Want to make a bigger dent in CC debt, already pay minimum every month

[batgirl]

Right now, the discover card has a limit of $8k but it's at $11k right now. If I bring it back down to $8k, will I be able to get a bigger credit line for a balance transfer cards? The other 2 cards I have debt on (as mentioned earlier) are under the limit but still close to the limit. I have a couple other cards that have a 0 balance.

Now I am spending pretty much what I make, which is why I am trying to lower the interest rate. I have cut out a lot of my spending but yes, there is still more work to be done (will change phone plan when my contract expires, have already sold a few things and looking to sell more, looking to reduce grocery bill). I am also looking for a new job and a 2nd job.

I don't know much about debt consolidation with credit cards but if it lowered my interest rate I would still pay the $750-$800 per month I pay towards credit cards currently, assuming my income doesn't increase. Why would I lower my interest rate and pay less per month? This makes no sense to me, because my goal is to pay less overall.

[Wino]

Why would I lower my interest rate and pay less per month? This makes no sense to me, because my goal is to pay less overall.

Snip

If I bring it back down to $8k, will I be able to get a bigger credit line for a balance transfer cards?

You lowered your interest rate with the 0% card, and then ran up the other credit cards above their max. So now, instead of having two credit card bills, you have three. That's not progress. If you get another card at any rate, past performance indicates you'll just run that balance up as well.

You've given all kinds of excuses and preferences as to why you can't pay off your credit card bills. Others have pointed out the realities and offered suggestions. Until you make the decision that you're going to pay off these cards and never use them again - they're still in your purse or wallet, aren't they? - until you make that decision, borrowing money in any way will only worsen your problem.

As I said, there's a mental switch that goes off. You're right on the edge. Once you say to yourself, "These credit cards are a rip off and are the cause of my problem. I need to get their balance to zero and never use them again," and really mean it, then you can make the lifestyle changes that will bring you to the point where you're willing to do absolutely anything to get rid of the debt, and you'll NEVER go into credit card debt again.

You've made excuses about the gym, about your phone, about your food, about your cat (I love animals, too, so I understand about the cat)... You're like the 400 pounder who says, "I need to lose weight. Please pass me the mashed potatoes." You need to cut up the credit cards. You need to either make more or spend less. Borrowing money has not worked for you in the past. There is no reason to think it will work for you in the future. You need to stop looking for an easy way out of this debt and settle down your spending to eliminate it.

PS. Don't close the credit card accounts. Just get rid of the actual card. Closing the accounts will kill your credit rating and put you into even worse straits than you're already in. This is a different discussion, but don't close the accounts even after the switch goes off in your head.

[batgirl]

You lowered your interest rate with the 0% card, and then ran up the other credit cards above their max. So now, instead of having two credit card bills, you have three. That's not progress. If you get another card at any rate, past performance indicates you'll just run that balance up as well.

You've given all kinds of excuses and preferences as to why you can't pay off your credit card bills. Others have pointed out the realities and offered suggestions. Until you make the decision that you're going to pay off these cards and never use them again - they're still in your purse or wallet, aren't they? - until you make that decision, borrowing money in any way will only worsen your problem.

As I said, there's a mental switch that goes off. You're right on the edge. Once you say to yourself, "These credit cards are a rip off and are the cause of my problem. I need to get their balance to zero and never use them again," and really mean it, then you can make the lifestyle changes that will bring you to the point where you're willing to do absolutely anything to get rid of the debt, and you'll NEVER go into credit card debt again.

You've made excuses about the gym, about your phone, about your food, about your cat (I love animals, too, so I understand about the cat)... You're like the 400 pounder who says, "I need to lose weight. Please pass me the mashed potatoes." You need to cut up the credit cards. You need to either make more or spend less. Borrowing money has not worked for you in the past. There is no reason to think it will work for you in the future. You need to stop looking for an easy way out of this debt and settle down your spending to eliminate it.

PS. Don't close the credit card accounts. Just get rid of the actual card. Closing the accounts will kill your credit rating and put you into even worse straits than you're already in. This is a different discussion, but don't close the accounts even after the switch goes off in your head.

I'm not going to try to prove my "switch" is on or off to you. I'm here to find more information about lowering interest rates on CCs. I received a lot of helpful advice on getting out of debt from other posters here, a lot of which I agree with and will follow, but I am under no obligation to follow everything I see on the internet.

You do seem to know about loan consolidation or are at least familiar with it, so it would be helpful if you actually explained how it worked. If I assumed wrong or you aren't willing to share, that's fine. No need for the negative assumptions.

[Petunia 100]

Right now, the discover card has a limit of $8k but it's at $11k right now. If I bring it back down to $8k, will I be able to get a bigger credit line for a balance transfer cards? The other 2 cards I have debt on (as mentioned earlier) are under the limit but still close to the limit. I have a couple other cards that have a 0 balance.

Now I am spending pretty much what I make, which is why I am trying to lower the interest rate. I have cut out a lot of my spending but yes, there is still more work to be done (will change phone plan when my contract expires, have already sold a few things and looking to sell more, looking to reduce grocery bill). I am also looking for a new job and a 2nd job.

I don't know much about debt consolidation with credit cards but if it lowered my interest rate I would still pay the $750-$800 per month I pay towards credit cards currently, assuming my income doesn't increase. Why would I lower my interest rate and pay less per month? This makes no sense to me, because my goal is to pay less overall.

Are they charging you over the limit fees?

[batgirl]

Are they charging you over the limit fees?

No they are not. It is the same interest rate either way.

[cooliemae]

I'm sorry the credit card companies won't work with you, but from their perspective why should they. You're up to date with your payments so they'll just keep taking the minimum monthly payments and will make a good deal of money off of you.

If you want to consolidate your debt, then you need to understand a few things. First, you want to get an actual consolidation with a fixed interest rate. There are "consolidation" companies out there that don't actually consolidate the debt. The act as an intermediary between you and the cc companies. They may be able to negotiate a lower rate and simplify your life by allowing you to pay all the cc companies through them. However, some of the money you are paying them to pass along to the cc companies will be going into their pockets. These companies may also be able to get the cc company to forgive some of the debt. However that is going to hurt your credit score and you will end up having to pay taxing on the forgiven debt because it will be treated as income.

There are reputable companies out there that will provide you with an actual consolidated loan, however you might find that the interest rates are higher and/or the monthly payment may not be any lower than what you're paying the three companies right now.

Another option would be to see what kind of interest rate you can get on a loan through a peer-to-peer lending site or through your local bank.

So here's my two cents.

First, you need to get the Chase card paid off before the Oct. end to the intro offer. Most credit cards with these intro offers will have a stipulation that if the transfer balance is not paid off by the end of the intro period, the normal APR will be applied retroactively to the balance transfer. With the min. payments you still need to come up with $350 more. If you can cut that from your food budget over the next six months or pick-up a little extra money that would be great.

While you are completing this goal, I would suggest that you find out why your minimum payment on your Visa card is so high. You have a larger balance and are over your limit on the Discover card, yet are paying a higher min. monthly payment on the Visa. Something is missing there. If you can get the min. monthly payment on the Visa down, then you should take that money and start tackling the Discover debt first (highest interest rate). Once the chase card is paid off then that $25 should be added to the Discover payment.

I would only go to a debt consolidation service as a last resort. It will take some time, but you'll chip away at the debt and it will eventually be done with. Ironically you are faced with the same decision that we as a country are faced with. Do we pay down the debt by earning more money or by cutting our spending.

The debt is simply that and for good or worse it is your responsibility. I can appreciate you're reaction to some of the comments, but you asked for opinions and help and sometimes what we hear is what we want to hear. So see if you can squeeze a few more dollars out of your budget while at the same time seeing if you earn just a little bit more. Take heart that you are not alone and that you are doing the right thing by trying to tackle your debt. A bit of ramble, but hope it helps.

[batgirl]

I see what you mean about credit cards just wanting to make money off me. They have no incentive to help me, which is why I was considering 3rd party programs/organizations to help lower the interest rate.

The Visa terms and conditions states that the minimum payment is the greater of: (a) $35, (b) 10% of my New Balance rounded to the next higher whole dollar amount, or (c) the sum of all Interest Charges and Fees imposed during the current billing cycle plus 1% of my New Balance, rounded to the next higher whole dollar amount; provided, that if the New Balance shown on my monthly billing statement is less than $35, the Current Due will be my New Balance. I guess that is why my minimum payment is so high on this (most CCs use 1-2% if I am not mistaken). I'm not sure if the minimum payment can be lowered by talking with them. Is this a viable option?

Thoughts on this plan?

1. Continue looking for ways to increase my current income (such as 2nd job, new job, selling stuff, etc.) and decrease my current spending (grocery bills, cell phone, etc.)
2. Obviously, continue NOT using credit cards and only use debit or cash.
3. Pay $85/month for Chase card. Since there is $500 on it and the 0% APR ends in October, it will be 0 before the 22% APR kicks in.
4. Pay minimum (currently $500/month) on Visa card. Again, is there a way this can be lowered because this is my lowest interest card.
5. Pay remainder on Discover card. The minimum varies from $220-$250 per month. Right now, I spend about $800/month on credit cards without any leftover money, which leaves only $215 left, but I am sure I can find a way to cut out $20 or $30 from my grocery bill. Also, my cell phone contract expires in July.
6. Look into peer-to-peer lending or local bank. Could you give me more information on this? I am not familiar with this option at all. Obviously, this is only worthwhile if I can get a lower interest rate. Again, not particularly interested in lowering my monthly minimum payment.
7. Debt consolidation sounds like so many things could go wrong. I was considering this because I thought it would be possible to lower my interest rate. It sounds like a lot of companies pull scams - how do you find an actual consolidation company with a fixed interest rate as you mentioned? And if it is a fixed interest rate, is it going to be higher than what I'm paying now? I'm OK with not lowering my minimum monthly payment. How much could they lower the overall debt (% wise) and how much of a hit would my credit score take? I mentioned this earlier but I do have a decent credit score (700+).

This isn't so much a technical question but thoughts on this situation? I told my boyfriend last night about my financial woes (as all explained in this thread). He said he noticed I've definitely cut spending back a lot over the past few months and he told me he would pay my CC debt for me. Not a loan, just as a gift, assuming I don't get into this mess again. I said no for obvious reasons. But I am thinking... should I ask him to borrow the money? It would be interest free. I would give him 24 checks, each dated and signed for the first of each month, with $875 (obviously, I'd still have to find more income and decrease spending further with this since I can't even afford to pay $875 on CC payments right now). When my income increases I could give him new checks for a higher amount. I know a lot of people here have advised not to borrow again, but this would save me a several thousand dollars over the long run. I am still not sure about this option because I have never dealt with friends/money before and not sure if I want to.

[Esozh]

Something no one has touched on - what do you do for a living? Is it something that requires you to live in NYC, or another high cost of living area? If you were able to make a similair income in a lower (not even low, just not major city) cost of living area, then it seems like it would be very easy to lower your budget, and get you out of debt.

As an example - I live in Kansas City. A nice two bedroom apartment (utilities paid) can be had for $800 a month - with a room mate, you're looking at $400. And I imagine this situation is not unique to where I live.

As it is, unless you're willing to start cutting coupons or change your diet to live on significantly cheaper foods, there isn't a lot you can do without getting a second job.

The debt consoliation - most CC companies aren't going to be willing to work with you unless you're missing payments. They know you care about your credit score, and you caring about the credit score is making them a lot of money in interest payments. Why would they work with you? That's a bad business model for them. Now, if you don't care about your credit score, and get 6 months behind, and let it go to collections - a debt collector will often settle for less than 50 cents on the dollar. But, that's a debt collector and you're credit is going to take a huge hit.

If there is anything of value that you can sell, I would suggest doing so and putting the proceeeds towards the CC debt. 22% on 20K is quite a chunk each year.

The second job has been hammered home pretty hard. You need to either lower your costs or increase your income, or not care about your credit score. There is no other option here. I don't understand what job that requires you to live in NYC only leaves you with a take home of $36K a year. That's $45K-ish gross... I really think you could cut your rent and grocery bills in half if you lived somewhere else - that's an extra $9,600 a year. If you're ONLY concerned with the CC debt, you could move to a lower COL area for 18 months, pay off the CC's, then move back to NYC, and be able to put the $775 a month you're spending on CC's on your student loans.

I think this is the only reasonable alternative to getting a second job or demolishing your credit score.

[Esozh]

DO NOT borrow the money from your boyfriend. Just don't do it. You're looking at the immediate gratification of having the debt paid off, and that desire to have it paid off has a great ability to cloud your judgment. Don't let that happen. What happens with the relationship? You will always feel beholden to him. What happens if he tries to use it as leverage to coerce you into other things? You're always going to have that guilt or feel like you owe him. It's not worth it.

A local bank MAY be willing to loan you the money. This would be a good idea, if you can find it. What they will do is pay off the loans themself, then charge you something like 10-15% interest. Most of them are going to want 10-20% down, and/or some sort of collateral.

[batgirl]

I work in construction. There aren't a lot of jobs in my industry right now. I have been and am currently working on more income/less spending (obviously that is the first step), but my interest rates are high so I'm looking for ways to lower them too.

What if I don't have anything for collateral? I own no assets and don't have any savings.

[Petunia 100]

What did you study in school? Do you have a degree?

Are you working in construction because it is your chosen field? Or was it the job that you happened to find?

Are you originally from NYC, or is that where life took you?

[Petunia 100]

Many consumer debt counseling services are very scammy. However, this organization is not: http://www.nfcc.org/. Give them a call and see what they recommend.

[cooliemae]

6. Look into peer-to-peer lending or local bank. Could you give me more information on this? I am not familiar with this option at all. Obviously, this is only worthwhile if I can get a lower interest rate. Again, not particularly interested in lowering my monthly minimum payment.

There are companies such as Lendingclub and Prosper that allow private individuals to lend money to other private individuals. (Full Disclosure: I do invest with Lendingclub) Basically, you would figure out how much money you want to borrow and apply for a loan. The interest rates vary from 6% to 20%+ and the rate is determined when you apply for the loan. Then the loan is put on the their site for other individuals, such as myself, to invest in. I have no clue what interest rate you might be able to get, but it's an option.

You can also go to local banks and see about securing an unsecured loan through them. The rates will be similar to what you have right now if not higher. And about those rates, for unsecured debt I would have to say that those rates aren't too bad. Notice the 22% on the Chase card...I would say that is more typical of credit card debt rates.

This isn't so much a technical question but thoughts on this situation? I told my boyfriend last night about my financial woes (as all explained in this thread). He said he noticed I've definitely cut spending back a lot over the past few months and he told me he would pay my CC debt for me. Not a loan, just as a gift, assuming I don't get into this mess again. I said no for obvious reasons.

I wouldn't do this if I were you. Understand that I don't know the relationship you have with your boyfriend, so I only speak in generalities. The debt repayment is a long term thing and you don't know where you and your boyfriend will be in a few years. The money could lead to resentment and ultimately your parting ways with a large amount of money still connecting the two of you. Try never to mix family and money!

[batgirl]

What did you study in school? Do you have a degree?

Are you working in construction because it is your chosen field? Or was it the job that you happened to find?

Are you originally from NYC, or is that where life took you?

I have a MS degree from a top 5 school. I studied engineering and construction. Life took me to NYC. This isn't the exact job I wanted, but it is related to my studies. That is why I am looking for a new job (partially due to my own interests and partially due to money). I know I am currently a bit underpaid but times are tough in construction, as nobody wants to build things since the 2007 crisis.

I am interested in calling NFCC but by calling, am I obligated to enroll in some program or have my creditors know? Or will it affect my credit score? Basically I want to call them for information and see what they say. I am definitely open to enrolling in programs they have if they seem right for me. I don't want to be bound to anything just by calling them.

[batgirl]

I am aware my CC APRs are not THAT bad for CCs. But of course, I am still struggling and looking for ways to lower it. I did look those p2p sites mentioned and it seems that I am not eligible to take out that large of a loan (again, probably due to my debt to income ratio). I looked at some local credit unions and some of them do offer slightly lower rates, but those are what were advertised so it may not end up saving me much money in the long run.

At this point the best would be to continue with my plan of cutting spending/getting more income. I am going to call that organization Petunia mentioned if it doesn't obligate to do something I may not want to do. I am also going to try to find other ways getting of money to get my Discover card back under the limit, and maybe I can try finding a 0% APR credit card with a large enough credit line to transfer to.

If I get my Discover card back under the limit, but barely, how much can it help my credit score and how long will it take? Like I said, I have never had a late payment but my maxxed out credit cards are not helping the situation. The last time I checked my score was last year and it was about 700. It may be lower by now because of my maxxed out CCs.