Posted on
September 8, 2009
at
3:57 pm
Alright guys so this situation is relatively simple, here is the background.1. I am 22 years old, credit is 4 years old. I have 3 cards with about 11k total debt and an average interest rate of around 16% on each card. My credit score is a tad under 700 (685) which I consider pretty good in relation to the age of my credit.2. I have been calling each bank I have CC's through seeing if I can get interest rates lowered or payments deferred. I was laid off and cannot make the full payments while still living decently.3. I have never been late on a payment that has been reported to the bureaus, though i had 2 late payments on my BOA CC, one day (I forgot it was due monday not tues, and one that was 2 days late) neither was reported to bureaus. My credit report is generally flawless save for utilization ratios which are very bad (each card is has about a 90% balance to available credit , I know this is bad) but everything else is great and I have paid down balances more than once.Ok, so I called BOA today to see if we could work something out, they seem to think I'm in good standing and the first customer service guy said "oooo, if you had told us before you lost our job, and gotten a payment protection package we could have deferred payments for 18 months!" then he followed with "But don't worry we'll figure something out, let me transfer you to our debt relief department, it is not a 3rd party company it is still BOA, and we can work something out." So I was transferred and talked to a woman, after proving I have some small income from a side gig of building and selling computers, and a lack of other bills and debt, she told me I qualified to get my 20% interest rate (how ridiculous) to 5% for 5 years. This sounded like a great deal but then she went into the details. She said that the card would be closed but that it would show up as a customer decision to close it, and this put up a red flag with me as I am generally knowledgable about what will hurt credit scores. I questioned about what this will do to my credit but she said it would do nothing since....1. It is not my oldest credit lineand 2. It wouldn't screw up my debt to credit available ratio since I didn't have much of one in the first placeIs this correct?Anyway, my payments would go from around 110 to 70/month which would definitely be of help. Am I missing out on something here or are they just helping me out since they know I will definitely make payments? Is there anything I should be worried about (other than defaulting obviously, which will not happen). Thanks and sorry so long.
Posted on
October 16, 2009
at
12:23 pm
I would take the deal. Even if you close the account to save 15% a year on finance charges you will be able to pay it off faster. I have ran the credit card treadmill for 11 years and will be credit card debt free next month. I have taken a stand in my financial life to pay cash for anything consumable like food, clothes and cars. What really will matter in the long run is your financial peace of mind. Patience and perseverance is what pays dividends over time. Take the deal and develop and action plan to eliminate your debt. Make projections and set goals to meet. I know you are short on income at the moment, but setting a goal to increase your income by either working more on your own business or finding more work is key to your future. Then you can set goals to pay off debt and accumulate an emergency fund to deal with circumstances where you may have resorted to plastic in the past.
