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Credit Late Fees
In Debt Settlement |
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Call Today: (877) 274-1260 |
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If you
successfully complete our program, it’s possible
that you’ll enjoy these benefits: |
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Settle your debts for less than you owe |
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(read here for full details about how much you can expect to save) |
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Resolve your unsecured debts in 18 to 60 months |
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(read here for full details on how
long our program lasts) |
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No Up Front Fees - Don't Pay Till You See Results! |
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| Who Is Affected Most By Interest
and Late Fees In Credit Card Settlement Programs? |
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The fact that
interest and late fees continues to accrue in credit card debt
settlement
is a concern of many consumers. In the end, the savings from
settlement are still quite dramatic despite this fact, particularly
in light of how expensive just barely making the minimum credit card
payments can be. That being said, some consumers are affected more
by the fact that interest and late fees continue to accrue
throughout the debt negotiation process. Those consumers are those
with smaller balances and overall debt. Yes, consumers with small
balances can still benefit tremendously from settling their debts,
but on the same token, the overall percentage savings tends to be
less than those who have larger balances.
The reason is simple: credit card late fees are typically not based
on your debt amount, so late fees can increase the balance on a
smaller debt much more than a larger one on a percentage basis.
That is, a $50 late fee assessed on a $500 accounts for a larger
percentage increase than a $50 late fee assessed on a $10,000
balance. In order to better understand this concept, consider the
following examples.
Example A
A late fee of $50 is assessed for 6 months on a $10,000 balance
before the debt is charged-off and sold to a third party collection
agency. That amounts to an increase of $300 on the balance from the
late fees, or a 3% of the outstanding balance. The interest on the
account was 30%, so the balance with late fees and interest amounts
to $11,701. The account is then settled for 40 percent of the
current balance, so the consumer pays roughly $4680.
Example B
A late fee of $50 is assessed for 6 months on a $500 balance before
the debt is charged-off and sold to a debt collector. The late fees
and interest rate are the same as Example A, so the balance at the
time of settlement is $870. The account is settled for 40% of the
current balance, so the consumer pays $348.
In Example A, the consumer pays just under 47 percent of the
original balance, so the savings are tremendous. In Example B,
however, the consumer pays just under 70 percent of the original
balance. Although the savings from enrolling a smaller balance can
be very significant versus making the minimum payments or through a
debt management plan (DMP), debt settlement clearly favors consumers
who have large balances.
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