I Am Being Eaten Alive By High APRs

Dude, fuck this. I am spinning my wheels trying to pay down debt while being charged in the hundreds of dollars (each month) in interest. I’ve been caught (along with many others) in the perfect storm. There’s no new credit available, and all of my credit card limits have been bumped down to just north of my balances.

I have good credit, in the mid-700s, and in the past I’ve simply moved balances to lower rate cards (and, as you can see, that worked out so well for me). Now there’s nothing. Nada. I managed to get ONE new low interest card but my limit was put at just $1500. I’ve been weighing my options, which are rather depressing, because I cannot stand to look at another $100+ finance charge. My options are as follows, in order of priority:

Call The Credit Card Companies And Ask For A Lower Rate

I won’t lie, this scares me a little. I am incredibly passive and I hate negotiating. Also, I feel as though creditors now have the upper hand. I’m never late on payments (except for one time), I always pay over the minimum, if only slightly. So, I can’t use the excuse that I am unable to pay. I can threaten to take my business elsewhere but they must be aware that credit is tight, and if they look at my credit report they will see a number of inquiries as I’ve tried, in desperation, to open a few cards recently. Should I lie and say that I’ve lost my job or was demoted with lower pay? I’m not entirely sure how to approach this and would love some advice.

Try To Get A Personal Loan

If I am unable to negotiate any lower rates from my creditors, this would be my next step. However, I am not confident that this is a possibility, as the loan industry has also been impacted by the credit crisis. I’ve already submitted a loan request to the Lending Club to see if I get a bite.

Seek Help From A Debt Consolidation Organization

I’ve already kick-started this as well. It should be my last option (well, before bankruptcy, which I refuse to consider).

All I know is that I need to do something, and fast, or I will be swallowed by this debt.

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13 Responses to “I Am Being Eaten Alive By High APRs”

  1. Anna Says:

    I totally sympathize with you- I was one of the people who suggested that BoA will lower your rate if you call, but I am a wimp when it comes to stuff like that so I don’t know how easy it would be (and they informed me of this before the whole econo-crash anyway). As it was, I am extremely lucky that my fiance moved my balance to a 0% APR card that he opened and I am now finally able to pay it off. I have heard that those debt consolidation places are a bad idea, I think it negatively impacts your credit too, so my gentle advice is to try calling & negotiating for a lower rate, by whatever means you can. Good luck!

  2. Melissa (AthertonMerriweather) Says:

    DO NOT DO A DEBT CONSOLIDATION SERVICE!!

  3. Melissa (AthertonMerriweather) Says:

    DO NOT DO A DEBT CONSOLIDATION SERVICE!! I’ve done this and it only made my credit worse. They didn’t make my payments on time and would raise my monthly payment about every three months. I ended up calling my creditors and explained that I was working with a service and they actually worked with me and I ended up with better payment plans than I did with the debt consolidation service. I have friends who’ve had similar experiences too.

  4. pennyplastic Says:

    I am, literally, so stressed out about this. I worked on some calculations today and it’s looking like I will most likely not be able to pay off this debt in two years and, if my APRs stay the same, I will have paid around $7K in interest when it’s all said and done.

    I’m feeling very…..boxed in right now. I think I need to get on the phone with my credit card companies and see what I can work out.

  5. pennyplastic Says:

    I should also comment that I asked about this on a money-focused discussion board and got some interesting answers. One person told me to pay down the 0% card first, before the cards with the high APRs. The other told me just to stop paying altogether, put away what I would have paid monthly and when I’ve collected around $11K, contact my creditors and settle.

    I am thinking I will not consider either of those options….

  6. M Says:

    Oh dear, I should have read about the phone anxiety before responding to your most recent post. So, here’s a little advice from an anonymous but totally sympathetic reader about calling customer service.

    I’d suggest just being honest. Call the company you’re most concerned about and tell the operator that you are making an effort to pay down your debt and that the high APR is making it feel impossible and demoralizing. Tell him/her that if you could get even a slightly lower rate (maybe even name a rate that would be desirable) it would really help and that you have a payment plan. I’d imagine that credit card companies are concerned about defaulting customers and will try and help you rather than take the risk that you’ll completely bail on your payments.

    You could even write out a script. Try to remind yourself that ultimately these people have heard far worse stories than yours. They aren’t going to judge you and could quite possibly help you out. Do this in the evening, stick to your script, have some wine waiting for you, and just see how it goes.

    Good luck!

  7. lululucy Says:

    DO NOT even think about the settlement thing, where you stop paying.

    Be honest, and call your companies — no need to be obsequious, or come up with a sob story. Just call and say, I’ve been a good customer, the rate is high, want to see if it’s possible to lower my rate. Some may say no, but I’ve had some say yes, when I’ve been on time for 6 mos or more. And every bit helps. Once you’ve got the rates down as low as you can, then you’ll be able to think straight about what to do next on the big picture.

    I know it’s hideously scary, but really — they’re just people in a call center at the other end of the line, people like us. If you’re polite and straightforward, they will be too.

    Ditto for the accidental overdraft you talk about in your other post. It can’t hurt to call BoA and explain that you messed up — there’s a good chance they’ll take one NSF fee a year off as a courtesy. Look at it this way: if you can endure a slightly embarrassing 5 minute phone call, you may earn back $33 for it. That’s a pretty good return.

  8. nenasadije Says:

    are you still charging on these cards or are they maxed out?

    if they’re maxed, or close to, and you can live without the available credit, and with a slight ding to your credit score, you might consider closing the accounts. not outright, mind you.

    this worked for me once on a card that was about to be maxed with an 18 or 20% interest rate. i was able to close the account, which shows on my report as a consumer close as opposed to a creditor close, and get it down to 10% interest.

    yeah, 10% isn’t 0% but it’s better than nothing and didn’t seem to change my score too badly. i did have to explain the closed account on a recent car loan app, but i was able to put myself in a good light, “i didn’t need the card so i closed the account.” hello responsibility!!

    so i guess this is a long way of saying – maybe you should close the card with the highest interest rate in hopes of getting the rate down low. then negotiate (hard) with the others for a point or three lower. take a paid day off from work and get it done. i agree with M – be as honest as possible – and i’d add, don’t hang up until you get what you can live with.

    also, have you tried your local credit union? they aren’t as strapped as most traditional banks.

  9. Kivrin Says:

    I feel your pain. I actually just got a balance transfer offer today — those things are becoming increasingly rare — and jumped at the chance to move some 20% APR stuff to a 10% card.

    I’m kind of intrigued by your previous commenter’s suggestion to close the account to get a lower interest rate. I need to look into this, because I’m not exactly sure how/why it would work. I’d expect to have the company say, “Fine, don’t spend any more money on the card, but you still have to pay it off the same way!” But I guess they prefer open account + higher rate in case you do decide to make purchases. If you flat-out tell them, “I will not be making purchases on this card,” maybe they’d rather just lower the rate and get you to pay the balance faster? I dunno…

  10. John (aspex) Says:

    Wow. I’m really glad I’m bad at math. Otherwise I would’ve figured out how much I pay in interest on my cards. Being under-employed, I haven’t put a lot of thought into paying them down. I was doing decently when I had full time work, but once that ended, I started using the card I’d told myself I wouldn’t use again…

    I need to retell myself to not use that card, as, well, the number is only getting bigger.

    I’m with M. Call them, be honest, in this climate they should be more than willing to negotiate a lower rate. Don’t go into it thinking “I can pay it if they say no.” Because then you’ve already settled for them saying no. Have a bottle waiting, and don’t hang up until it’s something you can live with.

    Good luck.

  11. Susan Says:

    i agree with other comments that being honest is the best way to go. you’ve been a good and loyal customer and chances are they will be willing to knock it down some.

    just also want to say how brave i think you are for tackling this and blogging so frankly about it. your blog has become a must read for me. good luck- tail up and ears forward, my friend, you’re doing great.

  12. Maeg Says:

    I feel you on the phone anxiety part. I mean, really really – I have to get my family to call for the pizza, because I ‘hate’ the phone that much.

    Someone suggested above, write out a script. Talk to someone who’s gone through these calls before, try to anticipate the conversation. Playing it in your head, roleplay it with David until you’re comfortable with it. (These are all techniques I used when I did phone sales).

    That and.. just DO it. The more you think about making that call, the worse it’s going to seem.

    Success Story: My Mom has done it more than once with different companies. As long as you’ve paid faithfully for 6 months or more? Your chances are good.

  13. Jessica Says:

    Girl, I hear you. I have a BoA card with about $6k of debt on it. $4k was due to a pet’s emergency, which in turn drove up my minimum payment to $200. Ridiculous.

    If that wasn’t bad enough, my last payment was late. If you pay online, even if your due date is on a weekend and you pay it on the last business day after 3pm, it’s still considered late. Excuse my french here but BASTARDS!!!! I paid on time fair and square on the Friday before the due date. Because it was after their ‘grace period’ it was considered late.

    So because of that, my APR went to 29%. Yeah. 29 fucking percent. I couldn’t believe it.

    I called and found out that’s why it increased. The girl checked into it and couldn’t credit me back the late fee EVEN THOUGH IT WASN’T MY FAULT. I also asked her to check to see if my APR could be lowered. It couldn’t. I asked to speak to a supervisor and she said, “Well they won’t be able to help you because they’re going to see the same thing as me.”

    Wow. I’m so upset with BoA right now. I actually went off on that girl and cussed up a storm. I went a little crazy pants and I’m not proud of it, but these credit card companies are ridiculous. So we get into a little debt and they rake us across the coals. I hate them so much.

    I wanted to threaten them with the “Well you’ll lose my business” routine but that won’t work. We’re just peons to them. They’ll continue to bleed us dry no matter what.

    I’m so frustrated and pissed off that I can’t even think straight. I’m going to try and call them back again so I’ll get a different person but that’s certainly no guarantee of a different answer.

    These companies want you to be afraid so you’ll never call. They want you to lay down and take it and not complain. 29% APR is not something I can take laying down. That’s laughably the most ridiculous rate ever and I have to take action.

    I’m in the same boat as you so I’ll keep checking your blog to see if you’ve had success. If I have any I’ll let you know!

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