Here is the situation: I am about to graduate college and have since accrued around 10.5K in CC debt. I have three cards with limits 8500, 3500 and 1000. My issue comes from the $8500 CC. The card is a Providian and is owned by Washington Mutual. I have always been on time with payments and have always tried to pay above the minimum payment. Lately due to having some financial problems the card became overlimit and my rate jumped from a pleasant 16% to a not-so-pleasant 28%!!!!!! My minimum payment jumped from around 200 a month to over 300. In a fit of rage, during a phone call to one of the company's lovely Indian or Malaysian operators, I cancelled the card....which in turn locked me into the 28% rate (I wasn't informed this would happen). I called the company back in hopes that they would bestow mercy upon me and turn my card back on but of course no such luck. WaMu has been screwing me with the overlimit fees and the percentage rate and everytime I pay a bill (the minimum being all that I can afford) I am underlimit for a day or so and then the next cycle begins and I am right back overlimit again. I have been considering credit counseling to hopefully consolidate my debt and shred my cards...not sure if that is too good of an option. Also last week I made some attempts at securing a closed end loan to consolidate but no one would approve one (even with a 685 score). Someone give me some sound advice please....
try a goodwill letter explain your problems,then follow up with phone call talk to higher up try to be pleasant when you plead your case.
You might not like my advice, but here it is. You have learned that a credit limit is just that, a credit limit. The CC industry is now in the mode of cutting CLs, and trying to restore profits. There are two terrible things that you can do, both in the eyes of the CCCs and in FICO scoring. One is to carry very high credit limits, and the over is to go over-limit. Both do not demonstrate conscientious repayment risk. It will take some time to rebuild credit, but the good news is that %util of CC debt is not historical. It re-calculates with each monthly CR. Learn, and dont EVER to go over limit again.
Ok While I do appreciate all of your responses, I think that I was looking for more of an answer than I got, or at least another avenue of approach with this CC company. See the situation is that I cannot continue paying the minimum payment (which is all that I can pay). I happen to be a few years older than most college grads, a military vet, so on and so forth blah blah blah....the point is that I would rather not go bankrupt right out of college, while younger people may have an easier time rebounding I worry that I won't. I clearly see the err of my ways and now need a way to deal with these people. They don't seem to be worried at all about my situation, am I surprised....absolutely not.
When it comes to dealing with the CC company (any CC company), it seems to me there are only a limited number of options. 1) negotiate: Not with the outsourced customer "service" agent who's just reading from a script, but badger them enough to move up the chain to talk to someone who can actually make a decision (just keep telling them you can't understand their accent until you get someone who's in a position of authority). This could (will) take some effort, but it might pay off. The goodwill letter is another way. (you're a student, you're a veteran, pull out all the stops when it comes to describing why they should want to bend the rules and keep you as a happy customer. 2) pay them off: refinance something (car, house), borrow from family, friends, the web, etc. and pay them off or pay them down. You'll still owe someone the money but at terms that might be more palatable. 3) default on them: Just stop paying them and see what happens. Some possibilities are they sue you, the ignore you, they send the debt to a collection agency or junk debt buyer and they harass and/or sue you. Whatever happens, however, it could follow you through the mail and your credit report for seven years or more. 4) default on everyone and declare bankruptcy. That seems extreme in your situation, but it's an option, nonetheless. What more of an answer are you looking for?
Try to negotiate a settlement - in writing, never ever over the phone unless you record the conversation.
I would suggest trying to get the account re-opened. If it was still open you could of paid down the debt, sometime down the line ask for a credit limit increase to fix the over the limit reporting. Does not look good when high balance is higher then credit limit. Since you closed the account, you are going to want to try and get on hardship to pay the debt down. If you go with a credit counseling company be sure that they make payments before the due date on the credit card, they are bad at paying in a timely manner. If they don't pay in time call the credit card company to see if they will push back the due date. If you go with credit counseling - there will be a note added to the account from the creditor showing that you are in credit counseling. This comes off of the report when the debt is paid off. It looks just as negative as a bankruptcy. But least it can come off sooner then a bankruptcy. Which can report 7 for chapter 13 and 10 years for chapter 7. If you are having too much trouble paying you might let it charge off and go to a collection agency then later offer payment for deletion. Sometimes you have to let debt go to keep up with other accounts. If it ages so many years it will expire the statute of limitations. Then the debt is time barred and they missed out. But likely they will file for a judgment. Even if you can't pay and they get a judgment you could still come back in later to pay and offer payment for dismissal. That means that they agree to delete the judgment off of the credit report. Try for re-opening or getting on hardship first.
Hi Bullets! Since you're asking for advice I'll offer my input...there's no ONE answer for your situation. The first thing you need to do is to educate yourself as much as you can about personal finance and debt management...message boards like this and other sites are extremely helpful. Personally, I wouldn't bother with a credit counseling service since there is so much info available for free on the web. You just have to dig for it. I'm also a WaMu c.c. account holder. In fact I just called last week to inquire about my interest rate. Anyhow, I didn't get to talk to a nice person from S.E. Asia...I got a nasty woman named "Mary" who spoke to me in a condescending manner with an american accent. From my experience with Providian/WaMu you will get absolutely NO WHERE speaking with customer service. And once you make a mistake by not making timely payments they show no mercy! My interest rate has been in the 28-30% range for the last five years because of two consecutive late payments five years ago. At one point I was even charged over-limit fees because of the annual fee that was added to my balance. So I know what you're experiencing by being a slave to WaMU. There's really no magic answer for your situation. As was suggested the "goodwill" letter is probably your best bet. You could even do this by email if you do a little investigating on the web. ccbob has also given you some excellent advice. You're just going to have to sit down and think about your options (see ssbob's reply) for the situation. You've already been late on payments with WaMu and that's likely going to put a ding on your credit reports. My 60 day late for Providian/WaMu is STILL a negative mark on one of my reports...and that's from five years ago! I think I'll take my own advice and write a "goodwill" letter. Also I don't know if you noticed but the last few WaMu mailed statements included cryptic notices of changes to the account agreement. I'm still trying to figure them out...something about default interest rates and annual percentage rates. What is interesting is that both of these notices mention that if you don't agree with the changes in the account agreement "you must notify us in writing". So I'm surprised that they agreed to your verbal phone request. It appears that the MARCH 2008 notice which states the changes become effective on May 1, 2008 regarding the default APR might be what you had issue with (?). WaMu really isn't "screwing" us cardholders. They give us written notice of all their crummy terms and no doubt they're hoping that we continue to be uneducated about the consequences of making mistakes regarding those terms. Of course they don't care about their cardholder's...they're a business and aim to make as much profit as possible. Your best bet is to throw their own agreement in their face, get the account re-opened and take it from there. I can tell you there's no way in hell you'll get the interest rate lowered or back to the original rate. Well, not by calling customer service. I've been doing that for the last five years with no luck. And I have carried a zero balance for the last year and a half. I even threatened to close my account by telling them I've got better offers from other banks. Huh! No luck with that either...although they've been regularly increasing my credit limit! They must think I'm really stupid. Good Luck!
