Bad credit, credit card with a high balance, and a very high APR. PLEASE help me!

[Anonymous]

Good morning everyone.  I'm new to the FICO Community boards, but not to MyFICO.  I've been using the service for over a year now.  I need some help or opinions, though.  I have a very low credit score and a credit card (which I've had since I was probably 18... now 25) with a very high APR, and a very high balance.  I'm never getting anywhere with payments because the APR is 29.9%.  It is killing me.  I cannot get my balance to decrease unless I make a large payment.  And even after I make the large payment, I turn around and end up earning that amount or more in interest the next month.  It is plain crazy.  I've asked them to lower my APR and they will not do it.  My bad credit score and high balance are from over the past few years.  I left a job and lost insurance, moved back home with my parents, took a minimum wage job and struggled through the last 2½ years.  I'm finally in a stable place with my career and am trying to get my credit under control and back to a good place.

I don't know what the best course of action is.  Should I try to obtain a secured card and transfer parts of my balance over to it and pay on both credit cards??  I don't know of any cards that have high limits and low APRs for people with bad credit, so I'm really not sure what to do here.  I need out of this crazy spiral, though.

Can anyone help?

[GregB]

A secured card requires you to post a cash deposit. That cash is better used to pay down the existing card. I dount a BT is available with a secured card since it doesn't make much sense. Secured cards are very low limits. A CC with a high balance and low rate is difficult with good credit at this time.

Interest is charged on the total balance so a big payment NOW helps to reduce the interest charged at the next statement. This allows more of that payment to go toward the balance. Whatever you can do to get the balance down now helps much more than later. A short term loan from a family member, perhaps? Just don't make any more charges.

[Anonymous]

I don't know what your credit score is, but you can see mine below. I have a BofA card that I put a surgery on that ended up defaulting to the 29.9% after one or two short lates. I ended up calling several times about my balance of over $9k, but BofA eventually gave me a manageable fixed payment for 5 years at 5.75% interest if I closed the card. I feel that without the offer I could not have ever climbed out because they had no intention of ever lowering my rate.  My payments were about $260-$320 a month and $220-$250 were interest.

The drawbacks to this could be that your credit might appear to have an extremely high credit utilization ratio until you get it paid off. Mine does not report that way, so I am a bit lucky.  The other drawback is that you will no longer have this card and that company might not offer you credit in the future, but if you are struggling to pay it off than please consider the risks.

I hope other people offer more options, because I would love to know if there is an easier way to get them to drop the 29.9% interest to something that isn't as painful.

[Anonymous]

Disclaimer: I am not a long time member here and I do not have a high score yet. I just wanted to share my experience and the option I chose to take. There are many other options that might work for you.

I am curious which credit card company has you at the 29.9% and how high your balance is though. 

[Anonymous]

The company is 1st Financial Bank USA and my balance is roughly $7700.  Thanks for your input!

[GregB]

At that interest rate:

$250/mo would payoff in 5 years with $7200 total interest

$277/mo drops a complete year off with just $27 more

$327/mo would payoff in 3 years

$430/mo would payoff in 2 years

$750/mo would payoff in 1 year and would still be $1300 in interest - wow!

If you can't manage $500+ for at least a few months to get it down a bit or do the $430 consistently, I would think it would make sense to try to negotiate a lower fixed rate in exchange for closing the account.

[RobertEG]

Another option, which may be harder to obtain,  is to secure a loan, and use that to pay the revolving credit. 

Installment loan util counts much less in your score than does revolving % util.

And will most likely have an interest rate of about 1/3 of that you are now paying on the revolving card.

This, of course, depends on your ability to obtain approval of an installment loan. 

Keeping that high interest rate card at a high balance may result in the credtor, at some time in the future, reducing your CL, and thus further hindering your atempt to improve your revolving % util.

[laz98]

sorry to hear about your troubles!  boy, have i been there!

we also have a 1st financial card, with the same 29.99% apr.  it was 19.99 or 23.99, something like that.  but we let our balance get to high, & they raised the apr.  luckily, they did not cut our limit, which we are very happy about.  i did ask in writing once if they would cut the apr, but they said no.  i don't blame them; we were carrying a lot of credit card debt at that time.  once it's paid off, i will ask again.

it took us a long, long time to climb out of that mess.  for a long time i was only paying $300 every month, & the minimum payments were something like $115.  i thought we would be paying that stupid card for the rest of our lives!  i started doing the math, & i was absolutely disgusted with how much money we were throwing away on interest.  we could have been putting that into savings!!!  but slowly, i got a better grip on our finances, & i started making $500 payments every month.  doesn't sound like much, but it did make a difference.  it also helped that we stopped using the card!!

whenever we got extra money, i would throw an extra $500, $750 or even $1000 at it, & that also helped a lot.  after a while, the interest stopped accumulating as high, & so the balance was coming down a lot faster.  i would try & pay twice a month if i could, or pay $750 instead of my usual $500.  today, i'm very proud to say it's at less than $1000.  that's still high, considering the apr, but considering where we were, which was around $9300, we are doing stellar!

so, i know it's tough, but it CAN be done.  it definitely did not happen quickly, it took over a year, but we are no longer getting crushed by this one card.