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Thread: Credit cards, argh... a question!

  1. #1
    Yekhefah
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    Credit cards, argh... a question!

    I have two debts remaining after my car: a student Visa with a ridiculous interest rate and a balance of approximately $5500, and a personal loan with an interest rate of 16% and a balance around $8500. I was planning to pay off my car by the end of October (see the ticker in my sig) and then buckle down on the other two, and see if I can knock them out by next spring.

    My bank, which I am very happy with, sent me one of those card offers for a new 0% card. I decided to get one, transfer the Visa balance over, and close the Visa account, then work on paying down the balance with a lower rate. I stressed to the guy that unless the credit limit was high enough for the balance transfer, I didn't want the card. He said okay. So I just got the card and it's got a $2500 limit. Argh. I called to bitch but they told me to go fuck myself, my only option is to keep the card as it is or cancel it.

    So would it be better for my credit to cancel the new card, or to transfer over $2000 from the Visa and make minimum payments on that while I work on paying off the Visa, and then pay the rest of it once the Visa is cancelled? I haven't activated the new card yet, and I'm not going to have it in my wallet at all or put anything on it but balance transfer.

    All this complex juggling is giving me a headache. What should I do?

  2. #2
    God/dess shasta's Avatar
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    Default Re: Credit cards, argh... a question!

    I would call back and talk to someone else. Whenever I am talking on the phone to one of those people I can usually tell really fast if they are going to do what I what. If I get a bad feeling I just hang up and call again.

  3. #3
    Yekhefah
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    Default Re: Credit cards, argh... a question!

    They won't raise the limit and it's too late to go back and cancel the application; I've got the card, it's on my credit report. I can either cancel it, or keep it. I'm really annoyed about that because I told the guy if the credit limit was not going to be high enough for the transfer, then I did NOT want the card; the last damn thing I need is more credit cards, but this guy's English wasn't very good and I have since found out that they can't find out what the limit will be until the application goes through. Wish he'd told me that. I guess they don't have to worry about credit reports in Nepal or wherever the hell he was.

    I just don't know whether it would be better to keep the card and move part of the balance to it, or cancel it and keep all the balance together on the high-interest card.

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    Default Re: Credit cards, argh... a question!

    Do they charge extra for balance transfers?

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    Member texasdancer's Avatar
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    Default Re: Credit cards, argh... a question!

    I am not going to get this exactly correct, but I think on many zero interest cards, they charge a fee to transfer that balance. So, while you are not paying interest, you actually are because of that fee. Assuming that is not a factor, then I would transfer. If you are paying twenty percent, that is $500 a year that could go towards paying it down. As least that is how I see it.

  6. #6
    Banned Melonie's Avatar
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    Default Re: Credit cards, argh... a question!

    ^^^ yeah, typically the scam with the 0% interest rate teaser cards is that you'll be assessed a 3% CASH FEE when balances are transferred. Even if you were to transfer $2000 you'd also get clipped for a $60 fee, which has got to be equivalent to two or three months worth of interest on the same $2000 balance if left on your original card(s). Taking a cash advance to pay off other cards and avoid this fee doesn't work either, since cash advances usually don't qualify for the 0% teaser rate.

    As far as credit ratings go, having yet another credit card certainly doesn't help. Having any of your cards charged up to the point where the balance exceeds 50% of the card's credit limit will lower your credit score for sure !

    My advice would be to call the issuing bank on monday, attempt to speak to a credit manager, and demand that the limit be raised to a more 'useful' amount (like at least $5k) or cancel the card on the spot.

  7. #7
    Yekhefah
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    Default Re: Credit cards, argh... a question!

    Thank you. I'll do that!

  8. #8
    buffie06
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    Default Re: Credit cards, argh... a question!

    If you use the card for 3 months (gas, groceries, whatever) and pay it off each month on time, they will raise your limit. I would do that and once the limit is raised do the balance transfer. In any event if there are no annual fees or anything , i would keep it open and just not use it. For emergency purposes.

  9. #9
    Banned Melonie's Avatar
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    Default Re: Credit cards, argh... a question!

    ^^^ actually, this has changed in the last 3 months as regulatory guidance has instructed banks to tighten their creditworthiness standards. Now, instead of 'pushing' additional unsecured credit to credit card holders with 'average' credit rating, credit committees are starting to take a much harder look at individual financial situations. In many cases, credit committees are unhappy with the credit limits that have already been approved credit card holders with 'marginal' credit rating.

    Bottom line is that regulatory guidance now requires lenders to take a hard look at the amount a person earns, and at the amount they are already committed to spending in order to pay existing loans and credit card balances, as well as the cost of living they must pay (which is rising). Thus if you don't have the verifiable income, and you do have the other loans and credit card balances, and if you live in a high cost of living area (which is rising faster), credit committees simply aren't going to increase limits just because the cardholder made a couple of months of on-time payments.

  10. #10
    buffie06
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    Default Re: Credit cards, argh... a question!

    Quote Originally Posted by Melonie View Post
    ^^^ actually, this has changed in the last 3 months as regulatory guidance has instructed banks to tighten their creditworthiness standards. Now, instead of 'pushing' additional unsecured credit to credit card holders with 'average' credit rating, credit committees are starting to take a much harder look at individual financial situations. In many cases, credit committees are unhappy with the credit limits that have already been approved credit card holders with 'marginal' credit rating.

    Bottom line is that regulatory guidance now requires lenders to take a hard look at the amount a person earns, and at the amount they are already committed to spending in order to pay existing loans and credit card balances, as well as the cost of living they must pay (which is rising). Thus if you don't have the verifiable income, and you do have the other loans and credit card balances, and if you live in a high cost of living area (which is rising faster), credit committees simply aren't going to increase limits just because the cardholder made a couple of months of on-time payments.
    Yes, however if you talk to them they have specific policies on how you can get your credit limit increased. Capital One is one that I know for sure will raise your limit after 90 days of paying on time. Also, they only know what you tell them, credit card companies have no way to verify your income or your other bills, etc. Only credit report and possibly references. If they are tightening down I would think you would have a better chance of an increase later than right now when you are a new cardholder.

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    Default Re: Credit cards, argh... a question!

    all of our credit cards are through banks (except the discover ones which are paid off/unused), so they can verify income.

    that said, the limit on one card was raised twice in the last six months (basically since we started carrying a modest balance on it, about 20-30 percent of the original limit). i wonder if the limit will go up any further in the next six months once that card is paid off this month.

  12. #12
    Yekhefah
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    Default Re: Credit cards, argh... a question!

    ^^^ Probably. When I first got married, we had a combined credit card debt of about $10,000. We paid it all off in a year or so, and all our cards (I had one, my ex had three) immediately jerked up our credit limits. At one point we had almost $100,000 in available credit (which we didn't use). It was very nice to be debt free, but then we got divorced and I moved to L.A. and started working in production. The thing that pisses me off is that my debt doesn't even represent travel or nice things like everyone else's; it's just living expenses and shit. I didn't even get to enjoy myself on that money. Argh. My ex is still debt-free, except for his mortgage.

    Oh well, I paid off $4000 worth of debt in August and I'm hoping I can get settled at a decent club in L.A. and in my new day job, and commit $1500-2000 a month toward debt reduction from now until spring. Seems fairly doable, especially since my next debt goal is to pay off my car and that would free up an additional $350 a month to put toward debt. I am feeling highly motivated since my reward for paying it all off is liposculpture on my upper arms, and I'd like to have that in time for next year's tank top season!

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