Question on snowballing debt.

**Surilda** · 05-24-2009, 03:08 AM

Hi,
Like millions of other credit card holders the last several months, despite a decent FICO score, never paying late, and paying more than the minimums, my interest rates have been raised and/or credit limits slashed.

Next month, I am starting a snowball plan to pay off my credit card debt.

My question concerns the effects of only paying the minimum payments on the cards other than the one I will be snowballling first.

It concerns me that the banks will see my dropping payments to the minimums, as more of a risk to them, and raise my interest rates even higher. As they won't know that I am in the midst of a snowball plan, they may ASSUME that I am suddenly having financial difficulties.

For those of you who are in the process of a snowball debt reduction plan, have you experienced any problems like this?

Feedback will be appreciated!

Thanks!

**NikoSan999** · 05-24-2009, 09:26 AM

Hi, happened to me also. Chase started the ball rolling. I had several ( live and learn the hard way ). They all started with canceling cards because I hadn't used them then progressed to lowering limits and raising interest. As were were ( and still are ) having an extremely hard time financial wise I started paying minimums. Never late but minimums. If I remember correctly the interest raised when I started the minimums but hard to tell because THEY snowballed one right after the other. If you can afford to pay $5 or $10 extra on the others I would do it. If they raise the interest after that go back to minimums.
I wish when times were good I knew what I know now. My car has been repo-ed and we very well could lose the house. We are 2 payments behind on it. Called and they said they couldn't help us. CountryWide which is Bank of America...Like they haven't been bailed out. AND supposed to helping homeowners. We have been talking bankruptcy versus our own bail out. Don't know yet which one. We have our own business and it's holding it's own..barely..relies alot of snowbirds from up north...we are in Florida central...Do alot of robbing Peter to pay Paul...
Sorry about my own personals here so back to your question. I would try to do at least $5 or $10 extra on the others cause when they raise the interest it is anywhere from 18% to 20.99%. Hope this helps. Thanks for letting me talk

**Surilda** · 05-24-2009, 11:59 AM

Hi NikoSan,
Hugs to you and your family this morning.

Thank you for replying to my post and for sharing your own story.
NikoSan, Obama just passed a law to help homeowners like you. How effective it will be and whether it is something that can help you, I don't know, but google this: "Helping Families Save Their Homes Act", and read about it.

The credit card reform act that Obama just signed is good in theory, but in my opinion, it will not help anyone who already has credit cards. It will only help new credit customers that get cards after the July 2010 effect date. It will not be retroactive, and it does not keep interest rates from rising on EXISTING balances. Now that the banks know exactly what they will not be allowed to do any longer, they are stepping up to do as much as they can before the law goes into effect.

The banks say that the interest rates are being raised to reduce risk.
I am at a loss to understand how raising your interest rates, and making it harder to pay your bills poses less risk for them.

For banks that go over the top though, there is a place you can call that oversees banks, and some people have had luck contacting them. They are called "The Office of the Comptroller of the Currency". There is also some information about the new mortgage law. You can find that through Google too, as I was not allowed yet to post a link.

I think I will take your advice and pay just a bit over the minimums. The interest rates on all of my cards have been raised already, so I am not sure they would do it again, at least so soon.

Thank you again for your reply. Hang in there.

**nuclear_j** · 06-14-2009, 10:48 PM

I thought that CC companies could not raise your interest without your permission. While you are in good standing. I could be wrong.

Maybe you could just cancel the cards and that would stop them from raising your interest rates? I'm just spitballing ideas here.

Since the goal is to never use credit again you really do not need you credit "score" and your "score" might take a hit with less lines of credit open. Good luck!