase change began in the summer. After a bump in the May/June time frame from tax refunds and credits, spending declined by $400 / month / household. Spending eroded even further (a $200 drop) in November along with consumer confidence, bouncing back only slightly for the holidays.

Looking by category from January to November, there is a greater than 20% decline in entertainment (-22%), Home – including furnishings, services, and home improvement (-21%), gas/fuel (-32%), and travel (-24%). Spending also declined in food, shopping, and bills/utilities, with the only increase being spending on financial advisors as people look for help during uncertain times.

Looking at average account balances is also interesting. From August to December, the average savings account was halved to $5,500. Fortunately, credit card debt remained roughly constant, but investments declined by 24%, while loans (mortgage, HELOC, student loans, and personal loans) increased by 11%.

More credit card and debt statistics


Be systematic about cutting your debt

Many consumers have decided to make 2009 the year they whittle down their debts. In fact, according to a survey by Franklin Covey, the self-help planner company, it's the No. 1 New Year's resolution.

That's good, because most people can help themselves to lower debts without calling in outside help, says Scott Crawford, head of a new debt-reduction website called DebtGoal.

See story here


Stop Eating Your Way Into Debt!
by Jill Cooper

At this time of year, there are usually three things people are panicking about: how to lose weight, how to save money, and how to get organized. We have already touched on losing weight, so this week I would like to touch on saving money.

Hopefully, most of you realize that you can get into deep debt if you buy a house or a car you can't afford. That seems to be pretty obvious, although a lot of people do it anyway. But that is not what I want to deal with today. The Bible talks about the little foxes that spoil the vine. What that is talking about is the little things that sneak into our lives without us realizing it. They start picking away at the vines in our lives until it destroys us. One of those "little foxes" is dining out.

Dining out is among the top causes of personal debt. Most of us hunt for the best interest rates on our mortgages, and we complain about the awful price of gas the whole time we are pumping it.

Finish reading the article


"Outraged and discouraged, I came across your website..."

Dear Scott,

I lost my promotional rate of 4.99% for the life of credit (American Express) over a month ago. (It changed to 18.99% in a split second). I was late with my payment, I admit. This happened for first time in my credit history. I did mark the bill as "PAID," but I didn't post the actual payment online. Life is complex, and sometimes things just don't work our way.

Anyway, I called customer service and requested to have my promotional rate reinstated. My request had been denied within 48 hours (I learned this today from CSR!!!! 4 weeks later); however, nobody from AE took the time to inform me about it!!! It seems that American Express deliberately kept this for themselves in order to charge high finance charges. I was charged twice in a row some $120 (I owe them about $7,000) in finance charges.

Outraged and discouraged, I came across your website and decided to try your books. I got them in the mail yesterday and educated myself overnight. Empowered and knowledgeable about my actual customer rights, I called customer service today AGAIN. I did recite them a couple to-the-point sentences of yours and stated clearly--in plain English--what I wanted. And, guess what: They apologized for not informing me about the denial of my request in a timely manner and were very "happy" to help in any way. note: As an ESL (English-second-language student) I appreciate ready-to-use sentences/examples.

Results of a single call: (1) Late fees of $38 waived without any further questioning; (2) Promotional rate 4.99% reinstated within 10 minutes while I was on hold; (3) The difference in the two interest rates credited back to my account.

Call time: about 15 minutes. Total credited to account: $206.15 (but with my rate reinstated, I'll be saving much more). I had no difficulty dealing with CSR and lady on the phone was actually very helpful and understanding. I also called my other credit cards regarding the lower interest rate, and I was 100% successful.

I just want to say thank you for writing this money and life saving book. Money is extremely emotional. I never knew that; I'm in credit card debt for the first time in my life. I hold two bachelors in Finance and Management but had no idea that I have so much bargaining power as a customer of theirs! I will recommend your powerful stuff to everyone I know. Please Scott, continue the good work and if you can, advertise more.

Lenka

Learn how to "Talk Your Way Out of Credit Card Debt"


Recession: a good time to negotiate credit card debt

You might think this is the worst time to try to negotiate a better deal with your credit card company, but you're mistaken. It's true that the nation's credit crunch has resulted in card issuers reducing credit lines, canceling unused accounts and raising interest rates. But you don't have to sit by.

Having regular conversations with your credit card company can be highly profitable. It's especially important if you're in a money jam or loaded with debt. Those conversations should include asking for lower interest rates, waived fees, higher or restored credit limits and, in dire cases, settling card balances for less than you owe.

See story here


Household Math (TM): Minimum Payment Balance
by Scott Bilker

Jeff owes Visa $2,500. The credit card company has an interest rate of 19.6% APR. The company requires a minimum payment of 2% of the unpaid balance, rounded to the nearest dollar. Jeff makes no additional purchases with this credit card and makes only one minimum payment monthly.

How long will it take him to pay off $500 on the $2,500 balance?

Answer this math problem


Frozen HELOC
by Gerry Manning

Dear Scott:

I thought I'd share some more tidbits with you, for whatever they might be worth. So far, I've been reading the "handwriting on the wall" with 20-20 vision.

Back in the spring, when Countrywide and WaMu were reported to have sent out hundreds of thousands of letters freezing people's HELOC accounts, I told my wife to immediately draw out the full limit on our GMAC one. She didn't like the idea, because we didn't need the money but went along with my judgment on the matter (will wonders never cease?)

By summer, sure enough, GMAC informed us that our HELOC was frozen. But now, since it was at prime + 1%, we're paying a much lower rate than on our first mortgage with them, and we only have to pay interest each month. I know they hate THAT. And we have no true "consumer debt" other than our house. No cars, no nothing. We only use credit cards as a form of "guerrilla financing" for our businesses - balance transfers and teaser rates. It's kept our cost of working capital below 6% for many years.

In October, when things started getting crazy with...

Finish reading this article


Cable Bill High? Phone Costs Up? Now, Let's Talk

Frustrated with his hefty and mounting monthly bill for TV, Internet and phone service, Alan Weinkrantz of San Antonio decided to call his provider, AT&T, shortly before Christmas to ask for a discount.

"Times are tough, and I don't think I can keep paying these rates," Mr. Weinkrantz says he told an AT&T representative. A communications-industry consultant who keeps a close eye on the space, Mr. Weinkrantz says he hoped for a reduction of about 10% to his $159 monthly bill. To his surprise, AT&T reduced his bill to...

See story here



The author(s), 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 this email newsletter and/or at the DebtSmart.com website. The information, methods and techniques described may not work for you and no recommendation is made to follow the same course of action. Every effort has been made to verify the accuracy of all content contained herein. However, there may be mistakes; typographical, mathematical, or in content. This email newsletter and the DebtSmart.com website have been created for your entertainment only. You must always seek the proper professional advice before taking any financial or legal action. You have been warned. Copyright ©2009 Press One Publishing. All rights reserved. Please do not reprint, or host on your web site, without explicit permission. However, if you found this newsletter helpful, we grant you permission, and strongly encourage you, to e-mail it to a business associate or a friend. Thank you.

The DebtSmart Email Newsletter, ISSN 1538-6740, is written and published by Scott Bilker and edited by Larissa Bilker and Denise Troy. Please contact comments@debtsmart.com with any comments, problems, or concerns. (See the very bottom of the email to make changes to your subscription.)

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