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Consolidated Credit’s Misleading TV Commercial
By JLP | April 25, 2006
Have you seen this Consolidated Credit commercial starring Paul Michael Glaser. There’s another extended version of this commercial that goes into more detail. He gives a hypothetic example of someone with a $5,000 credit card balance at 21% interest. He then says that of the $100 minimum payment, $87 is interest. Then he says it will take over 30 years to pay that card off.
Did you catch the misleading part? It is the $100 minimum payment, which represents 2% of the outstanding balance. They are still using the old minimum payment percentage of 2%. It is now 4%. So, the minimum payment should be $200, rather than $100. This changes the entire scenario since $113 will be applied to the balance instead of just $13. I haven’t done the math but I know that this card would be paid off a heck of a lot faster than the 30 years they claim in their advertisement.
Of course we know why they left this little fact out since it really reduces the importance of what they do. Keep in mind that although these credit consolidators are “non profit,” they do make money. If they didn’t, they wouldn’t be advertising on TV. My point is: why pay them to do something that you can do yourself?
Topics: Credit, Credit Cards | 10 Comments »
April 25th, 2006 at 1:50 pm
I pretty much assume that all credit consolidation commercials are misleading from the get go. I really don’t understand how this entire industry goes around as “non-profit”. Are they really? I wonder how their people are paid and what experience or credentials they have.
April 25th, 2006 at 2:22 pm
As much as I think those types of companies are total sharks, and I would never deal with them, they may not have been totally misleading. I still have a credit card that is at a 2% minimum payment. I’m still in the 0% interest window so I don’t know if that makes a difference. That ends next month though so it will be interesting to see if the minimum changes then. Anyway, my point is that 2% is still out there.
April 25th, 2006 at 3:35 pm
Most are at 2%. Some have decreased to 1.5%. The 4% minimum payment, if it is out there, is the exeception rather than the rule.
April 28th, 2006 at 3:50 pm
I’m not being charged 4% on any of the cards I have balances on. Bank of America is charging me 1.7%, Citi has only been asking for $20 regardless of my balance, it works out to 1.6% and Capital One is charging 3%. I’d love to be charged 4% so it will get my debt snowball paid off faster.
May 22nd, 2006 at 8:52 am
And where is the extended commercisl?
January 16th, 2007 at 9:45 pm
Since this post, several non profits have been shut down or sued. Here’s a great example of an older lawsuit
http://www.ftc.gov/opa/2003/11/ameridebt.htm
January 15th, 2009 at 5:32 pm
I wouldn’t deal with an organization that has a spokesman that looks like a raging alcoholic anyways.
January 23rd, 2009 at 11:48 pm
Thanks for the comments on the topic of credit consolidation. You all helped with my decision. http://www.outlawphotography.org
January 28th, 2009 at 2:59 pm
I have been in the program for 18 months. I have reduced a 63,0000 debt to 40,000 over that period. I no longer have any penalties and my interest rates have all been lowered. I pay one bill instead of 15. It is working for me. i will be 100% debt free in 2 more years.
August 2nd, 2009 at 11:05 pm
Personally I am shocked that no on has pointed out the glaring error in the commercial. Apparently Consolidated Credit does not know how to amortize a loan. The 33 year figure is incorrectly calculuted using a monthly principal payment of $13; the $100 min less the $87 interest ($13/month X 12 months/year X 32 years = $4992). I find it laughable that even the incorrect estimate of 33 years has been rounded up from the (still hugely incorrect value) of 32.0512 years. More importantly they completely disregard the fact that the as the balance of the load is paid off, an increasing portion of the $100 pays toward the principal. It will take far less than 33 years to payoff such a balance… In actuality a $5000 loan at 21% apr with payments of $100 per month will be paid off in:
just under 10 years… NOT 33 years!