June 4, 2009
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Looking for Debt Settlement; Beware!
Tales of the dark side -- story 1They like to kick you when you're down. When it comes to credit cards, it's a double whammy Recently, a friend of mine allowed (foolishly) someone else to borrow her credit card for a "business" deal, promising to repay a charge in just a few days. By surprise, he stupidly made a cash draw against the card. With a $2,000 debt against a $3,000 limit on the card, this other person drew over $900 in cash from a credit card (world's biggest idiot). Boom! The next thing she knows is she's over her limit. Because of the huge 28% interest charge on cash withdrawals, the finance charge caused an overdraw on the credit card. To boot, that huge 28% portion could not be paid down until all the other $2,000 at 9% was paid off in full first.
Now burdened with the $39 penalty and an outstanding $3,000 debt she could not pay down quickly, I tried to help out with a balance transfer to a new credit card. First, I researched the Internet for good deals on credit card balance transfers. Found one -- "Discover -- More Card". Zero-percent promo for six months on balance transfers (with 4% Transfer Fee.) Then I got the phone number to call the representative direct (trying to protect this girl). To my surprise, the agent did my one better. Zero-percent promo for 12 months on balance transfers with no other fees except for the Transfer Fee. With a $5,000 limit, we arranged for an immediate $2,600 balance transfer from the old card.
When the new credit card arrived in the mail a few days later -- what a shock! A 27% (same as cash advances) minimum variable finance charge on balance transfers with a $39 annual fee. To boot, the credit limit was only $500! Instead of issuing a "Discover -- More Card" HSBC have issued a "Direct Rewards Platinum Card". How is that to help someone who just needs a balance transfer and is willing to pay the 4% Transfer Fee ($104) for it? Moral of this story -- beware of promises from HSBC.