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Duh, yes of course you are correct. That's what happens when you are thinking about math before the day's coffee quota. :b
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Credit card company raised my interest! (1 Viewer)
- Thread starter Wes T
- Start date
E
Eric Kahn
If you have other credit cards with a zero balance, you could call them to try and arrange a balance transfer to one of them, it never hurts to ask, even if the interest is not much lower, it gives you a free month to consolidate for the next month
Drew Bethel
Screenwriter
- Joined
- Nov 22, 1999
- Messages
- 1,209
Looks like you won't be making a formal complaint. Like someone said, no matter how flat you make a pancake it always has two sides. Maybe you just wanted some sympathy and a chance to vent. Good luck.
Justin Lane
Senior HTF Member
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- Jan 18, 2000
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Wes,
You should look into snowballing your overall debt. Pay as much as you can each month on the card with the highest interest rate, and then the minimums on your lower interest rate cards. This will let your money work the hardest for you. Paying off a card with a smaller balance first might give you a sense of accomplishment, but the other card is compunding interest month to month at a whooping 29% interest rate.
Also, have you thought about selling anything including DVDs, hometheater equipment, furniture, etc. These are just consumer goods, and probably a big part of the reson you got in debt in the first place. Get rid of them, re-examine your spending habits and try not to make the same mistakes again.
10K in credit card debt does not seem that hard to overcome. Work a second job, work overtime, find a higher paying job with less of a commute, ask your wife to work more for a bit. Together you can get out of this debt, and free yourselves from the credit card companies.
J
You should look into snowballing your overall debt. Pay as much as you can each month on the card with the highest interest rate, and then the minimums on your lower interest rate cards. This will let your money work the hardest for you. Paying off a card with a smaller balance first might give you a sense of accomplishment, but the other card is compunding interest month to month at a whooping 29% interest rate.
Also, have you thought about selling anything including DVDs, hometheater equipment, furniture, etc. These are just consumer goods, and probably a big part of the reson you got in debt in the first place. Get rid of them, re-examine your spending habits and try not to make the same mistakes again.
10K in credit card debt does not seem that hard to overcome. Work a second job, work overtime, find a higher paying job with less of a commute, ask your wife to work more for a bit. Together you can get out of this debt, and free yourselves from the credit card companies.
J
BrianW
Senior HTF Member
- Joined
- Jan 30, 1999
- Messages
- 2,563
- Real Name
- Brian
I thought compounding interest on consumer debt was illegal. Have things changed since I got out of college (in 1980s)?
Jay Taylor
Supporting Actor
I always thought that every credit card company that charges interest will charge compound interest if you didn’t pay off the total balance in the previous billing cycle. Just like every savings account will pay compound interest when you leave the accrued interest in the account.
Wes T
Stunt Coordinator
- Joined
- Apr 11, 2000
- Messages
- 55
I have not yet looked into filing a formal complaint yet Drew. My first priority is getting my self out of my current situation. I will explore a formal complaint, but that is not going to help me with my current problem. Please don't dismiss this thread as being some cry for sympathy. I certainly did not post a bunch of my personal information here as some kind of cry for sympathy. I expected quite the opposite. I got myself into this mess. I understand that. Venting? I suppose I have been venting some. I think I have a right to be upset.
I have gotten some really good advice on how to handle this problem. I have gotten good advice for how to handle money better in the future. I have gotten some good references of books, articles, and even another forum to help me out. Even after I have come up with a plan, I am still getting good advice. I am a member of several forums. I chose to pose this question to the HTF because I knew that I would get some good help and sensible answers here.
Maybe just a few of the several hundred people that have read this thread will think twice about plunking down their plastic from Satan's bank of Delaware on their next piece of home theater gear. Maybe someone out there has wised up and come up with a better financial plan because of this. Maybe more people will read the 10 page credit card agreements that come with a new card they got so this doesn't happen to them. I think my question and all of the great answers I have gotten here are very valid. Again, I thank you all very much for all your help. -Wes
I have gotten some really good advice on how to handle this problem. I have gotten good advice for how to handle money better in the future. I have gotten some good references of books, articles, and even another forum to help me out. Even after I have come up with a plan, I am still getting good advice. I am a member of several forums. I chose to pose this question to the HTF because I knew that I would get some good help and sensible answers here.
Maybe just a few of the several hundred people that have read this thread will think twice about plunking down their plastic from Satan's bank of Delaware on their next piece of home theater gear. Maybe someone out there has wised up and come up with a better financial plan because of this. Maybe more people will read the 10 page credit card agreements that come with a new card they got so this doesn't happen to them. I think my question and all of the great answers I have gotten here are very valid. Again, I thank you all very much for all your help. -Wes
Chris Lockwood
Senior HTF Member
- Joined
- Apr 21, 1999
- Messages
- 3,215
> I thought compounding interest on consumer debt was illegal.
Huh? I'm pretty sure the interest is just added to your balance, & your balance is what is used to calculate the interest.
Why shouldn't it compound? If you pay more than this month's amount of interest, you won't have to deal with it.
Huh? I'm pretty sure the interest is just added to your balance, & your balance is what is used to calculate the interest.
Why shouldn't it compound? If you pay more than this month's amount of interest, you won't have to deal with it.
PhillJones
Second Unit
- Joined
- Jan 20, 2004
- Messages
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Wes,
You have my sympathies. All banks will do this, it's a really sharp business practise. They identify vulnerable customers and take steps to literally trick them into ruining their credit scores. I heard one horror story where a bank contacted a customer who had about 50% credit utilization and offered him a low interest loan for some of the remaining credit. It seemed like a great deal. Then the following month, because he used more of his credit, he was a high risk and they put all his rates up and couldn't transfer his balance because nobody would give him another card. They do it deliberately, they convince you that one set of actions will save you money and when you do it, they pull the rug out from under you.
Fortuneatley, I've never been caught out myself so can't offer much advice apart from to add another vote to those who say not to close any unused accounts. Not only will it increase your utilization but several closures in quick succession is a red flag. The credit companies think you are panicking. So even after you pay off the debt. Close them with a six month interval between each card.
Generally, if you do use cards, keep open more than you need and roatte them in and out of use. Apparently, this is good for your score as it keeps the % utilization low whilst avopiding haveing stagnent unused accounts, which apparently is another red flag.
Perhaps you could talk to a couple of these unused cards companies about balance transfer and play each company off against the other. Let them know that you have choices. They think that you don't, and therefore they have nobody to compete with, and that's why they're messing with you.
Another thing that's just occured to me. This may be pushing it so consider this carefully. If you have an IRA, it's possible to borrow against it and get a lower interest rate. You could perhaps use this as a consolidation loan the same way as you used your equity loan? Obviously be careful doing this and don't use the credit crads while you're doing it. Same rules as for a home equity loan I guess.
You have my sympathies. All banks will do this, it's a really sharp business practise. They identify vulnerable customers and take steps to literally trick them into ruining their credit scores. I heard one horror story where a bank contacted a customer who had about 50% credit utilization and offered him a low interest loan for some of the remaining credit. It seemed like a great deal. Then the following month, because he used more of his credit, he was a high risk and they put all his rates up and couldn't transfer his balance because nobody would give him another card. They do it deliberately, they convince you that one set of actions will save you money and when you do it, they pull the rug out from under you.
Fortuneatley, I've never been caught out myself so can't offer much advice apart from to add another vote to those who say not to close any unused accounts. Not only will it increase your utilization but several closures in quick succession is a red flag. The credit companies think you are panicking. So even after you pay off the debt. Close them with a six month interval between each card.
Generally, if you do use cards, keep open more than you need and roatte them in and out of use. Apparently, this is good for your score as it keeps the % utilization low whilst avopiding haveing stagnent unused accounts, which apparently is another red flag.
Perhaps you could talk to a couple of these unused cards companies about balance transfer and play each company off against the other. Let them know that you have choices. They think that you don't, and therefore they have nobody to compete with, and that's why they're messing with you.
Another thing that's just occured to me. This may be pushing it so consider this carefully. If you have an IRA, it's possible to borrow against it and get a lower interest rate. You could perhaps use this as a consolidation loan the same way as you used your equity loan? Obviously be careful doing this and don't use the credit crads while you're doing it. Same rules as for a home equity loan I guess.
Justin Lane
Senior HTF Member
- Joined
- Jan 18, 2000
- Messages
- 2,149
That is a good point Phil. If he has a 401K, he could probably take a loan out from that as well to cover the credit card debt, and then pay it back over 5 years (I think that is the limit). The loan would be paid back with a payroll deduction so he would have to get used to having less funds each paycheck and adjust his lifestyle accordingly (without using credit cards).
J
