General Question

Bill_Lumbergh's avatar

Scam or my lucky day?

Asked by Bill_Lumbergh (1468points) August 8th, 2011

I received a Citi Financial (now OneMain Financial) pre-qualified “Express Loan Certificate” for $6000 in the mail this past weekend. After calling the number on this certificate, and reviewing with my co-workers – I’m gather that this “quick cash” offer is real! I know that something like this will come with a hefty interest rate, they will ping my credit with their hard check on it, and that I would be ludicrous to even consider this offer. But…

I am currently buried under two credit cards, with APR’s of 24% and 25%. I can pay off these cards with this “Express Loan Certificate”, only to inherit the mystery APR of this loan. I am confident that if I do not pay off these credit cards soon, the finance charges will eat me alive! I am seriously considering this as my only option! Please help me decide my fellow jellies!

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15 Answers

koanhead's avatar

Don’t make a move until you find out this “mystery APR” at the very least. For all you know it could be 70% or more. Or it could be variable or tied to arbitrary charges that make your current situation look good.

If you can’t get numbers out of them, then it’s a scam for sure. Good luck, and


poisonedantidote's avatar

Never borrow money to get out of a problem caused by borrowing money. Chances are the interest rate will be much much higher.

When they tell you the interest rate, make sure they dont tell you “it’s X monthly interest”, monthly interest rates will sound low, but will work out being a massive APR. 4% a month would be more than both credit cards combined.

john65pennington's avatar

Old saying….......“If it sounds too good to be true, it probably is”.

Read the small print. There is a catch in it somewhere.

Smells like bait looking for a hungry fish.

You cannot borrow yourself out of debt. This is the country’s problem right now.

As I have said in the past, plastic will eventually own you.

Vincentt's avatar

Paying off debts with new loans sounds like an extremely bad idea. Probably an oversimplification, but I would first try to the best of my ability to find safe (i.e. less spending, more income) ways of paying off your debts. I you really can’t manage that, you’re absolutely not in a position to take risks with things that, as @john65pennington said, seem to good to be true, while it’s very likely that they probably aren’t.

If you’ve borrowed money, you can probably estimate what would be a reasonable price for you to pay to make it worthwhile for the company you are indepted to to loan you that money. If you pay that, you can hardly go wrong – and of course, when taking on a credit card, you have to calculate in advance what this price would be and if you are willing to pay it.

wundayatta's avatar

Paying off loans with new loans is not necessarily a bad idea. If you can lower your interest rate, then you want to do it. So if you have a house and you can get a home equity loan at 6%, then you want to do that in order to pay off your credit card loans. Of course, with a home equity loan, you have to pay the bill every month, or else you lose your house. With credit cards, you can pay the minimum amount thus pushing off payment for the debt another month. Really, really bad idea.

Once you pay off your credit cards, you never want to run a credit card debt again. Pay off your loans in full every month. Don’t pay any credit card interest.

The only reason I can think of to violate this rule is if you have a project you need to finance and you can’t get the money any other way. People have financed movies this way. But you really have to believe in the project.

The other thing you could do is not worry about your debt. Go bankrupt and lose your credit rating. It’s not the worst thing in the world to be unable to borrow. It puts you on the straight and narrow for the time it takes before they let you have credit again. Maybe 6 years?

tedd's avatar

The catch is the interest alone on that loan will be far more than your 24–25% interest rates. Often times they’re usually over 50% .

For the love of god do not get that “loan” out.

MeeblyConevily's avatar

As I read the title i was just thinking is this guy an idiot that fell for that ” congratulations you are a winner ” virus that pops up on websites

YoBob's avatar

You cannot borrow your way out of debt.

woodcutter's avatar

It’s been my experience if you are automatically approved for a loan, that is going to some expensive money. Time to dig for that small print, or just try to listen to that guy at the end of the ad talking so fast it sounds like one long rambling word.

Cruiser's avatar

I would apply for a lower interest rate credit card and transfer the balances to start. Then contact your bank and meet with an adviser to see if there is a bank loan you can get to pay down these credit cards. The very least call up the credit cards and ask for a lower rate and if they balk threaten to transfer the balance. That most often will give them incentive to try and keep you as a customer.

Blueroses's avatar

I can’t believe these bottom feeders are still at this game. They prey on people desperate to get out from under credit card debt and they know it means you don’t manage your money well so they’ll profit from being your primary creditor. They intentionally send statements late in the hope that you won’t be staying on top of the repayment schedule. One day late, and the APR shoots up to over 40% and late fees are generated at over $100 per WEEK!

Don’t take this offer. You’ll never get it paid back.

Jeruba's avatar

Don’t. Find another way. Do what you would have done if you hadn’t received this. Trash the offer.

I think @YoBob ^^^ said it best.

Raven_Rising's avatar

Although I would highly recommend paying off your credit cards before getting into more debt, I can understand where you’re coming from. I’ve been there and it can seem like a blessing to have an opportunity to pay off all your debt all at once with just one small payment per month. It can also turn to crap pretty quickly and you could find yourself in a much worse situation than what your already in.

It wouldn’t hurt to see what their offering. Information is your friend here. Find out everything you can about the terms, what happens if you pay late, if you find yourself out of work, etc. It might actually be a good move if the APR is significantly less than what you’re currently paying and if you’re willing to stick to an extremely strict budget until your loan is paid (That includes not using your credit cards one month later to buy pizza thus negating your reason for getting the loan in the first place)

However, the possibly the APR is lower than what you’re paying now is pretty unlikely, especially if you’ve been buried under debt for a while. My gut is telling me that you would be better off setting up a strict budget and putting more money towards your credit card rather than replacing two small debts with one large one.

woodcutter's avatar

I get those every so often and I tear them in half right there in the post office and toss it in the bin. Apparently I’m on their mailing list because my name was sold off and they are going to hound me from now on, especially right before Christmas. It’s as close to a scam as it gets by definition.

mrrich724's avatar

You CAN consolidate your CC debt into one manageable credit card with a decent rate. If you are a college graduate or part of a national organization, see if your university or organizations have any credit card offers with 0% for the first year intro offers. Also, by doing it through an organization, you will get a much better rate than you have now. And that’s my emergency card.

My first year in college the max I could get was a $500 limit with 26% interest rate. I signed up for our FSU Booster credit card and got a $4000 limit with a 9% rate. (With practically no credit). The limit on that card has continually gone up, and the rate has stayed the same.

By consolidating, you will have less bills to worry about and likely a smaller minimum payment. This is a big deal. Do NOT EVER pay the minimum payment. Stick to as close to as what you are paying now above and add that to the minimum payment. It will help you pay down your original balance faster, and save you alot in interest.

IF you do this, CLOSE your other credit cards… You should NEVER need a 20+% interest card, and closing them will reduce the temptation to consolidate, free up your credit and build up even more debt! (Since it may seem like you don’t have the self control to not charge)

Also get clarification on balance transfer fees, before you consider any of these options.

FINALLY: I’ve NEVER seen any offer in the mail like that which was actually legitimate. And I’ve seen quite a few offers. Don’t even consider that one you got in the mail.

Amendment: I just read an answer you posted to another question and if you are this seriously in debt (and this is beyond serious 25% is unthinkable!!!), then nix the facial scrubs with lotions, and nix the pedicures! These are really things that you can sacrifice every month and use the savings to pay down your debt! It’s totally worth it, and I promise, you can care for your own feet. Your facial skin will also survive with regular body wash!

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