27% interest rates... rugh
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| Mon, 08-29-2005 - 3:24pm |
hubby and i have been current on our credit cards for months.. (we were really far behing a year ago.. but have made on time, current payment for at least 9 months) We are just about to start our debt snowball(up till now, we have been pyaing minimums). and on three of our cards we are paying 27-29% interest rates!! the balances are about 3k each on each card. How in the world are you suppossed to get ahead this way?? I have called the credit companies (bank one and universal card) and they told me they cannot lower the interest rates because the accounts are in closed status (we closed them). it is so frustrating. And before any asks.. we are unable to get a card at zero percent... we've tried. We have been turned down because we are at our limits on the cards or close. I have two cards with three hundred dollar limits that have zero percent interest for one year and they told me they cannot up those limits until we pay off more debt. urgh!!!!whats the best way to organize our snowball? this is our debt... (urgh.. this is embarrassing ,but here goes)
1.chase - 300.00 (0%)
2.chase (dh's) 300.00 (0%)
3.household - 300.00 (9%)
4. orchard bank(dh's) 300.00 (9%)
5. target - 120 (not sure interest)
6. sears - 800.00 (24%)
7. chase - 2500.00 (27%)
8. chase (dh) 4000.00 (27%)
9. universal card 2800.00 (28%)
10. discover 2700.00 (19%)
11. visa (mom's - i used her card and make payments) 600.00 - i cannot charge to this account.. had to use this in an emergency and what to pay it off)
how would you organize this? any help would be great!!
kel

Good for you for getting all caught up. That's a huge thing.
Yes, you have high interest rates, and it isn't fun, but the way you get ahead is to just keep going forward. As you get more of the little ones paid off, you may be able to transfer some of the higher APR debt down to them. It's always amazing to me how the universe helps me out when I'm going down the right path, and I'm sure that the same thing will happen to you!
That said, if this were my debt,and I was about to start snowballing, I'd do it like this:
1. Mom's Visa-$600.00. this is 1st because 1)it's not my visa, and 2) I hate the lectures, lol.
2. Target-$120.00. Low balance, and I know our APR is 18.99% on our card.
3. Household Bank-$300.00 (9%)-it's a smaller balance with a non 0% Apr
4. Orchard Bank- $300.00 (9%)-see #3
5. Chase- $300.00- has a smaller balance and IS a 0%, through when?
6. Chase- $300.00-same as #5
7. Sears- $800.00 (24%)-yup, you're not going to make much headway on this one until the snowball gets this far, but it'll happen faster than you'd expect!
8. Chase- $2500.00 (27%)-Yes, this is a high APR, and hopefully, after clearing out some on #1-7, they'll be more willing to lower your rate.
9. Discover- $2700.00 (19%)
10. Universal- $2800.00 (28%)
11. Chase $4000.00 (27%)
This is not impossible, because honestly, once the snowball starts rolling, it takes on a life of it's own almost. My reasoning for not going after the higher APR's 1st is because I know that I'd get too impatient about not seeing the quick wins. As you pay them off, especially the store cards, close the accounts so that you're not tempted to use them again. Do you have even a little emergency fund so that if something happens, you don't have to use the cards again?
Good luck!
Lisa
Great job so far! Keep this up, and you will get ahead. The first part is the hardest, but it's fun to watch the momentum build.
Here's how I would organize your debts:
1. Pay off your mom's credit card. It's best to keep family out of debt as much as possible, and you'll feel better when it's taken care of. Besides, it's a small debt so you can probably pay it fairly quickly and have the satisfaction of having it off your back.
2. Target--probably high interest, and a small balance--again, it will give you a good feeling to get it off your back.
If your snowball is pretty sizeable each month, and you can pay them quickly, I would next take care of the other four small accounts--the two chase cards, household, and orchard bank.
Then I would take it in order of interest rate: universal, chase (2500), chase (4000), sears, discover.
Along the way, you may discover that your credit rating improves so much that you start to get offers from other cards for lower interest rates. Call your existing creditors and ask them to lower your rates. Hold the other cards's offers over their heads if necessary. If they won't budge, then surf.
You're doing great. Keep up the good work!!
Heather
I'd go with Lisa's plan. as she said, you'll be surprised how quick it will happen.
IF you truly dont have ANY extra over minimums, then I would recommend credit counseling. they dont lower your payments much, if at all...but they DO significantly lower your interest rates. (You wouldnt be able to include your mom's card in that, though, so I would still start by snowballing that one card). For example, I know they told me my Chase, that was at 27% would go to 6%. it sounded like thats what Chase goes to. period.
~~~of course, credit counseling WILL show up on your credit report and can affect your score, so I would ONLY recommend that if you dont have any $$ over minimums right now.
Hope that helps,
~ Teresa
Teresa
http://www.affordingpickles.blogspot.com
thank you so much everyone for your input! It feels so much better to have a plan! I think we will just continue to pay what we can,there isn't much we can do about the interest rates until we pay more down. We did consider credit counseling, but they told us we would have to actually be behind on our bills to be considered. Right now, we cannot be more than three months on any of our credit cards because hubby could actually lose his security clearance for work!! (he is a draftsman for a naval contrator and works with high security plans and blue prints for subs and aircraft carriers. I didn't understand that at first, but i guess they figure if you are in dire straights financially you may be tempted to sell plans to "shady characters".)to be honest, that job has been what made us actually straighten ourselves up financially. It's been a great motivator.
So anyway, thanks so much everyone! I hope to post more to this board for inspiration!
kel