Capitalism Getting Me Down Low
August 19, 2011 7:18 AM Subscribe
I have been unemployed for a long time, and I can no longer handle the minimum payment for my credit card. It's a Chase card, and my checking account is also Chase. If I stop paying my card, and hope to negotiate a lower interest rate (it's 29.9% and I haven't put a penny on the card in years, just keep paying off the interest month after month), can Chase somehow take money from (or otherwise harm) my checking account?
All I have are unemployment payments, but I am really fearful of risking those. Should I be trying to open a new checking account at a bank unassociated with that credit card? Also, in case it is relevant, the card is already closed as of a few months ago.
All I have are unemployment payments, but I am really fearful of risking those. Should I be trying to open a new checking account at a bank unassociated with that credit card? Also, in case it is relevant, the card is already closed as of a few months ago.
My experience is with the Canadian banking system so it is possible that the US system is different but I would doubt it.
A bank can absolutely take money from a savings or chequing account to cover unpaid debts with the same bank. Where I worked it even said so in fine print on the back of the signature card. The first thing we did with a delinquent account was print out all their other dealings with us and determine if there was money we could debit to make the late payment.
If that account money is critical to you it should be moved asap. Do not put it in a bank where you also have debts.
posted by pixlboi at 7:57 AM on August 19, 2011 [1 favorite]
A bank can absolutely take money from a savings or chequing account to cover unpaid debts with the same bank. Where I worked it even said so in fine print on the back of the signature card. The first thing we did with a delinquent account was print out all their other dealings with us and determine if there was money we could debit to make the late payment.
If that account money is critical to you it should be moved asap. Do not put it in a bank where you also have debts.
posted by pixlboi at 7:57 AM on August 19, 2011 [1 favorite]
Two things I would look into if I were you:
1. Call Chase and see if they'll lower the interest rate. I was able to get my interest rate lowered on one of my cards just by doing this.
2. I've gotten a lot of offers for balance transfers that have 0% interest for a year. There's a small fee for doing so, but the interest rate after that first year is a lot lower than 29% (I think my offer was 16%). Have you gotten any offers for something like that? Don't throw your junk mail away! Maybe there's something like that in there for you.
Best of luck!
posted by too bad you're not me at 8:12 AM on August 19, 2011 [1 favorite]
1. Call Chase and see if they'll lower the interest rate. I was able to get my interest rate lowered on one of my cards just by doing this.
2. I've gotten a lot of offers for balance transfers that have 0% interest for a year. There's a small fee for doing so, but the interest rate after that first year is a lot lower than 29% (I think my offer was 16%). Have you gotten any offers for something like that? Don't throw your junk mail away! Maybe there's something like that in there for you.
Best of luck!
posted by too bad you're not me at 8:12 AM on August 19, 2011 [1 favorite]
I don't think so, unless they have gotten some kind of judgement against you.
There may be pitfalls, but I would suggest negotiating a lower rate *before* you quit making payments.
What you might be able to do is go to a branch and ask them if you can refinance the CC debt into a personal loan, connected to the checking account. They will be more likely to approve the loan (or give you a better rate) if you let them auto-pay the note out of your account.
Say the debt is $1000 bucks. 29% is $25 a month, forever. If you can convert that into a personal loan at 10% with $20 a month payments, not only do you reduce your monthly payment by $5, you also pay off the loan in a little over 5 years.
posted by gjc at 8:13 AM on August 19, 2011
There may be pitfalls, but I would suggest negotiating a lower rate *before* you quit making payments.
What you might be able to do is go to a branch and ask them if you can refinance the CC debt into a personal loan, connected to the checking account. They will be more likely to approve the loan (or give you a better rate) if you let them auto-pay the note out of your account.
Say the debt is $1000 bucks. 29% is $25 a month, forever. If you can convert that into a personal loan at 10% with $20 a month payments, not only do you reduce your monthly payment by $5, you also pay off the loan in a little over 5 years.
posted by gjc at 8:13 AM on August 19, 2011
If you stop paying your credit card, there's absolutely no way in hell the bank is going to lower your interest rate. That's just not how it works. You pay interest because you're a risk. The bigger the risk, the higher the interest rate. If you stop paying, you're a higher risk. You do the math.
And if you stop paying, they definitely can come after you for the balance. They'd probably give your card to collections first, but you would probably wind up getting sued. And because you do owe the money, you'd lose. And when you lose, they'll try to garnish your wages.
That's where things get interesting. If you don't have any income... what are they going to do? Yell until they're blue in the face? I mean, they can, but if you don't have any money, that can't take any money. Most states have a certain level of income/assets below which you can't be forced to pay judgments and are effectively immune from garnishment.
I suggest that you go talk to a local legal aid clinic about this. It may be that your best way out of this is to file for bankruptcy.
posted by valkyryn at 8:19 AM on August 19, 2011 [1 favorite]
And if you stop paying, they definitely can come after you for the balance. They'd probably give your card to collections first, but you would probably wind up getting sued. And because you do owe the money, you'd lose. And when you lose, they'll try to garnish your wages.
That's where things get interesting. If you don't have any income... what are they going to do? Yell until they're blue in the face? I mean, they can, but if you don't have any money, that can't take any money. Most states have a certain level of income/assets below which you can't be forced to pay judgments and are effectively immune from garnishment.
I suggest that you go talk to a local legal aid clinic about this. It may be that your best way out of this is to file for bankruptcy.
posted by valkyryn at 8:19 AM on August 19, 2011 [1 favorite]
Call them and tell them what the deal is. Any sensible business knows that something is better than nothing, and IMO, 29.9% is practically usury. If it doesn't work the first time, try again; you might get a more sympathetic operator. The way things are going right now, everybody knows someone who is unemployed. Banks are especially keen to that, and might be willing to cut a deal.
posted by Gilbert at 8:42 AM on August 19, 2011
posted by Gilbert at 8:42 AM on August 19, 2011
They have to get a judgment to snag anything from your account, but I'll echo everyone else--call up and plead your case. I was able to do this, years ago, with Citibank--they froze the account, lowered my interest rate and set up a reasonable monthly payment that went directly out of my bank account to the card. Doing this was fairly painless, and my credit score didn't take a big hit, because Citi didn't report it as being in collections.
posted by Ideefixe at 9:28 AM on August 19, 2011
posted by Ideefixe at 9:28 AM on August 19, 2011
IAAL, IANYL. I believe that Chase can take money from your checking account to pay your credit card balance. It's probably specifically allowed in your account agreements, but as a practical matter, the money is right there and it's easy enough for them to "accidentally" make the payments, and good luck trying to get them to fix that "error."
The suggestion to move your money to a different bank is the only way I know to keep them from grabbing the money when they think it's due to them.
posted by spacewrench at 11:03 AM on August 19, 2011
The suggestion to move your money to a different bank is the only way I know to keep them from grabbing the money when they think it's due to them.
posted by spacewrench at 11:03 AM on August 19, 2011
Echoing pixlboi, at least here in Canada they can absolutely do so. There is usually a clause in both your credit card agreement, and personal account agreement, that allows them to do so.
posted by smitt at 12:29 PM on August 19, 2011
posted by smitt at 12:29 PM on August 19, 2011
I went through something similar when I was unemployed, except that I didn't have a checking account at the same bank. I called them, told them I'd been unemployed for X months. They asked me about my other expenses and what I could afford to give them. They reduced the interest rate DRASTICALLY and came up with a reasonable monthly payment.
I highly recommend you do this AFTER moving your checking account.
posted by desjardins at 1:39 PM on August 19, 2011 [1 favorite]
I highly recommend you do this AFTER moving your checking account.
posted by desjardins at 1:39 PM on August 19, 2011 [1 favorite]
Response by poster: I have found that the ONLY way to get a bank to make any kind of deal with you is to be delinquent for 3 months. Your experience may vary, but this is exactly how it went down for me with 4 different cards. I held out as long as I could with Chase. I have tried repeatedly to negotiate a lower rate, but they refuse. My credit is totally shot now, so they've pushed me into a situation where I can't do anything else.
But thanks for the answers. I think I will open another checking account.
posted by asimplemouse at 1:41 PM on August 19, 2011 [1 favorite]
But thanks for the answers. I think I will open another checking account.
posted by asimplemouse at 1:41 PM on August 19, 2011 [1 favorite]
Check the credit card agreement but your bank is likely to be able to plunder your current account - it's called 'set off'. It's a common law right.
posted by dmt at 8:18 AM on August 20, 2011
posted by dmt at 8:18 AM on August 20, 2011
"I have found that the ONLY way to get a bank to make any kind of deal with you is to be delinquent for 3 months."
The problem with that approach is you're effing up your credit score and, in the process, making it much harder for yourself to dig your way out of that hole. What you need to do is tear through your expenses with a fine tooth comb. You'd be amazed by how easy it can be to come up with extra money every month if you have to so you can keep paying on that card.
Got cable? Cancel it.
Do you rent movies? Don't! Get them for free from the library.
Do you buy paper towels? Don't! Even something as simple as switching to cloth napkins and cleanup rags can save you a few bucks a month. Seriously.
If I were in the financial position you're in, I'd even get rid of my cell phone and switch to Magic Jack. That's at least $50 a month savings right there.
Best of luck.
posted by 2oh1 at 12:21 PM on August 20, 2011
The problem with that approach is you're effing up your credit score and, in the process, making it much harder for yourself to dig your way out of that hole. What you need to do is tear through your expenses with a fine tooth comb. You'd be amazed by how easy it can be to come up with extra money every month if you have to so you can keep paying on that card.
Got cable? Cancel it.
Do you rent movies? Don't! Get them for free from the library.
Do you buy paper towels? Don't! Even something as simple as switching to cloth napkins and cleanup rags can save you a few bucks a month. Seriously.
If I were in the financial position you're in, I'd even get rid of my cell phone and switch to Magic Jack. That's at least $50 a month savings right there.
Best of luck.
posted by 2oh1 at 12:21 PM on August 20, 2011
A highly personal question: how much debt are we talking about here? Solutions that might work for a $1000 debt might not work for a $10k debt.
posted by justsomebodythatyouusedtoknow at 5:18 PM on October 5, 2011
posted by justsomebodythatyouusedtoknow at 5:18 PM on October 5, 2011
This thread is closed to new comments.
Did you buy that payment protection service they offer if you are unemployed? That helps defer payments. Otherwise you can see if they can try to defer 1 month payment.
Other than that, you may have to look into debt consolidation or file bankrupcy. Credit card companies are far from sympathetic to people's life.
posted by stormpooper at 7:57 AM on August 19, 2011