Friday, October 28, 2011

The credit card game

by Nathan Stout (of AccordingToWhim.com)

Credit cards suck. Chris can go on and on how the credit industry is crap and keeps poor people poor and so on and so forth but this post from me is about my credit issues and what is going to be done about it.

I began using credit cards back when I was like 18. It was so easy to get credit back in the early 90s... you could blink and poof you got a credit card. I played right into the credit card company hands. My first purchase was a Creative Labs CD Rom drive (1x). It was from Best Buy and it costed me $1,200! I am probably still paying on that damn CD Rom drive to this day. I will go into more detail about the CD Rom drive and all the cool stuff that came with it next week when According To Whim presents 'Gaming Week'! 6 days of gaming and PC blogs. Let the fun begin!

Anyway back to more depressing subjects. My credit card use only went upwards from there. With the ease of getting cards my credit limit soared and so did my balances. I have not been credit card balance free since then. That was more than twenty years ago! I have never defaulted on any of my credit cards or been late (on purpose). I have only ever done the credit card companies right. I paid my minimums and payed all that interest out the nose. At one point my available credit limit (including all cards) was over $22,000!

Time went on and balances became unmanageable. I played the credit card shuffle like most people. A balance transfer offer would show up in the mail and I would move my balances over to it. Six months (or a year) would pass at a low rate then I would have to do it all over again. Once again, I was being a good credit customer. I paid on time, I paid my interest, and when I transferred balances I paid all those ridiculous fees. Life was good.

Then 2009 shows up. The shit hit the fan in the economic world thanks to the housing market and all that crap and banks and creditors started panicking. I started getting letters in the mail from creditors cutting my available credit to nearly nothing. Bank of America was the biggest offender. I had a $18,000 credit limit (with NO balance) and they reduced it to $1,000. This happened with every one of my credit cards and soon I was stuck. My previous trick of shuffling my debt around for decent rates was no more. I couldn't transfer balances off other cards so when full APRs kicked in I was stuck. This basically doubled my interest payment each month (into the $600 range). This wasn't my payment... this was just the interest added to my cards. I was fucked.

I considered my options. I could just screw them all and stop paying (like many people were forced to do during this time period) or I could file bankruptcy or find some debt pay off plan. Being the decent consumer (even when creditors were not) I opted to pay back my balances in full and I found a payment plan company. Basically I made one lump payment each month to them and they dispersed the funds to the credit cards. I pay them a $50 a month fee and they do the foot work. My interest rates get knocked down and they setup the plan to pay off all the cards I submit in 5 years. I didn't know at the time that you can deal directly with credit card companies and get yourself into a 'debt plan'. All you have to do is call them up and tell them you want to get onto a debt repayment plan. They suspend you account and reduce your interest rate.

This coupled with my plan to have Chris help me pay off my debt (Chris McGinty, Emeny of Debt Season 2) should help me kill off my credit balances. This is my main goal when it comes to getting my finances in order. Chris will want to go after my cars and home and such but I am more interested in getting rid of the credit debt.

No comments :

Post a Comment