One overlimit card mistake, help advice needed
Question: I have a card that is holding a balance of $7000 and the limit is $6500. The huge mistake that I made was taking out quite a few cash advances while first daughter was being born and the expenses in her first year.
What I did not realize was the extra interest on cash advances.
Steps taken were scissors to the card.
Now we just cant seem to get the balance back to its normal payment. Made a $500 payment (minimum was $190) and the next statement showed a $2 increase in the balance after interest added.
We can only afford $300 payments which will help if we can get back to the $190 minimum.
Our mortgage is up for renewal and we considered trying to consolidate this CC into our mortgage but not sure if that helps.
Any advice?
Answer: You have a few options. The first option would be to call the credit card company and ask if they can reduce the interest rate, or convert the card into a loan with a reasonable interest rate and payments of $300 per month. They probably won’t want to trade a high interest credit card for a lower interest loan, but it’s worth a try.
Next, you could do as you suggest and increase your mortgage when you renew by the amount necessary to repay the credit card. If there is sufficient equity in your mortgage and you can afford the mortgage payments, this option makes sense.
If that isn’t possible, you could try a debt management plan through a credit counsellor. If all else fails, a consumer proposal or a bankruptcy may be necessary to deal with your debts, but because you own a house those options should not be considered until you have discussed your situation with a licensed trustee.