credit card hell

Hello, I was hoping if someone could help me out for a sec--my question probably seems really stupid but this is my first time to have a credit card and the company are being extremely unhelpful. It's not a huge problem (or is it?) but I've had the card three months, paid my first bill straight away (e100) and then apparently went a bit crazy because I now owe e1,800. I know that the interest on this is going to be extortionate but I can't afford to pay this back straight away. I am currently also paying back a 7,000 student loan with BOI, who refused me a c card previously and who want me to increase my loan repayments. I told them I couldn't afford to, but if they see large amounts of money leaving my current acc for c card account can they demand to have my money paid to them instead? I pay them every week but its a small amount and I got the loan in 2001. One of the reasons my c card bill is so high is because on their advice I used some money to pay off my loan.
I can't afford to pay both sufficiently, the interest is rising and I'm really confused and worried. I know I have no one to blame but myself because I shouldn't have got a card, but everyone has one, and they approved me so I thought I was able to afford it. Also all my wages are now going on repayments and I have to keep using the card for commuter tickets, bills, everything. I also have a mobile phone bill.
If this seems like a stupid query sorry for wasting time.. but I'd appreciate if someone who is handling something like this could get back to me..

No offence but you obviously cannot manage a credit card at this point in time so you should not have one. You really need to get rid of or stop using the card immediately otherwise you are simply digging yourself into a bigger hole. It may be possible to transfer to a short terms low/no interest credit card to give you some breating space in terms of interest charges. See the best buys for details.

www.askaboutmoney.com/clu...stBuys.htm

You may beed to carefully account for your incomings and outgoings by doing a personal budget and then examine it for opportunities to make savings in order to help clear your debts:



The MABS and Motley Fool debt pages might be of use.

www.mabs.ie
www.fool.co.uk/debt/debt.htm

I know that the interest on this is going to be extortionate but I can't afford to pay this back straight away.

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Credit Cards are expensive, but in real terms on a 1800 balance you're looking at about €15-€20 a month, so don't get into too much of a panic over the interest just yet.

The most important thing is to make sure you do the following:

1. Allways make at least the minimum payment due on the
card, but pay as much as possible above that, because
the minimum due is designed to keep you in debt for as
long as possible.

2. Make sure you don't miss payments on the bank loan, but
also don't agree to increase repayments on it. They have
an agreement with you and unless you've broken that by missing payments, it's unlikely they can force you to increase payments. Don't worry if they see money leaving your account, that's none of their business, as long as you keep up your payments to them you're fine.

One of the reasons my c card bill is so high is because on their advice I used some money to pay off my loan.

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Have you missed payments on this loan? If not then they shouldn't bully you into paying it off if you can't afford to. In fact it's in their interest to keep the debt running earning interest. Can you post more details about missed payments if any.

Most important, if you find you can't makethe minimum payments each month, or worse if you're balance is rising each month, then cut the card in half, or take it out of your wallet, but stop using it.

-Rd

..

You should really consider contacting the MABS people (as advised above) before the position becomes any more acute.

They have considerable experience in negotiating with banks on the rescheduling of debt and may be able to get you more latitude than you would yourself.

Re: ..

This may be stating the obvious, but be prepared to make significant adjustments in your lifestyle. If you are spending more than you are taking in, something has to give. Unless you can increase your income in the short-term, you need to be prepared to take the pain of cutting back spending until you can get on top of these debts. Otherwise, you're going to find yourself sliding down the ever-decreasing spiral of debt until you crash & burn.

and who want me to increase my loan repayments. I told them I couldn't afford to, but if they see large amounts of money leaving my current acc for c card account can they demand to have my money paid to them instead? I pay them every week but its a small amount and I got the loan in 2001

If the payments you're making to the bank are the agreed payments when you took out the loan then as far as I'm aware they can't force you to do anything. Feel free to tell them it's not their business. As long as you're making the agreed payments that's all that matters.

Talking to MABS would be a really good idea as would calming down about the situation. It's never as bad as it looks and 1800 euro isn't that much. It's manageable. Not easy but manageable.

I'm pretty sure if you put your mind to it you can figure out ways of cutting down on expenditure yourself and perhaps even making more money in the short term. Do you get overtime in work? Have you thought about a part-time weekend job for a few months?

Do you really need your mobile?

Thanks guys, I really appreciate the advice, and I already have stopped using the card, which was impossible because all my income is going on c card bill, rent, etc. As for the bank thing, as far as I knew I never missed a payment, I was paying 40 a week in college and now I pay 60 a week. They called me a couple weeks ago and said I missed four payments at the end of 2002 so would I pay the money straight away as was in arrears of loan. I checked it out and paid the money but I thought it was odd. They asked me could I increase payments and I said no, but was worried they'd see the extra money going on my card bill.
But I'll take your advice and not worry about it and stop using the card. I realise 1,800 isn't much to someone who owes thousands and thousands I just worry because I'm on my own and really bad with money..
Sometimes I still have to use the card though, because I really have no money if I don't to get to work. I don't get overtime, just days off in lieu of time worked

sorry for double posting, but just wanted to ask about daltonr's comment about 15-20 a month minimum payments. Did you mean this is the min interest I'll be charged on 1800 or that is the minimum I should pay altogther? Once again sorry for sounding stupid but I don't really understand..I should NOT have got a credit card. Also is it a really bad idea to maybe get a credit union loan to pay off the card?
Thanks again for taking the time to help me I really feel better.

To reiterate what was said previously - in my opinion you urgently need to do a personal budget to see what's coming in and where it's going out in order to see what scope there is for regaining control of your finances. I don't understand when you say that you have stopped using the CC but then go on to say that you sometimes still use it? You should seriously consider going to MABS either after you do out the personal budget above or else immediately and let them help you tackle this exercise. I agree that you should not worry unduly about your finances (worrying is wasted effort after all) but you SHOULD take some practical steps towards rectifying the situation and definitely should NOT ignore the situation and hope it goes away.

Sometimes I still have to use the card though, because I really have no money if I don't to get to work

Hi goddess,

Am I reading this wrong or is your work of a temporary or part-time nature?

If not and your income is the same every month then sit down tonight and write down a very strict budget for yourself, detailing an amount or chunk of money that you can pay off the credit card.
Sit in this month...don't go out at all. Very boring, but will save you a lot (if you do go out regularly).
Do everything conceivably possible to save cash. Make your own lunch. Don't buy any clothes...etc etc. It's a state of mind sometimes that will get you out of debt more than anything else.

And like 'blank' said, don't unduly worry about it. But do do something serious about it. You're only bad with money up until now because you've chosen never to take money very seriously. Here's your first chance!

Did you mean this is the min interest I'll be charged on 1800 or that is the minimum I should pay altogther?

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It depends on your card, but as a rule of thumb the minimum you need to pay each month is usually around 3% of the balance. The interest added each month is usually around 1% of the balance.

Now, using these figures for your card I recon that the minimum payment they would be looking for would be in the region of €55. Interest each month would ad about €18 to
your balance.

Check the Terms and Conditions of your card for exact figures here. It can be an eye opener, and the Jargon isn't as bad as you think.

As you pay off the balance the minimum they would ask for would decline and so would the interest. But if you can afford to keep paying the €55 or more then do. DO NOT PAY THEM LESS JUST BECAUSE THEY ASK FOR LESS. Allways throw as much money at a credit card balance as you can afford to throw at it.

Once again sorry for sounding stupid but I don't really understand..

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You don't sound stupid at all. You sound like a remarkable proportion of Credit Card Users. Ask any of your friends how the minimum payment for their card is calculated, or how much interest is added per month, or what the penalty is for late payment. I think most of them will look at you like you have two heads.

I should NOT have got a credit card.

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Perhaps not right now, I don't know your work situation, but having access to credit when things are tight is dangerous.
But look at it this way, you realised you had a problem with a debt of only €1800. Some people have debt's of 10 or 20 times that figure and growing and still think everything is fine.

I reckon when you get on your feet, you'll be fine. And speaking from experience, there's no harm in running up a debt if it teaches you the value of avoiding debt in future.

Finally, I'm conscious of the danger of suggesting that you spend some of your money, but if you can find €10 it would be worth investing in a Book like "Your Money Or Your Life" by Alvin Hall. It's a good read and worth the money in my opinion. Others might disagree.

-Rd

Hi
Yes, I have checked terms and conditions again, it says minimum payment each month is 6.35! Thats so low. I would have paid that or just a bit more thinking I was keeping them happy so thanks daltonr! Thanks to my new budget (courtesy of your advice and MABS) I'll hopefully be paying 400 a month, I'll be broke but I dont care, I'm not spending any money until this is paid off (its sooo hard!) Thanks again for your advice guys and I'll definitely buy that book because this is something I dont want to happen again. This is a great forum, I really feel better now that you all have helped..you should start charging!! Do you all have experience with debt or are you all working in the area (of money/debt counselling/banking I mean)
Just one more question though, the conditions say I have 58 interest free days 'as long as you pay your balance in full and on time each month', does this mean once my full payment reaches them in 58 days I am not charged interest? Or that for the first 58 days of my card I'm not charged any? And it also says interest is backdated to the day of purchase of an item! gaaah presumably this means it doesn't matter if I've paid most of the balance, they'll just slap extra money on something I bought a month ago!
I do work full time but I meant by the time the month reaches its end I've spent my salary on bills, rent etc so that for my weekly commuter ticket I have to use my card. But this has stopped as of yesterday.
My credit rating will be bad now won't it? I mean if I ever want to get another loan for a car or major reconstructive surgery etc. (joke)

My credit rating will be bad now won't it? I mean if I ever want to get another loan for a car or major reconstructive surgery etc. (joke)

No...having a credit card debt will not affect your credit rating as long as you're paying the minimum anyway.
I owe 700 euro on my card...but this is firmly under control. I'll be paying it off in full when I get my next pay packet (or at least half of it anyway). I used my card a lot on holidays last year and came back with a debt of 2500! I paid it off though over 4 months so no problems.

Having and using a credit card can be very handy in my opinion...but only if you're good with money...something I've learnt to be. I used to be really atrocious with it and regularly found myself with no money (as opposed to in debt). Then I learnt to save and live well below my means.

> it says minimum payment each month is 6.35! Thats so low

Credit cards operate this way - with a minimum payment on outstanding balances. However anybody who pays only this minimum payment rather than clearing the full amount will soon see the interest charges racking up - in many cases such that the interest bill will eventually outstrip the amount of credit originally obtained. CC provides make much of their money from the people who do this and these people subsidise the people who more prudently clear their balances each month.

> Thanks to my new budget

Great! Well done on taking some practical steps to sort out your situation.

> Just one more question though, the conditions say I have 58 interest free days 'as long as you pay your balance in full and on time each month', does this mean once my full payment reaches them in 58 days I am not charged interest?

It normally means that from the time of purchase to the point at which interest charges start accruing (if the balance is not cleared) you have a maximum of 58 days. Sometimes it's stated such that interest charges start accruing x number of days after the bill has been issued if the balance is not cleared in the meantime. If the balance is not cleared then I guess that interest is charged backdated to the date of purchase. CCs are useful as a cashflow control mechanism but are NOT good for longer term borrowing due to the generally penal rates of interest charged.

Good luck with getting the finances in order. Sounds like you've made a good start. Post back if you have any problems or other questions...

Will do, thank you. I'm sure I'll always have questions as the whole thing confuses me, to be honest. I'm just going to pay regular lump sums off and not worry about interest/minimum payments because there's no point. I worked out that I should have it paid off by the end of August. No holidays for me, then...

Do you all have experience with debt or are you all working in the area (of money/debt counselling/banking I mean)

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In typical poacher turned game keeper style you'll find many of the people who appear "Good with money" only got that way by being "Very Very Bad with money".

Piggy's example is typical, I'd be similar. The phenomenon of earning a lot but having little or nothing left to spend is not uncommon.

-Rd

> Do you all have experience with debt or are you all working in the area (of money/debt counselling/banking I mean)

Missed that one. Speaking personally I'm lucky enough to never have been in debt other than when I had a mortgage and never to have had any major financial crises. I remember a secondary school teacher once telling us how it was a good idea to stretch to one's limit in order to buy the largest/best first house possible and even then thinking to myself "this doesn't sound right!". I guess my prudence is partly in my nature and partly passed down from my parents. I'm similar to my wife in that respect. Like many AAM contributors (though not all) I don't work professionally in finance and am simply an interested amateur. I'd love to give it a go working in some sort of (perhaps voluntary) advisory capacity but haven't really had the opportunity. I also considered attempting some sort of financial course (e.g. QFA - Qualified Financial Adviser or something similar) a while back but never pursued it. Maybe some day...

money or your life

Can I just say congratulations on taking care of this so quickly and not ignoring it for another few months/years and allowing things to get worse and worse as so many other people do (well, I did and I like to think lots of others are as silly as me too!) I used to be fairly good with money and then a couple of years ago seem to have just lost the plot a bit and the whole principle of only spending as much as I earn got lost in a mire of overdrafts/credit card/loans. After lots of worrying about it but not really doing anything about it I've been sucessfully living on a strict budget for five weeks now. It was the best feeling in the world to get to payday last month and still have money in my bank account. Admittedly it was only five euro but it still felt good.

I would really recommend that Alvin Hall book. You may only need the first few chapters at the moment but it's fairly straightforward and easy to understand and best of all, it makes you think.

With regard to your travel expenses etc. be careful to make your budget so that you do not need to use your credit card to cover expenses towards the end of the month. If you budget correctly you should have enough money left to cover everything. Even if that means paying slightly less off your credit card each month, if you use your credit card to make up a shortfall at the end of the month you will never manage to clear it. If you're paid monthly try to buy as many things as possible monthly and as soon after you get paid as possible. If you've already paid for a monthly ticket or four weekly ones at the beginning of the month, you won't need to hit the credit card for it in the week before you get paid again.

Book

Can I add, I really enjoyed Alvin Halls book (your money or your life) and the TV series, but I borrowed the book from (I think) the Ilac Centre library. I read quite a bit and the library saves me a fortune!! (and I get to read books without the commitment of buying them)

money and emotion

I found Suze Orman's book The Courage to Be Rich very good because she goes in to quite a lot of detail about how our relationship with money is emotional and so before you sort your finances, you might need to sort your head. It might sound a bit new-age-y but actually works. A bit like your diet will fail as long as it's only a short term measure and not a lifestyle change.

Anyone found themselves, who'd normally be very careful, signing cheques for huge amounts of money without a qualm? like when youre buying a house, you suddenly start thinking in thousands and tens of thousands and suddenly it loses all meaning. Whereas normally you'd be thinking about driving 3 miles to the €1 car wash!

Also used the libraries for books - excellent source!