Last week I received a life-changing product in the mail: Discover’s ‘Debt Eraser’ personal loan.
Amazewife caught it while I was at work. She was ecstatic. She didn’t wait to tell me. My Google Chat did a jig on my screen and distracted me from Job #1. Boy am I glad that it did.
This little product changed me from the moment I saw it. Here’s how:
The brochure within promises “to get rid of my higher-interest debt” in two steps.
Yep, that’s it. Two simple steps.
1) “Use the Debt Eraser loan to erase the higher-interest debts you have now,” then,
2) “Erase the Debt Eraser loan itself until that’s gone, too!”
Life changing.
“But RI,” you are now asking, “You must be silly. How could this change your life? You’re against debt, not for it.”
You are correct. This changed my life by further cementing this truth:
Credit card and personal loan companies think the American public are stupid. Amazewife and I proved them right for far too long.
Discover should be ashamed of itself. This is slavery peddled as freedom; it is handcuffs pedaled as the key to unlock themselves. You cannot get out of debt by going into debt. You cannot get out of a hole by digging out the bottom.
Crazy. Something shaped like a credit card can be labeled SEVERAL TIMES in HUGE LETTERS as a “debt eraser.”
And they could get away with it without having to tell the truth, too, if it weren’t for those meddling credit regulations.
A small booklet with a million different sections of small print fell out of the envelope. Inside was this little nugget:
19% interest. Don’t let them fool you. They say 18.99% because of a mostly United States based marketing strategy called Psychological pricing.
But that’s not what they’re selling. They want us to think we qualify for the 6.99% rate. People who don’t read the fine print might think this is a good deal. None of the consolidated student loans I hold have an interest rate above 6.8%.
And life doesn’t go according to their schedules. If the whole payoff schedule were in the picture, you would see that $15,000 – which is the closest listed amount to our balance – would cost us $12,000 in finance charges on top of the balance if we were late on any payments. If you’re anything like we once were, you know what I’m talking about. It’s called the penalty rate, a.k.a., the maximum.
What a joke. At 19% interest, it would cost us $27,000 to pay off the $15,000 balance.
What rational human being would say, “Wow! I would love to erase my $15,000 by both paying $15,000, and an extra $12,000 to Discover for letting me! I didn’t need that $15,000, but I REALLY didn’t need $27,000!”
No one.
This mailer is deceitful and shows what lengths this particular lender will reach to in order to bolster its margins by keeping people in chains with them instead of the competition.
I’ll say that again. They don’t want you to erase your debt. They want you to carry your debt with them, and it is in their best interest that you not pay it off.
I’m so glad I got the Debt Eraser in the mail. It really has changed my life. It strengthened my resolve to educate those around me about how bad of an idea consumer debt really is.
Discover could rebut this. They could say that there is nothing dishonest in this pamphlet. And they could probably hold it up in a court of law, saying that they are offering a different debt vehicle.
Yep, it’s a different vehicle. Instead of being cuffed, gagged and rolling around in the back of a conversion van with MasterCard, Visa, your Car financier and a few other institutions’ logos, you can be cuffed, gagged and rolling around in the back of a conversion van with the Discover logo on it only.
Pick it apart. Let’s say you take out a Debt Eraser personal loan.
You pay off your balances with those Other Guys using your Debt Eraser. They lose nothing.
You carry all your debt with Discover. They now own all of your debt. They gain that balance, with interest.
Like I said, cuffed, gagged and rolling around in the back of Discover’s conversion van.
What do you gain? You might feel better. It might be easier on you emotionally to have one lump sum to work on. However, the behavior problem isn’t fixed. You are still heavily in debt, but with only a single loan. You will probably be tempted to think you’re safe getting more credit cards or personal loans again. To quote daveramsey.com’s article “The Truth About Debt Consolidation”:
A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt.
Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, but if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business. (Link)
Yup, my life changed just a little bit more, and for the better. I hope I can convince you to let the Debt Eraser change your life, too.
ROE INTENSE
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