Letter from the credit card folks

scarlett2001January 27, 2009

Right now I am breaking my big rule and carrying a balance on my credit card. My dad died last month and my husband and I had to fly from CA to PA to be with him in his last days, so plane fare at prime holiday time, motel, rent a car, gas, eating out, etc. Then my pet got injured and we put it on the card rather than put her down. She made a recovery so I don't consider that a waste of money.

Yesterday I got a letter from the credit card company- they are changing my FIXED 7.99% rate of interest to 11.99% "Due to market concerns". Now I have never made a late payment, exceeded the limit or broken the other rules. My credit rating is very good. It says I can opt out of the rate increase if I want to close the credit card. I think if you close a line of credit with money owing, that is a bad mark on your credit, right? I can't pay it off by March 1st so what to do?

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scryn

most credit cards will offer a 0% introductory apr if you transfer money to their card. I would look for a card with that offer and transfer the balance over to the new card. Then pay it off as fast as you can.

also, although it sounds too easy, call your current cc company and ask for your rate to be lowered. many times that can work.

-renee

    Bookmark   January 27, 2009 at 5:34PM
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joyfulguy

Hi Scarlett2001

Much of the stuff that they do is not written in stone: there's wiggle room.

If you call them and make a good case, perhaps they may cancel the increase, or reduce it, or extend the date at which it takes effect, etc.

If they turn you down on one proposal, suggest another. Be courteous and pleasant: be sure to mention all of the different aspects of how good a customer you've been (without emphasizing the issue that they've transferred so little interest from your pocket into theirs).

If one proposal fails, have figured out ahead of time which other one you'd prefer and run through them one by one, checking them off as you go. Be patient, reasonable ... and persistent.

Can you think well on your feet? Maybe do a dry run, with a family member or friend as the credit card agent.

Have you had an offer from a different carrier of a low rate for several months on balance transfers, etc.? I've received three, via mail, internet ad and my own search, recently.

You haven't? Don't let that sleeping dog lie - ask around among your friends as to whether they have ... and can fish the proposal out of the garbage for you, for if you ask that carrier, quite likely they'll be willing to make the same offer to you.

Even if they don't ... when you're talking to your current company, you can say that your friend received an offer at 1.9% for xx months, etc.

Nothing requires you to say that you've spoken to the other company, should you have done so ... and they turned you down.

Grandma (died in 1950) used to say that one should tell the truth, but [usually] we aren't required to tell all that we know.

If you don't get your desired result this week ... call them again next week - some customer service reps are more accomodating than others!

If you can't find a better deal in that channel, how about talking to your usual financial agecy - maybe they'll make you an unsecured loan to enable you to pay off the C C balance owing in full, at a lower rate ... especially if you have a bond, mutual fund or stock certificate(s) to offer as collateral.

Or try a credit union ... even if you're not currently a member: many are looking to expand, with financially responsible people as members.

"You don't ask - you don't get", is a worthwhile proposal for lifestyle that I've heard on occasion.

I have an L o C at the bank that was charging at their prime, 4.25% ... but when their prime went to 3.5% ... they wanted a surcharge of 1.5% (different financial climate), wanted me to pay them 5% ... so I figure to buy some stocks using original credit card, then transfer balance owing to a new card at 1.9% (and buy nothing on the new card, for I can't pay any of that new loan off till all of the balance transfer and interest is paid).

Now - the "I told you so" ... many of us financial advisors have been promoting having at least 3 months' income available in case of emergency (6 mos.' to a year's worth, even better). How would you be feeling now, if you had built such a cushion earlier, to be available currently?

Good wishes for success in achieving a better result than the current situation.

ole joyful

    Bookmark   January 27, 2009 at 6:15PM
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nutbunch

My friend has a balance from when lots of things added up for her. She transfers it to a new zero balance card to spread out the payments so she can afford to pay off.

Heres a comparison. If you normally don't carry a balance, a zero card offer should be really easy to get, and will save you some money in the long run.

Here is a link that might be useful: zero balance comparison

    Bookmark   January 27, 2009 at 6:49PM
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stargazzer

I was told that every time you apply for a new CC or close one there is a hit on your credit rating. If you apply for a card to get the discount on your purchase then cancel you will take a big hit.

    Bookmark   January 27, 2009 at 8:25PM
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western_pa_luann

IDK... I do the store card thing every couple of years (for the discount). It never seems to affect me much.

    Bookmark   January 27, 2009 at 8:45PM
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scryn

if a cc can only be used at a specific store than it will hurt your credit rating to have it (although I have heard it won't hurt you much at all). cards that can be used anywhere won't hurt your credit when you open them.

-renee

    Bookmark   January 28, 2009 at 4:23PM
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trianglejohn

If you call them and ask them to keep you at the regular interest rate and they won't you can ask them to cancel the card and then hang up. Don't talk to them anymore. Don't let them trick you into any other business dealings with them. It will take them weeks to process everything you asked for and up to a month before you'll receive anything in the mail about the amount owed on the closed account. If you can look back through your records and see when the bill normally came for that card, you will know what your billing cycle is. They don't actually close your account until the end of your billing cycle. All of this buys you time. Time to find a cheaper interest rate, take out a loan at the bank, whatever. You can also re-open the account after they have closed it if you can't come up with the pay off amount. You will have to pay the new interest rate. Don't be surprised if no one offers you a better deal. All the cards and loans out there are changing every day so there is no way to know who will offer you what.

    Bookmark   January 28, 2009 at 4:25PM
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tishtoshnm Zone 6/NM

Try to keep the credit score in perspective. If it does ding your score, it won't by much. There are other things that play into the score much more, things like paying on time, etc. However, if you are about to refinance your home or buy a car, something where the credit score is paramount, suck it up and hurry and pay it off.

    Bookmark   January 28, 2009 at 5:35PM
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