My Credit Card Company Wants to Give Me a Home Loan Refinance
April 12, 2008 by Miranda Marquit
Filed under Finance
Yesterday I got an interesting offer in the mail. My credit card company wants to give me a home loan refinance!
Because you have shown financial responsibility, we are sending you this special offer. Refinance to a low rate of 6.28%!
The offer goes on, of course, to expound on the things I could do. Save money on interest! Take some cash out to go on vacation! Take cash out to improve my home! Take some cash out to pay off my credit cards!
Unfortunately for my credit card company, I pay off my credit card balances. I have a special fund that the family puts money in for vacation, and we’ve already saved up almost enough to have our yard put in. And the current (fixed) interest rate on our home mortgage loan is below 6%.
So, what do I need this home loan refinance for? Right. I don’t. Because, for the most part, I try to show financial responsibility.
Miranda:
This is a good and important post.
May I suggest a follow up post on why – in many circumstances – credit card companies offer these deals… especially to those who are getting in over their heads?
Credit cards are “unsecured debt,” meaning that if you default or go bankrupt, they can’t take your house, car or stuff. They are last in line, behind secured debt, like your mortgage. When they see people getting in trouble, they offer nice guy home-equity loans. Take them up on it and guess what? Their debt is now secured – and tied to your home. Before, they could do nothing to you, really, but mess up your credit rating.
Even people who show financial responsibility can fall into the traps of these robber barons. A person who never missed a payment can suddenly see their interest skyrocket from 9% to 30% overnight. Absolutely pay those things off every month if you can…
Excellent point, Sean! That’s the problem with taking unsecured debt and then securing it with your home. I’ll put up a post on it Monday morning :0). Thanks for the suggestion!