We’ve reached another financial roadblock. Yesterday we received a letter from the bank saying that one of our credit card interest rates is going up to 19.24% (variable, of course). We’ve done nothing to warrant this change. We’ve made all payments on time, haven’t gone over the credit limit, etc. This is the same credit card that we are trying to pay off by the end of November. Coincidentally, the interest rate change will go into effect on December 1.

So far, this doesn’t sound like a problem since the card will be paid in full. We were hoping to receive or apply for a balance transfer rate on this credit card because it is currently our lowest interest rate. Now it will be our highest. Balance transfers to this card would not be beneficial at a higher interest rate, even if the balance transfer is 0% for six months. Our plan was to transfer a balance from a higher rate card and then let the balance at 0% interest sit while we aggressively paid off a higher rate card. That’s not going to happen now.

I’ve seen numerous articles that say that some banks are now starting to charge fees if the user does not charge anything to the account or annual fees regardless of usage. The new credit card legislation (link is a pdf) goes into effect in February and I’m afraid the banks are trying to take advantage of the last few months before they are restricted. I’m really nervous that we’re going to be getting rate increase notices on all four of our credit cards.

Now we have to decide – do we close the accounts for which we receive notice of increased interest rates? Keeping the accounts open and facing increased interest rates is going to hurt our finances. Closing the accounts and taking the hit on the our credit scores is also going to hurt but only if we try to apply for credit. I hate credit cards and regret the mistakes I’ve made with them.

$1,028.48 starting balance
– $25.00 minimum payment
– $300.00 snowball payment

= $703.48 current balance (65% paid!!)

It feels good to make some real progress this week. We owe less than a thousand dollars!

I hate that the bank will only allow me to make payments every three days. I probably need to start making one payment a week instead of sending multiple smaller payments. The $300.00 payment hits our account on Monday because I had to schedule it in the future due to having just made the minimum payment. It doesn’t seem fair that the bank can charge interest on my daily balance but I can only send payments every three days. That’s just a bit lopsided in their favor.

For this upcoming week, I should be receiving a paycheck for my contract work shortly. As far as I know, that will be the only payment for the week. The only other possibility is the mail in rebate for our tire purchases but I don’t expect that check in the immediate future. The fine print stated that rebates can take up to six weeks and I mailed in the paperwork a week ago.

We are in route to having this credit card paid off by the end of November, which was our goal. I am very excited and can’t wait to see one less bill each month.

$1,278.60 starting balance
– $244.00 contract paycheck
– $6.12 half.com payment

= $1,028.48 current balance (35.3% paid)

When we started aggressively paying off this credit card, Bankrate calculated that it would take 60 months to eliminate the balance. Calculating our current balance, Bankrate now states that it will take only 36 months of minimum payments. In only 6 weeks, we have eliminated two years of minimum payments! Every little bit really does help.