The Credit Gods Giveth, The Credit Gods Taketh Away...

AHHHHHHHH!!! So I was checking my credit card account online (Credit Card C), and I noticed that my available credit was only about $2,000. This was a shock as this card has a credit limit of over $20,000. HMMMMM...

So I went to the statement section and noted that my credit limit was now listed as $5,000. I started to panic thinking I did something stupid, as we were considering reducing this limit anyway and I was looking at the reduce your credit limit online screen and thought I may have hit something by accident. But I thought, we were never planning to go less than $10,000, so what was going on. To the phones...

I called the credit card company and she told me that the company reviews credit limits on a regular basis to assess our qualifications for credit. At this time, it is felt that we only qualify for a $5,000 limit. She said that it did not appear to have anything to do with our usage of the card, but we should order our credit reports to figure out what could have gone awry. I have done so and should receive them next week.

So I am sure you are thinking, what the big deal if our balance was less than the limit, and we were going to reduce it anyway. This should help with the debt thing, right? Yes, you are correct, but it doesn't feel good. When we got our consolidation loan, it was on condition that they take away our credit line. That was okay. No big deal. Now one of our credit cards has dropped our limit over $15,000. This is panic time! In the last month we have lost over $20,000 in our available credit, and not by choice. The panic is, since we are still working on the debt, if something were to happen will we have no recourse? Also, for Credit Card A what happens if they drop the limit here? We will most definitely have some or all of our balance called. Where are we going to get that overnight?

This debt has to go!

You may have a point...

I received a comment the other day in regards to my post on my dismal attempt at getting my credit card interest rates lowered. The comment indicated as to whether the economy may be to blame for my lack of success. My response: probably.

This is one of the reasons I have not completely given up on this idea. As I indicated in my post I will likely try again once I have paid off more debt. Part of this is due to fact that hopefully the economy will turn around and my credit card people will trust me again.

However, one of the reasons I decided to call was because of the economic situation. I thought, just maybe, that the companies might be willing to toss me a few token percentage points as an incentive for me not to default on the entire balance (not that I would, but they don't know that). I guess I was wrong.

Thanks for the comment.

Trying to shed some extra pounds...

I decided that since I didn't receive a balance transfer offer this month that maybe I could try to reduce my credit card interest rates by calling the companies and simply asking.

Although many debt smarties recommend this as an alternative, it did not work for me! First off I asked. No dice.

Then I threatened to move my debt to another provider. I was told to go ahead.

Then I asked to speak to a manager and I was told they could give me a "payment holiday" for a month, or lower my minimum monthly payment, but no reduction in interest! AHHHHHH!

This is frustrating as I have had one of these cards for 10 years with not one late or missed payment.

Oh well. I guess it is back to the drawing board. Can't say I didn't try. Maybe after I pay some of the debt down I can try again.

The Balance Transfer Trade Trick...

Okay, so we have all heard that one of the keys to reducing your debt is transferring the balance to a low rate or promotional rate credit card to reduce your monthly interest. Pretty good plan, but sometimes we don't have any credit room, or we can't/don't want to open another credit card to acheive this. Here's a little trick to bring your rate down (after exhausting other options, like just calling the company).

When your credit card company offers a balance transfer (even if your card is maxed) do the following:

a.) Take every spare penny that you have (credit line, upcoming mortgage payment, anything!) and make sure you can part with it for about a week.

b.) Put all of this money on the credit card with the low transfer rate.

c.) Wait until the money has been applied. If it is a bank credit card, you can sometimes speed up the process by physically making the payment at a branch.

d.) Write one of the handy dandy cheques that come with the transfer offer to yourself and put in the bank.

e.) Put the money you spent back to where it belongs.

Voila! Whatever money you managed to put on your card is now traded from your high interest rate to a low promotional rate. This may only be short lived (due to length of promotion, or low amount of money that you managed to scrounge up in step a) but even any reprieve in interest costs will help to pay down the amount faster and reduce your interest charges.

After the amount is paid off (or the promotion runs out), try the traditional standbys to reduce your rate, and if all else fails, repeat the above process ensuring that you maximize the amount of money that you put on your card.