[wsmith]

A family member is loaning me $20K to pay off part of my $33K credit card debt. The loan will enable me to pay off the balances in full on two of the highest-interest rate cards, and part of the next highest-rate card.

I'd love to just call the bastards up & close the accounts as soon as the balances are paid, but I know I can probably use the leverage of paying off the full balances to negotiate lower rates, with the idea of doing a balance transfer on at least part of the debt I have remaining.

I did some of this phone negotiation stuff years ago w/ pretty good success, but the credit card industry has gotten so competitive lately, I'm wondering if people who've done it recently have some advice (particularly if they've dealt with Chase, the company I'll be negotiating w/, but any advice welcome!). Thanks!

[LisaB4657]

Please allow me to make a suggestion. Rather than negotiating lower rates, please consider closing the two accounts where you are paying the balances in full. Then apply for a new account with one of the dozens of companies that offer 0% for balance transfers. Once you obtain this new account, transfer all remaining balances and close all of your other credit card accounts. If you owe $33,000 in credit card bills and you need to borrow a substantial amount from a family member just to pay off a portion of it, then you need to stop using credit cards. Transfer all of the balances to your new account and then lock the new card away, to be used only for a real emergency. Most financial advisors will tell you that you should not spend more than 15% of your monthly after-tax income on credit card bills. Please use that as a guide in the future, once you get your situation under control.

[fredg]

Hi,
I agree with Lisa.
I would accept a new credit card, different company. Many are online, through searching.
A new "sign-up" in most cases, offer 0% interested charges for 6 months or a yr, whatever, and will do that if you transfer other credit card companies' bills to them.
I would then call Chase, or whoever, and cancel your account, and be SURE to tell the representative to cancel it "at customers request". In that way, it will not hurt your credit rating later. (There might be some problem with the cancelled credit card company saying THEY cancelled it on you, not you.)
I do know that getting in "over one's head" with credit cards is easy to do, or can be done if there is a hugh money emergency.
Personally, I don't charge anything on either of our 2 different credit cards, unless I can pay them off when I receive the bill.
I do wish you the best, and hope you can reach a good decision about this.

[wsmith]

Thanks for the advice. I am already determined to end my credit card use, I've actually stopped using the cards months ago and am just trying to get the balances and rates manageable. I'd like to close the accounts that I pay off in full immediately, but I know that this partly affects my credit rating (even if it's noted on my credit record that they were closed on my request). My concern is not the temptation to use these accounts again, but rebuilding my credit rating. And getting a lower rate on my remaining balances of course (I'll still be carrying over $9K on a card charging me %25.5 interest unless I can negotiate).

[LisaB4657]

Your credit rating will not be hurt by closing those accounts. A credit rating is built up in two ways: (1) always making payments on time; and (2) not carrying a large amount of risk. A lender reviewing your credit rating would rather see you with one or two cards and a relatively low credit limit (such as $10,000 per card) than several empty cards with high credit limit. That's because they are afraid that they could give you a loan and then you would go out and max out all of your cards. If you had only $10,000 debt outstanding and a maximum of $20,000 credit limit that is more attractive to them than seeing you with $10,000 debt outstanding and a $50,000 credit limit. So don't hesitate to close those accounts. Keep one or two accounts open but don't use them unless you are able to pay it in full when the bill comes.