You can pay off high interest credit card debts by working with your financial institutions.
Are you paying high interest rates on credit cards?
Are you drowning in debt?
Are you overwhelmed with high interest rates on credit cards and drowning in debt? Credit card companies are being affected by the declining economy as much, if not more, than consumers. Many people are simply not paying their accounts or are filing bankruptcy. According to Market Watch, Bank of America announced in January that profits tumbled by 95% during the last quarter of 2008. They can't afford to continue losing money.
I recently discovered that major banks are willing to cut interest rates and set up lower payment plans. The most flexible accounts are credit cards; Visa and MasterCard. The loan accounts, especially fixed loans, are already calculated for the term of the loan. Credit card accounts are adjusted monthly according to the "average daily balance" which changes depending on payments and charges.
While assisting a friend, I contacted the CEO of several major banks. We had great luck in reduced payment plans and lower interest rates on the credit card accounts. The interest was lowered to ZERO percent on one credit card and will remain at zero percent until the balance is paid in full. Another credit card account was set at ZERO percent interest for the next twelve months. Every dollar paid over the next year will be applied to the principal balance.
The person you need to write is the CEO of each company where you owe balances. The content of your letter is outlined below.
1. Explain your current financial situation - send copies of your W-2 or pay stub, a copy of your driver's license (this will verify your address and identity) and copies of statements on all debts that you owe. Send ALL debt information to EACH bank. They will see that you are contacting everyone attempting to work out a plan on all.
2. Let the bank know if they don't work with you there is no way you can pay back the balance owed.
3. Ask them to lower or zero out your interest.
4. Tell them the payment amount that will work for you.
5. Make a plan (a spread sheet works well here) listing income and all debts.
Below is a method of figuring out the payment on each account. These are the monthly payment amounts you will request that each bank agree to.
First, you get the percentage for each individual account of the total amount owed. * see below
Example: You owe a total of $20,000 on 5 different accounts.
Account #1 - Balance $5,000 (= 25% of $20,000)
Account #2 - Balance $1,500 (= 7.5% of $20,000)
Account #3 - Balance $3,400 (= 17% of $20,000)
Account #4 - Balance $100 (= .5% of $20,000)
Account #5 - Balance $10,000 (= 50% of $20,000)
* The way to calculate the percentage is to divide the balance on each account by the total dollars owed.
Example: Account #1 - $5,000 divided by $20,000 = 25%
Now you figure out the total you can spend each month on ALL accounts. If you can pay a total of $1000 each month on ALL accounts, you want to take the same percentage above to calculate your payments. * see below
Account #1 - 25% of $1000 = $250/monthly payment
Account #2 - 7.5% of $1000 = $75/monthly payment
Account #3 - 17% of $1000 = $170/monthly payment
Account #4 - .5% of $1000 = $5/monthly payment
Account #5 - 50% of $1000 = $500/monthly payment
* To calculate each payment, take the percentage and multiply by the total you can pay on all accounts ($1000) each month.
Example: Account #1 - 25% x $1000 = $250.00
This is the method I used and although we didn't get exactly what we asked for, one payment was much less than we requested making up for the ones where the bank insisted on larger payments.
It's very important the financial institutions know you will be able to make the payments if they make the adjustments. If you have detailed information and leave nothing to question, your chances of being successful are much higher.
How do you find the CEO for each company? You should be able to go online and find out where the corporate office is for each institution. When doing your search make sure you type the word corporate. Example: Bank of America Corporate, not just Bank of America
Do this for each credit card company. Once you find the state in which the corporate office is located, that state's corporation division should have the officers listed. This can usually be found online within each state website. You may be able to Google CEO Bank of America (replace Bank of America with the name of your credit card bank or financial institution).
It's very important to contact the proper authorities instead of talking with a debt collector. I will be writing another article about debt collectors and collection departments at a later date.
Here are the addresses that I've already researched and used. They were very effective. I mailed the letters and "plan" chart using Priority Mail through the US Postal Service.
Capital One
Richard D. Fairbank, 1680 Capital One Drive, McLean, VA 22102
Chase
Jamie Dimon, 270 Park Avenue, New York, NY 10017
Bank of America
Kenneth D. Lewis, 100 N. Tryon Street, Charlotte, NC 28255
Good luck on reducing your credit card interest and lowering payments!
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