Credit Card Debt Reduction Story: How I Got My Minimums Reduced

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Scissors cutting up a credit cardFor those of you who are on the uphill road of getting out of debt and working towards the light at the end of the tunnel, paying off credit cards can feel like it eats up every penny you make. Several months ago, I was paying the minimum or close to it on multiple cards and trying to scrape up as much as I could to keep things together. As you can tell, I got myself into a bad debt situation. However, I was pretty lucky in that I have never actually missed a payment or otherwise given the credit card companies an excuse to exercise the universal default policy and jack up my interest rate.

But one day, I wasn’t prepared for what I got in my mail – a notice from Chase, with whom I have two cards with large balances, stating that starting the next month, minimum payments would rise to 5% of the balance each month, from 2%. I started panicking. I had not been having an easy time making the 2% payments each month, and I was certainly not going to be able to pay 5%. That alone would be over a thousand dollars a month, and I would have literally no money left. I had been picking up 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 even to cover the next month’s increased payment.

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

And you know what? It wasn’t the end of the world. It was really the beginning of the climb out. I was immediately transferred to a very nice woman who asked me about my income and expenses (at the time, my boyfriend was unemployed and his mother was living with us as well). I was surprised at how caring and nonjudgmental she was. She plugged all my numbers into the computer and said that I qualified to go on a payment plan. The plan involved closing the credit cards and giving me a fixed rate and fixed monthly payment, enabling me to pay off the cards in five years. My cards were given a fixed rate of 6% and my minimums went to below their previous levels. I was so shocked that when we got off the phone I started crying out of relief.

Several days later, I received a letter in the mail stating that one of the card’s rate had been further reduced to 2% and the payment was also reduced.

I decided I would call the carrier of my other large-balance card, Bank of America, and see what they could do for me. The woman there was also extremely helpful, even asking me if I had any pets so that she could add the cost of their food and veterinary care into the other allowances for rent, food, utilities, and other bills. I also qualified there 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 half and reduced my rate to 9.9% for a year without closing the card.

After getting all these plans set up, I felt a huge relief. The plans were within the range that I could afford, and getting the interest rate reduced meant that I would pay them off much more quickly. It’s been a year now and I have paid off 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 keep making these payments that I will be out of debt by the end of the payment plans. No sudden changes in interest rate, payment terms, or any other games. It was last-ditch effort, but calling up these companies was one of the best thingsI thought of in a long time.

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

  • Call the number on the back of your card. Be polite and calm with the person on the other end. You are not the first person who’s had trouble making the required payments.
  • Be honest and direct with the representative. They will not verify your income and you don’t need to make grand promises about money you may receive in the future. Most programs include provisions for if you are unable to pay – mine expressly stated that the interest rate reduction would not be affected if I missed a payment.
  • Get together a rough budget before you call. They are going to want to know who lives in the household, what income they make, and all the expenses you have to pay. They are not going to judge whether you should have cable TV or not. However, leaving items out creates an imperfect picture of what you can really afford and may affect whether you qualify. Don’t forget to include estimates of what you spend on food, gasoline, or other irregular expenses, as well as rent, electricity, gas, cable, cell phone, car insurance, and anything else you pay regularly.
  • Call them as soon as you know you won’t be able to pay. If you miss a payment, they may not be able to remove the fees you’ll rack up, and you’ll end up paying those fees one way or another.

Most programs will close the cards, so if you’re relying on your cards to pay necessary items like groceries and gasoline, these reductions may not be enough and filing for bankruptcy might be a next step.

Remember, there is no shame in asking for help! The credit card companies want you to repay them as much as you want to be out of debt, so anything they can do to help you repay the original principal is a benefit to both of you. Good luck!

(photo credit: SqueakyMarmot)

  • Ernie

    Kira – what is wrong with you – you are what’s wrong with America, people spending beyond their means. Stop spending!!!!!!!!!!!!!!!!! Pay your stuff back, and take a deep breathe. You personally are a true source of our economic troubles. Thanks!!!!!!!!!!!!!! (sarcasm)

    • Kira Botkin

      Wow, thanks for the constructive, helpful comment! I’ll be sure to go back in time and un-spend all the money that kept us fed and housed during long stretches of unemployment.

  • KIm

    I think it is great that you are taking responsibility for your debt and paying it off.

    The first commenter said that “you are what’s wrong with America” I do not agree. You are taking responsibility.
    I believe what is wrong with America and the world is that so many people do not and will not take responsibility for themselves and or their actions.

  • Jay

    The monthly minimum on my Citi Card became too much to handle, so I called them and told them point blank that I couldn’t afford it and if they wanted to get paid they needed to work with me. That did the trick. I locked into a payment plan which reduced the interest to 0%. I had to close the card and can’t use it anymore, but the payment is manageable now and no interest means my payment is actually making a dent in the balance.

  • NG

    Trying to negotiate with Bank of America. Talked to 3 different account reps in the financial dept and the answer was the same. You can’t afford to pay the monthly payment. But I have paid the amount each month, never missing a payment. This month I sent them half of my monthly due $950…. Paid $500.The other half is interest due. I want to pay off the balance but all I am asking BOA is to reduce my rate which is 18.99% an affordable rate. I have a large balance of $40,000. This card has kept me alive for the past 2 yrs., paid my real estate membership dues and other real estate related payments, doctor bills and so on. As all real estate agents, I am self employed. No benefits. No unemployment comp….no help for the self employed!! And no family member that could help financially. I have taken a side job to help me while the market gets better.
    Any suggestions out there dealing with BOA.

    • Kira Botkin

      Well, as I stated and the other commenter stated, the only way we could get our interest rates reduced and get on a payment plan was to have the card closed. So if you need to keep using the card, that is a sticking point. You might try applying for other credit cards if you need to have credit, and then calling BOA and asking to be put on a payment plan with the card closed. But they have no incentive to reduce your interest rate if you keep paying them and keep using your card. You could also try getting a loan from a regular bank, hopefully you have a home or car you can use as collateral, and use that to pay off the credit card (or at least some of it.) And the last resort of course is stopping paying them altogether for a few months and see if they’re more willing to negotiate then. Bankruptcy is also a last resort. Both of these options will do serious damage to your credit.

  • Rick

    Thank you so much for this article! I moved for a job that then fell through and ended up racking up credit on my chase card. By the time I realized how much trouble I was in the minimum payment was so high that it just kept me in the perpetual cycle. I went into chase today and they cut my apr down to 6 instead of 20 and cut my minimum payment almost in half! My old payment would have payed it off in 27 years! Now I’ll be paid off in 5 and actually be able to afford paying it! And I never would have known this was an option if not for you.

  • john cartner

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