04-08-2009 08:11 AM
Just received a letter in the mail from Bank of America saying my cc rate is going up to 27.74%!!! I am livid. It use to be around 12% which was doable, but has progressively gone up to the current 16.99% now.
Called back door number only to be told that my utilization rate too high, I don't make enough $$ and only option was to accept it or opt out. I am afraid to opt out if they close the account, even though they said it would not close it.
BOA avail credit $8500, balance $7662 (16.99%). Have another cc avail credit $5400, balance $4300 (19.99%). I have always tried to pay more to the higher percentage rated card, but that keeps flip flopping.
I am a stay at home mom that is also self employed working part time. I pay approx $300-500/mo towards the credit cards.
I have $2200 in savings that I have been working on in case of emergency.
Starting in December, I stopped using credit except for minor purchases to keep it open. Was working towards lowering balances, improving the ratio, and improving my credit score (702 in beginning of Jan). This is a slap in the face!
So my questions are:
1. Do I opt out and worry about the possible closed card later?
2. Do I try to get a loan to consolidate even though the chances are nil since I do not make enough?
3. Do I use my savings (took a year to get to this) to pay down the cc?
So overwhelmed. Appreciate your input in advance!!
PS. cc's are my sole responsibility, as my husbands check is stretched to limit. He is also maxed out loan wise with house, cars, etc. Things are tight!
04-08-2009 08:26 AM
04-08-2009 08:33 AM
If I was in your position I would opt out of that horrible rate and continue to pay what I could afford to pay. I would not touch my savings. More than likely BOA will close the card and allow you to continue to pay the card at the 16.99% rate. Like Pappy mentioned in this economy you need to have some sort of savings. Nevertheless, you need to do what is best for your situation.
In terms of a loan consolidation loan, that is a reasonable option if you have the discipline and can get approved. One of the drawbacks to these loans is that people then go and run their credit card bills back up and now they are stuck with revolving debt along with an additional installment loan. If you do decide to go this route, I would chat with a loan officer at a credit union and see what are your viable options. Good luck!
04-08-2009 09:02 AM
I got that notice tooo.. and they closed my account last yr, due to a "reevaluation of my CR and terms" (never late or over the limit).
I will opt out.. what would change on my report if the account is closed already?
04-08-2009 10:11 AM
Thanks everyone for the input...
Going to my credit union was a thought I had, but figured I would get the same answer. All of my banking and previous loans has been through them so maybe?
And it was my understanding if I had a balance, but the card was closed, that it would hurt my ratio (not necessarily my score) until paid off?? And I would like to keep at least one card to use for small items.
The cash system has been working surprisingly well for me...no frivolous spending any longer. No intentions of racking it up again...
04-08-2009 06:31 PM
04-08-2009 09:17 PM
Just got my letter today too. I had a 70% util rate for a couple months because got a new car. I was reducing my debt-to-credit ratio on that card by 25-35% each month. I love how it's an 'offer' to increase your rate.
Sad how after working on my credit score raising it from 530 to 735 that now I have the 'option to reject the offer' at the old rate, pay it off and then face them closing the card due to "lack of usage". Doesn't seem like one can get fair treatment now days... whether you have a good credit score or even the income to pay off your debt.
Sorry to hear about your situation. Don't dip into your savings and always pay yourself first. Reject the offer and pay it off. Good luck.
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO