Wednesday, February 4, 2009

calls that make me smile

Well, to all those thousands of people that commented and sent me private emails telling me not to refinance my car, i'm happy to say that I'm not going to do it. The interest rate is 60% on such a loan. One card I want to pay has a interest rate of 54% and the other two are at 59% and 52% so it just doesn't make financial sense.
I remember that I read on LG's blog that some credit cards charged 70% or more. I have platinum and gold cards so maybe the lower, more common cards charge more. Honestly I was surprised that my rates weren't up there in the 70's cause it sure feels like a lot of money in interest.  
So here I was yesterday wondering how was I going to get a jumpstart to start reducing the money I owe. In other words, paying my debt. I have two jobs now. the main job pays for my monthly expenses and a company loan. The other job now is my main source to pay my minimum payments on three credit cards and the payment plans on the other two. So even tough I'm making headway on two cards the other three are killing me and I couldn't earn enough to just pay a lot on one and snowball it from there.
The phone rang and there's this lady calling me to tell me that they have approved me a line of extrafinancing (from one of my active credit cards) of L66,000.00 that I can take now. Being now more cautious than before I ask for the rate and it's 42%. Argh, not the 25% i'm used to on extrafinancing from past times but better than the credit card rates stated above.
Anyway, I took for a term of 36 months. I could've gone up to 48 but I thought that it might be extending it too much into the future.
With that I plan to pay my Alianza-Bac-Unitec cellphone card. It will still get charged with our cellphone bills but I will make sure to pay them in full every month. I will still have about 26,000.00 left to pay on my Bac Visa Platinum card which has a bigger balance. I think that's best to pay this card because if I miss a payment on either of them the bank blocks both and if there's a real emergency I can't use either of them. By emergency I mean something medical!
Of course i've learned to keep all of this a secret from my wife. And I feel it is right to do so because I still owe money, I just have lower payments.
What do you think about this ?
On a side story i'm installing debt tickers at the bottom of the blog's main page. I was wondering how to set it up because the way they work doesn't fit me precisely. So in the end I thought I will one debt ticker per debt instead of a single one for all the money I owe. I have a test ticker right now. Tell me what you think.
Well at the ticker was free and so is this blog.


La Gringa said...

I'm not sure I understand what this is so I'm going to guess and you can tell me if I'm wrong. You have refinanced one credit card balance at a lower of 48% and gotten a new loan of L.26,000 in the process? And you are going to take all of that L.26,000 to pay off another higher rate card? If so, that sounds very good.

Yes, it is too bad that they wouldn't do the 25% rate, but keep trying with your other cards. I don't know how this works or the bank's thinking, but perhaps if you are diligent with your payments, some of those other banks will consider extrafinancing in the future. Keep trying.

I think you are right to not mention this to your wife. Just use the money to directly pay off (or down) another card -- should be your card with the highest rate.

When I mentioned 70%, that was just what I've heard from others and may be outdated information. In any case, 50%-60%-70% interest is just obscene!

La Gringa said...

Whoops. I should have said 42% not 48%.

AJ said...

You are correct in that I took a line of extrafinancing that allows me to move my whole debt from one credit card to this new extrafinancing that is at 42% and still have about 26k left to put down towards debt on another of the credit cards.

I have asked for extranfancing on BAC and they have flat out told me that they can't give me because I have been missing payments and I need to have at least 6 continous month of good payment behavior. Either that or cosigners that earn more than me.

HSBC won't refinancing or set me up with a payment plan. I guess i'm not deep in debt enough for them!

The check just arrived today. I'm going to deposit it hopefully today.

La Gringa said...

Okay. I'm glad that I understood that. Remember: EVERY CENTAVO goes to paying down the debt! Don't kid yourself that you need to buy this or that thing because your goal is to decrease your debt not increase it (--LG in tough love mode)

The stable payment history makes sense for the bank. If they are going to have to file suit for a bad debt, they want the amount to be as high as possible. Similarly, if they are going to give someone a break, they want to make sure that you are worthy. So just keep at it and be diligent about making at least the minimum payment and ALWAYS on time. Maybe those other banks will come around.

I don't know how you are prioritizing which card gets paid off first, but you might consider paying off the bank(s) that don't/won't offer extrafinancing first, with the hope that in a few months you can convince the other cards to reduce your interest rate.

AJ said...

After paying the lowest balance-card the other two have about the same balance. HSBC is the one that won't give me extrafinancing and is physically more difficult for me to pay so I will put the 26k on that debt. BAC is the one that has been telling me they need to see good payment history to let me take again refinancing (which i'm on payment 33 out of 36 this month). So I think you are right.

I was going to do it the other way around but your idea sounds better. And yes I'm going to do it all with transfers so as to not get any cash in my hands. I'm sending someone to deposit it and will ACH it over to BAC

Alita said...

Yesterday I saw the documental: "Maxed Out" directed by James D. Scurlock. In this documental you can see how evil banks and credit cards companies can be. It's very good, you should rent it.