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The Dangers of Debt Solutions

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If you are in debt and it feels like it is getting out of control, you may be at a point where you are ready to reach out for help. If you do, use caution and common sense. There are some upstanding companies looking to help you, and some predators looking to take advantage.

What Debt Solutions Companies Offer

Debt solutions companies exist to help you manage your debt and get out from difficult debt situations. Many people find themselves struggling to make ends meet after paying credit cards, student loans, and medical debts, and a debt solutions company may be able to help reduce, eliminate, or consolidate some payments to save cash each payday and save money in the long run.

Quality debt solutions companies will help customers understand and evaluate their debt, income, and expenses and use that information to plan a series of steps to remove the burdens of the debts through a combination of budgeting and debt payoff.

In some circumstances, if the debt load is beyond your ability to pay, the company will suggest debt consolidation or debt forgiveness to help you get out of debt. These options have serious ramifications to your credit, so they should never be taken lightly.

Debt consolidation is taking out a new loan to pay off existing loan balances. Credit cards generally have very high interest rates, typically over 20% per year, and consolidating outstanding debts to a lower interest loan can help simplify payments and save money. However, people with high revolving debt balances may have trouble qualifying for lower interest debt consolidation loans, so this is not always an available option.

Debt forgiveness is another option, and a near last resort for people with a serious problem managing their debt. In this case, a debt solutions company will reach out to lenders to ask for a reduction in outstanding debt balances in exchange for a lump payment or lower monthly payments. When a lender agrees to this, the account will show that a settlement was reached on your credit report, which will hinder your ability to receive new credit for seven years or more. In this case, borrowers may receive a debt reduction of 50%-60%.

As a last resort, some borrowers file for bankruptcy protection. Bankruptcy courts can lower or eliminate debt balances, but a bankruptcy leaves a bad mark on your credit report for ten years and may disqualify someone from any new credit or debt, such as a mortgage loan to buy a home.

What to Look For

If you are in a situation where you could benefit from the services of a debt solutions company, it is important to hire a company that will put your best interest first and stand by you as you work to get debt free.

First, any interaction with the company should leave you feeling like you are making the right steps. If you are being pressured to do something that makes you uncomfortable, you are not working with the right company for your needs. A debt solutions company should treat you with respect as you work through your difficult situation. They should not add more stress on top of your already stressful time.

Debt solutions and debt settlement companies offer a variety of fee structures. When choosing a company, the fees should be very clear and easy to understand. Do not agree to anything you do not understand or ambiguous.

Also look for online reviews. You can look to the Better Business Bureau to see if the company is highly rated or riddled with negative comments and complaints.

Warning Signs

While there are good debt solutions companies out there, the industry has garnered a bad reputation thanks to the many predatory agencies looking to profit from American’s bad fortunes. Here are some red flags to lookout for when choosing a debt solutions company.

  • Pushing for bankruptcy – If the first thing that happens out the gate when you speak to the company is a push towards bankruptcy, take a step back and evaluate if this company truly has your best interest in mind. Bankruptcy is the right choice in some situations, but should never be the first option discussed and you should never be pressured into doing so quickly.
  • Quick fix solutions – There is no quick fix to debt problems. Outside of medical bills, people rarely get into crippling debt quickly, and it takes time to get out of debt too.
  • High pressure – Your debt solutions company is not a used car lot. If you feel like you are being pitched by a seedy car salesman, take your business elsewhere.
  • Unclear fees – You should know and understand up front exactly what you will expect to pay for debt solutions services. If the fees seem high, call around to a few companies to compare.
  • Bad reviews – Companies get bad reviews even with the best of intentions from time to time, but a trend of more bad reviews than good ones shows that more people have had negative experiences than positive ones.

Try to Solve It Yourself First

Before you look for help solving your debt situation, look in the mirror and you will find the number one advocate that will help you get out of debt. You care more about your situation than any business, so put in the work to get yourself on track to getting out of debt before calling for help.

If you have higher monthly expenses than your income, look at your spending habits and get on a budget that leaves room for debt payments.

If you have several high interest rate loans, look for consolidation options on your own through a personal loan.

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EverBank Yield Pledge Checking Review

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EverBank is an Internet-only bank looking to compete in the checking account game. Its Yield Pledge Checking comes with a unique guarantee, but this promise may not be enough to give EverBank an edge against competitors.

About Yield Pledge Checking

Yield Pledge Checking is an online checking account for users anywhere in the United States. The standout feature is the yield pledge guarantee stating your checking account interest rate will always be in the top 5% of all competing checking accounts. EverBank does earn an “A” transparency score, because it discloses its fees and hoops, but keep in mind it isn’t quite as user friendly as some of the other Internet-only checking account options.

In addition, the account offers unlimited ATM fee reimbursements, but only if you maintain a minimum average daily balance of $5,000. If you keep that balance in your account, you can go to any ATM in the United States and EverBank will pay back 100% of the ATM fees charged by the other bank to use its ATM. But it must be a daily balance, which means if your average daily balance dips to $4,999 you revoke the right for a free trip to the ATM.

Some people worry about not having a bank branch nearby, but for the typical bank customer bank branch visits are rare. Like other Internet-only bank options, EverBank provides the ability to do anything you would in a bank branch, except deposit cash. Instead, deposits can be made from your phone, so you can deposit checks anywhere with the Android or iPhone app.

Pros and Cons of EverBank Yield Pledge Checking

Like all checking accounts, EverBank Yield Pledge Checking has both pros and cons. Here are some major benefits and drawbacks compared to the competition.

Pros:

  • Full featured online banking
  • Deposit checks from your phone
  • ATM fee reimbursement with minimum balance requirement

Cons:

  • No cash deposits
  • Fee for out-of-network ATM when minimum balance not met
  • Complicated, tiered interest rate structure

What Are the Fees?

For typical banking activity, there are no fees charged for your Yield Pledge Checking account, but there are a few hoops to jump through in order to qualify for all the perks

Yield Pledge Checking has no monthly fee and includes free bill pay. There is no minimum balance requirement to avoid the monthly fee, though a $1,500 deposit is needed to open the account.

EverBank never charges any ATM fees, though to qualify for the reimbursement you must keep an average daily balance of at least $5,000.

If you overdraw your account, you will be charged a $30 non-sufficient funds fee, though you can choose to decline NSF service or link an overdraft line of credit, or just never overdraft, to avoid this charge. If you deposit a bad check, you will have a $10 charge and if you stop a payment, you will be charged $30. If you do opt to keep overdraft service turned on, there is a cap of five overdrafts per day, or $150. After that, transactions will be declined. This policy is actually worse than all of the Big 4 Banks, so if you’re banking with EverBank you need to have overdraft protection.

You may also have to pay fees for infrequent requests such as cashier’s checks, replacing a lost debit card, or wiring funds out of your EverBank account, though there are no fees for an inbound wire.

How Does EverBank Yield Pledge Checking Compare to the Competition?

EverBank does tout being in the top 5% for interest rates, but its tiered structure makes it a bit complicated. As with most banks, EverBank lures you in with an intro rate of 1.40% on all funds under $100,000 in the first six months. Then APY reduces depending on your assets. Less than $10,000 and you’ll be earning 0.85% for the rest of year one. Into year two you’ll only earn 30%. Granted, most banks don’t focus on checking account interest rates and place a stronger emphasis on savings – we recommend you do too.

Ally Bank only offers .10% on balances less than $15,000 in Interest Checking and .60% on balances $15,000 or higher. Charles Schwab only offers 0.06% APY on its High Yield Investor Checking Account and Bank of Internet (Now Axos Bank) offers up to 1.25% APY, but with a rather complicated tiered structure.

EverBank’s Yield Pledge really loses the battle compared to the competition when you stack it up against other bank’s ATM fee offers. Ally, Charles Schwab and Axos Bank all reimburse 100% of ATM fees within the United States, with no minimum account balance requirements. Charles Schwab also reimburses international ATM fees.

EverBank also loses against competition when it comes to overdraft fees. Axos Bank automatically declines overdraft charges without a fee. Charles Schwab and Ally both offer no-fee overdraft protection. Without protection, Ally only charges $9 with a once a day cap. Charles Schwab automatically declines pin-based transactions without charging a fee. But if you wrack up overdraft charges on checks and ACH payments, they will cost $25 each with unlimited fees being charged in a day.

Most large banks now offer a mobile deposit feature and powerful online banking, and EverBank does as well. Features are comparable to any other large online bank such as Capital One 360 or Ally Bank.

You can also link your accounts to an EverBank mortgage loan and extensive investment account options including foreign currency bank accounts and precious metal investments. Most online banks do not offer these investment options, so if you are looking at currency diversification, EverBank is one of your only options in the United States.

How to Sign Up

Head to the EverBank website to begin the simple online application process.

You will need your typical personal information including an address, email address, and social security number. If you’ve lived at your current address for less than three months, you will need an additional proof of address such as a utility bill, bank or credit card statement, or mortgage statement clearly showing your address.

You will be required to submit a $1,500 opening deposit, so have that cash available in a checking account to be transferred into your new account as an opening balance.

If you get stuck or need time to find some required information, you can save your application and return to complete it later.

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Is This the Right Account for You?

You know your personal finances better than anyone else, so only you can decide if an EverBank checking account is right for your situation.

If you keep a high balance in your checking account and like the convenience of online only banking, this is a great option and ranks among the top accounts available. Your account will offer the same features and benefits of the largest nationwide banks and regional banks, but with a higher interest rate than you will find at 95% of them.

If you like going into a bank branch and working with a live person or if you need to make frequent cash deposits, this is not your best option, but otherwise EverBank Yield Pledge checking should be able to handle any needs, and you can avoid lots of pesky fees while you’re at it.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.