Tips To
Fight Debt And Poor Economy
by Robert K. Heady
It's
not a pretty picture:
The economy is in the
doldrums, investors have already lost trillions of dollars in
the stock market, the consumer debt load is $1.3 trillion and
climbing, and corporate moguls and accountants are ripping off
the country right and left. Plus, bank fees are quadruple what
they were six years ago, and your accounts are earning zip.
Is there anything you
can do to protect your wallet?
Yes. Just don't buy
those rosy forecasts by "experts" who promise that
"recovery is just around the corner." They're no Warren
Buffett and neither are you. The only certain thing is that someday
not tomorrow or the day after the economy, which runs in cycles,
will go back up, but nobody knows exactly when.
Fact is, record-low
borrowing rates are a blessing, and those near-zero bank savings
and CD rates are sadistic. There are moves you must make now
because you might not get another chance for years:
Join a credit union.
CUs pay you more than banks do on your savings, charge as
much as 1 percent less on loans, and don't nick you as badly
on fees. Plus, you may not get clobbered if you're late with
a credit card payment. For the location of a CU near you, phone
Credit Union National Association at (800) 358-5710.
Get rid of poison-pill
credit cards immediately! Shop around. Why pay insane interest
rates of 18 or 19 percent when you can find a cheaper card at
www.bankrate.com or www.cardweb.com (also check Bull & Bear's
Best Credit Card Rates listed below)? Dump cards you don't use,
or those with a zero balance. Transfer high-rate balances to
low-rate plastic. Negotiate a better deal with your card issuer
(Odds are it will work). Check every single word in fine-print
contracts. Monitor each monthly statement carefully.
Cut your mortgage
costs. Shop at least four or five low-rate, low-points lenders.
If the new rate is about 1 percentage point below your old rate,
you're probably a candidate for refinancing. On a $100,000, 30-year
fixed-rate mortgage at 6.5 percent instead of 7.5 percent, you'll
save $24,170 over the life of the loan, or a whopping $94,932
on a 15-year term. Making biweekly payments instead of monthly
could save you even more. Just make darn sure you get any deal
in writing every single penny well before your closing date.
Shop personal loans.
Who's got the best deal? Never, ever, grab the first offer
that comes along. Always check out several lenders.
Beware of "home
equity" promoters. They're not all bad. But promises
of "quick, easy cash to pay off credit card debt" could
force you to lose your home if you can't repay the loan. If you
don't think you can, stay away. The industry is loaded with fast-buck
con artists.
Be cautious with
those "zero percent" auto deals. It's your total
cost that counts, not the dazzling pay-no-interest come-on. What'll
be the entire tab, considering that the dealer may jack up the
price of the car? Plus, even with a low-interest arrangement,
you may have to pay off the loan in three years, not four or
five, thus increasing your monthly payment. Now's the time to
negotiate for a used vehicle because dealers' lots are loaded
with inventory.
Get a copy of your credit report. Three reasons A) Know what creditors have on you. B) Check the report for errors; seven out of 10 have them. C) Learn whether some thief has stolen your identity and is running up bills in your good name. After all, there were more than 500,000 cases of ID theft last year alone! To get your report, Call Equifax at (800) 685-1111, Experian at (888) 397-3742, or Trans Union at (800) 916-8800.
Editor's Note: Robert K. Heady is the founding publisher of Bank Rate Monitor. He invites reader mail on consumer money problems and solutions but cannot respond personally to all inquiries. Send e-mail to jrnl8888@aol.com, or write to P.O. Box 14875, North Palm Beach, FL 33408.
