By Robert J. Semrad | Published February 16 2021 |
Debt Consolidation Loans in Illinois
Questionable schemes for paying off high-interest credit cards
One of the things that make people susceptible to the scams we've been talking about is desperation. Let's face it: spending months or even years worried about money can make anybody feel desperate. At DebtStoppers, if there's one thing we've seen over and over again, it's this: desperate people make bad decisions.
Let's say you have a lot of high-interest debt on your credit cards and a poor credit rating. A consolidator wants to lend you enough money to pay off your credit card balances at a lower interest rate. Sounds like the answer to your prayers, right?
But hold on. Ask yourself this: if you owe a lot of money and your credit score has suffered, why would anyone want to lend you even more money at a better rate? They wouldn't. So once again, let's all say it together:
If it sounds too good to be true... it probably is!
How credit card debt consolidation in Chicago can leave you poorer
Basically, debt consolidators have three tried and true ways to turn your desperation into your worst nightmare — up-front fees, hidden charges and the bait and switch.
In the money up-front scam, they promise you a loan regardless of your credit, but require a processing or administration fee in advance. This fee can be thousands of dollars. You pay the fee, and then either you never hear from them again or they tell you that there was a problem with your loan application. Bottom line: you don't get the loan, and they keep the fee.
In the bait and switch scam, they promise one thing, and then at the last moment talk you into accepting something not nearly as good. For example, they promise you the loan at an 8 percent interest rate, but when you go to sign the loan agreement, they tell you that due to unforeseen circumstances the interest rate is 15 percent. You're desperate, so you sign anyway.
The final big scam is hidden charges. We all know that we have to pay interest on loans, but in some cases, the interest rate may be artificially low to make the loan appear more attractive. Then they pile on hidden charges that dramatically increase the cost of the loan.
So here's what you should remember if you're considering taking out loans to consolidate your credit card debt:
- Never pay an upfront fee to apply for a loan.
- Make sure that all charges and fees are explained to you in advance so that you can calculate exactly what you are paying.
- Don't agree to any last-minute changes and never sign any contract that contains blanks that haven't been filled in.
- If it sounds too good to be true, it probably is.
Call DebtStoppers for debt reduction strategies that actually work!
To speak to an experienced DebtStoppers attorney about your debt dilemma, call us at 312-913-0630 or contact our Chicago office online.