For those of you who are on your way to getting out of debt and working towards the light at the end of the tunnel, paying credit cards may feel like it eats every cent you make. A few months ago I paid the minimum or almost on multiple cards and tried to scrape as much as possible to keep things together. As you can see, I got into a bad debt situation. However, I was lucky that I never missed a payment or otherwise gave the credit card companies an excuse to pursue the universal standard policy and to raise my interest rate.

But one day I was not prepared for what I got in my mail – a message from Chase, with whom I have two cards with a large balance, stating that from the following month minimum payments would amount to 5% of the balance month, from 2%. I started to panic. I didn’t have an easy time making the 2% payments per month, and I certainly wasn’t able to pay 5%. That alone would be more than a thousand dollars a month, and I would literally have no money left. I had raised extra money here and there, but certainly not enough to cover the difference, and I wouldn’t have time to come up with the extra money, not even to cover the increased payment for the following month.

So I did the only thing I could think of. I called Chase and said, “I can’t pay the minimum.”

And you know what? It was not the end of the world. It was really the start of the climb outside. I was immediately transferred to a very nice woman who asked me about my income and expenses (then my friend was unemployed and his mother also lived with us). I was surprised how caring and non-judgmental she was. She put all my numbers in the computer and said I qualified to make a payment plan. The plan included closing the credit cards and giving a fixed and fixed monthly payment, which allowed me to pay off the cards in five years. My cards received a fixed interest rate of 6% and my minimum dropped below their previous level. I was so shocked that when I got out I started to cry with relief.

A few days later I received a letter in the e-mail stating that one of the card’s rates was further reduced to 2% and that the payment was also reduced.

I decided that I would call the courier of my big bank, Bank of America, and see what they could do for me. The woman there was also extremely helpful, and even asked me if I had pets, so that she could add the costs of their food and veterinary care to the other allowances for rent, food, utilities and other bills. I also qualified for a rate reduction to 6% and a low fixed payment that was less than my previous minimum. Finally, I called Discover, who cut my minimum in two and lowered my rate to 9, 9% for a year without closing the card.

After I had drawn up all these plans, I felt a huge relief. The plans were within the range that I could afford, and lowering interest rates meant that I would pay them much faster. It is now a year ago and I have paid more than $ 6,500 in principal on these cards. But more importantly, it has allowed me to see a way out. I know that if I continue to make these payments, I will have no more debts by the end of the payment plans. No sudden changes in the interest rate, payment terms or other games. It was quite a job, but calling up these companies was one of the best things I thought about for a long time.

Are you in a similar situation? Here are some guidelines for you if you experience problems making your minimums:

  • Call the number on the back of your card. Be polite and calm with the person on the other side. You are not the first person who has trouble making the required payments.
  • Be honest and direct with the representative. They won’t verify your income and you don’t have to make big promises about money you might receive in the future. Most programs include provisions for when you cannot pay – mine explicitly states that the interest rate cut would not be affected if I missed a payment.
  • Put together a rough budget before you call. They will want to know who lives in the household, what income they earn and all the expenses you have to pay. They are not going to judge whether you need cable TV or not. However, leaving items behind provides an incomplete picture of what you can really afford and can affect your eligibility. Don’t forget to include estimates of what you spend on food, gas, or other irregular expenses, as well as rent, electricity, gas, cable, cell phone, car insurance, and everything else that you regularly pay.
  • Call them as soon as you know that you cannot pay. If you miss a payment, it is possible that they will no longer be able to remove the costs you incur. You will pay those costs in one way or another.

Most programs close the cards, so if you trust your cards to pay for essential items such as groceries and gasoline, these discounts may not be enough and filing for bankruptcy may be a next step.

Remember that asking for help is no shame! The credit card companies want you to repay them as much as you no longer have any debts, so anything they can do to help you repay the original principal is an advantage for both of you. Good luck!


5 things you want you to learn at a young age

I wrote a post about the best financial advice from your parents. These topics varied from getting out of debt to buying a house. Well, today I want to look at a few things that you want, that you already learned at a young age. This could range from learning about personal finance to investing in the stock market.

Invest for the long term

Have you ever turned on a news channel for the cable world and noticed a network expert calling on the next great investment? CNBC can have an analyst tell you that a small technology company is the next Microsoft and that you have to buy it today. Fox Business may have a gold expert who says you have to buy gold, despite the fact that gold is sold at a peak of 30 years