Consolidating multiple cards to 1-2? (And ditching Lowe's Project Card)

[poet]

OK, folks. I've been in my home for over a year, never paid late, and never had a late pay show until now. The timing couldn't be worse.

I was up over 700 within the past year. Now, I'm down to the 630s or possibly lower.

1. Suddenly, these collections have appeared on my credit reports, each for phone services that (for complicated reasons) did not work in our home with our tech set-up and which I fought and fought to get free of, paying way more than I should have (Vonage = Hotel California). I have disputed the heck out of these to no avail. I'm going to send one more validation letter around to everyone and am considering whether a PFD is advisable or not.

2.  I added a mix of higher-interest retail cards: Lowe's Project Card, Wal-Mart, IKEA--trying to be practical about getting started on repairs while living on a very tight grad-student budget. I've kept up with these, but am ready to sock-drawer IKEA (don't really need it) or close it if that's more advisable. All three of these merchants are on GE Money Bank, but the Lowe's Project Card is screwy in ways the other two aren't. Trying to communicate with GEMB is impossible, as is importing the Project Card account data into Quicken. (For some reason, Quicken only recognizes the regular Lowe's credit card.) Buying anything small on the Wal-Mart card is a waste of money, given the interest rate, but that card has saved our butts more times than I can think of--and AmEx isn't likely to give me an account anytime soon, so who cares that they think! 

3. I thought I would make an early payment of $100 on the Lowe's card, pending a larger $500 or so payment this fall. Stupid me. They counted the $100 towards the previous month and charged me a $38 or so late fee!!! When I fussed, they credited back the late fee.

4. I get paid on the 31st. Naturally, GEMB consistently refuses to change my billing cycle date from the 28th. (Who are these people who say, "Call up and negotiate"?) I e-mailed Lowe's/GEMB when I had brief access to the Internet on the 30th or 31st, saying that I was sending them a goodwill payment of $50 (I owed more like $240, I think it was) and asked that they accept it *because I would be paying the account 90-100% in full in the next 30 days.* They accepted it, all right--them reported me 30 days late to the credit bureau. 

I've been on the phone with everyone from Bangalore to the Midwest today, all switching me to numbers where snotty and combative operators tell me I've got the wrong number, and all repeat the mantra "We can't change information we report to the credit bureau." Doing my level best not to lose my temper, I marshal all the evidence of my good faith, my consistent payments, and my e-mails back and forth regarding any discrepancies; I ask for supervisors; I ask that my call be escalated; etc.

So, after talking with:

Mark at the main customer service number > Minnie at 800-291-9329 > Sonja at 800-568-1056 > Mandy (the only nice one) at 866-834-3204, bumped up to supervisor Linda (EXCEEDINGLY rude), from whom I extracted her alleged boss Sheri x 5130 who should be in Monday,

I'm pretty annoyed.

Here's the scenario: I want to get rid of these high-interest rate store cards and do what I need to to get one decent rate (9-12%) with a $3000 limit to cover any possible emergencies or upcoming conference travel required in my line of work (about to go on the academic job market in 2-3 years). With Lowe's uncooperative, I DEFINITELY don't want universal default one month before the new laws go into effect!!

Sometimes, when I plug payoff scenarios into different calculators, it seems I can get a few more points in the long term if I drag out the payments. I thought I might pay off 90-95% of all my balances, then pretty much sock-drawer the cards through March (possibly with the exception of a once-a-month tiny purchase just to keep the accounts active). I need advice.

I HAVE:

--CapOne Platinum MC, oldest, "main" card, $500 limit, currently a few dollars overlimit, about to pay down 90% or so this month--want to keep for now as main card

--Orchard Bank VISA, newest, out of Christmas desperation, annual fee (!) and $300 limit--thought it would now be useful for separating certain tiny recurring expense (webhosting, professional journals, etc.) and putting them on autopilot so I don't miss them, owe $285 or so, will pay about $280 this month; hope good payment this year will make the annual fee go away next year (am I wrong in this?)

--IKEA, was $400 limit, raised to $500 limit, owe $283.65, will pay down 90% or so this month

--Wal-Mart, was $400 limit, raised to $600 limit, owe about$580, will pay down 90% or so this month

--Lowe's Project Card, $2000 limit, owe just over $1K and will pay down 90% or so this month

--A prosper.com loan that's a little more than half-paid-off (for a course I took) that's never been late in 1.5 years

I WOULD PREFER:

--One credit card with a 9-12% APR (!) and $3K limit

--MAYBE one gasoline card for travel out of town (although better to pay with the low-rate card)

--MAYBE keep the Capital One as a backup and use it to autopay small recurring expenses instead of the Orchard Bank, since it's the oldest card

Keep in mind that I'm trying to get back over 700 within the year (or sooner) through very low overall CL utilization, trying to dispute/PFD the ugly catfight collections, and having another solid year of on-time mortgage payments behind me.

THE GOAL:

--To consolidate all these  high-interest cards onto a single low interest-rate card. B of A, which also holds my mortgage, turned me down in November because of these collections. I'm more than willing to leave Bank of America for a good credit union or community bank who is willing to offer me a good card!

--To redirect $200+ a month in interest and fees saved into my Roth IRA.

Do I have a snowball's chance of achieving this goal within a year?... Suggestions?

Thanks so much.

Message Edited by poet on 01-09-2010 02:05 PM

Message Edited by poet on 01-09-2010 02:06 PM

Message Edited by poet on 01-09-2010 02:08 PM

[haulingthescoreup]

* resists urge to take a nap after plowing through all this *

If I have read this correctly, GEMB has now reported a new 30-day late to the CRA's --not just a late within their system, but a 30-day now on your reports. This pretty much means that you are cooked for a year, possibly two. A new 30 is a humongous red flag to lenders, indicating (correctly or not) that a consumer is in some sort of financial trouble. I don't think that you're going to be able to get anything in the interest rate you listed for a good two years. You might be able to get a decent card after 12 months go by, but with a higher rate.

The collections sound new-ish as well, although I can certainly understand the screw-ups involved in getting phone/ Internet service. The stories are legion. But that's another stinker that will frighten off any lender with a good APR card.

My advice would be to not worry about specific FICO scores for now. Keep working on the collections, and GW'ing GEMB, trying to get the late off. Keep paying down your retail cards (your plan looks good; congrats!) Plan to keep using your Cap One card --no more overlimits!!! --and maybe allow it to report a token balance, and then immediately pay it off before the due date. Keep the others reporting $0, even if you use them during the month. Just pay them off online before they report, which is usually on the statement date. Your Orchard card will probably report your balance as of the last business day of the month, actually reporting it a week or two later. (HSBC/ Orchard bank cards can be flaky with reporting.)

Your main plan this year should be no credit card debt, other than expenses put on during the month that you have money in the bank to pay off in full, and no lates or over-limits, no matter the situation. Let the late and the collections cool off, hitting 12 months (24 months would be better) before apping again. If you app for anything now, you will get declined, or you will get a crap card, and you don't need any more. Be patient and be careful, and let month after month of clean credit history start smoothing over the past messes.

Good luck! I suspect that this isn't what you wanted to hear, but a new late is just fatal. I had one myself, and I spent a long time licking my wounds and letting it age before I got back into app mode again.




eta: sorry, I didn't mean to type 244 months. 24 months is bad enough...

Message Edited by haulingthescoreup on 01-09-2010 04:58 PM

[poet]

Dear Haul,

Thanks so much! If it's two years, it's two years. I really am good with parking the cards. I do wonder what the "sweet spot" is in terms of time vs. low utilizations vs. how much to pay per month.

On my spreadsheet for the credit cards, I made columns for 9% and 7% of the total limit would be, based on the premise that keeping it under 10% is recomended and that the average utilization is 7% for FICO power scorer. Then I added columns for 6% to 1%. Once I saw what my "real" limits were, in total as opposed to per card, they made complete financial sense. If I can work out the kinks, I'll post it as a template for other people to try out.

Writing various oversight bodies and sending copies of my efforts at GF might not be a bad move, either. I'll keep after GEMB for the GW.

Thanks for such a patient and prompt response!

[Jazzzy]

"--To redirect $200+ a month in interest and fees saved into my Roth IRA."

Hi poet...the above goal kind of jumped out at me when I read your post.

I see that you have been in your home for only a little over a year. You also say that you will be in the academic job market in 2-3 years. Will you have to move for this new job?

Part of the issues you have now may have to do with the fact that you have no cash emergency savings? Is that the case? If so, you need to consider redirecting that $200 you want to save in your Roth each month into an emergency fund. I don't know where you live or what the real estate market is doing there. I also don't know how much of a down payment you put down or how much equity you may have in your home...but you may have a big challenge getting out of a home in one piece in such a short time period. You may need cash to make yourself whole on the house, or for relocation expenses.

Having 6-8 mos of expenses in an emergency fund can eliminate the need to make late payments. You also don't want to put money into a Roth just to have to pull it back out and pay taxes and penalties. Good luck...it seems you're on the right path...but remember to put first things first.

[poet]

Hi, Lynette, thanks for answering.

Yes, we are without a true emergency fund, and I would have to raid the Roth (which is small at the moment) should anything come up. Hence the paydown of all the credit cards. 

I was lucky enough to buy a foreclosed property that is assessed at 2.5-3 x the sales price. My house note is less than most folks' car notes. This was by design. The down payment came from the Roth and I am building it back up at $50/mo. Abuot 2/3 of that is in stocks returning about 20-25% and 1/3 in cash (the Suze Orman Save Yourself interest sweep account).

I've been playing with spreadsheets and talking with my partner about our joint and individual expenses/bills, and we are going to be in excellent shape after the end of this month. For example, we will save $190-250/month on credit card payments ALONE by sock-drawering the three GEMB cards above. We think we want to put $100/month of that into the emergency fund and $100/month as extra payment on principal on my partner's car (her work requires a new car every four years; if we can pay $200/mo extra on that, we'll save something like $10K over the life of the loan!). We also had the brilliant idea to PIF the Prosper loan this month, eliminating the mid-month $104 hiccup. That means we'd cut monthly outgo by $250-300. I can squeze an extra $50-100 elsewhere.

I know the emergency fund should be eight months' worth right now. We can catch up pretty quickly on that between the money I'm saving elsewhere in the budget and pending tax returns over the next six months.

I am calculating all expenses except her car note, her car insurance, her 2 individual credit cards and my individual 2 credit cards. Her work is somewhat cyclical and varies a great deal over the course of any given year. Mine is consistent. By not calculating her income, we can plan ahead a lot better. She is responsible for her car note, insurance, the Prosper loan, and her credit cards. I am responsible for everything else. 

I advocate throwing as much money at the car principal as possible--not because it's the highest interest rate, but because it's the biggest monthly bill.

All these other things have to happen if I am to rehab my credit score ASAP, which is now so low I want to vomit.