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  • PetMom
    replied
    Have you made any type of plan with your resources now to pay on these overdue credit cards?

    Getting a credit card to get current on your payments of past due cards and then still owing this new credit card with surely a high interest rate.

    They are surely giving you a punitive interest rate along with late fees.

    That is a credit card trap that takes years of strict budgeting to get out of.

    You might consider laying out your expenses here and asking for help.

    Working out a plan with the credit card companies.

    The last thing I would do is get another credit card when it might be a temptation.

    Also be putting any money at all into a emergency fund to have to not have to use a credit card again.

    Leave a comment:


  • reedda
    replied
    Originally posted by Christine88 View Post
    Perhaps so but what scares me is I haven't cut the card up. I'm afraid I'll use it and that's the last thing I need to do.
    I understand this statement completely. Stay strong...

    Maybe I missed this info, but if the new card is lower interest than the old, transfer the balance from old card to the new. Then, if you can't cut up the old card (no shame or blame here, I haven't cut any of mine up either), maybe put it in a ziploc, fill it with water and put it in the freezer?

    That way, it's there if you really, really need it. But at least you have to wait for it to thaw to use it, and maybe by that time you'd have thought of something else.

    Then, when you get the new card, do the same thing? Then just pay on the new (if lower interest rate) card?

    Just a thought.

    OH! I see Petunia suggested the same freezing plan!

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by Baby_nurse View Post
    The most important thing to consider , however, is this; If the accounts are past due, you can't GET a cash advance (or charge anything for that matter) until the accounts are made current.
    You'd think so, wouldn't you? It makes sense, and it seems like a prudent lending practice. Nonetheless, Christine states she is being offered a new credit account from one of her credit card lenders, even though it is one of the cards currently delinquent.

    Leave a comment:


  • Wino
    replied
    The thread title:

    This is part of the problem
    Christine's later quote:

    I'm afraid I'll use it and that's the last thing I need to do.
    which is the other half of the problem. Christine doesn't have the discipline to have even the first credit card. She's the ideal customer for Bank of America, who (in my opinion) rides those with no willpower until they break, then expects them to give up their lifeblood to pay back the loans they should never have been given in the first place. Of course, if BofA makes a mistake, they need the rest of us they haven't been riding to bail them out.

    Sorry for yet another rant.

    Leave a comment:


  • Baby_nurse
    replied
    Originally posted by neatdesign View Post
    Almost without exception, cash advances are at a very high interest rate AND the interest compounds DAILY, not monthly. This is bad news for someone trying to get out of debt.

    Also, if the OP already owes a balance on the Wells Fargo account (which it sounds like she does), then she's... what? Taking a cash advance in order to increase that balance and owe MORE money on the same account? That makes no sense. If she can't afford her current payments, she'll be less likely to if her balances (and thus her minimum payments) go UP.

    If the OP is late on her credit card payments, then her APRs probably skyrocketed by the second missed payment, if not the first. For all we know, her cash advance APR is 29.99% -- that's the penalty APR for many credit cards out there. So 29.99% APR interest that compounds daily... OUCH.

    Another thing to consider is that most credit cards apply your payments to your lower APR charges first. Only amounts in excess of the minimum payment are applied towards the higher APR .

    When taking a cash advance from your credit card, it also can't be directly applied towards your debt. That would require taking the advance and depositing it in your checking, then writing a check back to the credit card. If someone isn't making their minimum payment, how likely is it that they will actually use the money as intended?

    The most important thing to consider , however, is this; If the accounts are past due, you can't GET a cash advance (or charge anything for that matter) until the accounts are made current.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by neatdesign View Post
    However, cash advances have no grace period. The interest starts accruing the minute a cash advance posts to your account. Not so with purchases made to your credit card. On those you're only charged interest if you don't pay in full every month.
    Yes, that is correct. Christine is not presently paying her balance in full every month, so is not enjoying a grace period on purchases.

    Leave a comment:


  • neatdesign
    replied
    Originally posted by Petunia 100 View Post
    If you are carrying a balance, all credit card interest compounds DAILY, not monthly. This is not something unique to cash advances.
    However, cash advances have no grace period. The interest starts accruing the minute a cash advance posts to your account. Not so with purchases made to your credit card. On those you're only charged interest if you don't pay in full every month.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by neatdesign View Post
    Almost without exception, cash advances are at a very high interest rate AND the interest compounds DAILY, not monthly. This is bad news for someone trying to get out of debt.

    Also, if the OP already owes a balance on the Wells Fargo account (which it sounds like she does), then she's... what? Taking a cash advance in order to increase that balance and owe MORE money on the same account? That makes no sense. If she can't afford her current payments, she'll be less likely to if her balances (and thus her minimum payments) go UP.

    If the OP is late on her credit card payments, then her APRs probably skyrocketed by the second missed payment, if not the first. For all we know, her cash advance APR is 29.99% -- that's the penalty APR for many credit cards out there. So 29.99% APR interest that compounds daily... OUCH.
    If you are carrying a balance, all credit card interest compounds DAILY, not monthly. This is not something unique to cash advances.

    As you say, if someone is currently delinquent, they are being charged the penalty rate on their entire balance. This is more expensive than being charged a higher APR on a portion of their balance.

    Leave a comment:


  • neatdesign
    replied
    Almost without exception, cash advances are at a very high interest rate AND the interest compounds DAILY, not monthly. This is bad news for someone trying to get out of debt.

    Also, if the OP already owes a balance on the Wells Fargo account (which it sounds like she does), then she's... what? Taking a cash advance in order to increase that balance and owe MORE money on the same account? That makes no sense. If she can't afford her current payments, she'll be less likely to if her balances (and thus her minimum payments) go UP.

    If the OP is late on her credit card payments, then her APRs probably skyrocketed by the second missed payment, if not the first. For all we know, her cash advance APR is 29.99% -- that's the penalty APR for many credit cards out there. So 29.99% APR interest that compounds daily... OUCH.

    Leave a comment:


  • Baby_nurse
    replied
    I read quite well, thanks very much.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by Baby_nurse View Post
    Works for this month, but what about next month when the minimum payment is now higher? Taking out a cash advance is setting her up to repeat the cycle.
    That is why I suggested she needs a written budget.

    I feel you didn't read what I wrote, even though you quoted it.

    I was once in credit card debt hell and clawed my way out. The key for me was staying current on everything, so that I was able to take advantage of low interest opportunities which presented themselves. Being delinquent removes that possibility. Paying late fees on top of everything else makes the pile of debt that much larger and thus should be avoided.

    Originally posted by Baby_nurse View Post
    Better to get the cards current without borrowing more to do it.
    I agree, if it is possible that is certainly better. Notice in her first post she states she is several months behind on everything. I made an assumption that if she were able to pay, she would do so.

    Notice also I stated "use a cash advance if necessary to get current". That is quite different from stating "use a cash advance whether you need to or not".

    Leave a comment:


  • Baby_nurse
    replied
    Originally posted by Petunia 100 View Post
    The answer to that is in my original statement. To get current.

    Works for this month, but what about next month when the minimum payment is now higher? Taking out a cash advance is setting her up to repeat the cycle. Better to get the cards current without borrowing more to do it.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by Baby_nurse View Post
    Why would you suggest someone take a cash advance, at most likely a higher APR, when they cant stay current with the debt the already have?
    The answer to that is in my original statement. To get current.

    Leave a comment:


  • 97guns
    replied
    Originally posted by Christine88 View Post
    Ok so I'm a few months behind on some of my credit cards getting calls everyday and so what do they do? Well One sends me a new credit card with a $5000 limit and a letter stating that if I bring my current account up to date they will increase the limit on the new card to $7500 LOL! This is insanity!


    right now this is whats driving the economy, luring folks into credit merely for survival. this is a credit based economy, without it it crashes.

    Leave a comment:


  • Baby_nurse
    replied
    Originally posted by Petunia 100 View Post
    I would take them up on their offer. Use a cash advance if necessary to get current. When you have good credit, you have options. When you have bad credit, you don't. Get current, that is the first step.

    The second step is a written spending plan, otherwise known as a budget. If you don't have one, it is time to start.

    What is going on in your life that you have gotten behind? Has there been some sort of big change? An unavoidable big expense? Is it overspending?
    Why would you suggest someone take a cash advance, at most likely a higher APR, when they cant stay current with the debt the already have?

    Leave a comment:

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