Check those Interest Rates!

This can be a good thing or a scary thing for some. Usually when I am working with a new client they need to research their statements to write down all their accounts, including balance owed, credit limit and APR. This can be a shocking exercise for anyone to do, it especially hurts when you are already struggling. But the first and hardest step is facing it and putting everything down on paper. Lately though my clients are doing check-ups on their financials and are getting unhappy news. One client I started working with last August just got an increase to 3 different cards to around the neighborhood of 25%. The reason, one late payment on one card last June. Ironically she had great rates on both Bank of America and Citibank—how ironic that they feel the need in Jan of 2008–after they have gotten Billions from the Govt, to actually raise the rate of a cardholder that has never had a late payment on their card. That is crazy!!! Of course this means her order of payoff has drastically changed. So we are moving things around, clearing those cards. We will let those cards cool on the shelf for a little while and call back in a few months to see if any balance transfer offers are being done. As I have said before, organizing your finances is an ongoing thing, not something you can do once and forget about, the environment is constantly changing and you may miss an opportunity if you are not checking on a regular basis.

Some good news the other way on interest rates, I have a couple clients that are in a unique but happy situation. Their highest interest rate is now their Mortgage, due to the falling interest rates on Equity lines. It is a complete mindset change to actually pay down the Mortgage. But it is a very exciting and a real shock to see interest being shed by making principle payments to a Mortgage. I must advise though, that prior to doing this please consult with me, every person’s situation is different and we have to have a distinct plan to make sure what is being done won’t negatively impact them down the road.

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~ by debt2dreams on February 7, 2009.

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