So I'm a newbie. I've been reading a lot on this site (lurking) and have found a couple threads with people in similar situations, but not exactly so I've decided to register and post. Hopefully someone can give me a pointer... Here's what I have open right now: Citi Dividends Card - 6100 - 15.65% negotiated Discover Card - 4700 - 28.99% called, refused to negotiate rate BoA AAA Card - 7300 - 17.99% negotiated Chase Card - 8200 - 29.99% called, refused to negotiate rate Finally I have an HSBC card that was closed because of a 60 day delinquent payment. It has about $500 remaining at around 25%. Other than the HSBC, the rest of the cards have been paid near perfectly on, and the times that I have been late don't seem to be popping up on the credit report (maybe because I caught them before they hit 30 days past due). They did bump over the limit though which is the excuse the CC companies are giving for not lowering my rates. They are saying I need to wait 6 months with no major issues before they can do anything. Each of those open cards is around 95% full. I am doing what I can to get something paid down, but unfortunately the interest rates are killing me. And even with the bare minimum bills I have each month I have no money left over. I can't remember the last time I bought something for myself other than groceries. My credit scores are hovering around 630. I have to do something to lower the interest I'm paying so I can make some progress on paying these cards off. Does anyone think I'll have a chance at a lower rate card with those high balances and that score? Does anyone have any ideas for getting these rates lowered? I have very few derogatory notes on my credit and I'm thinking the low score is mainly due to the extrememly high balance to open credit ratio. Luckily, even the HSBC card that was closed is showing up on my credit report as though I closed it rather than them. I was divorced about a year ago which, sparing the details, really was the culprit behind all of this. No sob stories though, I am working on paying my debt. Very soon she will be remarrying and I will no longer have to pay alimony, which will be a god-send in having some extra cash to pay down the debts. Can someone please give me some advice on all of this? I'm stable at the moment, but one unexpected bill would throw everything into a tailspin and I'm trying to avoid that. Thanks!!!
Looks familiar Your list looks familiar: RE: Chase, same thing with me a couple of years ago. I later came into some money and paid them off. NEVER AGAIN!!!! RE: Discover, after a year of paying their extortion, er, I mean their default rate, I was able to ask for a re-rate down to only 19.9 (how kind). Right now, I'm trying to refiance the "hi-rate" cards with something a little more affordable. As far as advice goes, if they won't budge, your only other choices are either refinance or declare bankruptcy. I can't wait to get back to a FICO of 800 and have them grovelling for my business. Phoooey!!! Let 'em beg.
Yeah who would have ever thought I'd miss all that credit card junk mail. Anway, I'm trying to avoid bankruptcy at all costs because I want to get a house again before long. I had to sell mine, at a loss, with my divorce because i couldn't afford it on top of child support and alimony. Regardless, this is sucking the life out of me... :-/
Snapper25, I have a similar story and I am still paying my lawyers $1,000 per month to get them paid off. I had to max the CC's in order to get to the end of my divorce. I too have high interest rates on my cards and they are pretty full at this point. Keep reading on this site and you will get some answers as to what to do. Unfortunately, you need to show the CC commpanies you cannot pay before they really will deal with you. Good luck and I look forward to seeing you on the forum.
I rarely see anyone mention debt consolidation. Is this not a good idea? Years ago we had a huge balance on a Discover card that was eating us up. We got a loan from a bank at a much lower rate, paid off the cc, and closed the account.
That is a very interesting point. What about debt consolidation? What does it do to your credit score? I know it would def. lower the interest rate. Would that be worth the closed accounts reporting a bal. to get a lower interest? I think someone should bump this question to a new thread maybe. I'll be back to check on the great answers.
Some say consolidate, some say re-finance. It's all the same: you're getting one loan to pay off another.
yes, that's true. But what about something like ElimiDebt, etc. How does that effect scores or does it?
Snapper25: Welcome, and I hope we all can help. After reviewing your situation, you need to dig deeper than just "interest rate negotiation". My advice will aim at your whole picture. Excuse me during this, as I will make some assumptions about your whole financial position, and suggest what are financial management ideas: First, before all the rates and negotiating, you need to do a "cash flow" analysis for you (and your household), and work towards the goal of freeing up "cash" to pay down these CC debts. 1) Income and spending tracking: Make a tracking worksheet (from MS Excel) or go to www.about.com/financial where they have templates for these worksheets. The point here is to document and track EXACTLY where EVERY penny comes from, and where it goes (and when). There is amazing information after doing this for a few months. 2) Cash Flow Review and Possibilities for Increasing: The goal for the above is to start looking for ways to "free up cash" to pay down these debts (and when). Start thinking "how can I cut every penny". Look at every expense, and brainstorm how to reduce an expense, or increase cash/income. Immediate suggestions/ideas: * "E-Bay/Yard Sale "cash", it is estimated that the average person has over $3,000 in "stuff" they don't use. Look at all your belongings and start evaluating "can I live without this?" Post it on E-Bay or have a yard sale. For every dollar you bring in, you're getting a 30% return with these interest rates! * Cut out any expenses that you can & look for lower costs: Ideas include auto insurance comparison shopping, lower cell phone plans, eliminate cable television (or reduce package to basic), stop renting movies (use the library instead), look for ways to reduce utilities, start using coupons at the grocery store, buy "store brands" instead on namebrands. Also examine your income tax withholdings, if you're getting refunds, lower your withholding and use the cash to pay down the debt. Similarly, if you are making 401K contributions, consider putting them on hold until you've lowered your debt. BUT...be sure to get back on contributing ASAP! RUna Google search for frugal living, etc. you will be astonished at the ideas out there! * Look for "major cuts"" This means getting drastic, perhaps selling a car, and getting by with a cheaper automobile, selling any "toys" that are financed, etc. A long shot here, but any chance of negotiating your alimony? Propose how this has caused extra "hardship" due to the CC balances and resulting penalties. (I'm assuming the ex had "something" to do with the high balances) * Extra income: Think about getting a roommate to ease living expenses, a part-time job, asking for a raise at work, anything to increase cash coming in! I know sometimes this feels "impossible", but I am an executive working 70-90 hours per week, and I do accounting on the side just for the "little extra". It can be done. * The "Debt Paydown Plan": After a full review of cash flow, and squeezing every penny out that you can, BUDGET that cash flow to debt paydown. Now there are two schools of thought/approach to debt paydown. I will break them out, and give pros and cons of both. Both plans work on the "snowball effect", increasing the paydown rate as you progress: 1) Interest Rate Priority: The straight school of debt repayment says to rank your debts by interest rate. Pay as much as you can on the highest interest rate debt and the "minimum payment" on the rest. After that debt is paid, take the payment you were making, and add it to the minumum you were making on the next highest interest rate debt, and so on. The "pros" of this approach is that this is the "least expensive" approach in the long run. 2) Pay Off Debt in Ascending Order: This means rank your debt in order of amount owed, then pay as much as you can on the smallest debt, and the minimum on the rest. Once that is paid, take that amount (you used to pay), and add it to the "minimum" of the next debt until paid off, and so on. The "pros" of this approach is that it seems to be the most pschologically motivating. You feel like you've made progress sooner, and more likely to stay encourged to stick to the plan. 3) Debt Restructuring: This means getting a loan at a lower interest rate to pay down these debts. I don't know if you have the means to get any kind of loan, but examine any possibilities. I understand that this is a "Catch-22" right now, but keep this open as an idea. *Keep trying to negoatiate the interest rates down on your CCs: Just because some have said "No" right now, do not give up. Negotiate "when" they would lower your rates, and exactly by how much. If you do the above steps, and communicate your "analysis and plan" to your creditors, they may have more confidence in working with you. Review your account(s) terms and conditions, look for any error they may have made to use as leverage in negotiating down the rate. Don't be afraid to be the "irate" consumer either, Congress is investigating this entire CC industry practice right now, and the CC companies are feeling the heat. Many are "voluntarily" examining and restructuring these terms. * "Planning For Progress": As you increase cash flow, and pay down debt, look ahead to when you will feel "comfortable" requesting credit line increases to help lower your utilization percentages. This is for planning ahead for your home purchase. Also, do periodically monitor your credit scores (through FICO). As your balnces go down, (and your scores increase), you will at some point start qualifying for "better CCs", and perhaps attractive Balance Transfer rates. I know you're in a tough spot, and it will take some tough action to work out of it. It will take time, and it will feel painfully slow in the beginning. But if you truly embrace the meaures above, you will make progress, and as added benefit you will change your "state of mind" regarding personal financial management. Last note, I would "modify" the above repayment approaches to "reward" the CC companies that did work with you on the rates. Do what you can to get "extra payments" to them. And.. do not overlook the power of writing a "Thank You" letter to the ones who lowered the rate. Sorry, REALLY last note! Don't forget to cut up these cards, or "freeze them in the blocks of ice! Do NOT add any debt to your picture! If there are any other details you want to furnish to better analyze your situation, I'll be glad to help, and I hope some of this helps!
A few others: 1. Service fees on your bank account....most notably, ATM fees for using a foreign ATM. (Even if your bank doesn't charge you for this, the ATM's bank may.) Depending on your ATM habits, these can add up. 2. If you have accounts with late/overlimit fees or bank NSFs, it doesn't hurt to call up and ask for a "goodwill" waiver of some or all of these fees. They usually have authority to waive some. If not, hang up the phone, call back and try a different rep.
A quick article that may be helpful....... http://www.bankrate.com/nltrack/news/financial_literacy/Feb07_credit_card_steps_a1.asp?caret=9a
Wow!! That is awesome information! It makes me mad how credit card companies can put you over a barrell like that with those interest rates. It makes it really hard for a person honestly trying to get anywhere. I haven't been in quite that situation with credit card debt but I have been in a fix before which led me to going cash only for the last 3 years. I can add a few suggestions to the awesome ones that have been posted. I will say Bizwiz is just awesome, listen to his advice! heck he gave me new ideas! Make a budget: List everything you pay and exactly how much you pay. Plan exactly where your money will go and stick with it. Include EVERYTHING. Be brutal, thats what it is going to take. This will help you not only now but afterwards also to help keep you debt free as much as possible. You would be amazed at how those little expenses add up. Have a set amount for groceries and don't go a penny over it. Storebrands are the way to go and will save you alot. I know alot of peeps hate walmart but they will beat any price listed by another competitor and have thier own brands of stuff which is usually alot cheaper than brand names. Cut back on everything: do you buy coffee enroute to work? Make it at home and take it with you. Do you eat out alot? Cook at home and pack a lunch. Can you carpool? Or use public transit? Save gas whenever possible. Got toys? Sell them, ebay is good but a little time consuming. I have had alot of things sell well by putting them in the paper. Yard sales are good for quick cash but peeps usually want a deal and aren't willing to pay much at a yard sale. This is some things I have done: Rented a crummy but liveable place for a huge reduction in rent. I did it with the intent of saving for a home and it has served it's purpose, we just got a home loan and will be moving soon. Traded our van and got enough to outright own a cheaper car. No car payments has been a godsend. And gas is much better. Do you play online games or subscribe to any online services? If so drop them, We used to play Everquest and we dropped it to save money. We had dsl and dropped to dialup. Dropped netflix and watch regular TV or get movies at the library. Beauty schools for haircuts. Sold our boat and a bunch of hubby's toys. Shop the second hand stores for deals on clothing and have found some decent furniture this way. We dropped our cell phone carrier and went to Tracfone which is much cheaper. Not a better service but it's cheaper. We comparism shopped our auto and renter's insurance and got the best rates we could find. This amounted to higher deductibles too so be careful. We dropped the cable package and went to bare bones basic. We became very utility conscious, no more lights on all night outside. We grill alot and save the stove. I plan and save for every expenses, clothing, birthdays, Christmas & vacation. At first I had to cut those expenses all together but later when things got better I was able to add those savings to my budget and now I set an amount aside to them every month and save for those all year long. It works for household items, car repairs/inspections/registrations, furniture pretty much anything you want/need to save for. I don't buy anything big until I have the money saved for it. Then I can put it on my credit card and pay it in full shortly afterwards. It keeps my card active but I don't carry a balance. Best thing I can say is if there is a will, there is a way. You just have to find it, plan it and do it. Don't get burned out, have some goals in mind and beleive me you will feel so great when you accomplish them! It's not easy, it's frustrating as heck but it can be done. It sounds like you may be getting some breaks soon and will be able to siphon those funds into your plans. Keep focused and you can do this. I am glad to see that you are facing the problem now and not waiting to take care of it. I wish you much luck! Tegleg
Great suggestions and ideas Pheonix and Tegleg! it just shows how much you can do WITHOUT, and all the ways to claim back some cash! The beauty is that once you get into a "frugal" mindset, credit management seems to take care of itself also. Hang in there snapper25, yes it will be tough, and it will take time, but in the end you will be better off for the long run. The most improtant thing here is to ask yourself.. "what did I learn?"
