Equifax rolled out a new product this past week: Debt Wise.
Shame on Equifax! This is a flawed program for which Equifax will charge $14.95 per month.
Here's how it works, and why it's a bad deal:
Debt Wise pulls all the debts from your Equifax credit file, and the program algorithm stacks the debt in order of size, from smallest to largest, and totaling the minimum monthly payment required on each. This "debt stacking" strategy is similar to "Snowball" strategies touted by Dave Ramsey and others.
Let's say, for example, that your minimum monthly debt payments total $1000. You make a commitment to pay an extra amount that you choose – say, $30 per month – until you're debt free. That extra $30 goes to the top of the stack every month, while the rest of the stack gets their required minimums, until the top debt gets retired.
Then, you continue paying $1030 every month until every debt is retired, in stack order.
It's based on the "Snowball" strategy; you can find FREE Snowball calculators on the web, which WILL get you out of debt faster than paying the minimum each month, but WON'T the FASTEST strategy.
To SAVE THE MOST MONEY, you want to retire your debts not in order of size, of course, but in order of highest to lowest APR (Annual Percentage Rate, your Interest expense)!
People who are carrying too much debt should not be signing up for a recurring monthly fee! Don't give Equifax $15 a month for a second-rate strategy. Apply it to your highest APR debt every month and retire THAT debt first! You'll save ALOT more in interest expense and time, than the Snowball method!
Why would Equifax do this? Because their valued customers aren't the consumers, they're the lenders who pay Equifax for your credit score. And lenders don't want you to get out of debt too fast.