Student Credit Card Forum

[KLMRADTECH]

I recieved an offer in the mail to consolidate all of my credit card debt onto a Bank of America credit card and take advantage of a "clean sweep". Bank of America promotes this option as a loan of sorts. A said amount is borrowed and paid back with interest and with a set term agreement. The interest rate will vary depending on the amount of debt owed and credit scores, as I am told. My question, as a young professional now learning my lesson with credit card debt and wanting a quick fix, is this a good offer? They propose to give me a set term of months to pay with a set interest rate much like a "car loan" as it was explained to me. At the end of the term my credit cards are paid off and I am debt free. However, I opted for the short 36 month term and they suggested that I take the 84 month term and if I wanted to pay extra every month I could. So, "clean sweep" or not?

[Credit Card Guy]

I researched the Bank of America Clean Sweep Debt Consolidation Loan and found out how it works. In short I will say it "potentially" could help you out but "realistically" won't if you need it due to poor credit management. The issue lies in the fine print. The offer states good terms for somebody with excellent credit, the terms in the fine print for average to bad credit are far less appealing and probably not much better than what you're getting from your current credit cards if you've got bad credit.

If you are looking at this loan because you are making late payments and getting behind it could help you consolidate things but beware that you won't get the good rates. Also try to avoid taking them up on borrowing back the money you have already paid. As the fine print states there is a 3% charge for this and it sets your payment period back to the beginning.

Other things to consider before taking out this loan would be:

1. Look for low interest balance transfers where you can get a lower APR for a time and possibly consolidate that way. A list of possible cards for this can be found on http://www.studentplatinum.com
2. Along with this you should get a budget and read our free guide to paying off your credit cards found here: http://www.studentplatinum.com/credit-c ... n-plan.php
3. Next check with local banks and credit unions. They will likely make you the fairest offer for a personal consolidation loan.
4. If your goal is to get credit card companies off your back and make only one payment you might consider working with Consumer Credit Counseling Service and you can check with National Foundation for Credit Counseling (http://www.nfcc.org) for certified counselors. They will be able to negotiate lower APRs on your cards for you and put you on a payment plan with a fixed payment like the Bank of America Clean Sweep Debt Consolidation Loan only without the risk of it increasing and the temptation to take cash advances. Working with a credit counseling service is reported on your credit score but many lenders will view this as you starting to be responsible, because you are.

Here’s what you need to understand in the brochure for this loan:

What can a personal loan from Bank of America do for you?
A Bank of America personal loan can help you consolidate debts and expenses and manage your monthly expenditures. With flexible repayment terms (Translation: they will probably suggest longer repayment terms. The longer your repayment terms the less your monthly payment but the more you'll end up paying in the end. Its best to take the shortest term you can afford) and a non-variable APR you get one predictable monthly payment that won’t automatically fluctuate when the Prime Rate changes (Translation: fixed rate which also won’t go down if the prime rate falls so beware that you could be stuck with whatever rate they give you).

Plus, you have the opportunity to re-access your available credit as you pay down your balance (Translation: charging your card debt back up which is what you’re trying remedy. If you need it this is nice to have but it really should be the last resort plus there is a fee or accessing this) – building a cash reserve for future financial needs (Translation: Basically a cash advance.).

With a Bank of America personal loan we provide you with an easy, flexible solution to meet your needs today and for whatever tomorrow brings. There’s no application fee, no annual fee and no collateral required.

Here’s the fine print:
Upon approval, we will establish your credit line based on creditworthiness. Your actual credit line could be lower than $35,000. We may prohibit use of this account to pay off or pay down any account issued by FIA Card Services, N.A.

We will set your initial APR between 8.99% and 24.99% based on creditworthiness. By “non-variable rates” we mean that the APR will not automatically vary with an index, such as the Prime Rate.

We reserve the right to change your APR, fees or other credit terms at our discretion.

Repayment term and payment amount are estimates which may change if, for example: we change your APR, you make late or partial payments, we assess fees, you enroll in Credit Protection, or you take additional advances. 3% transaction fee on each advance (minimum fee $5; there is no maximum). Transaction fee is added to balance and accrues finance charges. Other fees may apply.

You may request additional advances on this account. For each additional advance, we will restart your monthly repayment term and recalculate your monthly payment amount. Borrowing the full amount of your available credit may result in an over-limit fee because fees and finance charges may cause your balance to exceed your credit limit.

[BosCelts07]

I too have been pondering the "clean sweep", since I have credit debt that has been near impossible to pay off. I have missed some payments, and my credit card company (which happens to be my bank, Bank of America), has been calling me non-stop. I went into the bank, and thats when they told me about the clean sweep. This almost seems like my only option, because I NEED to lower my payments. Few questions in regards to your post:

- I do not know my credit score. Is there a free way to find that out?

- I know transferring to a 0% balance card is the best bet, but again I think my score is probably too low to get a new card. Are there any cards that accept people with less then ideal credit? After reading your post this does seem like my best bet, I just don't know if its possible.

Thanks!

[Credit Card Guy]

I wanted to update you on the Bank of America Clean Sweep offer that KLMRADTECH started this post with. She emailed me the details and here is the conclusion.

Originally a sales agent told her over the phone that there was no early repayment charge for the Clean Sweep Offer and so she signed up for it and they deposited $10,000 into her account. They had offered her a repayment APR of 10% or lower but the one she actually got was 17.99%. After I wrote to her and sent her to the Credit Card Reduction Plan (http://www.studentplatinum.com/credit-c ... n-plan.php) she decided that she could get her credit card debt under control with some basic budgeting help and since there was no early repayment fee she stuck the $10,000 in her savings account.

The next month when the first bill was due she paid the loan off. She was charged a $350.00 early repayment fee. She called them and the representative on the phone said that sometimes they charge early repayment fees and sometimes they don't depending on the agent who sells the loan. She didn't get promise from the sales agent in writing and so she had to pay the fee.

Lessons Learned:

1. Don’t panic. Panic causes you to make poor financial decisions. It’s better to relax put all your options out on the table. KLMRADTECH got panicked because she was having trouble making a couple of payments around the holidays. When she looked at it a few weeks later using a basic budget she realized she did in fact have enough money to make her payments.
2. Any offer than sounds too good to be true, IS TOO GOOD TO BE TRUE. The Bank of America Clean Sweep program like any other debt consolidation offer is going to show you the best possible terms in the large print and a more likely scenario in the fine print. Read the fine print.

3. Companies are in business to make money, not just to bail you out of a mess. Make sure you understand how they will make money off you and exactly how much.
4. Get everything in writing or don’t agree to it.

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[jasminc2732]

It is always that way that the conditions for people with good credit are better than for those with bad credit. That is quite obvious as a bad credit rating is a sign that you have made some financial mistakes in the past.
So there will definitely be some clauses you won't like in the fine print. As your credit score is already low think twice about what to do as your next step. Of course there are bad credit loans that you might take out, but these will probably only get you into more trouble later on.
You to some banks personally and talk to some friends who are knowledgeable about personal finances and then decide which way you want to go.
Good luck!