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Need Advice on Credit Card Debt and Cash Flow

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thebear22
Established Member

Need Advice on Credit Card Debt and Cash Flow

Hi all, need some advice on what to do with my wife and my credit card debt and lack of cash flow.  Basically the problem is we have around 20k in credit card debt, and are getting killed with APR, monthly payments, etc.   One card has a very high APR (26%), and we're trying to pay that off first.  The problem is, we can barely afford the minimum payments from all the interest being charged, and not sure what to do.  

 

To start, we're going to put all of our tax return and my yearly bonus towards the main CC debt.  but that will still leave us with a large monthly payment.  I have poor credit, but my wife has very good credit.  However I have the job, and she is a stay at home mom now.

 

So my main question is, would it be beneficial or even possible to apply for a lower APR credit card with no APR on balance transfers, and move the remaining high APR to it?  Or is there a better idea or advice?  Or are we kind of screwed given the situation?  Many thanks for any help.

 

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10 REPLIES 10
Callandra
Valued Contributor

Re: Need Advice on Credit Card Debt and Cash Flow

You owe 20k, what is your overall utilization? If it's really high, you might not be able to get another card. Have you tried calling the CCC that you owe the balance on to see if they will lower your APR (maybe try to push that you're always on time and you really want to focus on paying it all off, etc)? 

 

If your wife has good credit (are these joint accounts, your cards, or her cards?), she might be able to get a personal loan which could have much lower interest. Even if she's a stay at home mom, if you file taxes together, she could use your income as it's household income and readily available to her. 

 

I think others might be able to help as well -- can you post the cards, the limits/APR, and what you owe on each card? You will probably get some advice on tackling payments. 

 

Good luck!! Cat Happy

Quicksilver $10,000 | Better Balance Rewards $2000 | Sallie Mae $3500 | Freedom $3500

Last HP: 9/27/2015
Message 2 of 11
Anonymous
Not applicable

Re: Need Advice on Credit Card Debt and Cash Flow

Take a step back.  Look away from the CCs for a moment.  Do you have a set budget for your everyday expenses.  This was the first step for me when we got in to trouble.  Take your income and make sure every penny is assigned somewhere.  Be as tight as possible.  Then with the remaining money you can start focusing on your debt.  You may have more money to make payments then you initially thought.

Message 3 of 11
creditconcept
Regular Contributor

Re: Need Advice on Credit Card Debt and Cash Flow

Whoever has better credit, apply for a personal loan and the other be the cosigner or joint applicant, pay off as much will allow with the loan since you will be saving in interest. Do a line of credit or personal loan. Never use an home equity line of credit, experts will tell you. You never pay off unsecured debt using secured loans.

Hope you can sort it out, I can relate lol


Message 4 of 11
racer-x
Valued Contributor

Re: Need Advice on Credit Card Debt and Cash Flow

Ramsey would tell you, you have a cash flow and spending problem.

 

Sell everything but the kids...don't go to a restaurant unless you're doing the dishes and making money...beans and rice 3 times a day....you get a part time job or if the wife is able to work, have her get a job.

 

Sounds like a cash flow problem more than anything.  If you had more income and managed it properly, the debt would go away.

 

-and yeah, I'm trying to get on the Dave Ramsey bandwagon. lol.

 

 

Message 5 of 11
scorewatcher7
Valued Member

Re: Need Advice on Credit Card Debt and Cash Flow

tough situation... many are in the same spot so you're not alone.

 

easiest and least likely to be red flagged would be if your wife- with good credit - takes out a 0% interest card on xfers with a long term. Best I've seen is Citi Diamond with 18 months 0%. You'll have to pay a 3% transfer fee though, so that's $600 on your debt. Only issue is approval, and if approved, how big a CL she'd get. 

 

Next is to ask your cc for a lower APR; 26% is pretty high so I imagine its a sub-prime card or that you had defaulted on a payment which raised your APR. Chances are they'd say no, but its worth a shot. If it's sub-prime, it won't really red flag anything if you ask for a lower APR so long as your payments have been on time and consistent. 

 

You could also consolidate through a consolidation company. They would negotiate on your behalf and you'd likely reduce your payments quite a bit. This would send a signal to the cc company that you need financial help and might put a flag in your file, however, it'll show responsibility and dedication to pay off the debt. Its just a matter of relativity.. which is worse? A red flag with your creditor (for which they do nothing for the most part), or the inability to make payments which could lead to much much worse??

 

Good luck. 

Message 6 of 11
Skye12329
Valued Contributor

Re: Need Advice on Credit Card Debt and Cash Flow

Similar situation as you are, i have 15k and my partner makes the money. However what your wife could do is apply for a card and use all available income to her. So if your income is available to her, put that down on the application.

If she has any Chase cards, i would suggest Chase Slate, and move limits around. Try to eliminate as many cards as possible with a Balance Transfer.

Or take out a personal loan. Also dont charge anymore unless its a emergency. Chase let me move some of my limits even though my cards had a balance on them, so i moved 1k of my CSP to Slate to cover some transfers, would that be possible for you?
BK7 - 2/21
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Venmo - 900 (11/21)
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Message 7 of 11
NRB525
Super Contributor

Re: Need Advice on Credit Card Debt and Cash Flow

OP, Sorry to hear about the situation, heavy CC debt is challenging.

 

Can you list out the cards you have, name of lender, CL, APR, amount owed?

 

Most likely, the best approach is either the "snowball" that Dave Ramsey promotes, pay the lowest balance first then add that monthly payment to tackle the next larger balance. The other method is the "avalanche" where you tackle the highest APR first then work to lower APR, always paying as much as possible.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 8 of 11
thebear22
Established Member

Re: Need Advice on Credit Card Debt and Cash Flow

Thanks for the advice everyone.  Basically it was a card that we've had for a long time, and used to have a much lower APR.  But they did this thing where they said they were raising the APR, not because of missed payments (have always paid her cards on time) or anything like that, but I guess they thought it wasn't high enough.  The higher APR wouldn't go into effect unless we used the card again, which we didn't plan on doing, but then unexpected medical bills popped up and we had to use it to get by.  Now things have spiraled out of control a bit.

 

So yeah, we've already started a budget, cut back on any non-essentials, and I think our next step will be to call her card company (cards are only in her name) and see if we can get it lowered since we've always paid on time, even if only the minimum.

 

My thinking with getting a new CC with low APR/no transfer fee would be to help with the cash flow issue and long term debt.  I figured if we could get it off the high APR card to a new low APR card, and one that offers 0% on balance transfers for 15-18 months, we could get it paid off quicker and easier then?

 

Either way, thanks to all for the advice, truly appreciate it!

Message 9 of 11
NRB525
Super Contributor

Re: Need Advice on Credit Card Debt and Cash Flow


@thebear22 wrote:

Thanks for the advice everyone.  Basically it was a card that we've had for a long time, and used to have a much lower APR.  But they did this thing where they said they were raising the APR, not because of missed payments (have always paid her cards on time) or anything like that, but I guess they thought it wasn't high enough.  The higher APR wouldn't go into effect unless we used the card again, which we didn't plan on doing, but then unexpected medical bills popped up and we had to use it to get by.  Now things have spiraled out of control a bit.

 

So yeah, we've already started a budget, cut back on any non-essentials, and I think our next step will be to call her card company (cards are only in her name) and see if we can get it lowered since we've always paid on time, even if only the minimum.

 

My thinking with getting a new CC with low APR/no transfer fee would be to help with the cash flow issue and long term debt.  I figured if we could get it off the high APR card to a new low APR card, and one that offers 0% on balance transfers for 15-18 months, we could get it paid off quicker and easier then?

 

Either way, thanks to all for the advice, truly appreciate it!


Yes, that's one of the few ways they have to boost your APR now, after the CARD act. It is effectively closed-in-place because you can't use it, and then if you do use it, you've opted into the newly proposed, higher APR. I closed cards in the past that pulled this trick, to freeze existing terms in place while I paid down.

 

How much is on the 26%? Compared to the other cards?

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 10 of 11
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