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has anyone used a debt reduction plan that some credit card companies offer. I know mbna has one. Anyone else know of any? Do they work?
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Do you have any details on what they offer? There are consumer credit counselors that work pretty close to credit card companies. Is this what you are referring to?

Personally, I think trying to get help at reducing debt from a credit card company is like expecting to get rehab from a drug dealer.

Have you ever heard of the debt snowball? Do you have a monthly spending plan? These are the type of questions that someone who really wants to help you get out of debt will ask.

Fred
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Personally, I think trying to get help at reducing debt from a credit card company is like expecting to get rehab from a drug dealer.



What the credit card company wants to do is take over all your current CC debt in one loan so that they can steal another company's interest. Then offer you a line of credit on a new card that you will hopefully spend to the limit, too. They don't honestly expect you to reduce your debt -- they just want to take over the interest on it.
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The plan I am referring too is actually an unsecured loan which means that the interest is not calculated the same as "revolving debt". In other words, just like a personal loan, there is a set payment based on the timeframe chosen to pay the money back ie 72 months. This helps someone pay back the amount quicker versus only paying the 2% minimum, etc.
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This helps someone pay back the amount quicker versus only paying the 2% minimum, etc.

A loan like that puts all the interest in front of the loan payment period. If you can pay more than your minimum now, then do it now with your existing debt. Chances are as you pay down the debt, you will be able to get the interest down in one way or the other.

Fred
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Hi.

What you are describing sounds like one of those deals in which the amount you have to pay will be the same no matter how soon you pay off the loan. If this is so, it is most likely a bad deal. It means that once you're locked in, you'll be stuck with ALL the interest payments even if you manage to pay the loan off in 4 years, rather than 7.

What's the interest rate on this loan? And what rate are you currently paying on the debt? Have you calculated how much it will actually cost versus steadily paying down your card? Keep in mind that as long as your credit report isn't in shambles, it may be possible to lower your interest rate pretty dramatically without resorting to this loan.

Looking for more info,

Mare

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After a 1-month lurk & knowledge-absorb, a question I can add to! I've set up repay plans with 4 cards in the past 2 weeks. They will usually close the card, your cr rpt will say something like "in repayment program", but they reduce interest rate from Shylock 23 or 28% to 5.9(lowest) to 14.9(highest). Pgms range from a 3-month catchup to 1 yr reduced rate & pmt. If I get the courage, I'll post how I got to need this.
Best, Trythrice
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Let me know. I've got to do something to get out of credit card debt. I was even thinking of a bank loan to get a lower interest rate but I don't even know if I'd qualify since my debt is so high. Please post how you did it. Thanks!
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The Plan: After a couple of sleepless nights, I called customer service for each card, asked to speak to the financial disaster department. They all call it something different: flex plan, special situation, hardship, normalization, etc. My cards are already in collection, that is more than 30 days past due, I had to politely decline to make a payment about 3 tumes before they would put me in touch with the special people.

Then you get to tell your story. Some of them want to know how much you owe on cards in total. You may have to work up a basic budget with them, so do this ahead of time. For the two with the biggest balances (would you believe $32K & $34K) they set up a 12 month program that dropped the interest rate to 5.9% on one & 9% on the other, dropped all future late charges as long as I make the agreed monthly payments around $260 each.

I ran the snowball program, & found it would take 20 years the way I was going. I have cut back phone expenses, buying clothes at consignment shops, and working 12 hrs a day. With the slack from the credit companies & snowing like crazy for a year, I think I will have it going the right way. Any advice from the board would be appreciated.
- A wiser & chastened fool -
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