Best way to deal with credit card debt?

[eks6426]

I recently got married and my new husband has some credit card debt that we need to deal with. His interest rates are very high. He is self-employed in sales with a not as great credit history. I have a steady salary job and a very good credit rating. I could transfer his balances to my cards at a lower rate but this moves the debt to me. Or I could do a home equity loan on our house (also in my name only). If I include his name on a home equity loan our rates are higher due to his credit and variable income. Does anyone suggestions or tips?

 

[diamondsrock]

I don''t have much advice but it is worth calling the credit card company and asking if they''ll lower his rate (he will have to make the call since it''s his card). I''ve heard some people have had luck with this although it didn''t do much for me. I''m not sure if you''ve read her books or seen her website www.suzeorman.com has a lot of advice on debt management. One of her main topics on her show is credit card debt and how to handle it.

 

[FireGoddess]

I have done the ''call the credit card company'' thing to ask for lower rates, and most of the time it does work. However, if you''ve missed a payment recently, or if your card is maxed out or close to maxed out, they tend to tell you there''s ''nothing they can do.'' However, if this isn''t the case (and even if it is, it''s worth a try) he should call them and say something on the order of ''this card has the highest interest rate of all my cards and I''d like to know whether anything can be done to lower it?" The most they''ll ever go down is a few percentage points, but that can make a big difference! And, you can only do this once every 6 months. They won''t lower them more often than that. I had one card creep up to 17% or so and I called them up and it got lowered to 12% or something like that. There was one card I had that was at an astronomical 22 or 24% - (more than twice as much as any other card I had) and I called ''em up - they told me there was nothing they could do. So I told them there was nothing I could do - I''d be paying my balance in full thank-you-very-much and you can make money off somebody else!!!

 

[FireGoddess]

Another thing - and I'm not a financial whiz so yanno, take it with a grain of salt, but could you transfer some of the debt to your card - enough to save on some interest but not enough to impact your credit rating? I believe only after you've gone up to half of your max cc limit does it impact your credit. ie. less than a 2500 balance on a card w/ a 5000 limit is okay, but once you pass 2500 that starts to ding your credit. I'm not pulling that out of my butt - I've read it on multiple financial advice websites, pamphlets, etc.

 

[Mara]

I agree, call and ask for a lower rate from the existing companies and see what they say. If they know that you could move to a lower card, they may be inclined to assist.

If that fails, transfer the debt to you. I don't know what the laws are in your state but I think CA the reports are tied together anyway so if one has debt the other does as well? I just kind of think of it as his debt is mine and vice versa, we have to share our expenses anyway. Anyway when we were engaged I had a big card to get rid of and Greg transferred it to a 0% card and I just paid it off over time.

Also if you transfer the debt to you, chances are his credit will improve and he may be able to get a 0% offer in the next few months with no balance transfer charge and then he could transfer it back to him. Not the most ideal way to deal with things, aka transferring back and forth, but the key is to keep the rate at 0% or super low while you pay it off, no need nowadays to pay all that interest!

However the BEST way to handle it is just to pay it off! But try to get a low interest card to get it done. Good luck!

 

[monarch64]

I would say get to the root of why his credit score is lower in the first place. Look at the current copy of his credit report and see if there is anything on there you can dispute. (Old accounts, things that have been paid off but are still on the report, etc.) My husband had to do this before we bought our house and you''d be surprised what should have been dropped from your credit report after so many years but never has been. In about a month we got DH''s score up about 50 points which was where he needed to be to get the lower interest rate on our home loan.

 

[FireGoddess]

I cannot underscore ENOUGH Monarch's statement to get your credit report checked!!!!!! It won't help with the debt your hubby already has, but it's really, really important. You may not find anything, but on a whim I checked one of mine (I think it was Equifax) and you would not BELIEVE some of the stuff I found.

I was named after my mom, and while our names are similar, they are not THE SAME. However, my credit report was a hybrid between her information and mine. Any idiot who looked could have figured out that there was a mistake...that it was virtually impossible for a mortgage to be in MY NAME in 1979 when I was only FIVE YEARS OLD. But there it was - a mortgage. And credit cards. All opened in the seventies, whilst I was born in 1974. And do you know that NOBODY at Equifax bothered in any of the years since I was born to figure out that there was a mistake? It's critical to take control of your credit reports - because they affect your financial future and NOBODY at these companies is checking the FACTS!!!!!

 

[monarch64]

My husband actually had sort of a similar instance on his credit report...his mom had named his as an authorized user on one of her credit cards. Turns out she was late making payments on that account a few times (several of which were 30, 60, even 90 days late!! egads!) DH had to really fight the credit card company to get his name off her account and get them to communicate with the credit bureau he was dealing with (can''t remember if it was equifax or experian, or the other one) to wipe her issues off his report! What a mess! I have no idea why she had him on her account, it was way before I came into the picture so it''s really none of my business. A hard lesson learned for him, as well as her. I remember her calling him EVERY SINGLE DAY until the matter was taken care of. She was way, way stressed out over it and just about drove us nuts. Sad, but you really have to educate yourself and know that even the people in your life who seem to have your best interests in mind sometimes don''t.

 

[aljdewey]

Date: 1/31/2006 3:28:11 PM
Author:IslandDreams
I recently got married and my new husband has some credit card debt that we need to deal with. His interest rates are very high. He is self-employed in sales with a not as great credit history. I have a steady salary job and a very good credit rating. I could transfer his balances to my cards at a lower rate but this moves the debt to me. Or I could do a home equity loan on our house (also in my name only). If I include his name on a home equity loan our rates are higher due to his credit and variable income. Does anyone suggestions or tips?

Oh, and yes, I have a suggestion. A couple I know was in a similar situation - she was a spender, he''s a saver.

The took out a home equity loan, and they she signed a promissory note to him with repayment terms to him.

I''d imagine you could do the same thing with card balance transfer. You could transfer the balance to a 0% card, and then he would sign promissory note for the same amount plus interest schedule the same as card (% after intro period).

 

[eks6426]

Thanks for all the ideas folks. I will definitely pull both our credit reports.

I am going to transfer as much as I can to the 0% interest card and then the rest to another card at 1.99% interest unless I can talk one of the cc company''s into 0 interest on another card. We will work to pay off the card that will jump to the highest rate. I''ll watch the rates and if they start getting high enough, I can always get a home equity loan at later date.

We are also going to go on a "cash" basis for household stuff like groceries, eating out, every day stuff like things from Target or Walmart & gas. That will force us to not put food & low-end shopping on cc cards.

The promissary note is an interesting idea. I worry that my husband would feel I didn''t trust him if I did it but it does offer some protection. Not sure on that one.