Author Topic: How to lower credit card and loan interest rates.  (Read 1284 times)

nsmall

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How to lower credit card and loan interest rates.
« on: October 01, 2019, 11:22:44 PM »
Thanks in advance for all your help.

My sister has 135k in student loans and 25k in credit card debt.

I know one of her cards she has had for 10 years is 22% and its 7k.

I can find more numbers/rates if you need me too.

I am trying to help her.  Neither of us have ever tried to negotiate lower rates and I trust you all before doing my own research online.

One a side note, she makes 85k a year as a college professor in LA.

She has a low credit score.

She has no assets

Where does she start?

Someone mentioned a thread on reddit.

Any suggestions?

Thanks again

secondcor521

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Re: How to lower credit card and loan interest rates.
« Reply #1 on: October 02, 2019, 01:56:53 AM »
0.  Cut her lifestyle.  No vacations, no eating out, no buying anything new except food.

1.  Make a list of all of her debts:  Creditor, balance, interest rate.

2.  Sort the list in descending order by interest rate.

3.  Call each creditor and politely ask them to reduce the interest rate.

4.  Make minimum payments on all debts.

5.  Throw all extra available on the #1 debt until it's gone.

6.  Keep repeating all of the above until done.

...

Most people's real problem is at step 0.  It's a lot less fun and a lot more uncommon to dig out of debt than to dig into debt.  The big question for her is whether she actually wants to get out of debt and subsequently live a debt-free lifestyle, or if just doesn't like the annoyance of half (*) of her take home pay going to interest because it's constricting her ability to buy more stuff.

...

She probably has done something bad to have a low credit score.  She missed credit card payments (plural), or had a car repossessed, or something.  She should stop doing whatever it was that led to her low score, and stop doing whatever she did that lead her to do whatever she did that led to her low score.  (You could try the "5 whys" technique to get at the root cause of her low credit score.  Google it.)

Fixing her credit score will ultimately help her get lower rates, but lower rates are not really the biggest part of paying back a ton of debt.  I think you really just have to get disgusted with it and hack at it with everything you have until you start to get a bloodlust sort of thrill of seeing those balances drop like a stone and see the light at the end of the tunnel and the possibility of what you can do if you're earning interest instead of paying it and decide that's what you really want.

...

(*) Guestimate, but I'm probably close.

...

Good luck.

Catbert

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Re: How to lower credit card and loan interest rates.
« Reply #2 on: October 02, 2019, 10:15:18 AM »
So is her credit score high as you said on the bankruptcy thread or low as you say here?

If its high(ish) she should be able to get a cc with the low or 0% introductory rate for awhile.  IIRC Slate will offer 0% for 15 months if you "transfer" another cc balance.  I found this article using google.

https://www.creditkarma.com/creditcards/explore/i/balance-transfer-cards/?adcopy=1339328566_55178632273_262421786575&adgroup=Zero_Interest_Balance_Transfer_Credit_Cards&adcampaign=Credit_Cards_-_Balance_Transfer_-_Broad

If she has a low score she'll have a much harder time.  After all, if she misses payments or makes them late a high interest rate makes sense.

nsmall

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Re: How to lower credit card and loan interest rates.
« Reply #3 on: October 02, 2019, 10:45:29 AM »
My apologies, she has a low credit score.

Thanks for all of your help.

nsmall

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Re: How to lower credit card and loan interest rates.
« Reply #4 on: October 02, 2019, 10:47:21 AM »
Let me know if you need any more details and I can talk to my sister.  It's just crazy how we both grew up in the same household (poor) and how different we are with money. 

DeniseNJ

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Re: How to lower credit card and loan interest rates.
« Reply #5 on: October 02, 2019, 01:04:02 PM »
Just call the credit card companies.  Say, I need to speak to someone about lowering my rate.  I can't continue to make these payments.

If they say no, ask to speak with someone else.

EscapedApe

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Re: How to lower credit card and loan interest rates.
« Reply #6 on: October 10, 2019, 12:59:47 PM »
secondcor521 pretty much nailed it. Your sister needs to cut all extraneous spending, buckle down, and work at her debts until they're all gone. This will mean sacrifices that she possibly isn't accustomed to.

Spending above your income is what leads to debts, so that spending must be eliminated to prevent further debt accrual. The lower your spending, the more money you have to launch at your debts and eliminate them.

 

Wow, a phone plan for fifteen bucks!