topic Re: I'm in a bind... in Credit Cards

I'm in a bind...

kc12286 — Tue, 30 Dec 2008 01:53:33 GMT

I have 4 major credit cards - a Chase Freedom card, a Amazon card from Chase, Capital One, and a TD Bank card. My Chase Freedom card is way over the limit, I haven't used it since July, but they finance charges started to get outrageous. When I went to make a payment online, I screwed up and the check didn't go through, so they assessed the usual fees. I sent out a check as soon as I noticed it, but now the account is past due.

There's no way I can make the minimum payment they're asking for, so at this point I'm seriously considering canceling the card. I just don't see any way around it. I know canceling a card is bad, but I haven't had it that long, probably only a year. I'd rather cancel it and make small payments than worry about trying to make a different minimum each month. My question is, how will it effect my credit in the long run? Chase is my newest card, so it's not like I'm canceling a card with long history. I just feel an immense amount of pressure to start making a dent in the debt and that's where most of it is coming from.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 02:11:25 GMT

It sounds like your asking the effect of just not paying that bill? After it going to 30 days late, 60, 90, and eventually a charge off it could be serious. Other cards may then recognize your deteriorating credit and reduce your credit line.

If you have the ability to do a balance transfer to one of the other cards to get you below the balance (and therefore regular fees) this might be your best bet.

If you have no available credit to do a balance transfer and can't afford the necessary payment call Chase. They'd rather work with you then get nothing.

I hope it all works out for you.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 02:22:16 GMT

It's not a good idea to cancel a credit credit card that still has a balance owing. Many credit card companies have a cancellation penalty, where the interest rate will be increased to the maximum level if a card is cancelled while still carrying a balance. It is best to pay the card off completely before canceling your account.

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 02:33:07 GMT

I'm not asking about not paying the bill at all, of course that would be worse. I'm considering closing the account and using their payment plan. They've offered it to me before, I'd have low monthly payments, no more late fees, no more overlimit fees, and the account would no longer be considered past due. They've been pretty reasonable about it and it seems like the best course of action at this point. I have no room on any of my other cards, because Capital One and TD Bank have such low CL that's I can't transfer this balance to either of those. My other Chase card is high but not over the limit.

Re: I'm in a bind...

iamrayl — Tue, 30 Dec 2008 02:45:41 GMT

If this is your only option you should take it. Be aware though that when you are on a payment plans some creditors may notate this on your credit report and that can have an impact on your score but you have to decide what is more important, getting the card paid off or a temp drop in your score. If you close the account it will stay on your credit reports for at least 10 years.

Message Edited by iamrayl on 12-29-2008 09:45 PM

Re: I'm in a bind...

SCF — Tue, 30 Dec 2008 02:44:58 GMT

Having a card over the limit is not only bad for your credit, but its a bad situation that won't get any better until you get that balance back down where it should be. If you really can't make the minimum payment with the extra fees and overlimit balance (which would be ideal), I think the best thing is to take Chase's payment plan and get that debt paid off. If you complete the payment plan successfully, I'd think Chase will be much more amenable to opening a new account for you in the future if you want.

Only caveat is to double-triple check those terms and make sure that they work for you. What will the interest rate be? What will the min. payment be? Now is the time to try to negeotiate on those things with Chase.

Good luck, I think you can be on your way to being unstuck soon!

Re: I'm in a bind...

cobaltnv — Tue, 30 Dec 2008 02:49:57 GMT

@iamrayl wrote:
If you close the account it will stay on your credit reports for at least 10 years.

A minor point, but a closed trade line, in good standing, will remain on a credit report for up to 10 years (not at least 10 years). Some CA tend to remove trade lines early (7 years or so). There are even some reports on here of TL falling off in a 3 or 4 years--fortunately these seem rare.

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 02:57:48 GMT

I already asked if it would be mentioned in the report and they said no. That it would only say I had closed my account (as opposed to having them close it due to past due balance and failure to pay) and that once I paid it off it would reflect that. I also asked if I might have any problems opening an account with them in the future and the guy I spoke said no, once I've paid this down (and it really is high, it's been hurting my score for a while now) that I shouldn't have any problems opening another Chase card. While this is nice to hear, I can't see opening another card with them, I do have the Amazon card I much prefer my TD Bank card to all of them, with that one I get 3 points for every dollar I spend, no restrictions. I've already lost all my Chase Freedom points, so there' s no point in keeping the card.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 03:12:26 GMT

Ouch. You are in a tough spot, but I think that SCF is right-- review (thoroughly) the offer and terms from Chase to get the debt paid. If their plan is affordable, and you have no other way to get it paid, without making your overall financial situation worse, then take it.

I also wanted to toss out some other ideas that you've probably already considered (forgive me if you have, please), but just in case...

Take a loan from your 401k (and pay yourself back) - Normally, I wouldn't suggest this, but if it's an option, it may help to get you righted so you can get out of the current negative cycle.
Borrow money from family or friends (and pay them back!) - Normally, I wouldn't suggest this either, but if you can get a low or no interest loan form someone that you trust, and someone that trusts you, it may be more economical, and preferable to whatever terms Chase may be offering.
Cut expenses (I'd always recomend this!) - If there are any extras that you can cut (cable, gym memberships, lawn/snow service, coffee/cigarettes/alcohol/dining out, etc...) that are not contracted (whereas the default would hit your credit report and cause Chase to immediately close or RJ you, etc...), then cut it.
Offer to do some type of work/service for family/friends for a fee - Babysitting (hey, the New Year is coming up) could bring in some serious cash quickly to make the minimum payment or more. I'm specifically mentioning babysitting, because a lot of people will be heading out for a night of fun in just a couple of days... You may be able to make a sizable dent in the balance, and have a fun and safe New Year, with some kiddies.
Sell something(s)

Of course, none of these things are permanent fixes (unless they let you pay the balance in full, or down enough to afford much more than the minimum payment), but they may give you some breathing room.

Good luck! I hope that you're sailing in calmer financial seas soon!

kc12286 wrote:

I'm not asking about not paying the bill at all, of course that would be worse. I'm considering closing the account and using their payment plan. They've offered it to me before, I'd have low monthly payments, no more late fees, no more overlimit fees, and the account would no longer be considered past due. They've been pretty reasonable about it and it seems like the best course of action at this point. I have no room on any of my other cards, because Capital One and TD Bank have such low CL that's I can't transfer this balance to either of those. My other Chase card is high but not over the limit.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 03:17:22 GMT

Take advantage of Chase's offer before it is too late. Don't be suprised to see Chase close the Amazon account in the near future.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 03:19:05 GMT

See if you can get the terms in writing, just to be certain that what the CSR is saying actually reflects the reality of what they're offering. I'm not concerned about whether or not you can open another Chase account down the line. I'd be concerned about the interest rate (and whether or not it can/will change), the monthly payment (and whether or not it can/will change), the length of the plan, whether or not it'll be reported as a charge-off (I know that he "said" it wouldn't, and I believe that it wouldn't, but read the fine print). You need to know what will happen if you can't make a payment while on the plan-- what are the consequences?

@kc12286 wrote:
I already asked if it would be mentioned in the report and they said no. That it would only say I had closed my account (as opposed to having them close it due to past due balance and failure to pay) and that once I paid it off it would reflect that. I also asked if I might have any problems opening an account with them in the future and the guy I spoke said no, once I've paid this down (and it really is high, it's been hurting my score for a while now) that I shouldn't have any problems opening another Chase card. While this is nice to hear, I can't see opening another card with them, I do have the Amazon card I much prefer my TD Bank card to all of them, with that one I get 3 points for every dollar I spend, no restrictions. I've already lost all my Chase Freedom points, so there' s no point in keeping the card.

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 03:23:46 GMT

@Anonymous wrote:
Ouch. You are in a tough spot, but I think that SCF is right-- review (thoroughly) the offer and terms from Chase to get the debt paid. If their plan is affordable, and you have no other way to get it paid, without making your overall financial situation worse, then take it.

I also wanted to toss out some other ideas that you've probably already considered (forgive me if you have, please), but just in case...
Take a loan from your 401k (and pay yourself back) - Normally, I wouldn't suggest this, but if it's an option, it may help to get you righted so you can get out of the current negative cycle.
Borrow money from family or friends (and pay them back!) - Normally, I wouldn't suggest this either, but if you can get a low or no interest loan form someone that you trust, and someone that trusts you, it may be more economical, and preferable to whatever terms Chase may be offering.
Cut expenses (I'd always recomend this!) - If there are any extras that you can cut (cable, gym memberships, lawn/snow service, coffee/cigarettes/alcohol/dining out, etc...) that are not contracted (whereas the default would hit your credit report and cause Chase to immediately close or RJ you, etc...), then cut it.
Offer to do some type of work/service for family/friends for a fee - Babysitting (hey, the New Year is coming up) could bring in some serious cash quickly to make the minimum payment or more. I'm specifically mentioning babysitting, because a lot of people will be heading out for a night of fun in just a couple of days... You may be able to make a sizable dent in the balance, and have a fun and safe New Year, with some kiddies.
Sell something(s)
Of course, none of these things are permanent fixes (unless they let you pay the balance in full, or down enough to afford much more than the minimum payment), but they may give you some breathing room.

Good luck! I hope that you're sailing in calmer financial seas soon!

----------------------------------------------
Thanks for the suggestions but none of those will work. I just got insurance with my current job and they don't offer a 401k, they're offering something similar but not the same thing. Can't really borrow money as my friends all are in debt themselves, being that we just graduated college and the economy clearly sucks. My current job is only paying minimum wage, so that gives you an idea of what I'm up against. I'll make less than 12,000 for the year. Trust me, I'm looking for a second job but that's not bring many results.

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 03:24:40 GMT

They'd close the account because my other one is over the limit? Wow, maybe I should close that one two and just keep the Capital One and TD Bank cards.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 03:32:06 GMT

@kc12286 wrote:
They'd close the account because my other one is over the limit? Wow, maybe I should close that one two and just keep the Capital One and TD Bank cards.

I would shred the card and let them close the account. I would not suggest YOU close the account. What are the credit limits/balance and APR on each card?

Message Edited by FaircreditguyFL on 12-29-2008 07:32 PM

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 03:38:00 GMT

@Anonymous wrote:
@kc12286 wrote:
They'd close the account because my other one is over the limit? Wow, maybe I should close that one two and just keep the Capital One and TD Bank cards.
I would shred the card and let them close the account. I would not suggest YOU close the account. What are the credit limits/balance and APR on each card?

My credit limit for the chase freedom card is 5000, and it's over the limit, so that's the one I want to close, because there's just no way I can pay it down. They keep assesing fees, because it's over the limit and the fees that were there when I screwed up the online payment. They now want more than 1000 as a minimum payment, I don't make that in a month, it's just not possible for me to pay that. The last time I spoke with them, they said I'd have to pay 600 in order to get it below the limit, I don't have that either. I don't want it to reach 60 days past due because then they automatically close the account and it's reported to FICO, at least if I close I have some control over it.

As for the Chase Amazon card, my limit is 2000 and I'm under that, that one I've been making the minimum payments on and not really using, so I'm not too worried about that one.
Message Edited by FaircreditguyFL on 12-29-2008 07:32 PM

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 03:59:41 GMT

Don't close the Amazon card...... I would accept Chase's payment plan and close the Freedom. If Chase wishes to close the Amazon card, so be it.

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 04:06:27 GMT

Ok, I'll leave the Amazon card alone. Thanks for you help. This has been stressing me out for so long. I spent 4 years in school (which is part of the reason I'm in this debt) and I ended up with a job that looks good on paper but pays horribly. I'm more than willing to accept Chase's payment plan because I just want to get it paid off, I'm tired of it hanging over my head like this. The payment plan was doable and affordable.

Re: I'm in a bind...

Anonymous — Tue, 30 Dec 2008 04:10:11 GMT

Sometimes you gotta do what a gotta do. Too bad there isn't another way out. Your FICO will take a hit.

Re: I'm in a bind...

haulingthescoreup — Tue, 30 Dec 2008 04:28:50 GMT

FaircreditguyFL wrote:
Sometimes you gotta do what a gotta do. Too bad there isn't another way out. Your FICO will take a hit.

IMO, financial sense beats FICO sense any time!

Re: I'm in a bind...

kc12286 — Tue, 30 Dec 2008 04:30:45 GMT

I'm sure my score has already suffered. I'd much rather take a hit now, voluntiarily, than if they closed it due to failure to pay or something like that. At least this way I have some control over it.