Thursday, November 27th 2014

Student Loans offered through Discover Card

By Jacqui Stewart

So, apparently Discover card is no longer just an ordinary credit card company. They have taken a step into the world of student loans. I know that with the way the economy is, private student loans are very hard to come by. The government is now running the show for the federal loans, which is certainly the easier loans to get, as pretty much everyone qualifies should you complete your free Federal Application for Federal Student Aid (FAFSA). When the economy started to tank a few years ago, private loans hit the road to splitsville because banks were no longer willing or able to finance them. This was a big hit to students who used private loans to supplement what they didn’t get from the government. These loans usually covered living expenses while attending college. Necessity items such as food, gas, car payments/insurance, rent, etc.

After a little bit, schools decided to try and help students with their school finances. Some students were invited to apply for private loans with some student loan companies. However, not like in the past where the student loan lender guaranteed the loan in case of default, the schools took that responsibility and were the ones to guarantee the loans as no financial institutes were willing or able to do so.

As they should, Discover highly recommends that you start your financial goals with the federal Stafford Loans and PLUS loans. If you need additional monies, they offer the private loans to help supplement the amount you need. Their certified private loans have a 0% origination fee and a 2% graduation reward.

From Discover Cards website:

Graduation Reward Eligibility

- You will be eligible to receive a Graduation Reward if:
- You graduate from the degree program (undergraduate program or graduate program) that the loan was used to fund, and
- Your graduation date is more than 90 days and is less than six years after the date of the loan’s first disbursement, and
- Your loan is not in default on the graduation date
- You are the student borrower for a Certified Private Loan (also called Private Education Loan) from Discover Bank
- You are the student borrower for a Federal Stafford Loan or Federal Grad PLUS Loan from Discover Bank, and you submitted the loan application between July 1, 2007 and October 9, 2007
- You are the parent borrower for a Federal Parent PLUS Loan from Discover Bank, and you submitted the loan application between July 1, 2007 and October 9, 2007; for Federal Parent PLUS Loans, “you graduate”, “your graduation date” and “your school” refer to the student’s graduation and school

If you have multiple loans, they said that you MAY be eligible for as many rewards. However, you will not, of course, be able to redeem more than one reward per loan.

Who do you use when obtaining private student loans? Would you have thought to check with your credit card company?

See the below image for more information. I’ve highlighted some info that I felt was important for you to take note of:

Gift Cards From Office Supply Stores Outsmart Spending Categories

By Jason Steele

I recently visited an office supply store and saw a large rack of gift cards for sale. Nothing unusual there. I then remembered that I hold an American Express Business Platinum card. It offers 5% cash back on purchases from office supply stores. That got me thinking. Immediately, I noticed two different gift cards from companies that I would likely do business with. The first was Southwest Airlines.  Certainly 5% off of a Southwest ticket would be something, especially for my family of three.  The next card that caught my eye was from the Home Depot.  I would certainly have to consider this when it came time for my next major project or appliance purchase.

Is It Worth It?

At best, I might value my rewards from my Capital One Venture rewards card at 2% or maybe 3% from my Starwood.  I would then have to weigh the additional percent or two against the hassle of purchasing the cards and using them.  I also should consider the risk that the gift cards are not used.  While I don’t think I would lose them or forget about them, I am sure a large percentage of cards end up that way.

This trick can be applied at grocery stores when they are being rewarded at a higher rate by spending categories. Playing the reward card game is all about the percentages. We obsess over a new card that offers a slightly higher returns and there are so many cards that offer increased rewards for different categories of spending.

Book Review: David Bach’s Debt Free For Life, Chapter 8

By Jason Steele

Earlier this week, I offered my impressions of chapter 7 of Debt Free For Life, the latest in a series of personal finance books by David Bach.  I have also been asked to take a look at Chapter8 of the same book; Your Credit Report And Score: What It Is And How To Fix It Fast.

In this chapter, Bach hands out the basics of credit scores, as the title would suggest. He really is not covering any new ground.  Most people should know this information, but there is a huge number out there that do not. He informs readers that credit scores not only affect people’s ability to borrow money, but can cause people to be turned down for a new job or a promotion. This is all true, but I was surprised that Bach failed to mention the growing role that credit scores are having in the insurance industry.  People are getting charged different rates depending on their credit scores, further bolstering his argument that his readers should know and care what their score is.

From there, he discusses the nature of FICO scores and the scores from other agencies.  He presents the formula that is used to determine your credit score, as well as a 12 step program to improve your score.  The advice he gives is commonsense, but not groundbreaking by any means.  His target audience is clearly people who have had trouble paying their bills in the past, so many of them will probably be able to soak this information up and make good use of it.  As with the previous chapter I looked at, there is a healthy dose of self help style encouragement here as well.

Those already versed in the function of credit bureaus and the nature of credit scores will find little new information here, but if you are new to the subject, this is a pretty good place to start.

Book Review: David Bach’s Debt Free For Life – Chapter 7

By Jason Steele

I have been asked to review a portion of David Bach’s new book Debt Free For Life. In particular, I had a chance to read Chapter 7, Negotiate Your Debt down: How to Lower the Interest Rates on Your Credit Cards. And I’ll be reviewing Chapter 8 later today.

About David Bach

Bach is one of the most widely published personal finance authors in the United States. He boasts more than 7 million books in print with titles such as the Automatic Millionaire and Start Late, Finish Rich. His work has been described as a combination of personal finance advice mixed with motivation. His latest offering does not stray far from from this proven formula.

Bach’s Advice On Lowering Your Credit Card Debt

Presenting me with advice on reducing my credit card debt may seem about as useful as giving me tips on childbirth. I have never had credit card debt in my life and I never will. Perhaps a better analogy would be to compare me to an obstetrician; while I will not ever experience first hand how it feels to be burdened with credit card debt, as a consumer advocate, I have a role in helping others to overcome their debts.

It Can’t Hurt To Ask

This chapter boils down to two points, both of which I found valid. The first is the old adage that it never hurts to ask. This is something that I have advised people to do on many occasions. In this case, Bach implores cardholders to simply ask for a lower rate. He presents strategies for escalating your requests to supervisors who are empowered to grant them. He also provides helpful logic to convince banks that they should reduce your APR. Intertwined with these strategies are side notes with personal stories from actual cardholders. This lends credibility to his advice while demonstrating that you do not have to be a best selling personal finance writer to convince a bank to lower your interest rate.

Get With The Program

His second point in this chapter is that cardholders can invoke little known programs that banks offer to distressed customers. These programs are called “forbearance” and “debt management plans”. I will admit that I had not been aware of these plans. Like the semi-secret discount programs that pharmaceutical companies have for customers having difficulty paying for their medications, these two programs can offer some relief from the high interest rates indebted cardholders may be paying. To qualify, you have to prove a hardship of some sort. My biggest fault with his explanation of these programs is that if he has done the research to determine what the banks consider to be hardship, he does not share it with his readers. Knowing specifically what circumstances are included would be extremely useful to anyone trying to qualify for such a plan.

In Conclusion

Bach presents his strategies for living debt free like the veteran personal finance writer he is. In the chapter I was asked to review, he offers advice that I found both obvious and novel. Even the obvious strategies are explained in such a manner that, as a personal finance writer myself, I was still able to learn some new tactics for dealing with credit card agencies. If you or someone you know is struggling to get out of debt, and paying inflated interest rates on your credit cards, Bach offers some practical advice and encouragement to get banks to lower your rates.

Are You Dealing With A Compulsive Buying Disorder (Shopaholism)?

By Mr Credit Card

There is nothing worse than an empty bank account, right? But maybe there is: how about a mountain of debt and this unquenchable desire to just hoard more and more?

This is how oniomania, or shopaholism, works. Oniomania is a psychiatric term used to label the compulsion to keep ing things. If you think that you’re spending way too much time at Sears, maybe it’s time to check if you’re a shopaholic.

Compulsive Buying Disorder, or CBD, as defined by psychiatrist Donald W. Black, is characterized by excessive ing behavior that “leads to distress or impairment.” In his review of the disorder, he noted that shopaholics go through a four-phase process that involves:

  1. Anticipation
  2. Preparation
  3. Shopping
  4. Spending

Indeed, it is an obsession and a compulsion, as compulsive shoppers spend hours studying their shopping “conquests.” Then, according to Dr. Black, despite how the objectives of the shopaholic have been met when they finally get to what they want, they end up crashing when they realize that they lost control once more. But then, to feel better, they go back to the start of the cycle by plotting another shopping spree.

This may sound like a sick cycle to those who can’t relate to it, but it is a habit, an addiction that renders one powerless. That is why for those who know that they can’t overcome this on their own, it would help to see a professional.

Aside from seeing a professional, it could also be a good idea to take these self-help steps:

  1. Wean yourself from overusing credit cards. You may think that using plastic that offers top credit card deals is a way of saving money, but if you’re not paying your balance in full, you could just be asking for trouble.
  2. Switch to more manageable plastic. If you’re finding yourself misusing credit cards, then these may not be the right tool for you to use. If you’d like to have the convenience of using a card but want to allow yourself limits on what you spend, you may want to consider using something like these prepaid Visa cards instead. That way, you can only spend what you load into your cards.
  3. Find support from someone you trust. This is ideally a responsible person — a spouse, a parent, or a sibling who can oversee your financial progress. If you have to do this on your own, then you may want to think about cutting up your cards and then changing some of the ways you use money. Only accountability helps people recover and stay on track better.
  4. Change some ways you use money. You should draw up a budget and stick to it. Next, include a personal daily allowance. If you have a daily allowance, it would be easier to keep track of how money is spent to ensure that you won’t be using money intended for other things. Then see if you would be able to use cash for all your purchases. If you need to make online transactions, it may be best if you do it with someone to watch over you, or use debit cards. Up the ante by surrendering the debit card to your accountability partner right after the transaction. Also, you could try this: whenever you go out to groceries, work in a coffee shop, or just unwind, bring only ENOUGH money to use on that trip. This ensures that you won’t use money you’ve set aside for other items because you only have enough for that specific activity.

If you note that you are just spending too much money, you should be alarmed. However, don’t think that you can make things better by ing more, and neither should you let yourself get depressed without doing anything about it. There are always solutions. Try our tips to get started on the way to solvency!

This post is brought to you by The Digerati Life, a personal finance blog managed by a technologist and mom of two from Silicon Valley, CA.

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