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Lowering Credit Card Interest Rates
Sir Carcass
I have been shown the end of my worldRound Rock, TXRegistered User regular
I have been shown the end of my worldRound Rock, TXRegistered User regular
My wife and I have a lot of credit card debt. More than most of you spent on your vehicle, most likely. We've had it for many, many years and have always paid minimum + a little, as we could afford. My wife's job is pretty much based directly on the economy, so things have been tight lately. We've pretty much just been barely scraping by each month, but staying current on our bills.
Yesterday we got the statement from one of my wife's cards, saying they've raised her interest rate. I vaguely remember her getting a letter a little while back saying they were going to do this. What this increase translated to was her minimum being an extra $130 a month. There's no way in hell we can afford this. We have 3 cards through BoA, due to them buying out 2 of the banks the other cards were at in the past. The rate on my card is insane, I think 28.99%, due to it being my first credit card when I was 19. 10 years later with nary a late payment, it's still the same. I called them a year ago asking them to lower it to help me pay off the balance, and they told me to go fuck myself (politely). The new rate on her card is 24.99%. I don't know the rate of the third BoA card offhand, but it's probably at least 20%.
What are the odds of us getting these lowered? How does one go about doing this? Has anyone had good luck in the past? Our credit histories are good, save for the large amount of debt, which makes our scores suck. It's basically come down to them lowering the rate, or not getting their money. We usually get by somehow, but I don't see it happening this time. Please help!
Yesterday we got the statement from one of my wife's cards, saying they've raised her interest rate. I vaguely remember her getting a letter a little while back saying they were going to do this. What this increase translated to was her minimum being an extra $130 a month. There's no way in hell we can afford this. We have 3 cards through BoA, due to them buying out 2 of the banks the other cards were at in the past. The rate on my card is insane, I think 28.99%, due to it being my first credit card when I was 19. 10 years later with nary a late payment, it's still the same. I called them a year ago asking them to lower it to help me pay off the balance, and they told me to go fuck myself (politely). The new rate on her card is 24.99%. I don't know the rate of the third BoA card offhand, but it's probably at least 20%.
What are the odds of us getting these lowered? How does one go about doing this? Has anyone had good luck in the past? Our credit histories are good, save for the large amount of debt, which makes our scores suck. It's basically come down to them lowering the rate, or not getting their money. We usually get by somehow, but I don't see it happening this time. Please help!
Sir Carcass on
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Be open to changing the type of card you have. The interest rate is based on your credit and the perks of the card. Any rewards cards usually have a higher interest rate to compensate for it.
Maybe consolidating those credit cards into some kind of line of credit would be a good idea. Much lower interest and changes them from 3 seperate payments to one.
An appt with some sort of personal banking officer to discuss these things could be a good idea.
The only other advice I'd give is to ask how any changes you make will affect your credit score.
Actually, you might.
If you have decent (not terrible) credit, or your credit has improved since you got the card, call them up and tell them you've received a pre-approved offer for a lower interest rate card and a promotional rate on balance transfers. Say that you'd rather not close one account just to open another, so you'd like to stay with your current card, but only if they can lower your interest rate.
I have done this successfully three or four times.
the "no true scotch man" fallacy.
You can threaten to close your accounts with them if you don't. Well, "threaten" is a strong word. Just say you are having problems, explain your sisuation and ask them if you can "work on the numbers" with them and that you might have to go else were if you can't get it "worked out".
Lastly, you can get a new card and transfer the balance to that. Some cards have deals like "Open now and get a 0% transfer balance for X months". During that period pay down as much as you can (because more then likely, they'll jack up the rates really high after X months + 1 day).
That doesn't mean, though, that it still won't end up saving you money in the long run.
That's not necessarily true, I would suggest getting a credit card from a credit union. I find it incredulous that you would even pay 29% on a credit card from BoA, when you could easily get about 13-19% on a card from a credit union. Is the BoA the only bank in town? If you can, find a credit union that's convenient to you, since they aren't trying to squeeze as much profit out of you then the larger predatory banks.
Even if you can't get a 0% transfer, a 3% transfer balance with a 15% rate on the card would still save you large amounts of money on the long run. Do shop around.
If none of the previous suggestions or options work, you can also try getting a personal loan to pay off all those debts. Getting such a loan from a community bank or credit union would be the best bet. The rates on such loans are 9% to 12% and you can have terms between 36 months to 60 months.
I am a bit confused about what you said - why do you have to keep using these cards? How does your wife's payment method cause this?
I would check into Discover Card - my wife had a few thousand in debt before we got married, and we transferred it from a MasterCard onto a Discover Card with 0% interest on transfers AND no transfer fee. Saved a fair amount in finance charges and paid it off before the 0% period ran out (I think it was 6 months).
STOP USING THEM. You are living outside of your means.
If your credit is decent go to a credit union and try to get a consolidation loan and close the BoA accounts. Get a second job and cut your budget to the bone for a couple of months. Live like you just got out of college for a year. It sucks, but 25% interest is horrible.
If you're making a little more than the minimum payments then most of what you're paying is dead up finance charges. That is no way to live.
As long as he's paying purchase + minimum, he's not living outside of his means.
That said, a couple of months of living like paupers to store up some cash reserves would save a lot of money in the long run.
the "no true scotch man" fallacy.
I don't know about this. Paying them off IN FULL each month and not carrying a balance is living within ones means. When I hear someone barely able to pay even the minimum, then it sounds like there could be a problem there. Sounds like a cash flow problem to me.
EDIT: And yes I realise from the sounds of things you have more than $850 in debt, but its a start at least.
If all else fails you can definitely get them to renegotiate the terms of the repayment, but it's going to destroy your credit. If you can deal with that, great. If not, you're going to need to find a lower-rate source of debt financing. Try credit unions.
http://www.nytimes.com/2009/06/16/your-money/credit-and-debit-cards/16credit.html?_r=1&em
Not for nothing, but many card companies have or are preparing to change the amount you pay as a minimum monthly to 5% from 2% ahead of the law changes.
That may force you into a very unpleasant position, very very soon.
I'm a mortgage loan officer.
Your options are credit line or balance transfer, and sadly, that's about it. Debt consolidation services do as much damage to your credit as a bankruptcy, almost (and they're not nearly as effective)
You can apply for a mortgage about 3 years out from a bankruptcy (the more, the better) and FHA financing is probably going to be your best/only route. If you can accept that, I might just consider going bankrupt (with a good cover story later, though I predict lots and lots of people are going to be able to use "the economic circumstances of 2009" as a pretty good cover story)
If you're in $20K of debt, work it off. If you're in 40+, I'd consider the bankruptcy if I were you.
I'd speak to other financial professionals before you make the decision, but I can certainly advise you on the homebuying part.
I think the reality of them coming after you is much less fearsome than the idea of it at the end of the day. You probably don't have many qualifying assets for them to take.