Question

So we had a credit card that went into collections a while back when we hit a rough patch because my husband lost his job and had to take a lower paying one. We are back on our feet and beginning to make payments to the lawyer who took over the account. After a few months of payments I couldn’t figure out why the amount due was not going down. We just called and they said we are being charged 3. 61% interest A DAY! I can’t believe this is even legal! There is no way we are going to get this paid off at this rate! We are already throwing all extra money to it every month. Any one have any suggestions on what I can do about this? We live in Rhode Island. Not sure if different states have different laws.  

Answer 1

I’m confused. 3. 61% interest a day is not a thing. There should be an APR (annual percentage rate) and if you really want to get deep, a per diem (dollar amount per day). Is it $3. 61 / day? Or is it supposed to be 36. 1%?  

Comments

Ps. I’m a banker and there is a federal law that says credit products have to be disclosed in terms of APR. that’s federal not state law. It’s to protect consumers from confusing terms / interest. To make sure that all credit products are comparable. ie you can compare two credit cards or two loans in terms of APR.  

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@pickerel since making this post (a week ago) we called back and speaking to someone else, it is $3. 61 per diem. With an additional 1 percent per month. Do these federal laws still apply if it’s a credit card that went into collections and is now owned by a lawyer? We have to deal directly with the law firm not the credit card company. They would not give us a APR.  

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@adamec message me the balance, I can do the math quickly and get you an apr. I would guess it’s around 30% (collections is usually in that arena) but if I know the balance, I can confirm).  

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@adamec I was half asleep when I wrote that and don’t think I explained well. Collections rates can be around 30%, but sometimes they cut you a huge break if you work out a payment plan and the APR ends up being super low.