More good mail from that PARADE story on credit cards:
DAMPING DOWN THE TEMPTATION
From Diane: “One phone call to 1-888-567-8688 (OPT OUT) will put a stop to most unsolicited ‘preapproved’ credit-card offers. I called in August and to date have only received two offers. My mailbox can testify that this is a huge decrease!”
GETTING OUT OF DEBT
“What do you think of programs like the one at www.credit.org? Are they a good way to get out of debt? I am a full time student and have very little income right now and over 12K in credit card debt … please offer some suggestions.”
A.T.: I have not used it personally, but I think you are very much on the right track with www.credit.org. Try also www.genus.org. As Director of Education Bryan Amsel wrote me, “Our debt management and educational services are free. We do our debt-management services over the phone — 888-793-4368 — so people can call us and get the help that they need from the convenience of their own home. Also, since we are open 24 hours a day Monday through Saturday and 9AM-6PM (EST) on Sunday, people can call us when their debt problems are on their mind.”
KEITH AND JUDY ADAMS’ SMART STRATEGY
“My wife and I were $35k in card debt when we married in 1995 (divorce, illness, son’s college …). We were out of debt in two years by doing three things:
- “First, we plotted our progress using a computer spreadsheet program, and put it on the refrigerator. After a few months, we began to project when we would be debt-free. It helped us set our priorities, and to be patient.
- “Second, we used those 4.9%, 5.9%, etc. short-term rates to roll over the balance. We opened and closed a dozen accounts, and the maximum we paid (I think) was 8.9%. The credit card companies kept on sending us new low-rate offers, and we used them. Funny thing, since we are debt free, we seem to be getting fewer offers.
- “Last, we reserved one card for new purchases, and we paid it off every month. That way, we became used to paying off new purchases every month; I mean, we still had to live! Also, we liked being able to take advantage of the grace period right from the beginning of our debt recovery program, not after we were done.”
A.T.: So maybe you don’t want to 1-888-5-OPT-OUT of all those tempting ultra-low-interest introductory-rate credit card offers just yet. Keith and Judy Adams used them to good effect. But if you are even the tiniest bit out of compliance with the rules on those low-interest cards, many of them have the right to recalculate all your interest back up to the sky-high ordinary rates.
Toni Chiszar’s cautionary tale is a little different but makes the same point:
TONI CHISZAR’S CAUTIONARY TALE
“Back in August I noticed a high interest rate on my statement. Of course, I assumed it was an error, until I called and found out that 2 payments which were 5 days late in the last 12 months caused my interest rate to skyrocket from a fixed rate of 12.99% to 22.99%. I found no ‘small print’ allowing for this to occur. And I have impeccable credit that is now being threatened. To make a long story short, I obtained a home-equity loan and WILL NEVER PAY INTEREST ON A CREDIT CARD, AGAIN.”
A.T.: (The big caution on home-equity loans for paying off credit cards — on its face, a total no-brainer smart thing to do — is that two-thirds of the people who do that wind up just getting back into hock on their cards again. So they’re soon back where they started and have a second mortgage on their house.)
Tomorrow: Try a Credit Union; Beware “Convenience Checks”
Quote of the Day
Spending tens of thousands of dollars on a person's last few months of life is compassionate, but spending tens of thousands of dollars to improve a person's first few years of life is investment.~.
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