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As predicted by many over the last few months; Citi sent me a notice recently that they are raising my interest from around 5% to 29 % on my current card. This was with a pretty clear payment history, no late payments, for several years.
I know there are new laws arriving in 2010 to address this matter. However, that doesn't help the thousands of credit card holders who are currently dealing with the same issue.
I have to call someone within their company tomorrow, Thursday 6/11 ( before my monthly payment is due ) to see if there may be some way to negotiate on any level to even give me a temporary breather in this matter.
Do any of you have any ideas or creative strategies that might be helpful in negotiating a better solution?
I would be deeply grateful for any help or ideas with this.
Thank you all,
Janak
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Hi janak108, nice to meet you and sorry to hear about what Citi's planning to do. SavingTools's gave you excellent advice already. I don't have much to add to that.
Bankrate has a cc balance transfer calculator that might help you figure out what you'd save switching. If you know hard numbers, it's always something else you can mention when you talk to them.
http://www.bankrate.com/calculators/credit-cards/balance-transfer-calcul...
You can also compare credit card rates there.
http://www.bankrate.com/credit-cards.aspx
Welcome and please come back and tell us how it went. Good luck. :)
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Hi Janak. You took my breath away when I read what Citi was proposing! Shameful what they are doing to you. I posted a thread about getting a lower cc rate and pennywise added a good link about making the physical call. This is the thread link in case you hadn't found that before now. Best wishes with it all Janak and welcome aboard.
http://savingtools.com/content/ask-lower-cc-rate
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Do any of you have any ideas or creative strategies that might be helpful in negotiating a better solution?
I would be deeply grateful for any help or ideas with this.
~~~~~~~~~~~~~~
Hey Janek.
Welcome here.
My suggestion is to pay it off and find a CC that has a lower rate, or, don't carry a balance any more.
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I agree with micharch. Look for another credit card provider if you can't pay the balance off completely. I know my friend got a bank loan to pay off her credit card debt before. The bank loan's rate was cheaper to pay than the credit card.
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Thanks SavingTools, I actually had some success the other day with Citi lowering their interest and the monthly due. I was surprised they were actually so responsive.
However, I now have another issue looming even larger: My two highest balances and interest rates are with BOA and CHASE. I tried to negotiate lower payments and interest. Both said they will do so, but I have to close the accounts till paid off to do so.
While I am actually not opposed to doing so; I have some key questions I would like your input on before I take that action:
1) If I close these accounts, won't that have a negative effect on my FICO scores?
2) Is this really the best way to deal with this kind of a situation? Or can you suggest a possible other route? I don't currently have enough cash flow to pay these accounts off in full. So, I am stuck with just doing the bare minimum payements per month.
While the idea of being able to actually pay these off wiithin 4.5 years is ver appealing; I just do not feel good about the idea of closing these accounts for good.
Does anyone have any ideas on this matter?
Thanks,
Janak
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Dear all,
Thanks for your prior input and support. I actually did have some success with negotiating my situation with Citi. Now I have a somewhat even more challenging issue to resolve with my two highest interest and highest balance cards, BOA and CHASE. I have had preliminary chats with both about asking to either reduce my interest rates or lower my monthly payments or both.
I prefaced this by indicating that I am in a bit of a financial challenge with a reduction in my overall earnings over the last three years of close to $20,000 due to the downturn in the economy. I asked both if they have any protocols set up to help their customers in these types of circumstances.
Both were seemingly helpful, but the formats that are being offered are set up so that you have to close your account and they will reduce the interest, but the account stays closed till payed in full.
At the outset it sounds pretty reasonable, as I don't actually use either card for purchases. I have a couple of lower interest cards that I use only for emergency gas or food purchases.
My main question is this: By my requesting that my account be closed in order to work on a payment plan; am I going to do further damage to my credit score?
I have been sitting in the 685-699 range for several months and then took a hit three months ago when I asked my mortgage company to submit an application for an equity line of credit. I think at the time, it dinked Experian as much as 15 points. Which is 15 points I really didn't have or want to spare.
Am I better off just leaving my accounts open, bitting the bullet and just trying to keep making payments until I can get approved for some form of a Refi or equity line of credit to pay down or off some of these cards?
I need to make calls to both CHASE and BOA within the next 24 Hr. so I keep from running into late payment status with them.
Does anyone have any sound practical or innovative ideas about approaching these companies at this time?
Thanks, Janak
Janak,
Get clarity first on whether the interest rate increase applies to only new purchases, or if it also applies to your existing balance.
If it's just for new purchases, then your strategy is simple...just cut up the card and never use it again.
If it does indeed apply to your existing balance, your best bet is to have a real, credible threat of moving the funds and closing the account.
Do you have:
1) Another credit card with a lower interest rate, and an existing balance small enough to transfer the entire balance to?
--or--
2) Some equity in your home or other collateral with which to get a loan to pay it off?
If so, make the arrangements, pre-approvals, etc, before you make the call to Citi. Then you can just plainly tell them that they need to keep the interest rate where it is, or you'll move the balance and close the account. Be polite. Something like "I really have had a good experience up until now, and want to be a Citi customer, but it just doesn't make sense for me to pay that interest rate. So, unless you can help me get it to a reasonable number, I'll have to pay off the balance using [fill in the blank here]". Usually, suggesting a rate that's acceptable to you would help as well.
If you don't have either #1 or #2, you really have only two options. Either bluff that you do, or try the pleading approach. Either one is worth trying, as the worst that could happen is that they'll raise the rate anyway.
Other things to consider:
o Why did they up the rate in your specific case? For example, if you've had a couple of late payments, expect them to bring it up, and be prepared to give some details on what happened and why it's not an issue now.
o Do you have the cash in savings or elsewhere to pay it off without incurring an undue hardship? Perhaps now is the time
o If they do end up increasing the rate, cut up the cards! No sensible person will finance money at 29%!
Good luck with Citi, and do stop by and update us on what happened.