It is the time of economic slump and everyone is worrying about their finances. In such circumstances Bank of America is offering an opportunity which they call Clean Sweep.  It is Bank of America ‘Debt Consolidation Plan’.

It is good to know about this offer and educate yourself to get maximum benefits from it. Let’s take a look at their original offer according to their marketing plan and its difference.

If you go through the offer you will come to know that instead of getting great help to get out of debt, the offer in fact pursue you to use the line of credit to go even further into debt.

The Debt Consolidation Offer Envelope

When you got the envelope about that offer you will be surprised to see from the back of the envelope, the sender is from Bank of America but the face had some interesting statements:

• One Phone Call
• One Predictable Monthly Payment
• One Fast Way
• To help you get out of debt

From the marketing incentives made on the envelope it seems that only one of the four items is perhaps true, i.e. “One Phone Call”. The others may be much exaggerated statements or straight away trickery. Let’s see the other offers.

One Predictable Monthly Payment

When you see the details inside the envelope says you will come to know that the interest rate offered is variable and can be adjusted regularly and go way up. According to Bank of America they adjust your APR on a monthly basis due to changes to the prime rate. Also the estimates are used for repayment term and payment amount. These estimates can be changed because of the change in APR, late or partial payments by the customer, fees, by taking additional advances or your enrollment in credit protection.

Criticism

It is not possible to predict monthly payment if the interest rate is variable and also it is certain that the prime rate will almost certainly go up from the low today. The statement given by Bank of America, to support predictable monthly payment is the use of formula to calculate it, is ridiculous. The statement saying use of formula is apparently designed to make you believe that it will be a fixed monthly payment in the enclosed offer.

One Fast Way

It is difficult to believe that the statement “One Fast Way” is really true. We are not sure that this Bank of America statement is just to add few lines in their advertisement or this offer might get you approved fast. The only possible way that this loan will get you out of debt faster is when you are currently being charged much higher interest rates.

Criticism

Inside the envelope you can see that Bank of America is advertising an interest rate will be in the range of 8.99% to 21.99%. Now the person who has already poorer credit report or a lower credit score will be likely to be extended higher interest rate. So most probably he will get the initial interest rate up to 21.99% high. Thus this statement covers the entire Bank of America debt consolidation plan giving advantage to them. That entire means is only the one paying higher interest rate can get it faster. It is not mentioned anywhere that you would even get out of debt faster even with the initial minimum APR since the rate is variable rather than fixed.  Changes to the interest rate will also impossible to predict, during the period of repayment.

To Help You Get Out of Debt

It seems mare a wish “to help you get out of debt”. Actually this offer is like trading one debt for another. It is simply the use of credit from Bank of America to pay off other debts. Taking advantage of this offer mean rather than getting you out of debt, you are simply sinking into it.

It is for sure that Bank of America would argue that by taking advantage of this variable interest rate offer that is subject to penalty interest rates of 27.99% and other fees and charges, that it is possible for someone to get out of debt. Yes, but not until the entire loan is repaid, and at what total cost?

Front of the Debt Consolidation Offer

Let us see the front part of the Bank of America Clean Sweep Debt Consolidation offer. On this we can see a series of bullet points which are their key promotion statements.

A loan amount up to $50,000: Starting from the 1st one and given and the specific information statements related to it. The statement is “A loan amount up to $50,000” with this there is a mark which leads to the following explanation.

“Approved accounts will have a credit line between $500 and $50,000 based on creditworthiness”: Than with the statement “pay off high interest rate debt” there is a mark which leads you to this statement.

“We may prohibit use of this account to pay off or pay down any account issued by FIA Card Services, N.A”: Now FIA Card Services is actually the subsidiary of Bank of America. Therefore this means that your previous debt with MBNA is now debt owned by Bank of America. And by this statement BOA is preventing you from paying a debt off owned by Bank of America. Read the full story

There are many types of debt consolidation loans that are being offered by government to the financially troubled borrowers who cannot pay off loans. Borrowers can avail a debt consolidation loan from a range of choices and they can get full control over their outstanding debts.

Where You Can Use Government Debt Consolidation Loans?

Like other debt consolidation loans, government debt consolidation plans can be used to consolidate various debts related to credit cards, medical costs and other costly educational loans. Consumers that get their government debt consolidation loans application approved get financial assistance from the United States Department of Education. This department pays off all the debts of the consumer in return a new debt program is created for such consumers which allow them to pay a single payment for all their various loans.

Benefits of Government Debt Consolidation Loans

Government debt consolidation loans offer many advantages over other debt consolidation plans. One of the main advantages is that it offers simplified money management. Consumers have the easy choice of consolidate all different loans into one loan. Consolidation makes it easier for financially troubled borrowers to pay off only a single payment for different loans every month. Another advantage of government debt consolidation plan is the lower interest rates. Lower interest rate lowers the monthly payments and makes them affordable for consumers. In simpler words, consumers actually get lower payments on their dent consolidation loan regardless of the number of loans they are consolidating.

Types of Government Debt Consolidation Loan

There are many types of government debt consolidation loans that are being offered by government. These debt consolidation loans are provided by Direct Loan Program (DL), Direct Consolidation Loan (DCL), and the Federal Family Education Loan (FFEL). Consumers can use FFEL loan to pay off their outstanding loans of any size. This is a flexible plan and it provides the facility of non-educational loans. The other two loan programs come under the Higher Education Act. These programs are actually linked with four significant programs that are for repayment, extended, standard, income contingent and graduated. Consumers can get any of these facilities and can reduce their massive debts into smaller one.

Convert Unsecured Debts into Secured Debts

After getting any of the suitable government debt consolidation programs, consumers can easily convert their unsecured loans into secured loan with only a single loan. Consumers can simplify their monthly budgeting with government debt consolidation loans. It can be done due to lower interest rates on the monthly loan payments. It becomes easier for consumer to pay off monthly payments and to fulfill their other living expenses. The loan term for government debt consolidation loan repayment is also flexible making it the ideal choice for consumers.

On the whole, government debt consolidation loans are the best choice for consumers that cannot pay off monthly payments for their different loans. With government debt consolidation loans, consumers can not only reduce their debt burden but also can achieve financial stability.

Many borrowers always remain in the search of finding a way to get rid of debts and in this search many of them make mistakes, while others do the right things. There are many things that could help borrowers to get out of debt burden. One in these things include debt consolidation plan. There are many debt consolidation plans available, but not all of them suit everybody. It is very important for borrowers to first carefully go through the terms and conditions of debt consolidation plans.

Things to Avoid

Following are certain things that borrowers should avoid in any case while they think to take help from a debt consolidation plan.

Avoid Consolidators Claiming “Promises to Handle it All”

Every borrower wants a debt free life and for this purpose they consult debt consolidator who is according to borrower a life saver. Debt consolidators seem to be very promising and they claim that they will solve all your debt related problems, but that could be done only after one payment. In reality, there is no single payment and there are many fees that you will have to pay with your monthly payment. This total fee is normally around 10%. Your payment will shift along creditors.  Some of them will take out payment directly from borrower’s checking account. Creditors grab their half and rest of that payment will be deposited to consolidator’s pocket. It appears to be a great deal but you can perform this duty without any debt consolidator.

Avoid Hard Cash Loan

Some creditors try to take advantage from your weakness if they find you under heaps of debts. You should not fall for loans that are easy to do types because interest rates are higher on such loans and this is nothing but to increase your problem.

Avoid Transfer Balance

There are heaps of credit cards that are offering credit transfer facility with low interest. You should not forget that these interest rates are low for only now and after a certain period of time they will rise. Read the full story

Nothing can be as nerve stretching as paying huge bills and receiving annoying recovery calls from debt collectors. Situations can go even worse when you fail to pay your bills. There are many ways by which you can achieve a debt free life, what is required from you is your patience and time. There are various things which you can take into consideration and to become debt free. If once you get rid of all the debts, a stress free life is waiting for you.

Pay Bills on Time

Your first step towards financial freedom should be paying your bills on time. If you don’t do this, then be prepared to receive nerve cracking collection calls. You should also not forget that you can’t run away from your debts by refusing to pay your bills. It will just increase your problems nothing else. Timely payment of bills can help you to achieve financial stability as there will be no pending payments every month so you could concentrate on getting rid of debts. Following are certain things which you can do to achieve financial stability.

Realize Your Situation

It is very important for you to realize about the heaps of debts that are increasing the burden on your life. Avoid collection calls by paying bills on time and realize that you need a debt consolidation plan.

Don’t Get New Credit Cards

It is wise to avoid taking out new credit cards to pay off your current debt. Bear in mind that it will not help you and it will incur more debt on you in the end.

Get Credit Counseling

You should take credit counseling from any credit counseling company. There are many credit counseling agencies that charge no fee to give you counseling about your credit related problems. Read the full story

Many people are living their live under the heavy burden of debts. Some of them find ways to get out of this outstanding debt, while others remain in search. There are many choices and safe doors available for people living with huge debts. However, it is not necessary that all these ways are ideal and suite all people. Few of these ways include bankruptcy and debt settlement program.

Chapter 7 Bankruptcy

Many people file for chapter 7 bankruptcy and they prefer this solution over debt settlement plan. Chapter 7 bankruptcy helps you to get a fresh start without debts. All your outstanding dues leave you forever and the cost of filing for bankruptcy ranges only from $1,000 to $2,000. With this cost debt settlement services are expensive than bankruptcy. Debt settlement services charge huge fee. Some debt settlement agencies charge from 14% to 18% of the overall debt that you owe, whilst many others charge a large percentage of the debt settlement. There is no doubt that filing for bankruptcy eliminates all your debts and helps you to financial freedom, but still it is not recommended. It is because it is not always a good option to get rid of debts. It leaves a long lasting effect on your credit history and restricts you from taking out loans and make major purchases in future. It is recommended to you to search your options before selecting bankruptcy as your reliever.

Debt Settlement Plan

For many people debt settlement appears to be a good and effective plan to get rid of debt. People more than often confuse debt settlement with credit counseling and debt consolidation. Read the full story

The popularity of debt consolidation has increased in recent years due to many reasons. The main reason is that it enables users to merge all their debts into single loan agreement with reasonable monthly payments and loan terms. Interesting fact revealed by APACS that only in Britain the numbers of credit cards are higher than the numbers of people living there.

According to a careful estimate, the population of the United Kingdom is 60 million and reported numbers of credit cards by the year 2008 were 71.3 million. However, most people prefer taking out debt consolidation loans, while many others prefer taking help from debt solution like debt settlement plans or debt management plans.

Benefits of Debt Consolidation Loan

This loan is the best option for those who are having more than one loan agreements and are unable to pay off all of them. People having multiple loans like credit card debt, overdrafts or huge purchases, small loans often find themselves unable to pay off all these loans. Also, there are clear chances for such people to miss their payments due to having many debts at the same time. Their payments are more likely to be missed, late and expensive. On the other hand, debt consolidation loan merges all such unpaid loans into single loan and allows the borrower to pay off a single reasonable monthly payment.

Downside of Debt Consolidation Loans

It is worth to have a debt consolidation loan to deal with financial troubles; however, sometimes it does not appear as a suitable option. This is due to the following disadvantages of debt consolidation loan.

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During the past several years, the market scenario has completely changed. In order to retain the old consumers and attract new ones, financial companies are coming up with new packages and offers. Their sole objective is to help consumers and attain maximum cash in return.

The Latest Package of Bank of America

Bank of America is one of the well-known and reliable banks in the US financial market. Like other banks, Bank of America also introduces new packages for their consumers. The newest package of Bank of America is known as “clean sweep” line of credit. This package is aimed to those consumers who are in need of debt consolidation.

It is obvious that the banks and other marketing promotions are not always genuine; they possess some tricky games, too. The contracts company deal in may have some hidden clauses. They may not be visible in the time you sign the contract, but you will realize when you are made to pay the fees and interests of the service. So, you need to be very careful before getting into a deal. Actually the contracts of such organizations include some technical terms that might not be understood fully at that time could put you in a fix.

Moreover, there are some words in small size written at the bottom of the page. Consumers often do not read them and skip for grated, but these are things organizations catch people.

Similarly, “clean sweep” package also contains some hidden clauses. If you read the contents of the plan, you will see that it puts you into such a wild circle of debts. Even you will hardly be able to return the debt in full.

History of the Scheme

In reality, the scheme was introduced after the merger of Bank of America and MBNA. They advertised the package in debt consolidation loans and fixed the limit of borrowing to $25000. They also mentioned that the interest rate will not be more than 9.49%. However, this is the minimum rate, not maximum. The contract also states that these costs may vary as per the rates of interest published in the Wall Street Journal.

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With today’s rising economy and inflation rates, there is just not much money to do anything. All the basic necessities of life are hard to fulfill and even a little luxury spending can cost a fortune.

With all these issues on mind, people start to depend upon their credit card balance more and more, thinking of only the short term material gain and not the long term sufferings they would have to endure when they have to face numerous long bills of debts, late payments and interest charges.

When credit starts to accumulate, it no longer becomes an issue to be put at the back of the mind, because the totals of unpaid bills, fines and many other basic necessities add up to the total and you end up exceeding your credit limit.

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