What Are My Options Other Than Filing Bankruptcy to Help Me Reduce the 25% APR on My Bank of America Credit Card? – Bobby

Bobby wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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“Dear Steve,

I’m a college student, age 22, and have trouble reducing my credit card debt due to the high interest rates. I have nearly reached my credit limit of $5,000 with my Bank of America Credit Card due to the apr of 25%. My credit score has been reduced to poor due to a few late payments (3) and have had overlimit fees charged thus increasing my rate.

I’ve since been paying on time with at least 20% more than the minimum amount (i.e. paid $200 for a $153 BofA bill), but I can’t continue to pay like this through 2009.

What are my options other than filing bankruptcy to help me reduce the 25% apr on my credit card and/or my debt level?

Thanks for your consideration.

Bobby”

The Answer:

 

Dear Bobby,

It would be a shame to see you go bankrupt over just one card. My suggestion would be to first try a debt management plan and work out a new payment plan. If you enroll in a debt management plan Bank of America will probably reduce your interest rate to 7% after a few payments. Click here for debt management information.

The downsides of this approach is that it will close your card, but it is maxed out anyway. And a comment could be made on your credit report that you are working with a credit counseling or debt management company, but your credit report is dinged anyway from the late pays.

The debt management approach will eliminate any more overlimit fees as well so that sounds like the most logical place to start.

Steve

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