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Melisa on the Money

10 Ways Your Caribbean Lender Is Robbing You Blind

10 Ways Caribbean Banks Are Robbing You Blind

When I signed up for a Caribbean student loan to fund my college education, I thought I made a simple agreement.

I know, now, that it was everything but a simple financial obligation, and after my own lender messed up my student loan, I identified 10 ways your Caribbean lender is (probably) robbing you blind.

Non Disclosure of Policies and Procedures

Although you signed and agreed to a promissory note for your student loan from your Caribbean lender, details on its policies for applying principal payments, the process to apply for deferment, what happens to interest that builds up during your in-school or post-graduation grace period and when you will have an opportunity to keep outstanding interest from being added to your loan’s principal balance, are not disclosed to you in writing.

The result: You lack a full understanding of what you agreed to, and your lender makes more money

Mysterious Account Transactions

When you signed up for a student loan, you expect transactions to involve disbursements of loan funds, accrual of interest, loan payments and not much else. Yet your Caribbean lenders apply mysterious fees without much explanation, set payments aside to phantom holding accounts, record disbursements you did not request, and fail to apply payments to your loan account even after the funds have cleared from your personal bank account.

The result: You pay more in interest & fees, and your lender makes more money

Not Issuing Regular Statements

Even though transactions occur on your student loan account monthly, you don’t receive regular statements. Most times, it’s impossible for you to know what the status of your loan is, whether your payments were properly applied, and you can’t even be sure if your principal balance is on an upward or downward trend.

The result: You’re confused about what you owe, and your lender makes more money

Limited Access to Account Information

You’ve tried to get up-to-date information about your account, but experience delayed responses and if your lender offers online account access, the account information is hard to discern. Getting a clear picture of what you owe in terms of outstanding principal and interest balances, or how many payments you have remaining, seems out of reach.

The result: You can’t stay on top of what’s happening on your loan account, and your lender makes more money

Outdated Methods of Payment

Because the options to pay your student loan are cumbersome, your on-time payments are delayed and show up on your account, days past the due date. Your lender’s idea of innovation is an online payment option that involves the multi-step process of downloading a form and submitting a copy of multiple forms of identification, to make a payment by credit card or by directing you to third-party bill payment platform, whose system has with varying payment delivery times.

The result: You get hit with late fees and default notices, and your lender makes more money

Losing Track of Payments

You submit your monthly payments using the options available to you, then months (or even years) down the line, when you are able to get a copy of your loan statement, you realize that multiple payments are missing or not properly applied to your account. Your loan’s principal balance, that you thought that you were chipping away at with each payment, is stagnant or reduces only slightly.

The result: You end up repaying your loan for a longer period of time, and your lender makes more money
Related Article: How I Shaved $6,000 Off My Caribbean Student Loan After Making $4,000 in Interest Only Payments

Capitalization of Interest Without Prior Notice

Capitalization of outstanding interest on your student loan has a huge impact on the total cost of the debt to you and the size of your monthly payments. Yet, your Caribbean lender fails to inform you of when it takes place, and what happens to outstanding interest after capitalization.

The result: You pay interest on top of interest, and your lender makes more money

Withholding Extra Payments

After making room in your budget to submit extra payments to pay down your student loan faster, your receipts fail to reflect how it was applied to your account. You contact your loan officer, and you are surprised to find out, that although the money for your extra has left your own personal bank account, it has never made it to your loan account.

The result: Your loan accrues more interest than it would if your extra payments were applied, and your lender makes more money

Not Warning About Interest-Only Payments

Although it’s easy to tell when your principal balance stays the same after on-time payments, it’s harder to figure out why. You are totally unaware of when your loan effectively becomes an interest-only loan and receive no warning from your Caribbean lender when your loan negatively amortizes.

The result: The total cost of your loan can potentially double over time, and your lender makes more money

Subpar Customer Service

On top of the inefficient operations of your Caribbean lender, the customer service is the worst. In order for you get a minimum level of service, you have to contact a friend of your family who works at the bank directly. Other than that, the best case scenario is to endure frustratingly long hold times, unanswered emails, and unresponsive and rude staff.

The result: You are repeatedly worked up by the low level of service, and your lender makes more money

All these practices work together to bring more profits to your Caribbean lender at your expense. Make sure to use these 7 steps to keep avoid these lender mishaps and cut the costs of your Caribbean student loan.

~Melisa Boutin


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How I Shaved $6,000 Off My Caribbean Student Loan After Making $4,000 In Interest-Only Payments

How I shaved $6,000 off of my Caribbean Student Loan After Making 4,000 in Interest Only Payments

I never expected that my monthly payments on my Caribbean student loan would go to interest only. After all, I made sure to read my promissory note and started making my required minimum monthly payments, as scheduled, 6 months after graduation. That’s why I was completely shocked to find out that almost all of first-year of payments, totaling $4,000, only to interest.

In spite of that $4,000 setback, I was still able to pay off my Caribbean student loan two years early and shave off $6,000 in payments by using these 7 steps.

1. I Made Sense of My Caribbean Student Loan

When I started my first full-time job after graduate school, I decided to take the time understand how my student loan worked, instead of just making my minimum monthly payments, without giving much more thought to what was going on with my loan account. From that point forward I wanted to be more proactive.

I requested that my lender send my statements directly to me at the US address, and not to my parent’s house in St. Kitts and reviewed my student loan statements to determine exactly how much of a principal balance I had outstanding, the annual interest rate and how many payments were remaining.

2. I Paid Attention To The Accrued Interest

After learning that how loan interest accrues, is capitalized or negative amortized, can increase the cost of my debt and the length of time it takes to pay it off, I started to pay particular attention to the interest on my own Caribbean student loan. And I honestly wished I had done so sooner.

Related Article: How My Caribbean Lender’s Dysfunction Messed Up My Student Loan

I determined what the daily interest rate factor for my student loan was, double-checked that the amount of accrued interest on my account statement matched up to my own projections and confirmed that my payments were applied to both principal and interest.

3. I Communicated With My Lender Often

Caribbean student loan lenders have a peculiar practice of providing quarterly account statements to borrowers, even though transactions are recorded monthly. This, of course, leaves borrowers in the dark about their outstanding principal and accrued interest balances and how their payments are applied to their account.

Although I could not change how often I received my statements, I made a commitment to requesting updates on my account after each payment I made, to stay informed.

Related Article: The Caribbean Development Bank Student Loan Scheme Assessment

As a borrower based in the United States, this involved spending hundreds of dollars on international calls and enduring a sometimes frustrating process or multiple follow-ups with bank staff to get my account information.  The upside though, was that I could keep on top of my student loan account, and position myself to limit confusion about my loan transactions.

4. I Tracked My Transactions & Loan Documents

Student loan lenders process a high volume of transactions, on numerous loan accounts, which means there is a good chance of at least one error on any given loan account.

This is why I created my own tracking worksheet to make note of each payment I made, including when the payment was submitted and processed, how much of the payment went towards principal and interest; and whether the principal balance decreased by the amount I had projected.

Requesting copies of past statements and completing a close review, also helped me identify errors on my account, like when I was charged late fees during an approved period of deferment.

Student Loan Answers Book

5. I Set Up My Own Pay-Off Plan

Like most student loan borrowers, there were two important questions that came to my mind when thinking about how to tackle my student loan:

  1. When will I be done paying off my student loan?; and
  2. How can I pay off my student loan faster?

My amortization schedule listed my required minimum payments over a 10-year period, with my last payment ending in the year 2017. In 2012, I opted out of that default repayment plan, and create one that would place me on track to pay off my Caribbean student loan, as soon as I could, by adding an extra $2 per month to start.

I then went on to create my own pay-off plan to increase the size of my extra payments, and to make extra payments as often as I could.

[clickToTweet tweet=”She shaved $6,000 from her #Caribbean #studentloan after making $4,000 of interest-only payments” quote=”How Melisa Shaved $6,000 Off Her Student Loan After Paying $4,000 in Interest-Only Payments” theme=”style2″]

6. I Disputed Errors on My Loan Account

When mysterious fees showed up on my student loan statement, I identified my Lenders chain of command, filed disputes with my own supporting documentation, escalated the issue when the fees weren’t reversed, followed up and requested and received credit for these unexplained charges.

7. I Refinanced Some Of My Debt To Save Interest

As I got closer to making my last student loan payment, I refinanced about $1,000 or so on a 0% credit card that reduced the amount of the cost of paying back my Caribbean student loan, a bit more.

If you have a Caribbean student loan you can slash the high-interest costs of your own loans, even after a four-figure back, using these 7 steps that I detail in my book Student Loan Answers.

~Melisa Boutin


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Featured – Tackling Student Loan Debt As A Caribbean Immigrant in the U.S.

Student Loan Hero Feature Melisa Boutin Immigrant Student Loan Story

I had the honor of sharing my student loan story with a platform whose content I personally enjoy reading, Student Loan Hero.

I shared how my immigrant status complicated the FAFSA process and limited my access to scholarships as an entering college freshman, how I then switched schools to get off the path to $100,000 in student loan debt, plus how I tackled my U.S. and Caribbean student loans after graduation.

Read more about my feature over at the Student Loan Hero, HERE

~Melisa Boutin


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5 Money Lessons My Caribbean Roots Taught Me

Money Lessons Caribbean Roots

Formal personal finance education programs in the Caribbean, are few and far between, yet the informal lessons I learned about money growing up in the region still informs the way I use it.

Here are different money lessons from my Caribbean roots.

Living Within Your Means Was Your Reality

One of my first realizations about money as a child was that how much cash you had determined how much you could spend. Back then, credit cards weren’t a thing and nor making daily purchases with the swipe of plastic, routine.

Groceries, and school uniforms and supplies, and many other wants and needs were paid mostly in cash.

Save First and Spend Later

Saving for large purchases was another widespread practice, I witnessed growing up.

It was just as common to both save up for a down payment on a mortgage, for example, as it was to start buying the building materials for your home with cash, before you even approach a bank.

Some home owners even built their homes in a piece-meal fashion, by constructing each phase of a family home after saving enough to pay in cash.

If You Borrow, Pay Your Debt Fast

Although Caribbean people have a strong culture of saving, there were still times that you would take on debt.

How you handled that debt though, was to pay it off faster than required. This was especially true when it came to consumer debt. 

The are many times I heard the phrase “I don’t want to owe anybody,” from my family and other adult relatives, as they prioritized paying off debts, fast.

The are many times I heard the phrase “I don’t want to owe anybody,” from my family and other adult relatives, as they prioritized paying off debts, fast.


[clickToTweet tweet=”Money Lessons From My Caribbean Roots” quote=”5 Money Lessons From My Caribbean Roots” theme=”style2″]


Extended Family Is Your Financial Safety Net

In my twin-island Federation, there is no government sponsored unemployment insurance, nor a large scale program for cash payments for individuals or families to make up for low or non-existent income.

Your extended family provides housing, and financial support in cash and in kind to relatives in need. With multi-generational living arrangements as a standard, family members can easily pool incomes, and other resources, share the overhead costs and the financial need of things like childcare.

Side Hustles Are A Way Of Life

Unemployment rates in the Caribbean can top more than 30%, and what are called “side hustles” stateside are a way of life in the Caribbean.

It was not atypical for an individual’s income to be made up of a collection of side hustles. Nor was it uncommon to patronize your home economics teacher, as she vends local treats on a downtown street corner every Friday afternoon.

Supplementing your income is something that you just have to do.

These lessons have had a big influence on how I use money and I especially credit them for enabling me to pay off debt, save and invest while providing support to my extended family.

What are some money lessons you learned growing up?

~ Melisa Boutin

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5 Money Ratios You Should Know

Money Ratios Your Should Know

Money ratios can help you quickly gauge the health of your finances and pinpoint what changes you need to make to improve them.

Here 5 of the important ones you should know.

1. 50% Budgeting Ratio

The budgeting rule of thumb that limits your must-have expenses to less than 50% of your income.

2. Credit Utilization Rate

The ratio of the sum your revolving credit line balances to the to the overall credit limit.

3. Student Loan Debt-To-Salary-Ratio

The upper limit of student loan debt to take on in order to realize the return on investment in earning a college degree.

4. Loan-To-Value Ratio

How much of the property you purchased with a loan, you actually own.

5. Debt-To-Salary Ratio

A ratio of all your monthly debt obligation compared to your monthly income.

Related Article: How To Start Saving When You Don’t Know Where To Start

5 Money Ratios You Should KnowTo learn more about why they are important and how to apply them to your finances, head over to read the entire post, at CleverGirlsKnow.com.

~ Melisa Boutin


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