Consumer Debt – How the Federal Reserve Rate Cut Impacts Your Debt

The Federal Reserve’s ¾ point, emergency rate cut appeared to be the shot in the arm that Wall Street needed. After a major sell off in the morning of the cut, there was a significant rebound in the afternoon. This rate cut was good news for banks. The ¾ point cut in the discount rate reduces the rate banks pay to borrow money. This was welcome relief for many. (In case you weren’t aware, many banks are hurting from the recent sub-prime mortgage meltdown. Citigroup alone is writing off some $11 billion in sub-prime mortgage losses.)

Action by the Federal Reserve was later echoed by commercial banks which then cut their prime lending rate by three-quarter of a percent, dropping the rate from 7.25 percent down to 6.50 percent. (The Prime Rate is the benchmark used in establishing most consumer loans, credit card interest rates, etc.)

And this may not be the end for rate cuts! Many experts expect the Federal Reserve to cut rates again at its Jan. 30 meeting. Some are even worried that this emergency action taken before the scheduled meeting may mean the Feds know something we don’t – more bad economic news on the horizon!

But how does all this market volatility and rate cutting affect you and your debt? Is there good news for the average consumer in any of this? The answer for savers is NO! They will face lower returns on their money. For those with debt, the answer is mixed; for some, yes, for others, maybe!

Good News for Home Equity Borrowers – For those with home equity or consolidation loans, you should see a drop in your interest rate by next month. These rates are based on the prime rate so they should mirror the prime rate cut.

Good News for Mortgage Refinance – If you have an adjustable rate mortgage, now may be the time to refinance to a fixed rate. According to Bankrate.com on January 17, the 30 year fixed rate was down to 5.75 percent based on their weekly survey. The Federal Reserve rate cut will most likely drive further cuts in the 30 year rate. Remember, when considering refinancing, you should weigh the mortgage payment savings benefits against the refinance fees. But all in all, it may be the best time to get away from a variable rate that will balloon in say, 5 or less years, especially given the weak housing market.

Mixed News for Credit Card Holders – Some credit card holders could get a break on their interest rates, but it will most likely be limited to those with good credit. It’s important to note that credit card rates don't always track closely with action by the Fed. It could be three months before card holders see the lower rates on their monthly credit card statements. And for those with poor credit, high debt to income ratios, late on payments, etc, you will probably not see any lower rates and those excessive penalty rates are unlikely to change either. Late fees and penalties are big revenue generators for the credit card industry and one of the primary means by which they continue to profit on those in debt in spite of rising credit card defaults.

A Silver Lining for those with high Credit Card Debt – If you have $10,000 or more in credit card debt and have already been late one or more times on your payment, now may be your best time to see if you qualify for debt mediation (or debt settlement). By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years and for less than what you owe!

What is Debt Mediation or Debt Settlement?
Debt Mediation is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full, and marks the debt “zero balance”, which is very important and positive for your credit report. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have relationships built over time and leverage with your creditors that you don’t have.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

Nationally Recognized Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry.

You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt. For more information, click here.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.

A Debt Reduction Diet You Can Live With

Lately, I have been listening to some of the better-known financial and personal debt "experts" and their advice to people on why and how they should get debt-free. While I don’t disagree in principle with much of what they are saying, I do believe that some of their advice is a little hard to swallow and not always practical for many people struggling with debt. I also know, and question why, they leave out one of the best, and most palatable options available today.

First, let me say, there seems to be this prevailing theme of telling people that: You got yourself into this mess so you better just suck it up and dig your way out, no matter what it takes. Desperate times call for desperate measures. Put yourself on a strict financial diet. If you have to sell everything you own, including the roof over your head to pay off your debt, then just do it!

These may indeed be desperate times, but desperate actions don’t necessarily reap the best rewards. Given the current housing market, it may not be realistic to try to sell your house right now, especially if you have a second mortgage. Assuming you can even get it sold, you may find that you owe more than you can make by selling your house, figuring in realtor fees, etc. I am also baffled how these experts can tell people who are struggling to keep their heads above water to start paying more on their credit card bills than they have in the past in order to pay down their debt. Do you need to make sacrifices and change your spending habits in order to get out of debt? Should you cut out the $4.00 lattes? Yes to both! But for those in serious debt, it just may not be enough, especially for those whose debt is not from frivolous spending habits, but due to legitimate hardship issues. For these people, it could take years to ever pay down their credit card debt at the ridiculous interest rates being charged and with the exorbitant fees and penalties.

It amazes me that we have people talking about how terrible McDonalds and other fast food businesses are to corrupt us with their unhealthy foods, while the credit card industry aggressively goes after and dishes out credit to those already overweight in debt and no one says a word about what they are doing – how the credit card industry is contributing to the unhealthy financial state of millions of Americans. Have you noticed how, even though you are buried in debt, the credit card companies keep sending you credit card offers? They actually love people like you. It is called rolling, but I’ll save that whole explanation for another blog.

Is now the time to commit to a diet plan to eliminate your credit card debt? Absolutely! But it doesn’t have to be the starvation diet you probably have been hearing from others. There is a realistic and effective diet that these so-called experts won’t tell you about. This diet is one that you can live with. It is a diet that can get you debt-free in months instead of years and for far less than what you owe. This is not a miracle pill, nor is it a shady industry scheme. It is a totally legal program, recognized by the credit card industry, for getting you out of debt, and solvent with your creditors. Unlike bankruptcy, it won’t leave you with the serious long-term black mark on your credit. The diet solution I am talking about is debt mediation (or negotiation or settlement).

So why don’t the experts talk about the debt mediation option?
Well, I think there are probably a couple of reasons. 1) I think many don’t really know how it works. Some confuse it with Debt Consolidation. 2) I also think some aren’t comfortable publicly recommending a program in which you will typically pay less than what you owe. With debt mediation, the credit card companies are agreeing to settle for less than what you owe them out of the realization that they may get none of what you owe or just pennies on the dollar if they have to sell your debt to a collection agency. I don’t think the experts want to be the ones telling you that you don’t have to pay back every penny, plus all the outrageous interest, and all the ridiculous fees owed to the creditors. After all, who else but the financial industry (namely credit card companies and banks) are some of the biggest purchasers of television advertisements, the very people sponsoring many of their programs?

Interestingly, they seem to have little problem recommending consumer credit counseling, or debt management, under the guise that many claim to be “not for profit.” Unfortunately, this program has a poor success record with 60-70 % dropping out and is facing serious government scrutiny. In fact, according to Robert Manning, Director of the Center for Consumer Financial Services, the IRS findings conclude that CCCs are essentially debt collectors, not charities. Click Here, to learn more about this unattractive debt solution.

Debt Mediation – The Debt Diet You Can Live With
If you’re one of the thousands of people with high credit card debt ($10,000 or more), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track. I recommend you consider debt mediation (or debt settlement). By enrolling in a debt settlement program, you could realistically be out of debt in months instead of years.

What is Debt Mediation or Debt Settlement?
Debt Mediation is a program in which a qualified settlement or mediation company works for you with your creditors, to “negotiate” a reduction in your unsecured debt. Under this type of program, each of your creditors agrees to accept a portion of what you owe them, in lump sum payouts, as payment in full, and marks the debt “zero balance”, which is very important and positive for your credit report. You’ll get out of debt for less than what you owe and in a fraction of the time it would take to pay off the debt just making the minimum monthly payments. Because they are settling hundreds of thousands of dollars of debt for hundreds of clients, they have relationships built over time and leverage with your creditors that you don’t have.

Who should you contact? – There is one company than stands out because of their excellent track record (quality service and results) and their unique approach. I recommend that you start with this company for a free debt consultation.The program is Credit Card Relief™.

Nationally Recognized Attorney-Driven Approach - Their program is unique in that Credit Card Relief uses a network of participating program attorneys, local to their clients, and provides a free initial consultation to determine if debt mediation is the best solution. Once enrolled, your creditors are contacted and told that you now have representation in settling your debt. You now have a professional working for you. That’s where your relief starts. The debt is then mediated by a nationally recognized debtor mediation law firm.

Great Track Record - Credit Card Relief has years of experience, settling over $110,000,000 (one-hundred and ten million) of debt for thousands of clients.

Operates in 46 states.

Low Monthly Payment – Credit Card Relief can cut your monthly payment by as much as 50%. They also have reasonable fees that you can live with.

Your Money is Safe - In addition, each Credit Card Relief client is part of a unique Enrolled Member Trust, through which all their funds are deposited into a totally insured, risk-free trust account with a national bank. No money leaves your account without your permission.

Satisfied Clients - Credit Card Relief provides superior service, with on-going support throughout the duration of the program, through their full-time Client Care and Compliance departments. They have Zero open complaints with the more than 400 Better Business Bureaus (BBB’s) and the over 16,000 local, state, and federal regulatory agencies monitoring the industry. You can obtain a free debt consultation from Credit Card Relief™ by clicking here.

Or call (866) 960-5454

They can help you determine the best solution for getting you free of debt.

Don’t Delay! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. Yet this industry has more complaints filed against it than any other industry in the U.S. Getting debt free and starting a financial plan to build wealth instead of debt is one of the best things you can do for yourself and your family.