Credit Card Debt

Nealocus123

Nealocus123

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Hey guys, searched a little through the forums and couldn't find anything about this but sorry if it's a repeat.

I just turned 22 about a month ago and have one more year of college before I'm booted off into "the real world". I was hoping I could have some advice on getting rid of my credit card debt before I try to apply for my first car or house loan. Now I don't have much; about $1,400 on a Citi card and another $450 on a Capitol One. I make my minimum payments every month but I'm just starting to realize that probably isn't doing shit. My supervisor at work (who apparently is much worse off than I am) said she had called the company directly and offered them $500 on the spot to cover her whole $1,000-$2,000 dollar debt (I can't remember how much). I honestly had no idea you could...haggle with the credit card companies. Does anyone have any recommendations as to what I should say to them? I know there are a lot of experienced people on these forums and that's why I'm asking. Thanks guys.

Oh and if it's neccersary, I work full time (about 35 hrs) as well as take 14 units and I bring in probably around $1,500 - $1,700 a month.
 
It's simple. Make as much money as you can, and put as much as you can into paying that debt down each month. Cut back on most (if not all) luxury expenses (eating out, buying games, going to the movies) etc. until that shit is paid off.

Credit card debt is an awful thing to have due to the high interest rates.

I doubt that haggling stuff works very often. They've got you buy the balls and have little reason to relent unless you're filing for bankruptcy. Plus, the responsible thing to do is pay off the debts you owe and not try to wiggle out of them, and learn from the lesson and never carry a balance on a credit card again.
 
Yea, I figured as much, it's just that if I can save $500 bucks by giving them a call I would do it in a heartbeat. Thanks for the advice.
 
No credit card company is going to agree to take less than your owed balance and reduce your debt down to nothing. Unless the accounts closed, charged off or in collections or something like that is the only reason I can think of with them doing that which is probably what happened to your supervisor and you don't want to allow your account to get to that point.

Cut back and take out that smaller debt first while only paying the minimum on the larger one, than take out the larger one. You'll pay more interest leaving the larger one for last but you'll feel good when the smaller one is paid off and that's motivation to get you to pay off the other one.
 
I do recommend that you call your credit card companies to get the interest rates lower, especially if you've had a card with them for a 2 years or more.

Just call and be like you have been going over your finances and have been considering closing the card in order to budget better, but would like to see if there is a way to lower the interest before making that decision. That will scare the 1st line of defense and they will transfer you to one of the supervisors who has a lot of power to negotiate with you.

Repeat your thoughts to them, make it seem like your serious about potentially closing the card, and make it sound like you got a better offer somewhere else and 9 times out of ten they will drop the rate and give you 0% APR promotions if you mention that as well.

SN: Dont actually close the card if it comes to the worst.
 
It's actually a bad idea to do that, OP...The account gets closed, and a red flag gets put on your Credit Report, with the note Account Closed - settled for less than owed, or something to that effect...and it stays with you forever.

My advice, is pay as much as you can and get rid of it.
 
Haggling on such a small amount is likely to get you nowhere honestly. Your best bet is to do what dmaul said. Cut back on everything and focus on the debt. Given what you make, you could easily have this paid off in 3-5 months.

[quote name='blissskr']No credit card company is going to agree to take less than your owed balance and reduce your debt down to nothing. Unless the accounts closed, charged off or in collections or something like that is the only reason I can think of with them doing that which is probably what happened to your supervisor and you don't want to allow your account to get to that point.
[/QUOTE]


That's absolute bullshit. It's been documented repeatedly how people in serious credit card debt (think 10k or more) can easily settle with their credit card companies for a lower amount. It happens all the time.
 
I have been told that if you send a place a payment for 1 dollar and they send it back saying that they will not take it you no longer have to pay them. I have been told this by a few people and half of them never have a clue as to what they are talking about and the other half when they have told me things in the past have been right. So you could always check into it and if you find out it is ture give it a shot.
 
[quote name='sendme']I have been told that if you send a place a payment for 1 dollar and they send it back saying that they will not take it you no longer have to pay them. I have been told this by a few people and half of them never have a clue as to what they are talking about and the other half when they have told me things in the past have been right. So you could always check into it and if you find out it is ture give it a shot.[/QUOTE]

You've been told completely wrong. They have minimum payments for a reason. Your credit score will take a hit.

http://getoutofdebt.org/17602/is-it...onth-the-creditors-will-leave-me-alone-shanna
 
[quote name='mtxbass1']Haggling on such a small amount is likely to get you nowhere honestly. Your best bet is to do what dmaul said. Cut back on everything and focus on the debt. Given what you make, you could easily have this paid off in 3-5 months.




That's absolute bullshit. It's been documented repeatedly how people in serious credit card debt (think 10k or more) can easily settle with their credit card companies for a lower amount. It happens all the time.[/QUOTE]

Not with the amounts he's talking about 1,000-2,000 dollars I couldn't see any credit card company reducing that unless charged off. And the people who get it reduced are usually seriously behind 60+days and the credit card company see's it as take something rather than get nothing at that point. And like I said you don't want your accounts to get to that point. I wouldn't be encouraging about the fact credit card companies due it all the time and its easy to settle for less when you rack up crazy debt and then can't pay it gives the wrong message in my view when he's asking for advice to wipe out his debts.
 
[quote name='blissskr']Not with the amounts he's talking about 1,000-2,000 dollars I couldn't see any credit card company reducing that unless charged off. And the people who get it reduced are usually seriously behind 60+days and the credit card company see's it as take something rather than get nothing at that point. And like I said you don't want your accounts to get to that point. I wouldn't be encouraging about the fact credit card companies due it all the time and its easy to settle for less when you rack up crazy debt and then can't pay it gives the wrong message in my view when he's asking for advice to wipe out his debts.[/QUOTE]

Which is what multiple people (including myself) have already said. He's not going to get anywhere with $1000 of debt.
 
I'm gonna take Bliss' advice and pay off the $500 one first (just made a $100 payment so now it's about $360) because just thinking about not having that balance makes me happy so I'm sure when it's actually at 0 I'll be ecstatic.

When I first got the card I was completely uneducated about credit cards (mistake, yes I know), and made a few late payments...three I think. Would I be better off paying off the card and then canceling it? I feel like somewhere I had heard that was the thing to do if you've made a late payment.
 
Do you rent? If so, how much of what you make goes into that, $700-$800? And how long do you have left before you graduate? Seven months? It's $1850 of debt, which isn't really that big of a worry. Pay an extra $300 a month if you can afford it.

Having debt that's affect your credit that much, from what financial advisers have told me. For sure, keep it below 50% of your max if you can (I don't on my main credit card, but I also pay off the balance every month, no idea what that actually does to my credit rating, now that I think about it).

It's much more detrimental to make a late payment on any of your bills than having some debt, so I'm not actually sure why you're so worried.
 
[quote name='Nealocus123']I'm gonna take Bliss' advice and pay off the $500 one first (just made a $100 payment so now it's about $360) because just thinking about not having that balance makes me happy so I'm sure when it's actually at 0 I'll be ecstatic.

When I first got the card I was completely uneducated about credit cards (mistake, yes I know), and made a few late payments...three I think. Would I be better off paying off the card and then canceling it? I feel like somewhere I had heard that was the thing to do if you've made a late payment.[/QUOTE]

No no no, don't cancel it. Cut it up. Canceling cards will negatively affect your credit score for a short-ish period of time. Canceling the card will also not erase late payments from your credit history; only time will.
 
[quote name='dmaul1114']It's simple. Make as much money as you can, and put as much as you can into paying that debt down each month. Cut back on most (if not all) luxury expenses (eating out, buying games, going to the movies) etc. until that shit is paid off.

Credit card debt is an awful thing to have due to the high interest rates.

I doubt that haggling stuff works very often. They've got you buy the balls and have little reason to relent unless you're filing for bankruptcy. Plus, the responsible thing to do is pay off the debts you owe and not try to wiggle out of them, and learn from the lesson and never carry a balance on a credit card again.[/QUOTE]

This is the right answer. Although you are in the hole quite a bit judging by your monthly earnings vs. what you owe (over 1 month's earnings) you should still be able to cut back on luxury items and save some money and pay off your debt. Just this month my wife and I canceled our premium cable package and consolidated our cell phones. This will result in about $100/month in savings and all it took was a couple of phone calls. There are always things you can do without for a while and you may find you don't even miss them when you scale back. What monthly bills are coming in that aren't absolutely necessary?

Remember kids, don't buy things you can't afford! It's not that hard.
 
Seriously? On $1,500 a month you can't knock off a $450 debt? Sure, the minimum payment is probably $10-15 bucks but just toss $50 a month at it and it should be gone in a year.

I don't mean to be harsh but what the hell are you spending your cash on?

I'll second the notion of not cancelling a card. You never know when you'll need it. I've got a Visa card that I use only when I'm somewhere that doesn't take Discover or Amex. It probably gets $100 a year put on it but it's nice to have in those situations.
 
Some of us have considerably more credit card debt than you (~points to self~). You just have to chip away at it bit by bit. Always pay more than the minimum payment if possible. I have around $14k in credit card debt to conquer... should have it paid off by the time I'm 183 years old.
 
Oh, just thought of another thing. How long you've been with a credit card company also affects your credit, so keeping the account open, but cutting up the card only does you good.
 
[quote name='mtxbass1']You've been told completely wrong. They have minimum payments for a reason. Your credit score will take a hit.

http://getoutofdebt.org/17602/is-it...onth-the-creditors-will-leave-me-alone-shanna[/QUOTE]

With certain medical bills, this IS entirely possible. Prime example, I have an anesthesia bill from 2001 that still has a balance of $1,085. I send them a $5.00 check every month, and they have yet to turn me over to collections, or complain about not paying more.

Before you ask, I had to have a surgical procedure... and at the time, I didn't have insurance.
 
[quote name='metaphysicalstyles']With certain medical bills, this IS entirely possible. Prime example, I have an anesthesia bill from 2001 that still has a balance of $1,085. I send them a $5.00 check every month, and they have yet to turn me over to collections, or complain about not paying more.

Before you ask, I had to have a surgical procedure... and at the time, I didn't have insurance.[/QUOTE]

Medical, yes. Credit, no. I've had medical bills in the past as well and they usually don't care what you pay as long as you pay something.
 
[quote name='nasum']Seriously? On $1,500 a month you can't knock off a $450 debt? Sure, the minimum payment is probably $10-15 bucks but just toss $50 a month at it and it should be gone in a year.
[/QUOTE]

That's only one card, he has $1,400 on another, so $1,850 a month.

And $1,500 a month isn't a lot if he's in a pricey metropolitan area with high rent, a car payment etc. If he's in some small college town though, then yeah he should be able to knock it out in a year (if not faster) with cutting back on luxuries.
 
[quote name='dmaul1114']That's only one card, he has $1,400 on another, so $1,850 a month.

And $1,500 a month isn't a lot if he's in a pricey metropolitan area with high rent, a car payment etc. If he's in some small college town though, then yeah he should be able to knock it out in a year (if not faster) with cutting back on luxuries.[/QUOTE]

His location says San Diego... Rent here for a single bedroom apartment (in a shady area) is like $750+, up to $1500+, so no, $1400 is not a lot at all. Which is why I asked if op lived with his parents.
 
[quote name='nasum']Seriously? On $1,500 a month you can't knock off a $450 debt? Sure, the minimum payment is probably $10-15 bucks but just toss $50 a month at it and it should be gone in a year.

I don't mean to be harsh but what the hell are you spending your cash on?

I'll second the notion of not cancelling a card. You never know when you'll need it. I've got a Visa card that I use only when I'm somewhere that doesn't take Discover or Amex. It probably gets $100 a year put on it but it's nice to have in those situations.[/QUOTE]

I live on my own in San Diego so I'm paying $650 for rent, that combined with a car insurance, cell phone, utilities, groceries, gas, books, school fees (I go to USD so everything seems more expensive) and my girlfriend is what I'm spending my money on. Plus to be honest I'm 22. I go to bars, get drunk spend money, etc.

I'm not by any means freaking out or anything, I was just wondering if I could "haggle". I'll do what most of you recommended by just not buying stupid shit for a few months (like the Radiohead and Johnny Cash vinyl I wanted to buy today at work ergggg) and getting them paid off. However, I plan to be debt free by the time we get our tax refund.

Also I really do appreciate all the help. I don't exactly have parental figures that can teach me this stuff, and all my friends are my age going through the same experiences.
 
I would try to transfer the balance to another credit card where it's 0%. If you can't do that, get a co signer or something where you can transfer the balance (parents?).

If you can't do that, then just start paying it off. If you have savings, take all that out and pay off the debt because I look at it like this..the savings percentage is very low (less than 3% probably) and the interest rate on a CC is MUCH higher. The money is much better spent on the CC balance rather than saving. When you get into some situation and need money but don't have it because you put it all on your CC balance, just use your CC again. Of course, you must be frugal as hell at this point.
 
Am I the only CAG that refuses to pay interest? I pay my credit card balance in full every month and would rather save up for a large purchase like a TV for a few months rather than pay for one up front with a credit card, and pay interest over the course of a few months.

The only reason I use my credit card over cash is to keep track of my expenses per month rather than withdrawing from the ATM every few weeks.
 
[quote name='Kendro']Am I the only CAG that refuses to pay interest? I pay my credit card balance in full every month and would rather save up for a large purchase like a TV for a few months rather than pay for one up front with a credit card, and pay interest over the course of a few months.

The only reason I use my credit card over cash is to keep track of my expenses per month rather than withdrawing from the ATM every few weeks.[/QUOTE]

This.
 
I second the get a 0% and transfer the balance. Then you don't have to pay the high interest fees each month and you can use those additional savings.

I can't stress enough that haggling with the CC company if you plan on buying a house in the next 5 years is a HORRIBLE idea. Yes, you could probably get them to knock off some, but as mentioned you will most likely have to be behind on your accounts. I.E. several late fees and penalties later when the balance is around $4k you owe them, they will cut you a break. They are also going to cut off your credit, so as long as your fine with using cash that is not a big deal.

This will stay on your credit report for 10 years. If this dings you .25% (which it should at least on a mortgage) you are going to pay well into the 10,000s on the small savings you reap today (depending on cost which San Diego is not cheap). Not withstanding everything else will cost you more (home insurance, auto insurance, life insurance, any kind of credit). See, a while ago they were able to find a correlation of if you are risky with your finances, you are most likely risky in life and they are in general more likely to lose money from you as a customer.
 
[quote name='Kendro']Am I the only CAG that refuses to pay interest? I pay my credit card balance in full every month and would rather save up for a large purchase like a TV for a few months rather than pay for one up front with a credit card, and pay interest over the course of a few months.

The only reason I use my credit card over cash is to keep track of my expenses per month rather than withdrawing from the ATM every few weeks.[/QUOTE]

Nope, I and a few others have posted doing the same thing. The other reasons to use credit card besides that is to earn rewards (free money if you're only buying stuff you would anyway) and easier to deal with fraud (just dispute charges) vs. using a visa check card/debit card where the cash is gone from your account for a while.
 
To the OP.....you don't have credit card debt. You have a small financial speedbump that can be easily overcome within a year with small changes to your spending habits.

The average American has over $6k in credit card debt.

Also, people settle with credit card companies all the time. Credit card companies don't have to settle with anyone. The ability to settle, and how much they will settle for, changes on a case by case basis depending on a large amount of variables like how much you owe, what assets you have, your employment situation, what other monthly expenses you have etc.

Settling always results in the account being closed and will basically put a black flag on your record with that company for at least 7 years. In addition the company will report to your credit report that a debt was settled for less than the total owed that can result in a significant hit to your credit score.

If you are really hurting you should call the credit card company and ask for an interest rate reduction or a "workout plan." The workout plan is offered by quite a few major credit companies and while it does result in the account being closed, it does not result in a hit to your credit report. The plan basically takes your credit card debt, turns it into a fixed rate loan something in the 3-5% range in most cases with set monthly payments over 3-5 years. If you pay on time there is no hit to your credit and after the plan is paid off you would be free to re-apply for a credit card with the company and still be in good standing. Of course these plans are mostly offered on accounts that have significantly higher balances than what the OP is dealing with.

Of course the workout plan is also something that companies don't have to offer. You need to make a case that you are in financial distress and it really doesn't sound like you are.
 
[quote name='dmaul1114']Nope, I and a few others have posted doing the same thing. The other reasons to use credit card besides that is to earn rewards (free money if you're only buying stuff you would anyway) and easier to deal with fraud (just dispute charges) vs. using a visa check card/debit card where the cash is gone from your account for a while.[/QUOTE]

The one thing to be careful about is that your revolving balances affects your FICO score. I just got mine last week (801!) and a good percentage of the score goes to your debt percentage. Meaning if you have a credit card with $1000 limit and you are continually having balances of $850 or $900 to maximize your rewards, even though you are paying it in full each month, to creditors it looks like you are barely staying financially "afloat" by constantly reaching your maximum limit every month.

I hear it is good to be lower than 20% and my FICO report says the high achievers generally have 7% or less. Whenever you buy a house, that 1% better rate on a 30 year mortgage will save you thousands or tens of thousands.
 
True. But the credit limit on my Amazon Visa is $14,800 so I'm no where near my limit. Plus a few other cards I have (Macy's Visa etc) and rarely use.
 
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[quote name='Kendro']Am I the only CAG that refuses to pay interest? I pay my credit card balance in full every month and would rather save up for a large purchase like a TV for a few months rather than pay for one up front with a credit card, and pay interest over the course of a few months.

The only reason I use my credit card over cash is to keep track of my expenses per month rather than withdrawing from the ATM every few weeks.[/QUOTE]

I don't own a credit card. No Credit Card means no Credit Card debt. The only debt I have is my mortgage.

To OP, the best thing is to consolidate your cards to the one with the lowest interest rate. Next is to cut back on the non-essentials (i.e. your drinking, music, etc). You will be surprised how fast you can eliminate what you have in Credit Card debt by using this expendable money.
 
[quote name='lordopus99']I don't own a credit card. No Credit Card means no Credit Card debt. The only debt I have is my mortgage.
[/QUOTE]

Credit cards aren't entirely evil if you use them properly. I use my credit card on everything that will let me, because I have cash back bonuses with it. I also pay it off every month, which is a key portion of the equation.
 
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