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How Our Debt is Spread Out

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I haven’t posted in a while how our debt is spread out among our credit cards and my personal loan. As it stands right now, we have four total accounts and lately I have been thinking that it is too many. When I worked on our finances yesterday, I became worried when I thought I might have missed a credit card payment. I didn’t end up missing it, but the constant fear is always there. I will probably be looking into a way to consolidate everything so I only have to worry about one payment.

Here’s how things look as of today:

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For Credit Card #1, there are two interest rates. There was a balance of around $1,000 at 9.99% before we completed a balance transfer of 5.99%. Since payments are applied to balance transfer balances first, we’ll have to live with that smaller balance at $1,000 for quite a while. I can live with that, though.

For Credit Card #7, the 0% interest rate will be ending next month. I haven’t received a really good offer in the mail for a balance transfer offer for another one of my cards. I did receive a pre-approved offer from a different credit card and I thought about possibly opening up yet another credit card, but I didn’t do it before the pre-approved offer expired. That particular card has denied me two times in the past and I think I was hoping for a balance transfer offer from one of my existing cards.

It is getting close to where I probably should call all of the existing cards and see if they have any balance transfer offers that are not available online. Credit Card #7’s interest rate will go up to 16%+ and that is not good. I really don’t want to pay that much in interest.

Overall, it’s great to see the numbers continue to go down, although things are moving very slowly lately with only paying a few dollars over the minimum amounts.


14 Comments

  • Reply Tyler |

    Why are you keeping cards with zero balances. You already have enough money on credit right now so closing this won’t affect your FICO if that’s what you’re concerned about. Also, try to move all the CC balances over to one card that has a 0% balance transfer and 0% for 1 year, if possible.

  • Reply Kevin |

    Yep — pick up the phone and ask card 3-6 if they have anything to offer on balance transfers. If not, call card number 7 and tell them you may be transferring the balance to another card with a lower interest rate. Ask them if they would be willing to reduce you 16+ percentage rate. I did that with a BoA card I have and brought the rate down by at least 4%.

    Also, when you call the card companies looking for transfer opportunities, make sure to ask if they can offer you the rate until the balance is paid in full. Maybe just maybe they can turn a time-limited rate into a lifetime of loan rate.

    Good luck!

  • Reply Kim |

    I am confused by the advice from Tyler. I have read that it is better to keep cards you are not using open until you pay off all of your credit cards because closing unused cards affects your debt-to-credit ratio. Tricia, I have been reading your blog for several months now and this is my first comment. Keep up the good work.

  • Reply Tricia |

    Kevin – thanks for confirming that I should try that. I’ve never called to ask, so I wasn’t sure if it would work or not. I figured it was worth a shot.

    Tyler – those 0% offers are disappearing fast, and I haven’t received a 0% offer in quite some time. The one I have for credit card #7 was because it was a brand new card. The best I have received from an existing card is a 3.9% for 6 months with a large balance transfer fee. It’s not worth it to me to move the money around for 6 months and pay the fee. I’m hoping to find a life of the balance offer like I have with Credit Card #1 and that is the card we will be calling first if they have a balance transfer offer.

    Kim – I agree with you about the advise from Tyler. Everything I have read indicates that your credit score can decrease when you close out zero balance cards because of the debt to credit ratio. Especially if one of those cards is the one you have the longest credit history with.

    I’ll try to dig up some sources for that info and write a post on it.

    P.S. Glad you commented 🙂

  • Reply jean |

    I agree with Kevin, and you have nothing to lose by picking up the phone and asking for a better interest rate, or an extension of the current rate. Often the card issuer will extend the rate you have, or give you a better one, if you have made payments to them on time, and if your debt-to-credit ratio has improved. Do NOT close those cards with zero balances, as doing so would most likely have a negative impact on your credit score. (30% of your credit score is based on the debt-to-credit ratio)

  • Reply Sara |

    I called up a card to lower a rate, recently and they offered something horrible, even though I let them know I would transfer the entire balance, as I had a better offer in hand. No go. So I transfered the balance to another card, and the offer was even better than I thought. Start calling — it’s totally worth it! You have so much more leverage than you had a year ago when you started calling, too, so I imagine that you’ll be more successful than ever.

  • Reply Jim |

    I have played the balance transfer game and am trying to secure a solid life of the balance card to transfer my highest interest rate card, not to mention highest balance on top, so I can put more towards the principle balance on that debt.

    Those 0% offers are going away quickly, at least the long term ones (12-15 months) that made it worth while. I don’t think it’s worth the effort for 6 months to bounce a balance around from card to card. Usually though you have more pull with companies who you have accounts with already if they cut you a deal to transfer, it’s easier than getting a new account.

    Don’t close the old cards that no longer have a balance, the history is important to hang on to. I’ve read too many books and listened to too many people who say it is the worst thing to do because it can decrease your score quickly instead of having a positive impact.

    You’re making great progress though making the balances on those cards a thing of the past.

  • Reply Renee |

    Yep, my percentage went WAY up on one card I had because of a (two day) late payment. Up until then, I had always paid more than the minimum and never missed a payment. I threatened to transfer my entire balance and they wouldn’t budge on the rate, so I called up my other cards and one offered a 5.99% for the life of the balance transfer, so I took them up on it. Two months later, when I wasn’t carrying a balance on the first card anymore, they mailed me a letter offering a much lower rate! They should’ve offered when I asked before I dumped them!

  • Reply Da big D |

    So have you tried to get one mega personal loan to cover all the credit card? Maybe try to use your mortage or something like?

  • Reply sarah |

    I just closed 4 cards & my credit score initially dropped 30 points but then it went up 80 points the very next month.

  • Reply Rob |

    I generally pay off my credit cards each month, but I too have often worried that I may have missed a payment. What worked for me, and you may want to try, is setting up an automatic payment of the minimum balance. Most of the credit card companies offer this on their website. And, if you want to pay more, you can post additional payments on-line, or send in another payment.

  • Reply MVP |

    If you followed the Dave Ramsey plan, you could see those small ones (CC#2 and loan) disappear likely within a couple months. That would provide excellent momentum and a psychological boost to keep up the good work. I’m sure you already know this, but it works like this: pay minimum payments on all but the smallest debt, then attack the smallest with intensity. Then move on to the next smallest. Don’t worry so much about the interest rates. Your rates already are relatively small anyway. It worked for us…besides, paying a little above the minimums on everything will take you forever to pay ANY of them off. It will feel like you’re going nowhere, and you’ll likely lose focus. Good luck!

  • Reply Renee |

    I agree with MVP’s plan. Getting rid of the small cards quickly also reduces the number of payments each month and the chance of missing one and having late fees!

  • Reply Jen |

    I got rid of my credit card in a similar fashion, but instead of going for the smallest balance I attacked the highest rate. Either way, it works. But, if your income is tight and you don’t have that much to spare on the payments, then paying a little over the minimum on each seems reasonable until the income goes up.

So, what do you think ?