Because Bank of America is one of the largest consumer credit issuers in the United States, it tends to have its own way of doing things when it comes to debt consolidation. Remember, the bank doesn’t want you to default on your loans any more than you do. If you’re holding on to a large credit balance with the company and find yourself struggling just to make your monthly minimum payments, you can expect several things to happen.
As a first step, the company usually approaches its delinquent customers with an offer for a debt consolidation loan, which it frames as a convenient way to bundle credit balances from a variety of other issuers together with Bank of America debts. Such loans can appear attractive at first, but they are rife with drawbacks.
Consolidating Bank of America Credit Card Debt
If you opt for a Bank of America debt consolidation loan, you’ll usually receive just enough money up front to allow you to pay off your principal balances. The momentary elation you’ll feel upon getting rid of your old Bank of America balances will quickly fade, however, as you look over the terms of your loan.
Although the average introductory rate on a B of A debt consolidation loan is just 9.49 percent, these teaser rates can quickly balloon after a honeymoon period of as little as six months. If you choose the debt consolidation loan route and your credit is already poor, which is a decent possibility if you have more than $10,000 in outstanding credit card debt, you’ll likely end up with an annual interest rate of closer to 25 percent. On even a $10,000 balance, the difference between these two rates can be massive–over $1,500, to be exact.
In addition to the crushing rates of interest you’ll face with a Bank of America debt consolidation loan, you’ll find that these loans are of limited benefit if you suffer from very high levels of debt. The company begins offering these loans to clients with outstanding balances of more than $10,000 but cut off support at $25,000, meaning that the company will not offer financial assistance to customers looking to pay off debt loads beyond that level.
A Loan Is Not Your Best Way To Pay Off Bank of America Debts
Once you’ve wisely decided that a loan is not the best solution to your debt problem, you’ll have several options for tackling your outstanding Bank of America balance. If your account remains in good standing, your first step should be to call the company directly and explain the situation to them in great detail. Although it’s plain from the fact that you’re barely making your minimum payments and running a monthly balance that exceeds your stated income, they can’t help you if you don’t approach them first.
More so than other major creditors, Bank of America is known for its willingness to work with its clients. The company’s size and reach allows it to offer a “financial hardship program” designed to help individuals and families struggling with job loss, medical bills, foreclosure, and other issues.
It’s worth inquiring about this program even if you’re merely overextended, in which case the company can offer you a temporary interest rate reduction, a suspension or reduction in your minimum monthly payment, or a moratorium on penalty interest should you miss a payment one month.
Bank of America Debt Relief Plans
Bank of America also works with credit counseling agencies and debt consolidation professionals to help its customers negotiate settlements and pay off their debts in a timely fashion. If you’re unable to negotiate a settlement directly with the company directly over the phone, this will likely be the next step in the process.
If you’re struggling to make your minimum payment each month, the interest rate on your outstanding balances is probably quite high. Although every case is different, past Bank of America debt consolidation clients have shaved an average of nine percentage points off of their old rate of interest. If you’ve been paying penalty interest rates of 25 percent or more, you may be able to save even more than this. Remember, reducing your interest rate by even a single percentage point will save you $100 per year.
Reducing the average interest rate on your outstanding balances can be helpful, but oftentimes it’s not enough. Cutting the annual rate of interest on a balance of $20,000 from 20 percent to 10 percent will save $2,000 per year, a not-insignificant sum.
Bank of America clients who negotiate an outright settlement on their outstanding debts, however, can save many times that. If you see your settlement process through to completion, you can expect to knock over 50 percent, on average, off of your debt. Fill out the free form or call today to connect with a debt settlement professional and get the most out of your Bank of America debt consolidation!