Wednesday, April 8, 2009

Blessing in Disguise...

I've been on hold with *insert company here* for 15 minutes (Losers!). I got a notice in the mail on Monday that my interest rate was going from a fixed 4.9% to a variable 10.61%. It doesn't clearly explain what the variable rate is based on. Most variable rates are based on the prime rate, this card, not so much.

I talked to them on Monday and it seemed my only options were to 1) pay the higher rate or 2) close the card and keep the rate. I rarely use the card and I have other cards with more history, so I don't mind closing it on those accounts. But I'm worried about my debt to available credit ratio. If I close the card it'll go down by about 40%, which will put a huge dent in my fabulous credit score.

I was reading the MSN Money board (you are what you read) and came across a topic about this. Another consumer said BOA told him closing the card wouldn't be reported to the credit bureaus until he's finished paying it off. If that's the case, I'll close this bad boy swiftly. If not, I'm between a rock and a hard place. That's what I'm currently on hold to talk to them about.

I'm livid, pissed, furious and most of all hurt. My rate increased because I pay my all of my bills on time, resulting in a good credit score and because I carry a large balance on this card. That makes me an easy target for them to get more money from since they aren't going to get any money from people who are delinquent or file bankruptcy or who don't carry balances. Been on hold for 23 minutes now.

I've been following the Suze Orman method for paying my credit cards off, which is to pay the card with the highest interest rate first (rather than the card with the highest balance). You pay a lot on the high interest rate cards and the minimum balance on all the others. It's worked so far, I've paid 4 credit cards off in about 16 months. I'm very proud of myself, but I feel like I've just been punched in the stomach with this news.

29 minutes later... just got off the phone with them and guess what, I do NOT have to close the card to reject the charge. You already know what I'm doing... the stanky legg. This is a little blessing in disguise because truth be told, I spend just enough on this card monthly, so that I don't go over my credit limit, pay the minimum balance, and then do it again. (Don't tell my big brother, he'd be disappointed if he knew I was still using it.)

Update from BOA is that the card stays open on my credit report and all I have to do is not use it. If I use it, that means I accept the terms and conditions. They're sending me a letter in writing to say that they understand that I rejected the charge. AND once the card is paid off I'll have more leverage to get a lower fixed rate (or keep the rate I have).

Please believe, I took a pause from writing this entry to cut that bad boy up into tiny little pieces, so I can't see how using the card will be a problem.

I'll be credit card debt free by December 31st, 2010!!! Don't trip it's only 20 months away. 20 months ago (August 2007) seems like yesterday... remember D's wedding, NYC with PyT and Kel? Yeah, it'll breeze by. I'm so excited.

Thank You Lord for turning something that could have been seen as negative into a financial blessing for me. AMEN!


JOE CASTRO said...

What I don't understand is, with banks getting all this money from the government (our money, might I add), why are they still trying to put the squeeze on the general public? You would think that since you consistently pay them on time, they would break their backs to keep YOU happy. I'm glad that worked out for you though; otherwise you would not have had a reason to do the stanky leg (but does anyone ever truly need a reason?).

Brown Girl Gumbo said...

Glad to hear that you cut it up into tiny little pieces. Banks in general are just so corrupt, but we already know that.

Congrats on being credit card debt free Dec. 31st of next year!! It'll feel like a weight has been lifted!!

Btw, did you see Suze Orman on Oprah last week? She was talking about how due to the recession now people should pay only the minimum on credit card balances. Hmm...

Spiderlgs said...

You go girl. I am trying to get debt free myself. I used my tax return to pay off my other lines of credit and now I have just one measly card to pay off. I should be done with it by next year too.. given wedding expenses that I am using my extra cash to pay off. I feel ya. Taking control of yourself and your finances. :-)

T said...

@ BGG, Nope, I didn't see Suze Orman on Oprah, but I guess I'm going to have to youtube it, because paying only the minimum sounds ludicrous. I hope she's talking to people who pay their cards off every month. People with big balances like me that pay only the minimum will be subject to a lifetime of debt and I'm not on that.

boogie said...

so, i just saw a news story on this topic, speaking specifically on BOA. They are raising interest rates on ALL customers who have an interest rate lower then 10%. So my beautiful black people, look into this matter just like T did!

they need money to stay afloat. however, if they keep raising rates, fewer people will be able to make payments...hmmm...but i guess that keeps them in business.