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If you have a student loan and you consolidate it, you will lock in this low rate for the life of the loan. I suggest that if you're still paying on a student loan that you look into this to see how much money you might save.
If You Don't Pay You're Going to Jail
On May 16, 2003 the Federal Trade Commission announced that they had received a temporary restraining order against a New Jersey firm to halt an alleged nationwide scheme that threatened consumers with jail time unless they immediately paid amounts of money that were not even owed.
Simply owing money on a bill is not a criminal matter. You can not be arrested because you don't pay your bills. Yes, you can be sued, but this would be a civil matter and you would not be arrested. There is no debtor's prison so this is an illegal threat.
If a bill collector tells you that you are going to be arrested because you haven't paid your bill report them to the FTC.
Secured Credit Cards
Safe and secure, sounds like a good deal, but take a closer look. Many credit card companies prey on folks who have bad credit and are desperately trying to get a fresh start. They may even guarantee you a credit card. These offers generally fall into one of two categories, one being a card secured by a savings account and the other being one where no saving account is needed.
A card that's secured by a savings account can be a legitimate and good way to have a credit card and repair a credit report. A deposit is made into a savings account and the credit card company in essence lends you your own money at a high interest rate. If you don't pay them they just keep your savings as payment. If you do pay them they'll lend you your money again. The only possible benefit that I see to this process is that they will report your payments to a credit bureau, at least they should, be sure and verify this before opening an account if this is your desire.
If you don't care about the credit report, just get an ATM card with a credit card logo on it. You can only spend what you've deposited, just like a secure credit card but there's no interest charges, no annual fees, no late fees and hey guesses what, no over-the-limit fees.
No savings account required would then by comparison sound pretty good, right? Look again! These guys will talk about credit limits of up to $1,500 but don't bet on it. What's likely to happen is you'll be approved for $150. Then some interesting charges start to appear. Be prepared for an application fee of maybe $99, and your annual membership fee is $49. Great, you get a credit card with a $150 limit with $148 in charges on it, so go out and have fun with your $2.
I've heard of a credit card company whose limits were so low and whose initial fees were so high that as soon as you got your card you were already over the limit, and then guess what you got? Yes an over-the-limit fee. And this is all before you take it out of the envelope.
And I've also noticed a kind of hybrid credit card animal, when you apply they mention the high initial fees but buried in the fine print is the fact that your credit limit is based upon the amount of money you have on deposit with them. Ah, the best, I mean, worst, of both worlds.
Build Your Credit with a New Credit Card
Here's a beauty of an offer! Fortunately this offer was recently shut down by the government but it reportedly snared up to 500,000 easy credit victims. The program was simple enough: everybody was approved and issued a card, regardless of their credit history. The new credit card came with a $500 credit limit and immediate charge of $500 in fees. For your $500 in fee you then get $0 in available credit. As you pay down the balance, the credit line will open up and a credit history may build.
This card had a minimum $15 per month payment of which $7 was applied to the outstanding balance, your part, and $8 is applied to a ongoing monthly fee, their part. With this payment structure you would have had $500 in credit available in six years after you'd paid $576 in fees, that's if you didn't use the card for six years.
While this particular card is dead assuredly there will be other to rise and take its place. Beware!
Shocking But True
I used to think that if one had enough money there would be no reason to worry about your credit report. I was wrong. After hearing a news report about credit reports I’m convinced that everyone needs to have their credit report cleaned up. The report showed that a lady was paying an extra $2,500 a year in car insurance because, get this, six years ago after a family disaster she missed two credit card payments. Her perfect driving record made no difference because her insurance company put more importance of her credit card payments then her driving ability. This was for car insurance, I think this is stupid. Yes, it’s shocking but true.
My advice is to challenge every bad piece of information of your credit report whether it’s accurate or not. For best results consider this a long-term project. In my opinion there is no excuse for charging someone huge amounts of money for something that not related to credit because of something that’s on their credit report. So while you can challenge the information on your credit report yourself, I now feel if you need to get professional help it is worth the money to do so. And of course, don’t create any more new debt.
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