I am seeking thoughts and advice on behalf of a friend. She has a substantial balance (around $20k) with Citi on a credit card that she has had for eight years or so. She has never, not once, missed a payment; not to Citi, not to anyone. Credit score is in the 740 range. Citi has been raising her rate from 6% (where it always was until two weeks after the bailouts) to 15%. She called to complain and was given a trial 9.99% rate and was told that was the best they could do. Now that time is up and it's back to 15% and the payment simply goes beyond what she can possibly afford. So now she's looking at her first missed payment of her life and all the negative effects that will come with that and is considering bankruptcy. Perfect credit and about to declare bk because the banks are forcing her hand. We'd love ideas to avoid that and keep her enslaved to Citi for decades to come and just are not finding it. Any responses are greatly appreciated.
Citi isn't the only bank doing this. It's been a common practice over the last year or so to raise rates on customers carrying high balances in order to offset lost income due to the new credit card laws. Unfortunately, when rules are imposed on banks to further protect the riskiest customers that pay bills late, exceed credit limits or stop paying altogether, those who always pay their bills on time and have good credit bear the brunt of it. Anyway, since your friend still has good credit and has yet to miss a payment, has she thought about getting a 0% interest credit card or two and performing some balance transfers? Some cards are currently offering up to 18 months at no interest, even though you will most likely have to pay a balance transfer fee up front. Still, if you run the numbers, she'll probably save money over the long run and she'll be able to pay off her debt faster if she carefully plays the balance transfer game. Apart from getting a personal loan somewhere else, this is the only option I can think of to try and handle the problem right away before she misses that payment.
Thank you for the reply. A quick update to this: One denial on a balance transfer and one accepted, but we will not know what amount can be transferred until the acceptance package comes. After another day of fruitless negotiation with Citi again today, unless the balance transfer takes a large chunk of the total amount owed to Citi, it looks most likely that she will be meeting with a bk attorney early next week. Instead of $500 a month for the rest of her life, Citi appears to have received their final penny from this account. Quite a world we live in!
You're welcome - fingers crossed on the BT for you! Good luck, and please come back and let us know how things play out for you.
