Debt Reduction Planning
Citibank raised my interest rate! What do I do?
Guys here's my situation: When times were good I had a 28,000 credit line and citigold status. The last 2 years have been extremely difficult and I've unfortunately ran up my credit card to the limit. The problem was my APR was at 4.99% but because of one purchase that went over my credit line by 10 dollars, they have slapped me with a new rate of 25.99%!!
Now my minimum finance charge has gone up from 100 dollars to 500 and my minimum payment from 450 to 1400.
I've contacted them about this and the nice receptionist lady sent in an appeal for me to get my original rate...which ofcourse was turned down with the promise of getting a lower rate in 12(!) billing cycles.
I have been referred now to accounts resolution. What should be my strategy now? Ive gone back to school and left my job the last few years and plan to be in school for the next 5-7 years.
Should I close my credit card and ask for my original APR of 4.99? Should I take a debt reduction?
Please help me! 
Citibank isn't going to lower your rate or give you any kind of settlement. Folks who carry large balances for long periods are now considered higher risk.
You might try opening a new lower interest card elsewhere and transferring or you might contact an NFCC credit counseling company: http://www.nfcc.org/. These are legitimate, non-profit companies offering debt management programs for a nominal fee. They negotiate lower interest and payments so you can pay off your debt.
How To Create A Debt Reduction Plan
Everyone knows that economic times are tough right now and what better time to create a debt reduction plan? The government is trying to cut spending, businesses are cutting spending (or closing entirely!), and if you want to make sure you survive this era of tight pockets, you need to live within your means.
The first step in creating a debt reduction plan is creating a budget. There are many tools online that will help you do this, but nothing really beats the old pen and paper. Take a piece of paper and make two columns: Income and Expenses. In the Income column, list all of the money you have coming in, be it paycheck, government payments, interest or dividends, or income from other sources. The hard part is the Expenses column.
In the expenses column, it is best to divide it up in sections. Some expenses are mandatory and don't change from month to month: rent or mortgage payment, car loan, childcare expenses. Some expenses are mandatory and do change from month to month: utilities (gas, electric, phone), gas for your car, and food. Some expenses are optional: gym membership, cable bill, clothing, etc. The first place to start looking for savings is in the optional category.
If you can save $500/year by eliminating a gym membership and starting a walking program around your neighborhood, do it! If you can save $1,200/year by eliminating your daily Starbucks, do it! You will soon be amazed at what you can save by eliminating everyday items that you THINK are mandatory, but are actually luxuries you can't afford.
Once you have eliminated savings, you can allocate those savings to reducing your debt. Most Americans have numerous credit cards, many of which they are paying only interest. By paying only interest, you will essentially pay that bill forever. You need to pay down the debt! Use the savings you have found to pay off the credit cards with the highest interest rates first.
After the credit cards with the highest interest are paid off, start paying down the others. Do not take on any more debt during this time, no matter how tempting it may be. Credit card companies make a living out of keeping you in debt - don't let them do it to you!
The key to a viable debt reduction plan is to eliminate all optional spending and put that money to work by paying off your debt.
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Filed under Debt Settlement by on Jun 3rd, 2008. Comment. 
