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Sunday, January 29, 2023   
 

Good credit rating but too much debt for low rates
by Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.
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Scott Bilker

Scott,

I just found your website in a book I am reading from the Rich Dad Series. I am in business for myself for 8 years now. I have high CC debt all for the most part business debt. We always pay our bills on time. Recently though, the CC companies started raising their interest rates on us and lowering our limits dramatically. Some to the tune of 35%! I am at a loss of what to do.

My business is doing well to the point that, if I were able to pay off these cards, I would be able to do my business on a month-to-month basis without accruing any cc debt. Herein lies the problem of being able to pay off the credit card debt especially at these rates. Even at these rates, we still are not making any late payments. Our credit rating is excellent, but we are carrying too much debt to acquire lower rate cc to lower our monthly payments. What can we do? 

I am going to try and call all of my credit card holders and see about lowering my monthly interest as you talked about in one of your articles. I am also ordering your books as soon as I finish with his email. Your help is appreciated.

Bob

Bob,

I, too, am a fan of the Rich Dad series and was very happy they included my book and DebtSmart.com in their latest book.

Banks are eager to raise someone's rate for any reason they can find. The main reason includes making late payments to them or any other creditor. This, in turn, would lower one's credit score. And, if the score has gone down, for whatever reason, they want to raise the rate to match that of the people that they currently lend to with that score.

You mentioned that you're not late and that your credit is good, but you're having trouble keeping your interest rates low. This could happen if you are nearly maxed-out on your cards. Part of your credit score has to do with how much debt you have compared to your total available credit. This debt-to-available-credit ratio is a factor that banks consider when lending money. Banks always want it both ways. They want you not to have too much available credit but at the same time, only use a small portion of the available credit that you have. Then, of course, they want you to use their line of credit so they make money.

Call your credit card banks and let them know that if they don't reduce your rates, you're going to take your business elsewhere. Ask to speak to a supervisor if the first person cannot help you. If they don't reduce your rate, then you must punish them by transferring your balance! To do this, you will need a low rate transfer deal from one of your existing credit cards, or you will have to get new credit lines. If the latter is the case, then try to apply for a few credit cards that have low rates that I recommend.

Read my books when you get them and find a few phone calls that are similar to your situation. Study those calls and then call your banks again. Just because they don't do what you ask the first time, doesn't mean that you cannot succeed the second, or third, etc.

Other options may include a second mortgage to pay off that debt. There is the danger that you're going to now secure the unsecured debt with your home. However, you did mention that your business is going well; therefore, this option may be able to save you a bundle! Mortgage rates are relatively low, plus you will get the tax deduction.

Try everything I mentioned and let me know what happens!

Regards,
Scott

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