Credit Card Ugh

June 17, 2008 4:20 PM

How to get a new credit card with a high limit to transfer a bunch of smaller balances to when your FICO score looks more like your bowling score?

Well, not quite as bad as a bowling score. I have a handful of cards, adding up to about $5000 total in balances, with no single balance more than $1500. I'd like to get a new card to transfer all these balances to, with ideally a lower rate (below 20% would be nice :( ), so I can stop trying to keep track of all these payments dates, simplify my money management a little, set up automatic payments, and forget about it.

I've made a few months of late payments on everything due to everything being a little crazy because of my wife's health, so my credit rating has taken a real dive.

Personal experiences, ideas?

posted by cellphone to work & money (17 comments total)

Forgot to clarify, I'm looking especially for certain brands of cards that have worked for a similar situation for you, people you know, etc. Or, other similar options to achieve the stated goal.
posted by cellphone at 4:21 PM on June 17, 2008

The best would probably to apply for a line of credit at a bank. It works like a credit card account (that is, you can take out any amount up to the limit, there's a monthly minimum payment but you can pay more than that, etc.) and will have a much lower interest rate than you'll get on a credit card. You could even use this as your main chequing account and have your pay direct deposited, so that all the money you have on hand is reducing your debt (if you have the discipline to not overspend on it).
posted by winston at 4:29 PM on June 17, 2008

Seconding winston, sort of:

I got a debt reduction loan from my credit union. It was NOT a line of credit, it was a close-ended loan. This was hugely important to me getting my credit on track. Why?

Revolving debt (ie credit cards) drags down your credit score in a big way. Closed-ended debt doesn't. The interest rate from the bank wasn't that great (9%), but that's to be expected when you don't have stellar credit. The important thing was, as soon as I had that debt off my credit cards and onto the loan, my credit score skyrocketed immediately!

THEN I was able to be approved for 0% interest credit cards. I just applied and got approved for two new 0% introductory cards last night.
posted by drjimmy11 at 4:34 PM on June 17, 2008

Also, if you have the money but simply forget to make payments on time, I feel your pain.

Your bank should have some kind of online bill payer system where you can set it up to make a recurring payment every month. I make extra sure to do this for my 0% balance transfers, b/c I know the credit card companies are just dying for me to miss one payment by one day so they can jack my interest rate up to some ungodly 28% type number.
posted by drjimmy11 at 4:43 PM on June 17, 2008

Yeah, I'm working on getting my automatic payments set up, but part of the issue is I have all these payment dates strewn throughout the month. Oh, what I would give to just make one huge damn payment on the first of the month for everything.

It's not even an issue of living beyond my means (I've done the math), I'm just awful at organizing all this garbage.
posted by cellphone at 4:45 PM on June 17, 2008

Another vote for credit line from a bank, it's usually lower interest. 5K is nothing, you shouldn't have a problem securing one. I wouldn't mention anything like consolidation loan unless asked what the credit line is for. Do remember that closing credit cards can hurt your FICO score. Keep the one or two that you've had the longest.
posted by hungrysquirrels at 5:16 PM on June 17, 2008

I was planning on keeping the ones that don't have monthly/yearly fees just for having them open, and closing the ones that do. I already paid off one low balance card (yay!) and am keeping it open since it's about four years old. Thank to everyone so far, it's great to see there are in fact options beyond just paying these cards down for five years.
posted by cellphone at 5:25 PM on June 17, 2008

>The interest rate from the bank wasn't that great (9%)

? Non-promo 9% for unsecured credit is awesome.

>Keep the one or two that you've had the longest.

Keep 'em all

As for different payouts, I have 6 credit lines I pay every month right now. Since most of these are promo balances, I consider it my job to pay them on time.

What I've found doable is to pay them earlier in the month, via their online pay feature.

I've got one batch that I pay on the 1st, and the other batch I pay on the 15th. Everybody gets their money on time; easy-peasy.
posted by tachikaze at 5:27 PM on June 17, 2008

'course, don't keep the ones that charge annual fees!

I guess I can 2nd the above about a closed-end bank line. I actually got one back in the 90s for debt consolidation coming out of college, and it worked really well for me.
posted by tachikaze at 5:28 PM on June 17, 2008

I'm also bad at remembering to pay promptly. Online banking allows you to sit down on 1 day, and schedule the payments for the day they're due, at least Discovercard & BofA Visa do. My Visa rate was high, so I called and asked them to lower my rate. And they did. So, call each card, and see. Might work, and nothing to lose.
posted by theora55 at 5:33 PM on June 17, 2008

I'd like to get a new card to transfer all these balances to, with ideally a lower rate

It sounds like another card is the last thing you need. You should pursue some of the advice up thread about getting a line of credit (or some other loan-like deal) from a bank or credit union.

so I can stop trying to keep track of all these payments dates, simplify my money management a little

It's not a bad goal, but there are probably a lot of things you can do to simplify this whole process that doesn't involve taking on more debt or credit card(s) or in the event you're denied a line of credit from a bank, etc.

If it's a matter of not being able to keep up with due dates and the like that can be solved with a paper calendar and a sharpie. A simple spread sheet can track balances and payments. Or, just keep it all written down in a notebook. Store the whole mess, (notes, envelops, stamps, list of addresses, check book, etc.) in a drawer, box, or folder...

You're talking about keeping track of a few credit cards and $5,000 worth of debt. That is not exactly a complex financial undertaking... you can do A LOT with post-it-notes and in-out-boxes.

set up automatic payments, and forget about it.

Even with automatic payments you shouldn't "forget about it." Credit card companies can screw you in several ways, even if you've setup automatic payments. They can move your due date without telling you for starters... why would they do this? Because increasingly credit card companies make their money not just off interest, but off processing and late fees.

Also, are you sure your credit card companies don't already allow for automatic payments? Sometimes you bank will handle these sorts of payments as well. I know with BoA I can setup payees and have checks mailed automatically, etc.

Good luck.
posted by wfrgms at 5:46 PM on June 17, 2008

Oh yeah, one other thing: even when you pay these cards off, you shouldn't cancel them. That will ding your credit score because it messes with your ratio of offered credit vs. used. You can google around for more info on that. If you do want to close them you should one every six or twelve months. Until then, just zero-them out and cut up the card so you won't be tempted to use it.
posted by wfrgms at 5:47 PM on June 17, 2008

Another ditto on cutting-up the undesired credit cards, save one or two for things like hotels, car rentals, etc. I've tried the idea of freezing them in water, but it's too easy to get them out with hot water. Also, if you're into online purchases, make sure to eliminate any easy reference to the number, expiry date, and that number on the back. Credit is good, and bad, depending on how you use it. I had some bad spending habits, and I'm still paying for them.
posted by hungrysquirrels at 6:33 PM on June 17, 2008

I nth the bank loan idea but I would say that if you have 5K in debt that you can't pay off in 6 months than IMO you are living above your means. What about selling something or things on EBay or Craigslist to pay the debt down? What about a second job? Just moving debt around won't solve the issue of the debt. I would keep at the most ONE card for rentals and hotels and such, but more than that and most people end up consolidating and running the cards up again. Having just one card could protect against this. Good Luck.
posted by HappyHippo at 7:26 PM on June 17, 2008

Thank you for the extra comments, but please read all the replies before commenting, thanks.
posted by cellphone at 7:33 PM on June 17, 2008

You can ask the credit card companies to change your payment due date to one that is convenient for you: for example, if you get paid monthly, change all your payment due dates to a week after payday. (I keep meaning to do this.) You might have a month with a partial payment in there somehow, but after that things should go smoothly.
posted by shiny blue object at 10:13 AM on June 18, 2008

It's not even an issue of living beyond my means (I've done the math), I'm just awful at organizing all this garbage.

If you owe money you cannot pay right now, and are paying interest on a balance, you are living above your means, or did at one point. You can choose to pay a premium in order to buy things before you have the money for them if you like, but do not fool yourself into thinking that's not exactly what you're doing.

If it really would make a difference in your life to change your payment due dates, SBO is right: many of them will alter it at your request, though some have schedules based on geographic location in order to balance their processing center loads.

Even if they won't, however, when they require you to pay by doesn't mean you can't pay before then. The credit card companies make it difficult to do this since they have shortened the gap time between when they send their notices and when they're due, but you can simply set yourself up on a schedule. On the 1st, 11th, and 21st of the month, pay all the bills you have in your possession. Period.

Before I say more, let me say this: getting more credit is a bad plan, period. The reality is that you have a handful of cards with balances and there's a reason for that. I'd be surprised if at least one of those cards isn't one you got and transfered a balance to. Getting more of them is enabling more debt. Ever wondered why credit card companies offer these low transfer options (or did - recent regulatory changes limiting their ability to play shell-games with you will probably reduce offers greatly) when it also means people are transferring money away from them too? Because they know what most people don't: the majority of people who transfer a balance just end up adding new debt to that old card.

As far as getting more cards, the late payments are going to kill your ability to get anything with a good rate. Before you do anything else, you should pick up the phone and call each and every one of your credit card issuers and ask them to remove one or more late payments from your account. Many companies have a policy that they'll extend one "freebie" to a customer in a year, just for the asking. Second, you should ask them to lower your interest rate. You can state - politely - that you're considering transferring your balance somewhere else with a lower rate, could they lower your rate so you don't have to?

You may have less luck with the second; as said, they know there's a good chance you'll just run up charges again if you do that. But it doesn't hurt to ask. Even getting them to remove a few of those late charges from your account will improve your FICO score, though not till they next push out an update. For the big guys that'll likely be within 30 days, however, so that's not so bad.

While you're on the phone with them you could also ask the ones with better rates - if they haven't all bumped your rate for late payments - if they'll transfer over a balance from the other folks. You'll probably have a slightly lower standard to meet for a limit increase than a new card.

Good luck. Just remember the first rule of getting out of a hole: stop digging. All of this is deck chair choreography on a sinking ship if you don't stop creating new debt.
posted by phearlez at 11:10 AM on June 20, 2008