How To Find the Best Debt Consolidation Loan |
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Find out what makes a good debt consolidation loan, the potential pitfalls of debt consolidation loans, full service banks and reasons they are better as a resource for debt consolidation loans.
Then there are credit card banks like MBNA, Providian, Direct Merchants, Capital One and Discover. These don't offer checking, savings and other financing, with their revenues coming from credit card debt, fees and interest rates. To understand the benefit of full service banking, you first need to realize that all the above institutions offer great rates for debt consolidation programs. This was due to a Federal Government mandate, a few years back, for financial services to set up consolidation programs enabling the client to pay off their debt in less than five years. Why Full Service? Few consumers know one of the reasons. For transferring balances, many banks may not permit the account to be put in a counseling program for 9 months to a year. At this point the client may not find it relevant, as his interest is a consolidation loan, not program. However, Jim Young has said that once the balance transfer starts, the client may still be in denial in, attempting to convince himself that he can sort everything out, when he's already in trouble. Very often the consolidation loan is only the first step to a full consolidation-counseling program. Discover, MBNA and other banks, which are not full service, offer great rates for counseling. But they still review each account when a proposal for consolidation program is made and don't have fixed rates like Citibank and other full service members. They are more likely to look at clients who transferred balances recently, and give them higher rates of 12.9% to 15.9% when they seek help through counseling. Citibank, Chase, Bank One and other credit card banks would only give their fixed rate, which is a crucial reason to go for a full service bank. Delinquency Policy Another advantage of full service banking is the delinquency policy when the customer enrolls for a counseling program. Though not desirable, delinquency is still possible. The credit card banks like Citibank, Chase and Bank One offer leniency once the approval is given. In this situation, if the client misses a month's payment, a late charged is levied but the defaulter is retained in the program. However if the client exceeds 45 days without payment to the bank, they are dropped from the program and made to wait a year for reinstatement. During the one-year period, the interest rate is 29.9%. Naturally a delinquency is never preferred, but if it's inevitable, the knowledge of the cushion is comforting. For those struggling to make ends meet, it makes a huge difference. Taking an entire month of with virtually no consequences can be a much-needed breather. |
