Hello,
I owe about $19000 on a credit card, but I have never been late or missed a payment. The bank recently changed the minimum payment from 2% to 5% and that will make it hard for me to meet the minimum payment. My credit score is in the low 700’s
I called the bank and complained about it and they said that I have two options:
a) Payment plan with an interest rate af 12% for 60 months; I’m sure I can get a better rate from my local credit union.
b) Settlement, $15,000 that can be paid in 2 installments.
I’m very tempted on taking the settlement, but how is it going to affect my credit ranking? I really don’t expect applying for anything in the next few years, but you never know. I know I have to pay taxes on those $4,000
Thanks for your input.
You have another option. For a credit card bank to do this to a good customer really ticks me off. With your credit rating you can go to another lending institution and tell them what happened let them check out your credit history of payment. Guess what? Any lender will pay your bank owned credit card off for you. Set up a payment plan to where you can pay it off. This will keep you a high score of credit. Ask at another bank for more options on this but go to another bank. If the bank you have plays these tricks on their customers this means it won’t be long and they will probably go under. If they are doing this to you they are doing it to everyone else.
on Aug 12th, 2009 at 3:36 pm
A settlement is a BIG black mark on your credit rating. It’s up to you if it’s worth saving $3-4K to damage your credit rating. Get a loan with your credit union and pay it off.
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on Aug 12th, 2009 at 4:03 pm
Settlements COMPLETELY lowered my beacon scores!!
References :
on Aug 12th, 2009 at 4:42 pm
Honestly, I think you can do even better than $15000. If you consult a debt relief service, or an attorney, they’ll might even settle for 10 or 12 thousand. Trust me, it’s worth a look into.
To answer your question, it isn’t bad at all to settle the debt. Your credit may take a small hit, but not as much as if you failed to make payments.
So my advice would be c) consult an attorney or debt relief service and see if you can settle for even less. The money you don’t pay will add up to bigger savings later on.
Best of luck!
References :
on Aug 12th, 2009 at 5:19 pm
I’m pretty sure that any settlement that you do with a bank on any debt–including a credit card–will show on your credit report as a settlement. "Settlement" basically means that you and the bank agreed that you would pay off the debt for a certain amount below what you actually owe. This would bring your credit score down.
But, here’s another question. You are considering taking the settlement for $15,000 paid off in 2 installments. I’m assuming that is 2 equal installments of $7,500. 5% of $19,000 is $960, which you have said that you will barely be able to make. If you can’t afford a monthly payment of $960 every month, how can you afford to make 1 lump sum payment of $7,500, and then another lump sum payment of $7,500 shortly thereafter? If you can’t afford the $960, I’m not seeing how you can afford the $7,500 lump sum payment twice.
References :
on Aug 12th, 2009 at 5:42 pm
You have another option. For a credit card bank to do this to a good customer really ticks me off. With your credit rating you can go to another lending institution and tell them what happened let them check out your credit history of payment. Guess what? Any lender will pay your bank owned credit card off for you. Set up a payment plan to where you can pay it off. This will keep you a high score of credit. Ask at another bank for more options on this but go to another bank. If the bank you have plays these tricks on their customers this means it won’t be long and they will probably go under. If they are doing this to you they are doing it to everyone else.
References :