Ways to minimize interest charges on credit card debt?

[Jonathan Bones]

So, I had a whirlwind of a couple of years and accrued around $20,000 of credit card debt. I would have attempted to minimize this given the opportunity to go back and do it all again, but hindsight is 20/20 and all that, and it's time to move on as best I can. Right now, the interest charges are killing me. Thankfully, I can just make my minimum payments and have enough left over to live--I know there are a lot of folks enduring rough times right now who maybe can't even do that. But hey, if there are options available to me to reduce interest charges/get out of debt even faster, I need to look into them.

Scenario:

$10,000 on TD Visa Emerald (interest rate around 10%)
$6,000 on President's Choice Master Card (around 20%)
$4,000 on Citi Bank Master Card (around 20%)

Now, obviously, step one would be to dive right in and start working to pay them off. But as mentioned, I just don't have the money to do that right now. My wife is currently unable to work (but should be able to within the next couple of months), and the money that doesn't go to the minimum payments buys us the necessities.


Idea 1: Approach bank for debt consolidation options? My bank is TD Canada Trust. Are there any debt consolidation options available to me?

Problem: I don't own my home nor do I have a car, but I've been at my current job for a decent length of time. Not sure whether it's worth asking about, or if they'd just laugh me out the door.


Idea 2: Apply for additional credit cards with lower interest rates/balance transfer promo rates/etc. and transfer as much of the debt off my high interest cards as I can. I'm responsible enough not to run up my debt any further; i.e., I'm able to live within my means.

Problem #1: Credit is obviously difficult to get right now. I was turned down by Royal Bank for a card last autumn, even though I presumably have decent credit. (Have never missed a credit card payment, though may have been a day or two late on a few occasions. Am definitely over my limits from time to time, but I'm always back under by the time my monthly payment is due.)

Problem #2: With my wife unable to work right now, I currently have a household income under $35,000, which makes me ineligible to apply for a lot of cards.


Any thoughts? Are there any options available to me? Or am I just going to have to weather this as best I can, and wait until my wife can work/I can find a better job to make any headway?

Your advice is appreciated, thank you.

[fastlayne]

Finance Minister Jim Flaherty last Thursday stated that, "if someone wants a lower interest rate on a card, then they have choices and they can do that."

I would send Jim an e-mail and have him suggest an institution and credit card product that you can use to reduce your monthly obligations. Too bad Flaherty didn't have the ballz to put a cap on CC interest rates.

But, seriously, you'll have to see if you can qualify for some of the CC low-interest promotions that are mentioned in other threads. Other than that, your only choice is to cut all discretionary expenses and put every possible dollar towards the high interest cards.

[Jonathan Bones]

I'm actually shopping around for cards right now. I guess my thread's main question was more whether someone in my position could qualify for some kind of debt consolidation? I'll certainly ask at the bank the next time I'm there, but was hoping someone might chime in with what their experience has been.

[fastlayne]

Is your TD Visa maxed?

Getting the PC MC $6000 balance transferred to the TD would be a start.

You can try for a TD limit increase.

[Jonathan Bones]

Yeah, the TD's maxed. I tried for an increase about a year ago, but was declined. I'm making under $25,000 at the moment, so I just presumed a request for a limit increase would be dismissed out of hand.

I appreciate your responses, fastlayne. Don't mean to be too needy by posting a personal thread like this; just wondered whether you guys would be able to come up with anything I hadn't considered, or point me in the right direction.

[XShadowX]

Yeah, the TD's maxed. I tried for an increase about a year ago, but was declined.

Why on earth did you ask for an increase if you want out of debt? You know you would max that out & be in more debt right? I really doubt you want to clear your debt away, More like, Your looking at getting more Credit cards to get in more Debt.

I'll point you in the right direction, Cut up your Credit cards & never use them again. If you make the minimum payments, How are they maxed now? Don't tell me after you make the payment, You max it right back out.:|

Sorry for being harsh, Maybe you should cut off bills you don't need, including Internet.

[Jonathan Bones]

Why on earth did you ask for an increase if you want out of debt?
So that I could transfer the balances from my higher interest credit cards and pay less interest.

You know you would max that out & be in more debt right? I really doubt you want to clear your debt away, More like, Your looking at getting more Credit cards to get in more Debt.
You assume that without knowing almost anything about me. While I'll be the first to admit that I should have planned my spending better, it's not as if the totality of my debt was accrued as the result of frivolous spending. I found myself outside of the country for a period without employment, and whether good choices landed me there is irrelevant, because I'm not asking for your judgement.

Sorry for being harsh, Maybe you should cut off bills you don't need, including Internet.
Or, you know, use my head and attempt to find ways to minimize interest charges/be able to pay down debt sooner.

[XShadowX]

Well, Then if your serious, I found this Topic for low transfer rates, You can look through it, Last updated in April 09.

http://www.redflagdeals.com/forums/showthread.php?t=352003

250 pages to read.

[mecassa]

Well, Then if your serious, I found this Topic for low transfer rates, You can look through it, Last updated in April 09.

http://www.redflagdeals.com/forums/showthread.php?t=352003

250 pages to read.


+1

It wouldn't hurt to try for one of these 0% BT cards. Save on the interest charges, and use that money to pay down the principal.

[dealguy2]

1) Phone your credit card companies and ask for an interest rate reduction. This can't hurt. Don't tell them you're in trouble or anything just ask for lower rates.

2) Talk to TD about consolidating. They might do it if you close or reduce your limits on your cards. Make sure they don't do any hard hits. Just ask them to do soft ones and have a look at your debt service ratio etc to see if they could do something for you.

3) I would do the 0% card thing last because it will hit your score. I think a 0% card is the most unlikely solution to your problem given that you have so many accounts maxed out and your debt to service ratio might be high but again when you talk to the CSR ask them if there's something you can do to make it happen like close accounts or lower limits.

I hope you have success!

[brunes]

So, I had a whirlwind of a couple of years and accrued around $20,000 of credit card debt. I would have attempted to minimize this given the opportunity to go back and do it all again, but hindsight is 20/20 and all that, and it's time to move on as best I can. Right now, the interest charges are killing me. Thankfully, I can just make my minimum payments and have enough left over to live--I know there are a lot of folks enduring rough times right now who maybe can't even do that. But hey, if there are options available to me to reduce interest charges/get out of debt even faster, I need to look into them.

Scenario:

$10,000 on TD Visa Emerald (interest rate around 10%)
$6,000 on President's Choice Master Card (around 20%)
$4,000 on Citi Bank Master Card (around 20%)

I would do these steps, in order:

a) Visit your bank and try to get a consolodation loan. If they turn you down, go to another bank. And another. And another. Don't be afraid of being "laughed out of the door" - remember, this situation is temporary, as is evidenced by the fact that you are being smart trying to pay your debits off instead of declaring bankruptcy. As such, banks should be fighting to get you as a client, to get your current and future business. Remember that - YOU are THEIR customer. Also, as long as you apply for this loan at all the banks in a short period of time, it will not count against your credit score.

b) If you can't get a loan at any of the big 6, then time to start with the CCs. MBNA has a fairly liberal card issuing policy, and 0% and 1.99% balance transfer options - I would start with them.

c) If all else fails - sounds like you ARE able to scrape by - continute to do so until your wife can help out. Or, maybe get a small part time job.

[Avero]

I would go about it this way:

1) call PC & Citi credit card companies, outline the situation and see if they can lower the interest rate



2) If that doesn't work, given your situation its very unlikely that you will get accepted for promotional interest rate with another CC company. So suggestion to you...

If you're not planning to make any big purchases, where you would finance a house or a car, over the next 3 years (I believe your situation doesn't allow you to).

Call credit counseling company, make sure you find a company that is non profit, as speaking from experience some companies refuse to deal with for profit credit counseling companies.

The downside, if you get on the program I believe its for 3 years you get a rating on your credit bureau saying that you've been with credit counseling, that is something you might want to double check with them when you speak to them.

The upside, they can negotiate with your creditors on behalf of you (reduce interest rates to 0-11%), consolidate your monthly payments into one (you make payments to credit counseling company and they send payments to creditors)

Also something to keep in mind:
I used to work in credit card company, and basically anytime you go over your limit, it affects your credit score really bad.
On top of that, if you're using most of the available credit to you (credit utilization above 40%) that also impacts it in a negative way, even if you're always on time with the payments.


Here's a link to a company that came to our office to give a presenation: http://www.creditcanada.com/contactus.asp

Good thing about them, is that if you chose not to go through Credit Counceling they can still help you organize your finances and plans (lets say you wanna buy something big in the future), and I believe there is no cost to it.


Good luck

[adamtheman]

Rack up the rest of your credit cards, then declare bankruptcy. Let the tax payers pay your debt down. If Chrysler and GM can do it, then why can't we?

[brunes]

Rack up the rest of your credit cards, then declare bankruptcy. Let the tax payers pay your debt down. If Chrysler and GM can do it, then why can't we?

When you declare bankruptcy it has nothing at all to do with taxpayers... the debit is written off by the companies it is owed to, an in the end their customers pay for it, either with higher fees or lower price decreases.

[i6s1]

You're paying $3000/year in interest. That money is more important than your credit score. If you can't get a consolidation loan, then apply for a bunch of low rate credit cards. If a bank doesn't have low rate card, apply for any basic card. After 6 months or so, (or sooner) they'll start sending you low interest cheques. Use those to bounce your balance around to lower rate cards. Most of the banks also have a "low" rate option. For a ~$50 annual fee, they lower your interest to 12% or so.

Since you owe so much money, you won't really need a better credit score until you've paid off your debt. So trashing it by applying for a bunch of cards is ok.

[adamtheman]

When you declare bankruptcy it has nothing at all to do with taxpayers... the debit is written off by the companies it is owed to, an in the end their customers pay for it, either with higher fees or lower price decreases.

What a stupid post....

Banks write their losses off (tax deductible), which means they pay less money to the government in the form of taxes. That means our government needs to get the money elsewhere, and that comes either in the form of higher tax cuts, or decreased social services.

[mgronqui]

We actually just wrote an interesting article on this and what your options are http://colourfulmoney.com/credit-cards/should-you-consolidate-your-debt/

Similarily, here's info on how to get those low, no interest rate CC promos http://colourfulmoney.com/credit-cards/credit-card-arbitrage/obtaining-lowno-rate-balance-transfer-offers/

Best of luck to you.