Is the check in the mail a scam?

[Jebinok]

I get the lower your credit card debt checks in the mail all the time. I was wondering if anyone has used this and are happy or unhappy with their decision. Seems kinda iffy to me but if the rates hold true, a person can save a lot on interest. I just dont know about this so i came to the only place where i trust input.

 

[Betik]

Without seeing is hard to tell, but most likely there is a catch .

I do have some experience on the field if you would like to PM me.

 

[Ronnie]

I’ve found it’s usually a bait and switch scam. That is they provide you with a no or low interest loan at first but then it converts to a high interest deal a few months or a year down the line. Similar to how Sirius radio starts you on a $5 per month rate but it only last 5 months before they convert you to an annual plan that costs $10 per month and is billed for the entire year ($120) starting in month 6.

 

[props2you]

The Devil is in the details. READ the compliance verbiage and make sure to ask questions and get it in writing!! There are great offers out there and they all aren't scams, but, as @Ronnie mentioned, there are a ton of "bait and switch". Just do your diligence and don't rely on theirs!

 

[Beachbummer]

If you have great credit it's likely not a scam BUT.. Watch out for other "fees" that may add 2% to 5% to your balance in the form of a Balance Transfer FEE.... so you just added 5% to your balance. If it's interest free for 6 months with a 5% fee it's more like 10% interest equivalent per year...so just read the terms very carefully. Usually unless there is a very impressive promotion going on, a credit card is the generally one of the worst place to borrow from. (not counting payday loan stuff, and the mafia, of course)

If the offer seems attractive because your Credit card balance is high, To save the most money going forward consider a loan from your bank or credit union with a set term, and only put on the credit card what you can pay in full by the due date. This strategy gets you a free loan for 30-50 days every month. (Spent on the 1st, paid on the 20th of the following month. No interest due on full balance if paid by the due date) ...and if there is a dispute with a merchant, or a theft, the credit card covers you. (Unlike cash or debit card where the money has already left you and it's much harder to recall it into your possession)

Every situation is different, and people have different tolerances to interest. I happen to be amazed and in awe at the US Banking system, and I am impressed daily how much benefit you can get from using credit to your advantage. 0% same as cash is offered quite a bit on many services, and rates for auto and home are so very low. Some people think it's a sin to buy a boat on credit...but how boring it is to boat from the sofa...

On the contrary, I cannot imagine paying interest to borrow for things that are not long lasting, such as a party or trip or fancy dinner. Still paying for enjoyment that has already passed is not my cup of tea.

This is just my take, and everyone is free to decide how to best leverage available credit.

Best of Luck however you proceed!

 

[2kwik4u]

I went down this path last spring. We had at the time (and still do honestly) a staggering amount of credit card debt. I could go through the litany of reasons why, but that isn't the point.

I was approved for a 10yr loan at 3.75% for $50k. Payment was going to be around $500/mo if I remember right. It was a small savings over the minimums that I was already paying (around $600/mo at the time). So total cost out of pocket in the near term would have been less, on a monthly basis. The cards were running between 10-18% interest, so total cost out of pocket in the LONG term would have been less as well. The place I lost out, and the reason I DID NOT go through with it.....flexibility. That 10yr loan would have locked me into $500/mo for the life of the loan. By keeping the cards, I've been able to make slightly more than the minimums, chunk down some balances, and now the minimums are just under $475 or so. If the financial poo hits the fan (as it apparently does for me every few years), then I can drop back and pay the minimums for a few months to get by without missing a payment. Once the situation improves and I'm back above water, I can go back to chunking down the balances.

That flexibility has helped in the past, and has honestly saved my butt a few times. So I kept my higher interest cards for now, despite paying more out of pocket in the long run.

If anyone wants to discuss what "staggering" debt looks like I'll be happy to discuss. I'm a VERY good example of how NOT to handle personal finances for decades on end. Only in the last year or so have I honestly felt like I've gotten a good handle on WTF I'm doing (I'm almost 40 BTW), and am making positive headway in terms of both my balance sheet, and the underlying psychology that is/was the real problem.

 

[Beachbummer]

I can only imagine how much of a burden that amount of revolving debt can be. If your credit is still very good otherwise you could go into a fixed term loan for a good portion of the debt, while holding something else like an equity line on the house, so if there is a challenging time you can extend the debt by paying from the other account temporarily.

20% interest for 5 years and you are in for 45% of the borrowed amount in interest (borrow 50, pay back about 72.5) if you are making equal payments... So it's certainly worth it to assume some risk in order to bring the payment totals down. For loans that may be outstanding for a long time, the interest rate has such a compounding effect that a small change can result in large savings.

Anyway, it sounds like you have considered this in the past, but with interest rates so low now, think of it as an anonymous suggestion to consider it again and weigh the pros/cons to see if anything has changed.

Best of luck however you proceed!

 

[ifly4fun]

All depends on what you're receiving. If its "Balance transfer checks" from your existing CC's.. Those can be good tool to minimize your interest payments... paying a 3% lump sum for 12-18months of 0% interest can be a huge savings over a standard 18% rate on a card.

If its just the crap "debt consolidation loan" offers.. I think those are mainly junk.

I will say if you need a debt consolidation loan/signature loan or any other non-traditional loan (Even a Boat!!) check out light stream. I needed to refinance my boat loan because I need to get the title for my trailer and since the dealer bundled it, the bank wouldn't release the trailer without paying off the whole loan. I went on lightstreams (Suntrust) website and within 5min I was approved for my full loan amount of my boat, funded in less than 24hours, and they don't want the titles. They even sent an email specifically saying do not mention a lien when it comes to tiles - keep them as its extra paperwork they don't want to deal with.

Icing on the cake - the lightstream loan was 1% lower than the original boat loan.

 

[Dean P]

@Jebinok IMO having a cc or two is fine. Anymore and your asking for trouble. When picking up another card to payoff a card WITHOUT closing that card does not work. Most people (not all) will eventually start using all their cards because sh$t happens and you do what you gotta do.

(Keeping this simple in my mind) Credit (and money) is a man made fantasy/game which we all need to participate to make it work. We need and want things (now) and if you cant afford to pay cash, the CC (and loans) was invented. It's a brilliant idea! The world (a lot of it) thrives on it. But, as with all games, there are winners, players and losers. And, when you lose there are programs to help you get back in the game. Gotta love it.

My advice is don't do it. Get a low interest cc and stay discipline.

 

[2kwik4u]

I can only imagine how much of a burden that amount of revolving debt can be. If your credit is still very good otherwise you could go into a fixed term loan for a good portion of the debt, while holding something else like an equity line on the house, so if there is a challenging time you can extend the debt by paying from the other account temporarily.

20% interest for 5 years and you are in for 45% of the borrowed amount in interest (borrow 50, pay back about 72.5) if you are making equal payments... So it's certainly worth it to assume some risk in order to bring the payment totals down. For loans that may be outstanding for a long time, the interest rate has such a compounding effect that a small change can result in large savings.

Anyway, it sounds like you have considered this in the past, but with interest rates so low now, think of it as an anonymous suggestion to consider it again and weigh the pros/cons to see if anything has changed.

Best of luck however you proceed!

You're 100% correct. It's a burden. We're fortunate in that we make good salaries, have very marketable skills, and can "afford" the debt. Part of that debt though has come from job changes (both voluntary and forced), pay changes, and lifestyle changes. Sometimes those decisions have worked out well, sometimes not. At this point though we're just coming to the understanding of "how to put the shovel down" and are developing plans to really start digging out. Also, the psychology of making this happen is FAR FAR harder for us than the mathematics. I think that is an often overlooked portion of the equation of people getting into what is easily considered crippling debt numbers.

We go back and forth on if it's a good idea or not. We're looking into a refi on the house at this point, coupled with the closing of the cards once paid off. We have significant equity in the home, and this might be the right use for it. Considering a good deal of our unsecured debt was created when we moved in some 4 years ago (brand new house didn't appraise for purchase price, loan pulled out from under us, fork over $20k in down payment, or hire $15k in lawyers to fight it......I effing hate our builder, but that's another story). I hate the idea of "restarting" a 30yr loan, but we can probably drop PMI, get some cash out to cover the unsecured debt, and keep the payment roughly the same as it is now. The key will be to lock up and close out the cards once they are paid down again.

Thanks for the kind words and advice. We're gonna make it just fine. We're working hard to change our perception of how money works, and develop a plan to rid ourselves of this burden. It's our own fault, nobody else to blame.