Wednesday, August 14, 2013
Todd Ossenfort is an outspoken leader in the consumer debt management industry and answers questions about consumer debt management techniques.
April 17, 2013 - Todd Ossenfort, The Credit Guy: Hello Mr. Ossenfort: Hi, I have a delinquent credit card for $10,000 and I want to fix my credit again but I don’t want to pay 30.99% interest on the card and I don’t have 10 grand lying around anymore. What should I do? My son has one of those Amex cards and has offered to add me to the account and transfer the balance to it. Should I do it that way? Or should I just wait for it to charge off because it has been delinquent for over a year?
The first thing I noticed in your question is that you state you don’t “want” to pay 30.99 percent interest on your credit card balance, not that you “can’t” pay. No one wants to pay high interest rates on their credit card balances. Sometimes, however, due to circumstances outside or within our control we must.
Your son may be willing to help you out, but you and your son will be much better off if you resolve this situation on your own. Your son has his own life and credit score to worry about, and I believe you have the resources to pay your debt without his assistance.
Getting out from under the more than 30 percent interest on your credit card balance is a great goal but because you have not paid on the card in more than a year, qualifying for a lower interest rate card will be difficult to say the least.
I recommend that you contact your lender to determine what it will take to bring your account current. Once you know what the lender expects, take a good look at your current financial situation and decide if you can afford to make the payment(s) that it will take to satisfy your lender. It may be time to get a second job or cut back on some entertainment items. Be sure while you are negotiating on bringing your account current that your lender agrees (in writing) to note on your credit report that the account is now current. It may take up to 90 days for the credit card company to update your credit report.
Bringing your account current accomplishes two things, it gets you back into a good relationship with your current lender and it shows potential lenders that you have straightened out the problems with your account and are now current and paying as agreed.
You will have to pay on time for several months once your account becomes current to begin applying for a lower interest rate card. You might begin with your current lender and let them know you need a lower rate or you will do a balance transfer to another card. They may not be willing, to lower the interest right away but it is worth a try.
If you do transfer your balance to a lower interest rate card, be sure that you make all payments on time and that you are not charging additional purchases. This includes your telephone bill, utilities and needless to say any other credit cards you may have balances on. By the way, next time you do have $10,000 lying around, make good use of it and pay down your debts!
Take care of your credit!