Monday, July 14, 2008

The Main Event

I've had this credit card for the longest of all the rest. I took it when I was just starting to work. At least there are no cosigners on it.
I would've waited for the statement to come in the mail but I decided to give you the numbers right now. Currently it has a balance of $7046.51
The thing that bothers me the most about this card is that just 10 months ago it had almost no balance. Well except for the dollar amounts. I used it to purchase airline tickets for my wife (who made 2 trips to the US in 2007) to start businesses here that just failed. I also used it to lend money to relatives on my wife's side who never payed me. I used it to buy company stuff, including some $2000 worth of software. Then I got refunded by the company and used only part of it to pay this card and the rest to pay other cards.
Remember I told you I had taken an extrafinancing to buy my car and my dad helped me with rest? well this is the card that gave me that extrafinancing. Right now that balance I wrote before probably includes several of the payments I should've made on my extrafinancing.
My last statement said they were charging my payment #25 out of 36. The monthly payment of that is $253, so with 11 payments to go that's $2783 to add to the balance stated earlier. At least this payment is fixed at at lower rate.
The way extrafinancing works with most credit cards here is they set up a loan for you at some reasonable rate. Mine was 25%, then each month they charge the credit card the amount of one payment. It's up to you to pay your credit card (preferably the whole balance). Most credit cards will set the minimum payment to something a bit more than the extrafinancing monthly payment, so if one could say where the money goes it should be going to pay the extrafinancing.
In reality you really don't know since they are just slowly transfering the loan from one rate to a higher one. It's up to the person to keep up and not let the credit card balance rise (as I so miserably did).
Credit cards in Honduras actually have two balances one in Lempiras and one in dollars. So my Lempira balance was well, but my dollar balance was going up high. I started paying the dollar balance but in reality I was taking money from the lempira balance to pay for the dollar balance and to pay other credit cards too! I was desperate to keep up. 
One positive thing is that the lempira balance is in the same currency as my paycheck so I know that I owe that specific amount. The dollar balance could become more difficult to pay if our currency slides against the dollar. Right now it's at 19.02 Lempiras for one dollar. But if it were to slide just a few cents I could mean that i would have to pay more lempiras to cover my dollar balance payments. Let's hope it's stays the way it has been for a couple of years now.
Deep in my gut I feel that I will have to go to them and request a payment plan. I've done it with 2 other cards that I will write about later. It's an awfull feeling of shame. However at least in the previous cases the people have been nice enough since they want to get payed someway. At least I don't have to worry about this card until August 1st. That will give me some thing to think about what to do. Right now, getting a payment plan (preferably a long one) would seem to be the way to go.


La Gringa said...

Thanks for explaining the "extrafinancing." I wasn't sure what that was or how it works.

AJ said...

Your welcome. "extrafinancing" is usually restricted to store purchases such as TV's furniture, jewelry or appliances. However sometimes the credit card company will send you a letter stating that you can just take the cash out and use it as you wish.

As with all financial products, I should have used it with caution since it was just extending the potential for debt. At the time I did have resources to pay it but they dried up too quickly.

La Gringa said...

Bad news: I read in La Prensa that the banks are going to increase the extrafinancing interest rate by 2%. I don't know if that applies going forward or to current accounts.

AJ said...

Well the bad news is partially true.

The same bank that I have a credit card with extrafinancing and a loan has acted differently on either case. Credit card and extrafinancing have stayed at the same rate. Loan has had it's rate increase and so they raised my monthly payment.

However they have given me a change to lengthen my term and even hopefully re-finance the whole loan. I wrote about it in a more recent post