Audra Lowe: Consumer debt is feared to be the next explosion that brings down the economy, and to avoid that, President Obama has been cracking down on what he calls Predatory Lending Practices.
Tim Wilkins from FreedomDebt.com stopped by with some tips on what you should watch out for, so that you don't become a victim.
Alright! Good to see you back here again Tim. Thanks for joining us.
Tim Wilkins: Thanks for having me Audra.
Audra Lowe: Today we are talking about the tricks of the credit trade, and lot of people don't realize the things that are being done to keep them in debt. So if you are in debt, you find yourself in trouble, what are the things that you can actually do to try to get yourself out of that situation? Are there really tricks?
Tim Wilkins: There are tricks, and the credit card companies have been using them. The Fed has actually called what they do, unfair and deceptive, and now you know this administration is cracking down on them left and right.
One of the things they have done for a lot of people is loose credit standards to give people credit cards that maybe they shouldn't have and teaser rates.
Audra Lowe: That's not good.
Tim Wilkins: Yeah. They lure you in with 0% for six months or 4.9 balance transfers, and they really make it easy for you to get yourself in debt. Before you know it though, you go from a small balance and a small rate, to a high balance and a high rate, and the spiral really starts, and that's where a lot of people get in trouble.
Audra Lowe: We were just talking about that too, if you are not really careful in really looking at those statements every single month, it can double within a matter of a couple of months, your interest rate can double, and you don't even know it.
Tim Wilkins: And actually, they have been doing that lately. The Legislation goes into effect May of 2010, I believe it is, and they are going to try and make all the money they can between now and then. So they are raising rates all over as part of what they call a risk assessment.
And they are also lowering your credit limit. And you don't know it, you are over, and now you have got over limit fees, you have got overdraft fees, and they are really trying to make all the money they can before it's too late.
Audra Lowe: All at our expense. So there's a couple of tips that you give us, things that we should be looking for. The first one is that we should shop rates. So what's the best way to go about doing that?
Tim Wilkins: Well, start with your existing cards. Start with calling the companies that have your credit now and saying, what's the best rate you can give me, and like you said, be checking your statement every month, because that's where they can sneak it in for you, and you don't know how many months they have been doing it.
Audra Lowe: And also, watch out for the balance transfers. You say that they might have transfer fees as high as 3%.
Tim Wilkins: Some will be 0%, which is nice. Some of them just have a $50 or $25 fee, but some can be up to 3% of your total transfer.
Audra Lowe: Okay. So you have to really realize, is it worth doing all that for 3%?
Tim Wilkins: Absolutely.
Audra Lowe: Okay.
Tim Wilkins: And then, make sure that once you transfer things over, that you destroy those cards, don't necessarily close those accounts.
Audra Lowe: Just cut them up. Get rid of them.
Tim Wilkins: Cut them up. Don't put them on ice, because ice melts, get them away from yourself, so that you can't -- that's where a lot of the folks that are coming to us with problems have gotten into trouble. That's when you have got to call someone like FreedomDebt.com, the industry leader, one of the industry leaders that really right now in a market that's just exploding, people are taking advantage.
That's another thing. People are trying to get out of these problems through debt settlement, which is what we do, in a beautiful way to help yourself gain financial freedom, but people are opportunists in every market, and they are just taking them down.
If you look at these examples of how we have helped people, we have lowered what they actually owe, and we have gone to the credit card companies. This example they owed almost $14,000. We reduced that to right around $4,000, which is really a bright light for someone struggling. We reduced their principal balance to give them the opportunity to be debt free.
Audra Lowe: You can turn into a whole another person when the debt is lifted. It makes you feel completely different too.
Tim Wilkins: Or you can start investing in your now and in your future, which many people don't have the luxury of doing right now.
Audra Lowe: Absolutely. Well, so good to see you. Thanks again Tim, we appreciate it.
Tim Wilkins: Thank you.
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