Didn't want to do debt consolidation for fear of losing available credit, but now?

[inneedofhelp]

I will be debt free in under 3 years if I keep making my current monthly payments for my loans and cc's.

I didn't want to do debt consolidation because I heard you end up losing your line of credit and your credit score goes down.

My current scores are around 687, 670(something, and 656 (experian).

Now that it appears that my credit line was reduced, and most of my credit cards have a claus where using my remaining eligibility will result in higher interest rates, would it be better to do debt consolidation? I am paying almost $1,000 per month on these bills.

[disneysteve]

Why would it be better to do debt consolidation? Just keep paying as you have been. As your balances go down, your FICO will go up and you'll be in better shape than you are now. You should not use the credit cards for any new purchases until the balances are paid off and then you should only use them to make charges that you can pay in full when the bill comes.

[boosami]

Originally Posted by inneedofhelp

Now that it appears that my credit line was reduced, and most of my credit cards have a claus where using my remaining eligibility will result in higher interest rates, would it be better to do debt consolidation?

If you are being forced into higher interest rates, you may be able to opt out and freeze it at your current rate until it is paid off. You won't be able to incur new charges, but you'll avoid the higher interest. Call the credit card companies and ask about opting out of rate increases to find out if you can do it.

[inneedofhelp]

Originally Posted by boosami

If you are being forced into higher interest rates, you may be able to opt out and freeze it at your current rate until it is paid off. You won't be able to incur new charges, but you'll avoid the higher interest. Call the credit card companies and ask about opting out of rate increases to find out if you can do it.

My cc did freeze the account, so to speak, and kept me at a lower interest rate, which is sitll around 19-20%. the remaining avail credit, if used, will then have a higher interest rate of over 24%.

I have tried to get them to lower the cc rate and they refuse. I reviewed my credit report and there are no inaccuracies, and no late payments, etc. Just a high amount of debt to income ratio. Sigh.

[inneedofhelp]

When I spoke to my cc company about another card that had been given the auto default interest rate for future purchases, they told me that no matter how much I paid off or how my credit changed, that they would not reduce the interest rate as that was an interest rate assigned to that type of card.

Does that sound correct?

[creditcardfree]

I'm not sure...do your have the credit card agreement? If not, could they send you that information in writing. Maybe it is on their website.

I would keep paying the debt down as you have been. Things will get better.

[inneedofhelp]

It doesn't say that in the terms, but that is what the customer rep said. I thought that if I paid off the card entirely, they would be more willing to give me a lower interest rate, but they said that all people will the type of card I have will have similar interest rates.

[Seeker]

Originally Posted by inneedofhelp

It doesn't say that in the terms, but that is what the customer rep said. I thought that if I paid off the card entirely, they would be more willing to give me a lower interest rate, but they said that all people will the type of card I have will have similar interest rates.

If you pay off the credit card entirely and continue to pay off the credit card each and every month you charge anything to it, the interest rate does not matter one single bit.

The interest rate is just a number that you can safely ignore once you keep current and not spend more than you can pay.

The customer rep is probably not singling you out, it's just a factor of today's economy that they have to reduce their risk of loss. They do not have a choice.