How I conquered my credit card interest rates!

[SHOPGIRL]

Yesterday, I stopped by my PO Box and picked up all my bills.  I have all my bills go to my PO Box.  Anyway, much to my despair I found that the interest rates on all of my cards had increased.  I expected this since the prime rate has increased.  I pay my bills on time all the time and usually pay more than the minimum payments.  However, since my balances are high right now it affects my FICO score.  A so so FICO score isn't good.  FICO scores affect all your financial accounts.  Even though making payments on time will positively affect my credit score, the fact that my balances are more than 50% of my credit limit negatively affects the score.  Consequently, my so so FICO score increases the amount I have to pay for house and car insurance, home equity loans, credit cards, and etc. . .

Today, I got fed up, and starting calling people.  First I called my local bank and inquired about the 0% credit card they were offering.  It's 0% for the first 3 months, then 12.75% thereafter.  Of course, I didn't qualify for the 9.9% credit card because of...guess what...my FICO score.  I was approved for a large amount today and I'll be going into the bank tomorrow to fill out the paperwork for the new credit card.  I'm transfering some of the cc balances to the new card, and I'll be saving so much money.  I may have to close some of my cc accounts, but that is o.k with me.  I'll make sure to leave the accounts with the longest credit history open so I don't damage my FICO score further.

Next, I contacted my 403B retirement account.  I'm able to borrow my own money.  For example, if I want to borrow $5k from my account, the company transfers $5k from my stock account into a fixed account that earns 3% interest.  I have to pay a $60 transaction fee, plus 6% interest on the loan, but it really ends up being only 3% interest on the loan.  This money in the account was deposited as pre-tax dollars so when I pay back the money, it is with after-tax dollars.  When I retire and withdraw the money, I will then pay taxes on the money.  So, I'll be double-taxed on the money.  This is why financial advisors advise people not to do this.  However, if you really need the money, it sure is nice to be able to access the money.  I found out that I qualified for a loan so I'm having a big chunk of money sent to me. 

I'm just totally irritated with the amount of interest that the cc companies are charging.  Between doing a balance transfer, and borrowing some of my own money from my retirement account, I should be able to pay off all my unsecured cc debt.  It is such a relief!  I really want to lower my FICO score so all my other interest rates and charges go down!  I'm losing money because of the high debt.

Next, I contacted ALL of my credit card companies.  Most were very helpful, some could care less!  I was very friendly, and I made sure to get the person's name and throughout the conversation I called them by their name.  I told them that I was concerned with the huge increase in my interest rate. Usually, they said they'd look at my account. Also, a lot of the times they had to transfer me to the APR department.  Once I spoke with the next person, I told them the same thing.  One person said,"Well, what kind of rate are you looking for?"  I said, "I'm looking for the best rate you've got.  Right now either I'm going to pay off my balance in full at the end of the month, or I can transfer your balance to a new card with 0%."  Here are the results from the credit card companies:

Target Visa, my rate is 18.9%.  The lady claimed that my rate is based on my FICO score and currently I don't "qualify" for a better rate.  Even if I paid off the entire balance, it wouldn't matter to them.  It's all based on the FICO score.  I got nowhere with them.  Not such a bill deal with them as I only owe them $376.  That bill will be paid off this month

U.S. Bank, my Northwest Visa card, I liked this card since I earn airline miles whenever I spend money.  After talking to the customer service rep., I'm not much of a fan of this company anymore.  I got absolutely nowhere with this woman.  This was the last company I contacted so my sales pitch was perfected, and it got me nowhere.  Why????  Because of the FICO score!  She couldn't do anything because of my FICO score.  My interest rate was bumped up because of my FICO score.  Apparently, the company randomly reviews accounts based on the information from the credit bureaus.

Now for my success stories........

Capital One, the rate was at 18%, the rep lowered it to 12.9%

Providian, Somehow I ended up with two different accounts with this company.  On one card I qualified for a reduction from 18.9% down to 14.9%.  On my other card I was at 25.9%, and I qualified for 3.99% for the next 3 months, then the rate will be at 11.9%.

Bank of America, my rate with them for a long time was at 7.9%.  This statement it jumped up to 13.7%.  At first the rep thought he could lower my rate by 1% by switching me to another card.  He told me that I could switch to a frequent flyer card for Hawaiian Airlines.  I told him that I've never been to Hawaii as airfare usually is around $700, plus it is soo expensive, but I'd love to go.  I mentioned that it was pretty obvious from the amount I owed BofA, that I really couldn't be going to Hawaii.  He was really nice, made the point that at least I'd earn miles, and maybe I'd eventually get to go for free.  So, I agreed to transfer my balance to a different card that BofA fiances.  I'm saving no more than 1%, but I'm gaining miles. 

So, this is my story.  A few years ago, I took the time and called the companies, and they did lower the rates. It all depends on what company your dealing with.  So, it's worthwhile to call the companies.  Just be friendly with the customer service rep.  Sometimes, they can really help you out.  Also, I would recommend checking with your local bank to see if they have any credit card promotions or loan promotions.  Although, I will still have debt.  It's not as if the cc debt is just going to vanish, I will be saving a huge amount of money each month.  I'm already paying extra money to my debters, but at least so much money won't be going to interest.

I also noticed on the credit card statements that late fees and overlimit fees are going up to $40 each! 

This whole process took about 3 hours of my time today, but I'm now going to save a huge amount of money.  I'm going to make it a point to contact my cc companies every 3-6 months to see about getting a better rate.  Isn't it funny that they can "bump me up" in interest, but they don't usually lower my rate unless I call.  So, be proactive...start dialing those credit card loan sharks!

[nodmicks]

Sounds like a plan! Good job!

[Telephus44]

Wow! Way to go! Woo-hoo! You go girl!





Here's what DH and I ended up doing:

DH has a Chase card and a Discover Card. The plan for the Discover card is simply to pay it down and keep it for every day purchases (like my Capitol One card). For the evil Chase card, we decided to open a new card account to transfer the balance to. We just opened a joint Citibank card - 0% into rate for 12 months on balance transfers, prime + 3.49% afterwards (currently 10.24%). Since DH has so much outstanding debt, we only qualified for a $3600 credit limit. The Chase card has $7600 on it. I'm taking out $4000 from my EF to put towards it and then transfer the balance to the new Citibank card. After we get that paid off, then we're probably going to transfer the remainder of the Discover balance (around $6000 currently) to the new Citibank card and pay it off.

The goal is to get it all paid off by next May. Since we take home about $6,000 a month combined this is a realistic goal.


I didn't do as well as you did about calling and lowering rates, but Chase made me so mad that there was no way I'd keep that card - well, we'll probably keep the account open to stay on our credit report since we'll hopefully be buying a house next year, but we'll physically shred the card. The Discover card has a decent rate (14% or so).

Here's hoping to inspire other Frugal Village members to get out of evil credit card interest rates!

[bamamomto4]

Good job! I owe on my providian card and I should call....wont hurt!

Thanks!

[SHOPGIRL]

Yes! We can scrimp and save, clip coupons, etc. . .but as long as we're in debt to the "evil" credit card high interest rates, then we're basically in bondage. It is sooo worth the time to just make the calls. I don't like doing it, but heck...it's my money and I work hard for it! Not every company with budge, but it sure is worth the effort.

[seatosea]

Wow, well done!

[SHOPGIRL]

Anyone else out there contact their credit card companies this week to ask for lower interest rates? I'm curious what other cc companies are willing to do? Anyone try with Chase?

[bamamomto4]

Well,I had emailed Providian lastnight and got the response today. I may have done better by calling,but I'm happy with my decision....Anyways...Providian would not lower my interest rate.So I transferred the balance to a 0% Discover card (we just got a month ago and have not used) once the transfer is complete,I'll call and cancel the account. As I said,I am happy with doing that...the Providian interest rate was *GULP* 25.97%!!!!!!!!!!!!!!!!!

Why in the h____ I have a card with that high a rate is beyond me!! It was totally STUPID of me!! I can't wait till it's complete and I can cancel that card!! I have until 8/06 to pay it off through Discover,which I can and WILL do!!

Oh and on the Providian....they have whats called REAL REWARDS...I had almost 7,000 points and "cashed" them in lastnight for a $60 gift card


Thanks SHOPGIRL!! I wouldn't have done this if this wasn't posted!

[SHOPGIRL]

Oh great! I'm so glad my post helped you. I think if you would have called, you probably could have got it lowered, but you ended up with a better deal. If you've had your Providian card for a long time, you might want to think twice before canceling it. Long established accouts help your FICO score.

I just came back from the bank. Just transfered a bunch of date to my credit unions 0% offer till Feb. Then, it will be 12.75 fixed. Also, once my FICO score goes up a couple more points, I can qualify for the 9.9% rate.

This all takes time. I was lucky yesterday that I had the day off from work. Tonight, I'm tired and probably wouldn't have taken the time to make the calls.

[bamamomto4]

yea..you're right...maybe I'll just keep it and put it in the safe or something.Or destroy it and just keep the account open.

[alabamagirl]

Needed that boost - Bank of AM is very friendly but wouldn't budge from the 13.9 percent so I just filled out the application for my credit union cc - 8.99 percent and 5.9 percent for 6 months on the transfer.

Thanks,

Debbie

[Darlene]

I'm so hoping you all can get to a point where you don't owe anyone anything. I don't like companies changing the terms in mid stream without notice but it is written in their contract somewhere. Please, please look at the fine print and make sure what you are signing is something you can pay.

[SHOPGIRL]

Oh, I think the companies are upfront about everything. They usually send a letter or enclose a new disclosure statement in the credit card. We all get so much mail, I think often we just toss out all the extra paper without reading everything. It's just that the prime rate keeps going up and that affects variable rate credit cards. It's just recently because of the new credit laws that things are changing. The minimum payment due is being doubled so if you were paying 1% on the balance, you'll now be paying 2%. On a small balance, this won't be a big deal, but it sure will be a big deal on the bigger balances.

Here's another tip....

If you have a promotional rate, say 3.9% on $2000, and then 15% on another $2000...all on the same credit card, when you make your payments, your money goes toward the money with the lowest interest rate.

[SHOPGIRL]

I'm bumping this up. Remember, minimum payments will be increasing in January. I'd start calling your credit card companies. It takes time, but it will save you money.

[thrifty gal]

WTG.