Routine Order

For those with terrible credit having trouble paying off their debts, there are a variety of credit management programs to choose from. I decided to try out how these programs work, and wanted to put some real numbers to the test. So I was looking for a site that does not require too much personal information to play around with. This debt management program that allows users to evaluate their options seemed perfect, so I took the dive. The Consumer Alliance Processing Corporation Debt Management program seems to be good - it has a BBB affiliation, and seems to be honest.

They have a free debt management quote tool, which is we are most interested in. I filled out the form and the end results looks like the following:


I had plugged in some numbers that I thought to be typical for someone with 30% APR credit cards, choosing a sum below $10,000 for the total debt. I entered a total of 4 cards, with APRs from 20% to 30%, with the outstanding balance on the higher APR cards being about 75% of the total outstanding debt. The free quote tools gives estimates for how much money can be saved. It shows a monthly fee of $35 for the debt management program, but even after this, the total monthly payments are reduced by almost a hundred dollars. The tool also shows that the person can save a total of $18,476 (!!!) by enrolling in the debt management program. I expect this figure is calculated by comparing the total payments made over the lifetime of the debt if one were to pay only the minimum outstanding, to the amounts paid using the debt management program. What’s also interesting is that the monthly APRs are almost halved. If one were to continue making the same payments as before starting on the debt management program, then I suspect the debts will be paid off much sooner.

Debt management programs are not for everyone - of course, if you earn $1000 a month and your financial expenditure is $1200, you won’t find someone to manage your debt. These programs are not for those with less than $3000 in debt, neither are they for those with low APRs on their cards. One of the conditions of the program is that the credit accounts will be cancelled as they are paid off. Once you pay off all the debt, I bet your credit score will improve drastically - enough to get you another card, if you want to play the game all over again!

There’s no comparison of the rates for gas cards in the UK, but otherwise, UK Financial Options is an excellent resource to compare credit card rates. Surely, they must have Gas cards in the UK. Or are they “petrol” cards? I could find neither at UK Financial options, but I did find a good table comparing credit cards. The credit card comparison page lists the top 5 cards for the various categories, such as the best cards for balance transfer, the best cards for those with bad credit, etc.

The site also has a list of pages, each dealing with a particular kind of credit card. Here’s the page comparing the football credit cards, for example. Football as in the game played almost entirely using one’s feet, as opposed to the game where the foot-long ball is thrown around.

Here’s a great website for financial information: Bankaholic. The site has a section devoted to the best credit card offers. In addition to a very good coverage of the best credit card deals, it also offers tips on how to use the cards, and how to improve your score. There’s an example of how the author started with a $500 limit AmEx student card. After a few years, the credit limit is now $30 K!

There is also a separate section that provides the best rates for money market accounts. This is similar to the credit card offers section and has the low-down on money market accounts, which I briefly mentioned here previously. The list of money market accounts and the rates makes it easy to compare the deals and the deals are also star-rated. Money market accounts can be tricky, since unlike CDs the deposits are not FDIC insured. However, due to the higher returns and the increased liquidity, they are quite popular among investors. They are just like a savings account in that you can withdraw the money at any time. However, it bears repeating that unlike savings accounts, these are not FDIC insured - meaning, if the bank goes belly-up, your money does too. Then again, what are the chances of that happening, really? When you are at Bankaholic, do check out the finance section for good budgeting tips. I am pretty much sporadic when it comes to writing at this blog, but the bankaholic site seems to be more regularly, and more frequently updated.

Continuing the results of my research on credit cards here. So I got turned down for the AmEx Business Card too. I thought I should be saving some money at the gas pump. BP had an ad at the pump promising some discounts for the first few months I use their card, and I made a mental note to check if there are other cards with better deals. I wanted to save the trouble of getting the BP card, using it till I get some benefits, and then canceling it to get a new card, and so on, ad infinitum.

Best Gas Credit Cards is a site dedicated to only gas credit cards. They have a cool table to compare gas credit cards. Of all the cards, the Wawa Visa Card looks really good. The APR is kinda high, but the rebates are the highest at 10% for purchases at Wawa, and rebates for purchases elsewhere too. The Chase BP card looks good too, but like I said before the rebates are top-heavy, so as time goes by, I might forget to cancel the card, and get less rebates. The Discover Gas Rebate card is good, too bad Discover doesn’t get accepted everywhere, like VISA or MasterCards.

File this under “Weird, but True”. According to an article on the UK Personal Loan Store, more than 50% of the people who use a debt consolidation loan actually end up with more debt than they started with. Not that I am thinking of getting a debt consolidation loan - but the recent trends in borrowing in the UK show an alarming rise, and things are about even with the USA, for long the consumer debt champion of the world.

…a number of people use consolidation loans to pay off credit cards, but once the balance on the credit card is cleared it is all too tempting to rack up debt on it again, which is what many people tend to do. The average consolidation loan in the UK is for £16,459 but the survey revealed that even when given the opportunity to do so most people will not pay off the loan early.

The article on loan consolidation quotes a survey by fool.co.uk as the source for the data. If you are in the market for a debt consolidation loan, make sure you read the best practices for debt consolidation, which basically says it would be wise to use a lending broker in your search for a consolidation loan since they would have access to the widest range of loan providers. Also remember that the poorer your credit is, the more likely you might end up with a secured loan, as opposed to an unsecured loan. Defaulting on your payments will then cause the property which was the collateral to be seized by the lender. As a final tip, read the responses to this ask.metafilter.com question - some very nice tips there - between the tips they have all aspects of debt management covered.

There’s a coffee shop in our office complex where they don’t accept credit cards for less than $3. I have been going there every single day and he declined to give me coffee on my card. I was really eager to try out my citi credit card, to find out if I’d get 3% or 1% cashback at that coffee shop - the one I visit most frequently. The usual lady wasn’t around, so I waited for her to come back and asked her what the deal was with the $3 minimum anyways.

Turns out, credit card services have the cake, eat it, and then sell it. They charge you and me and call it “APR” and then they charge the merchants. Dealers sign up for merchant accounts. These services charge fees so the dealers can accept cards and get the money after these fees are deducted. Some merchant services providers don’t charge some of these fees components, like application fees, but there are some charges associated with all of them.

So the lady was telling me that for a sale of $3, after deducting her credit card charges, and he cost, and the pay for the folks that work for her, she actually could be making a loss. Wow!

From the outside it always seems like everyone else is making easy money. Not so, not at all so. Some credit cards give you cash back on purchases, I should really try and find out how they manage to make a profit after this - but my guess is, they just wait till you miss a payment and then they make money off of you - after all, since it’s really not easy to make money, everyone will have bad patches. I suppose they want you have their card when you hit your rough patch. The citi credit card that I picked up the other day is one such - lets see if I can keep myself on the positive side with citi!