Your Questions About How To Pay Off Credit Cards Faster

Mary asks…

Transferring part of high-rate balance to new 0% card – which should I pay off faster?

Citibank just played their little ‘rape and pillage’ game with our credit card – in advance of the upcoming consumer credit law, they’ve raised our rate to 29.99%. NO late payments…in fact, our latest bill was touting the fact that our last payment was on time, so they were being benevolent and giving us a ‘rebate’ on part of the interest accrued at the high rate for this month. How generous. 😛

So, since we’re attempting to actually pay this card off, and would like to do it as quickly as possible (and have no faith that Citibank will lower the rate if asked, since they’re raising rates on nearly everybody while they still can, *because* they can), we’ve opened a new card with a credit union, intending to transfer as much of the balance as possible. The rate on the new card will be 0% for a year (for transfers made within 60 days), and 0% on purchases for a year, after that it will be 13.99%.

We’re planning on transferring about a quarter of the original balance to the new card.

Now, my question is…what saves us the most money? Should we throw any and all extra money we have at the Citibank balance which is sitting at a nearly 30% rate, so as to lower that balance and minimize the amount that the bank can charge that 30% on (while the smaller balance sits in a holding pattern at 0% – not getting quickly smaller, but not costing us anything either)? Or, should we throw the extra funds at the smaller credit union card balance while it’s at 0%, so everything we pay is principal (meanwhile the larger balance is only slowly decreasing, costing us 30% all the while), and then transfer another large chunk from the Citibank card to pay down at 13.99%?

I’m just not sure which course of action has the potential to save us the most money.

(I’m not particularly worried about the credit score or balance-to-open-credit ratio at the moment – right now I just want to get the balances paid off.)

richmama answers:

Definitely pay the 30% card down as quick as possible. That will add up quick. You may also want to look at getting a second card with a 0% rate to transfer more of the money off the Citi card.

Lastly, a visitor to my website recently told me he was able to get his rate reduced back to its pre 30% level by following advice I give on my website, which is to call the bank, ask for a US based rep, then ask for that person’s supervisor. Once you get them on the phone, see if you can strike a deal to get your rate reduced. If you can’t, call again and try with a different representative.

Daniel asks…

How do I handle having more higher minimum payments across four credit cards then I can possibley pay?

Between no tenant in my house in south florida, medical bills, and not working for 6 months of last year not to mention wife’s legal expenses over her ex-husband’s crap I’m in over my head and I don’t even have the fancy flat panel TV or sports car.

Making decent enough money but was moving into a pickle I could have gotten out of before losing my job last year. Now I’m making decent enough money again but it’s all going out faster then I can bring it in. Two credit cards have higher minimum payments then I can possibly pay now and I’m just getting deeper and deeper with the mortgage companies. Made 10K off a job I was doing and made the mistake of spreading it across them and it did next to nothing for me in the end in terms of lowering payments. Now what?

richmama answers:

That is a tough spot. You will just have to dig yourself out.

1. Stop spending. Put the credit cards in a locked drawer and don’t touch them. Cut back to bare essentials.
2. Talk to each of your creditors and explain the situation. You are not the only one having problems at the moment so they will likely work with you to set up payment plans and or reduce finance charges. However, if you set up a plan, you better follow though.
3. Get a second job.
4. Check your withholding. If your income has dropped that much, you may be holding out too much for taxes. That will get you a refund at the end of the year, however you need the money now. Set your withholding to the proper amount.
5. I hate to say it, but you may have to sell something if you can’t afford everything you have now.
6. Pick one debt that you are most likely to get paid off the quickest (usually the smallest balance). Make the minimum payments on everything else. Concentrate on paying off that one debt. Then take the money you freed up from that and attack something else in the same manner.

Sandra asks…

what is the minimum payment for a credit card purchases?

i’m planning to buy a car and after deducting down payment 6000 dollars will be left and my dad will pay that amount with his credit card. i just want to know how much the minimum payment for the credit card would be. i know that it’s different from company to company but could you guys give me a rough idea.
i will be paying for those credit card bills (6000dollars) ,
what would be the reasonable monthly payment i should make to my dad so he can pay it off.
i know that the faster you pay it the better but i’m only a student with part time job so i can’t pay that much..
should i just pay whatever i can pay every month?
i guess i should do that right? to avoid interest

richmama answers:


Nancy asks…

credit cards and student loan?

i have paid off 4 out of 6 credit cards that i had in collection, the last 2 are in current standing. first question: after i pay off a credit card, how long until itis reported to the credit bureau and how fast will that affect my credit/credit score? second question: how will this credit/my student loan i still have affect my future husband if we wed in 1-2 years from this time?

richmama answers:

The negative information will show on your credit report for seven years from the date of deliquency (not the date of payment to resolve debt). It show Charge-Off/Paid and a Balance of $0.

It might have been better to have attempted a pay for deletion letter. Just something to consider if there ever is a next time.

Second question: It shouldn’t affect your husband upon marriage since the debts you had are still in your name. Unless he is added to your credit cards as an authorized user, there shouldn’t be any problems however it might be best for you to have separate accounts (savings, checking, credit) until you get all of your credit affairs in order.

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