What is the best way to pay down credit card debt?

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Landshark
 
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What is the best way to pay down credit card debt?

Postby Landshark » Wed Mar 14, 2012 1:25 pm

I have three credit cards with open balances; 2 issued through Chase and 1 through Citibank, a total of around 10k in combined credit card debt.

  • I have never transferred balances before for any cards.
  • The two cards issued through Chase have been put on a hardship program at 12%. The Citi card I have had for 15 years, holds half my debt, close to the limit and has shot up to 29% APR.
My question is should I look to transfer the balance to another institution for my Citi at 29%
or should I call Citi and try to negotiate a lower APR with out having my card closed and put into another hardship program?

Or should I find a an honest well established credit counselor to try to consolidate the three credit cards and pay down. Would this be even possible with the Chase cards since they are already in a hardship program?


jeffysdad
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Postby jeffysdad » Wed Mar 14, 2012 2:32 pm

Try to talk Citi down on your rate. Failing that, look for a decent transfer offer. You will almost certainly pay a transfer fee, probably about 4%, so make sure the offer is worthwhile in terms of APR and duration as well as rate following the promotion as you might be stuck with that.

Obviously, you should be working to pay down the highest interest debt as fast as you can.
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Postby bmw1990Z » Thu Mar 22, 2012 9:47 pm

another forum member just recently posted that he has called citi once a year and they gladly have reduced his APR to what is now in the single digits. He says Citi "appears" to operate on the basis of, if we don't hear from you, your are satisfied with your APR. Worth a shot.
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Celestine
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Postby Celestine » Fri Mar 23, 2012 9:29 pm

Landshark wrote:I have three credit cards with open balances; 2 issued through Chase and 1 through Citibank, a total of around 10k in combined credit card debt.

  • I have never transferred balances before for any cards.
  • The two cards issued through Chase have been put on a hardship program at 12%. The Citi card I have had for 15 years, holds half my debt, close to the limit and has shot up to 29% APR.
My question is should I look to transfer the balance to another institution for my Citi at 29%
or should I call Citi and try to negotiate a lower APR with out having my card closed and put into another hardship program?

Or should I find a an honest well established credit counselor to try to consolidate the three credit cards and pay down. Would this be even possible with the Chase cards since they are already in a hardship program?


Based on experience...

If the two Chase CC is already in the hardship program, then it would likely be closed.

At least keep one credit card, usually the oldest account, open. That is recommended for emergency purposes.

Doing a balance transfer is a hit or miss kind of thing since two of the three CC that you have is already in the hardship program. Citi, as with other lenders, are wary of doing a balance transfer for that specific purpose; high possibility of balance transfer to be rejected. But try anyways if you want. I just don't know the consequences of doing that since I have not done it myself.

And going into the program of credit counseling will also close down the CC that you will enroll in their program. Check with the credit counseling agency for the situation you are in with your Chase cards. The good side is, as you already know, will be consolidated into one bill.

Here are US Government approved credit counseling agencies, click this link
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Postby Crashem » Sat Apr 07, 2012 5:22 pm

You need to do an honest assessment on the time it will take you pay this back and where your credit stands.

1) If your credit is good and you think you can pay this out within a couple of years, it is probably best to go through the BT transfer method. Line up a good BT card and pay down during the 0% period. You will probably need to pay a BT fee. Rinse and repeat a couple of times if necessary. Also, there are some low interest credit rates offered through CU's that aren't intro rates. I just got one that has sub 8% rates. You will pay way less interest this way than any credit counseling agency and not really hurt your credit. But this is dangerous if you aren't up to proceed responsibly and takes good coordination.

2) Otherwise credit counseling is an option, but remember they will budget you out and try and come up with plan within your budget. The fact is credit card companies are less generous with credit counselors than they have been in the past so not sure you will see interest rates much lower than you are seeing now.

3) Consider 401k loan if you have 401k. Look at this option closely. Pay attention what happens if you leave your current company and you need to have discipline or you will get further into debt and mess up your 401k. Otherwise, it is an interesting option as with most 401k loans, the interest rate is low and the interest is basically paid back to yourself as opposed to a bank.
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Pete838
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Postby Pete838 » Wed Apr 11, 2012 9:34 pm

It looks like once you entered the 'hardship' your report is showing "credit counseling". Good luck opening a new credit line with that big red flag. Hindsight is 20/20, but you should have opened a new line to transfer some of the debt into BEFORE the house of cards started to fall. It looks like Citi saw the red flag and ratcheted you up based on the re-assessed risk.
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