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Thread: transferring credit card balances

  1. #1
    Veteran Member Laylalust's Avatar
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    Default transferring credit card balances

    I have a Bank of America credit card that I simply cannot pay off. I originally got it for overdraft protection for my checking account but, surprise surprise, I spent on it too and now it's IMPOSSIBLE to get ahead on. It's maxed out at $2000 and there's a 40% interest rate so every time I put a payment towards it it just goes back up next month, even though I'm not spending on it. I called the bank and tried to get my interest rate lowered and they wouldn't do it.

    So I'm thinking I need to get a new credit card with 0% APR for 6 months or whatever and transfer the balance. What credit cards should I look into? I already have a Capital One that I'm having the same problem with. Any recommendations for cards with no interest that I could get a reasonable limit on? How do I go about transferring balances?


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    Featured Member Sveta's Avatar
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    Default Re: transferring credit card balances

    I want to know the answer to that too!

    I'm in the same situation, only mine is maxed out at $3k. With the ridiculous interest rates, it's like I can't get ahead when I make payments.
    ~'A Seven Nation Army Couldn't Hold Me Back'~

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    Banned Melonie's Avatar
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    Default Re: transferring credit card balances

    So I'm thinking I need to get a new credit card with 0% APR for 6 months or whatever and transfer the balance. What credit cards should I look into? I already have a Capital One that I'm having the same problem with. Any recommendations for cards with no interest that I could get a reasonable limit on?
    Well I don't want to ruin anybody's day, but it's important to understand the following ...

    - the reason that banks give out new credit card solicitations with temporary zero percent interest rates is to attract the business of customers the bank WANTS to do business with. These customers are people with high credit ratings, low debt to (verifiable) income ratios, and extremely low risk of default. Banks seek out such customers on the premise that once the promo period expires the bank will be able to earn a steady 8-10% income from these new accounts with essentially zero risk of loss

    - for people with 'subprime' credit ratings and high debt to (verifiable) income ratios that have 'maxxed out' credit card accounts, the bank's risk managers know that there is a very high risk of default. So the bank imposes 'penalty' interest rates of 20-30-40% at the first evidence that the 'subprime' credit card account holder is falling behind in minimum payments or has 'maxxed' out their credit line. The bank's reason for doing this is an attempt to extract as much cash from the 'subprime' account holder as possible before that 'subprime' account holder files for credit counseling or bankruptcy (at which point the bank knows that they will take a loss on the outstanding credit card balance).

    - with virtually every US bank under financial stress these days, there is no way that a bank is going to offer a new 8-10% 'prime' interest rate credit card account to a person with a bad credit rating and/or an unverifiable income ... let alone a zero percent promotional account. In fact it's doubtful that a bank will allow a new customer with a bad credit rating and other 'maxxed out' credit card accounts to open a new credit card account even at 'subprime' interest rates of 14-18%.

    The problem of 'penalty' interest rates on credit cards is really just another aspect of the same problem which befell 'subprime' homeowners who borrowed / cashed out / spent money that they could ONLY afford as long as interest rates remained at historically low levels. Once interest rates began to rise, and the 'subprime' borrowers were unable to keep up with required payments on principal plus higher interest, a downhill snowball situation quickly developed which led to delinquencies, defaults, and losses for the banks who made the mortgage loans.

    The best way out of a 'penalty interest rate' situation is to simply bite the bullet ... work and save like crazy one month, and send in a payment for the outstanding balance PLUS the interest. $2000 + 40%*$2000 is still only $2800. Once the account has been paid off in full it can be closed, and further damage to your credit rating will stop.

    The next best way out of a 'penalty interest rate' situation is to try and 'refinance' the debt. It's possible that a local credit union, family members, a loyal strip club regular etc. would be willing to do this.

    A bad but easy way out of a 'penalty interest rate' situation is to sign up for credit counseling. This WILL get the penalty interest rate reduced to something manageable. However, in terms of impact on credit rating, there is little difference between entering credit counseling and filing for bankruptcy.


    " there is no constitutional right to cheap credit " - Malcolm Forbes (I think)

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    Last edited by Melonie; 09-13-2008 at 01:59 PM.

  4. #4
    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    I recently paid off a $1500 CC balance by transferring it to a 0% APR credit card within 6 months.

    This took a LOT of discipline.

    I got the offer for my card through US Bank. The terms were -- a 3% transfer fee from my old card. No annual fee for the first year as long as I made 1 purchase. I ended up buying a coffee and muffin.

    Okay, so I got the card and transferred my outstanding balance onto it.

    AND THEN I DUCT-TAPED BOTH CREDIT CARDS TOGETHER. I HAVE NOT USED EITHER CREDIT CARDS SINCE THEN.

    That is the MOST IMPORTANT PART. You can't pay off your credit card balance unless you stop using it.

    Okay... so then I just kept throwing money at my balance. Every week. When I felt like spending money, I paid money toward my cc bill. $10 at a time, $5 at a time, $300 -- my entire tax stimulus check -- immediately to there. I sold a bunch of CDs.

    I paid off the last $150 with money from my ING savings account because I was on such a roll.

    It's so satisfying to get my credit card statements now. It just says $0 every single time. I don't owe them jack shit. The only debt i now have in life is my student loan payments.

    You can do it if you want to. But you're going to have to commit to doing it. The choice is basically living a life free of consumer debt, or always being behind by several payments. If you want to get free, you really can do it.

    But if you decide 'I just want to eat out at a fancy dinner tonight, even though I don't have the money in my checking account/hard cash to pay for it' -- then you're just not going to be successful.

    My credit cards are still duct taped together, in the same box as my passport and my diploma.

    Good luck.

  5. #5
    God/dess Deogol's Avatar
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    Default Re: transferring credit card balances

    Quote Originally Posted by Sveta View Post
    I want to know the answer to that too!

    I'm in the same situation, only mine is maxed out at $3k. With the ridiculous interest rates, it's like I can't get ahead when I make payments.
    That's kinda the plan with these banks ya know.

    I'm not mocking you. I am glad you wrote this. Because other readers who might be new to the credit game need to know this is essentially the rules.

  6. #6
    AudreyLeigh
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    Default Re: transferring credit card balances

    Juniper is lenient and gives ok credit limits...

    Ill add that I will not have anything to do with BofA. I hate them.

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    Default Re: transferring credit card balances

    Do you belong to a credit union? Mine has given me several loans over the years just because I am a member. A 2 grand loan isn't that much.

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    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    ^^I don't think that borrowing more money is necessarily the best plan for debt repayment. I understand that a CU loan will have a lower interest rate but if she's really interested in paying it off (Laylalust are you still reading this thread?) she might want to stick to credit cards, instead of bringing bank loans it it...

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    Default Re: transferring credit card balances

    A loan will get paid off, transfer to another card and she will have the same problem with a bigger balance a few months down the road. Some people just can't handle credit. I know ....I couldn't.

  10. #10
    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    Me either. Haven't used my credit cards in over six months... have $16,000 line of credit open. But there's no way I'm going down the credit card path anytime soon! I think I will eventually -- my AmEx protection is very practical for booking hotel rooms, for instance -- but that has to be planned out. Day-to-day spending is freaking dangerous.

    That's why I suggested that she tape up her cards. Freezing them in a bowl of water's also a popular tactic, but when you live with roommates it's tough!

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    Default Re: transferring credit card balances

    I can see that working but I'm too impulsive. I had to cut them up and live on cash. Boy was that hard for the first couple of months. I've gone through this cycle twice now - yeah I'm a moron.

  12. #12
    Member 99baloons's Avatar
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    Default Re: transferring credit card balances

    I have also been in the credit hole. Sadly I agree that the only way to get out is to STOP using credit cards. Sucks but true!

  13. #13
    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    What really helped me with my spending issues was simply writing down every single purchase I made.. every tip at the bar, magazine, grocery... even the act of writing it down helped me curb my impulses.

    I'm glad the msg of this thread seems to be the same from everyone who's gotten out of credit card debt -- no matter how many tricks and balance transfers you do, it only works if you cut the cards out of your life...

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    Default Re: transferring credit card balances

    40% holy mother of god... you have to get that paid off as soon as possible.. no matter what.

    #1, cut up all CC you have.. you don't need them, debit card is ok.
    #2, you must pay off at least $200 each month until the balance is zero...

    40%interest is insane.. just insane.. you can't piss away that kind of money.
    give up shopping, the bars, eating out, doesn't matter... do whatever it takes, and I'm not even kidding.

  15. #15
    AudreyLeigh
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    Default Re: transferring credit card balances

    I had a card problem for a minute. Then I just put them away - if I dont have them with me I cant use them. I dont need to cut them up, freeze them, etc. I have SOME self control. The only time I use them is the Target one - on a planned trip, take the card, use it, pay it off the next day (this is to earn points). I only use my cards if I can afford to pay in full at that time. If the moneys not there to pay it off I cant use it.

    I had to really try hard with savings too. I had to train myself to forget the money is there and to ONLY use the money in my checking account. It was really really really tough but after a few months you get used to it.

    Can I just say $2000 is not that bad. What you need to do is cut back spending in another area (Starbucks, eating out, etc) Take that extra $100+ a month and just start paying it off. Paying the minimum or just enough to get back to the limit will get you nowhere.

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    Veteran Member Laylalust's Avatar
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    Default Re: transferring credit card balances

    Yep, I'm still reading this. Very, very helpful, thank you guys for the suggestions.

    I don't use my credit cards anymore, but mostly because I just haven't been able to; they're all maxed out. Once I have them paid off I refuse to spend on them anymore, I swear. But the BofA one was for overdraft protection on my checking account, can I at least still keep that account open for that? Will the interest rate drop once the balance is paid?


    "Lying's the most fun a girl can have without taking her clothes off...but it's better if you do."

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    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    It's a vicious cycle... if you still use them until it's paid down then it's never gonna get paid down... my math could be totes off but isn't 40% of $2000 $800???

    A good way of paying it off might be, assuming you are dancing regularly, to put all of the money you make on a certain day of the week - like every Wednesday -- toward your credit card debt. It might seem crazy and like a waste of time, but... go through your credit card statements, look at all of the charges. How many amazing, unforgettable, incredibly fulfulling items did you actually charge? Versus just the easy and convenient thing at that moment in time? (If your real bills like rent are on there, then get in the habit of paying with checks/cash for those.)

    You can keep the accounts open -- it's very ill-advised to try and close an account if it any balance whatsoever on it -- but you can't use the cards. It's just step one to getting out of debt.

    Make the cards impossible to use. Freeze them in water something similar and extreme. It might seem silly, but making them just slightly inaccessible by like 2 or 3 hours will probably be the delay you need, especially if the CCs are tied up in things like impulse clothing buys and dinners.

    Good luck

  18. #18
    Featured Member aviendha's Avatar
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    Default Re: transferring credit card balances

    I had this problem, and did actually use the 0% intro fee to get out of it. It started in 2004, when I had high balances (including $12K on one card, pretty much maxed) and though I had a good payment history, I had a very high debt-to-credit ratio. I applied for one of those "Consolidate your debt for 17% APR" loans and qualified, but my sister insisted I could do better rate-wise, and should try for 0% offers. So I did.

    I was able to qualify for two 0% offers and transferred as much to them as I could. I think one was for 6 months, the other for 12. I put all my smaller balances on the card with the 6 month term, and a big chunk of my $12K balance on the 12-month term. And then I put my credit cards away and devoted EVERY possible penny toward paying the debt off. I paid a decent amount on the original card (twice the minimum, I think) and then paid $300 each on the other two, concentrating on paying the earlier-ending one first.

    After the first year, I applied for another 0% intro rate and got it, and transferred as much of the original balance to THAT card (another $4K, I think). I finished paying off the first two cards and cancelled them, and split my payments between the original card and the 3rd card. And once I paid that off, I applied for a 4th and 5th card and transferred all my remaining balances to them, cancelling the original card which had had all the debt.

    It took me just about 4 years (because I made some major purchases in there) but I did successfully use this method to eliminate all my debt. I paid very little interest (maybe a few hundred overall) and thanks to that, I was able to make large strides on a monthly basis in reducing the balances. But I also cut out virtually every luxury--I rarely ate out, I didn't have cable, I didn't shop or travel, didn't get my hair cut, etc.

    I also went through my expenses and looked for places I could trim money. I switched my car insurance from comprehensive to liability. I switched to a cheaper cell phone plan and took all the extras off my land line (like long distance and caller ID). I switched from cable internet to DSL during a sale (I need the Internet for my job). I got a Netflix subscription and burned copies of the movies I rented. I switched to fluorescent light bulbs and made a point of turning things off. All in all, I managed to cut out $260 MORE a month in nickel-dime expenses by doing all that.

    So, like I said, it took me about 4 years to complete, and I paid off a total of about $20K in credit card debt, student loans (I didn't transfer these to the cards) and additional purchases. My credit is now very good (score in the 750s) and now I use one card to pay most of my bills (DSL, cell, hosting, Netflix, food, gas) and have two automatic payments per month paying it off. The other one is put away and I haven't used it since I paid it off in April.

    I think that the key to being able to do this was that though I was near maxed for all my cards, I still qualified for a 0% rate because I had a good payment history. I was never late and paid more than the minimum, even before I started. Even with that, I still got turned down for some offers, even when my balances were half what they were when I started. But as long as I qualified for one, I'd push as much onto the card and then pay it off ASAP.

  19. #19
    God/dess anomar's Avatar
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    Default Re: transferring credit card balances

    ^^Wow, congratulations! i love hearing debt-crushing success stories.

  20. #20
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    Default Re: transferring credit card balances

    You can find some low rate offers here:
    http://www.creditcards.com/low-inter...=KNC-YahooPaid

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