The other day I found out that banks are offering incentives for customers to close out their home equity lines of credit. The largest incentive I’ve seen was a $700 gift card. Banks are targeting people that don’t have a balance or have a small balance they can most likely pay off pretty quickly.

When I first heard of this happening, I was surprised. As I thought about it more, the more sense it made. Banks have to keep reserves based on the loan outstandings; therefore the more open lines of credit, the more reserves. What I think is really crazy is that banks are still desperately trying to make their loan goals for 2008 despite the financial crisis. It is extremely hard to get approved for a loan now, not to mention high interest rates. I checked the other day for rates on a second mortgage loan and they are as low as 7.9%.

You would think that with prime rate dropping, banks would lower their interest rates on loans. It seems the opposite is happening. How are high interest rates going to spur consumers to refinance? It just seems backwards to me.

The last time I updated about our debt reduction, we owed more than 50% on our student loans. I am happy to say that today we hit over 50% paid! I am ecstatic! I thought it would take us a lot longer than this to knock out some debt.  I had originally planned on paying off the student loan in the next nine months, but then decided that I would do a “reverse debt snowball” instead, and put the money that I was going to throw at the student loan in a savings account earning 4% interest. It looks like that was a sound decision, because now there’s rumors that they will start converting my area first. Oh well. I’ve got an emergency fund, and that’s what it for: in case we need it.

I can’t wait until I get to 50% of our car loan, but that should only take us 5 months or so.  I’ll keep chiseling away at these debts and try my darnedest to save, save, save!