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Author: krissy1130 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: really bad cc situation Date: 9/23/2000 11:44 AM
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I have a credit card with Providian Visa and it has been over the limit since last year. Every month they tack on a $30 over the limit fee and my balance grows and grows because I have only been paying the $25 minimum that they require. I am a bit over extended and am considering turning to a cccs for help. This is the only card which is in bad shape. My others are maxed but not over limit or late. My questions are:
How can I get these over limit fees to stop? If I close the account and continue to pay, will they cease? and If I want to apply for a mortgage Maryland Bond or FHA within the next five years, how will the cccs connection affect my chances for a mortgage? I really want to get out of debt fast. What do you reccomend?



Krissy
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Author: BigMoneyJim One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44930 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 1:52 PM
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AAAAAUUUUGGGGHHHHH!! <screams and the "eee! eee! eee!" sounds from the movie "Psycho" (like when she's getting repeatedly stabbed in the shower)>

This is the scariest thing I've seen on this board! Without charging anything (please tell us you're not charging anything), your balance is going up and up. Not only does that $5 ($30 fee - $25 minimum payment) add on to your balance each month, but the interest is adding on, and each successive month you're paying interest on overlimit fees and previous interest. This is the scariest compounding I've ever heard of! Depending on you're balance, you're effective APR must be in the 30%-50% range. (Very rough guess; I didn't do any calculations.)

Danger! Danger! Danger! This compounding will accelerate if you don't do something about it right now.

Okay, I'll try to calm down now. The first thing to do is every month, pay no less than the late fee plus the interest charges, both of which are listed on your bill. You really need to pay more than that, but consider that your new minimum payment.

I'll leave the rest to the other, calmer and more experienced Fools to help with.

-Jim

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Author: jthrelkeld Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44933 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 3:24 PM
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Hi Krissy,

I second BigMoneyJim's hysteria. You are in danger of drowning in credit card quicksand.

If you are really stretched to the limit and cannot take Jim's suggestion, what you might be able to do is call up one of your other card issuers and ask if they'll raise you available credit and help arrange for a balance transfer from Providian. Then you could at least transfer enough off of the Providian card to get it below their limit and stop the "over limit" fees.

A lot of people will think this is a hideously awful idea because it's just moving the debt to another location. But if it will at least help you stop the bleeding of money to Providian (and the damage to your credit), it's not a bad temporary solution which will at least stabilize your situation.

I'm using the words "at least" deliberately. Staunching your outflow of money to interest and fees is the very least you need to do. Don't stop there, though!

You've absolutely got to start paying off your cards, especially if they're maxed out. If you're paying the minimums on them, you will be paying them off for, well, forever. It's time to look at where your money is going every month and figure out how to cut expenses in order to free up some cash to pay toward your outstanding balances. Also, if you're only able to pay the minimums, it's a warning sign that you're overextended and need to start living below your means.

Might I suggest checking out the Living Below Your Means board and the Budgeting board here on the Fool?

Mortgage issuers like to see a clean credit sheet. You're likely to get a better mortgage rate, not to mention that if you're not saddled with credit card debt, you'll find it a lot easier to handle the cost of owning property when the time comes.

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Author: jennihart One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44935 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 3:54 PM
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I've had experience with Providian and know exactly where you're at.

Closing your account and continuing to pay will NOT stop the over limit fees. The only thing that will stop the over limit fees will be paying more than the minimum until you are no longer over the limit. The fastest, of course, would be to pay the entire over limit amount.

Contracting with CCCS will probably stop the over limit fees also. I've been working with them for a year now and interest rates dropped and many card issuers stopped those excessive fees. Some did not. Be aware of that if you use CCCS.

As for how it will affect your ability to obtain a mortgage, I'm not sure. Which is worse, being WAY over extended with high credit card balances on your credit file or showing that you have made a concerted effort to regain/maintain control over your credit situation? Some other Fools may be able to answer that better than I.

Best of luck!

Jenni

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Author: wildgirl Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44937 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 5:02 PM
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25 dollars a month you pay! Oy! Get with the program and get this paid off in a timely matter. I am the original white trash poor and have stocks, mutual funds which I contribute 100 dollars a month to at a minimum, keep up with two kids expenditures and a non-working spouse. I also have at least 9 credit cards and you may believe that I pay a lot more than 25 dollars a month!!

I have never and would never pay a fee!

Ok one time, but I was in jail and CapOne was kind enough to forgive me. Missed a payment cycle...

Another entertaining story...

Get to work unload that horrible slimey Providian and never get near them again...

wdg :>
boyfriend home all weekend and her blood pressure is high.

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Author: estermae Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44938 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 5:17 PM
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Krissy,

Everyone has given excellent advise. I will just add to it.

First, on the CCCS program, Providian will stop overlimit fees and reduce the interest 4% below current rate. Not as good as most but better than what you are paying them now. Your other credit card interest rates will probably reduce even more. If you want a mortgage you need to pay off your credit cards!

If you do decide to go on the program, your credit report will reflect your on a debt management program. Many creditors view this negatively. In the future, if you apply for a mortgage while still on the program, you can ask your counselor for assistance. Believe me, it can be worked out. The lenders want to lend money as much as you want to borrow it. You are more likely to be denied a mortgage for being maxed out on your credit cards with no means to pay them off.

Once you have compleated the program or dropped yourself you can get a letter from your counselor stating that you are no longer in the program and send it into the credit bureaus to have the notations removed.

Good luck Krissy,
Ester




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Author: sfvalleyinvester Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44940 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 5:33 PM
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Hey fools.....cut up every credit card you have NOW.. AT ONCE ,PRONTO, ASAP, DON'T WAIT!!! Do not put them in a drawer or file... get rid of all your plastic now. As for paying off the balances.. the snowball method is the best. If you own a property and can get second mortgage money to pay off the cc debt, then that will solve the money crunch and provide a tax deduction too. BUT...make sure you can afford the monthly mortgage payment or you run the risk of losing your house. I wish good luck to all you FOOLS !!

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Author: BigMoneyJim One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44941 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 6:39 PM
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"I am a bit over extended and am considering turning to a cccs for help."

"My [other credit cards] are maxed but not over limit or late."

"If I want to apply for a mortgage . . . within the next five years . . . ."

-Krissy


One thing I haven't seen addressed yet is that you say you're "over extended".

-----

Whoah! Brakes! Time out. I just checked your profile; you've posted a total of three times, and it's been variations on this same question. And I sense a lot of inexperience.

I'll email this to you in case you don't know how to review your replies, and I'll point you in some helpful directions. (The Motley Fool forwards the email to you; I won't know your email address unless you reply to my email. But come back to the boards and post a reply to let us know what you're finding out.)

Leviathan had a very good reply on how to lower your interest rates in this post: http://boards.fool.com/Message.asp?mid=13210444

Many credit card questions are answered in the FAQ: http://boards.fool.com/Message.asp?id=1040004001986000

Here is some beginner's info on how to get the most out of these message boards: http://www.fool.com/community/foolboards/tutorial.htm

This link will show you the responses you've had to your posts (assuming you are logged in): http://boards.fool.com/YourPosts.asp

Okay, time in.

-----

You say you are over extedned with maxed out credit cards. That's a very, very bad position to be in, especially if you're wanting to buy a house.

This seems to be the general advice for getting back in control of your finances and debt: First, stop spending more than you make. Learn to live below your means. America today seems to be a cultrue of spend, spend, spend, borrow and spend some more. But if you ever want a chance at being financially independent you need to spend less than you earn. And if you want to pay off those credit cards you must spend less than you earn, preferably much less.

The Living Below Your Means board is a board like this where people discuss how they spend less money: http://boards.fool.com/Messages.asp?mid=13321857&bid=100158

Here are some tips for Living Below Your Means: http://boards.fool.com/Message.asp?id=1040018005951000

This is the FAQ for Living Below Your Means: http://boards.fool.com/message.asp?id=1040018001439000

Since you are overextended and maxed out, you may need to consider selling a car with car payments and buying an old car for cash, or moving into a smaller apartment. I don't know if these apply to you, but these are the type of seemingly major choices you may need to make to get out of debt.

Minimum payments: Minimum payments are your worst enemy and your Visa's best friend. Basically they keep you in debt forever. Especially in your case where your minimum payment isn't covering interest plus fees! You said you've been over limit and paying minimum since last year. You may have noticed by now that your debt is growing faster than before. That's because of compounded interest. If you don't do something now, your debt will increase like this:

XX
XX
XX
XX
XX XX
XX XX
XX XX
XX XX XX
XX XX XX XX
XX XX XX XX XX
XX XX XX XX XX XX XX
XX XX XX XX XX XX XX XX XX - Level of current debt
. . . . . . . . .
Time

(Note: level of current debt is not zero, so graph mainly shows growth of future interest and fees, but it's still very scary.)

It will accelerate (instead of being a straight line) because you're paying interest on top of interest, and the beast keeps growing. You need to find a way to pay as much as you can to your credit cards each month. Pay on your Providian until it is below its limit, then pay minimum payments on all but your highest interest CC, and pay as much as you can to it until it is paid off. Repeat with the next highest interest reate CC.

Credit counseling services: Read the FAQ about these, and maybe read around this board a bit. (And read your replies.) They may be able to help, but not everyone needs them. And they're funded by the people you borrow your money from. But if your in dire straits they may be the way to go.

If you have retirement savings (IRA, 401(k)) I think they are protected from your creditors, so you probably don't want to use them for that reason and because of huge costs due to penalties, taxes and loss of opportunity.

Well, this is getting very long, but I hope it points you in the right direction. (And I hope it doesn't overload your email service!)

This is serious business; start learning and taking control now.

Good luck,
Jim

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Author: lawrenceEllison Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44943 of 308782
Subject: Re: really bad cc situation Date: 9/23/2000 7:53 PM
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PROVIDIAN IS THE WORST!!!!!!!!!!!!!!!!!!!!!!!!

I had to get a providian card several years ago because my credit was less then great. Now I have great credit and I am going to transfer my entire balance to a lower rate card. The reason I dont like Providian is they wont lower my intrest rate but every six monthts they raise my credit limit for paying on time. Recentley the offered to upgrade my classic to gold raise my limit another 1000 and charge 89 annual fee. HAHA the just want to make money bye bye providian

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Author: MikePSD Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44956 of 308782
Subject: Re: really bad cc situation Date: 9/24/2000 1:30 PM
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Krissy,
I agree with the other posters. You have to get that Providian Card down below the limit now. Whether it be a transfer from another card or cash from somewhere else.
You didn't say how much over the limit you are. This will snowball into a disaster if it is not fixed. Did you talk to Providian about possibly stopping just the fee? I would.
Mike

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Author: Makatak One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44992 of 308782
Subject: Re: really bad cc situation Date: 9/25/2000 10:15 AM
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krissy1130 wrote:
How can I get these over limit fees to stop? If I close the account and continue to pay, will they cease?

Krissy,
Among the finest of the fine print in many CC agreements is what happens if you close an account to new purchases. This can include a huge interest rate boost which can make it even more difficult to pay off your balance. Check out your CC fine print before even considering closing an account with a balance (and you might want to double check with a service representative). A lot of times it's better to hide or destroy the card and treat the CC account as a loan: don't charge to it anymore, just send payments.

Since you've posted to this board, you've probably already read the MF "Getting Out of Debt" section, but here's the link anyway:
http://www.fool.com/credit/credit.htm?ref=DSVcred
It contains tons of information about how to deal with credit and creditors. It definitely has helped me!

Good luck and we'll do a happy dance when the time comes. :)

Makatak



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Author: wilkun Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44997 of 308782
Subject: Re: really bad cc situation Date: 9/25/2000 11:48 AM
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I am a bit over extended... This is the only card which is in bad shape. My others are maxed but not over limit or late.

Hi Krissy,

First, the verbal spanking:

No, you aren't "a bit overextended". You're WAY overextended.

*thwack*

Your other cards aren't in "bad" shape? You're right here- they're in atrocious shape. Don't kid us, and for heaven's sake don't kid yourself about this. Yes, it's possible that this situation has come about due to some terrible expenses you've quite legitimately incurred, but the attitude expressed in your note suggests that you've simply been spending WAY more than you should be.

*thwack* *thwack*

OK, now the tender smiles, pained but loving look, and heartfelt discussion part:

You can get through this. You can most certainly rebuild your credit, and start setting yourself up for a bright future, although it will take time, patience and perserverance. You can do it, though, and will find yourself a better person, with a tremendous sense of accomplishment for having done so.

First things first- dispose of all but one card, and put that one in deep freeze- perhaps even resolving to keep it at home, and not on your person- for use only in the most dire of emergencies. A new bag is *not* an emergency. A blown gasket is.

The debt consolidation suggestions you've been given are excellent. Aggressively pay down your cards in order of the interest payments you're accruing. If you're working a full-time M-F job, I suggest you look for something on the weekends at least short-term, putting every cent into debt reduction. Will it be hard? Will it really stink on ice having less time to call your own? You bet, but Krissy, you need to get that debt cut, or it's going to cause you a great deal more hardship than a few months of missed weekends due to clerking, flipping burgers or selling Eddie Bauer sweats.

Visit the Fool's Living Below Your Means board, or the Budgeting board. While the LBYM board does get bogged down at times due to its heavy traffic, both will offer you some excellent tips towards the lifestyle change that might be required here. Heck, visit the Retire Early Homepage board as well- there's a goal to get excited about, and it's far more reachable than most think!

Most of all, sit down and ask yourself what could be gained if you were investing the amounts you're instead handing off to various credit agencies. Pretty amazing, when you think of it that way, isn't it? Make it your goal to make it so.

I wish you the very best of luck, and I've no doubt that you'll make it, because clearly, deep down, you want to.

All my best wishes,

Wilkun

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Author: EMTneeded One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47275 of 308782
Subject: Re: really bad cc situation Date: 10/20/2000 5:47 PM
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You probably also being charged a late payment fee since you only pay $25. I have been in this exact situatio, with Providian. Bite the bullet one month and pay to $20+interest under your limit. pay before the due date and they don't charge a fee (my United card charges a fee the day after the statement prints, Providian is the day after your due date). THe next month revert back to the $25/month until you can send more.

You could take the route a friend of mine took with Providian, not pay a cent, let them ruin your credit and hope they don't sue. But them you can say goodbye to that house.

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