How to handle Providian?

[Lainee]

Hi!

I have an account w/ Providian w/ 3300 limit. Unfortunately, I am maxed. This is okay (kinda) since I can make more than the minimum payments and I am moving toward bringing this down. Problem is, my APR is 28% and that just makes me sick. I used to have 2 cards with them (other w/ same rate which was paid and closed) and I have NEVER been late with either card since I got them (about four years). I have called many times trying to get a lower APR - I have even threatened to close my accounts, but with no success. I would just close this account also, but none of my other cards have such a high limit and I keep thinking I may need that high limit one day for an emergency. Also, I am afraid that closing the card will lower my score, and I can't afford that. (I am low 600s on all three.) What works with Providian? Are there magic words to use that can get my rate lowered?

Advice??

[cabledude]

Here is the deal. Since they see you at the low 600's they know that you are more than likely strapped. The only way to get a rate decrease when you threaten to close is to back it up with "I'd like to pay this today in full". Otherwise they know they have you in the corner.

If you don't have the money then your other option is to BT the amount to another card. However, your choices are limited in the low 600's for that amount.

I suggest you work on getting your fico above 650. This is when I began seeing better offers. Part of this will be to get your balance below 50% of the limit. The other part will be to NOT miss any payments.

You can try for a BT now with a generous lender such as Chase or MBNA. Both of these companies will lend below 650 as they generally do a manual review of your credit. However, it really depends on your total credit picture. If you just have a high balance ratio and some scattered lates you may get in and TX all of this amount. If you have a CO or two, maybe a BK, then you may want to work on getting that stuff removed first as that in itself smells like an auto decline.

Give us a quick look into your CR (number of lates, how recent, CO's, BK, etc.) and we may be able to suggest a lender for you to do a BT.

[katwoman]

You sound just as frustrated with them as I was!

Someone, on another board, said that if balances were paid off, I'd start seeing some love. So I did just that and received BT checks for 9.9%, which I used. My regular APR is still 28%.

Looks like they have us right where they want us.

[Guest jeeptravel]

My Dad told me years ago that the best time to borrow money is when you dont need it. That way YOU hold the cards. It took me years to understand that.

JT

[Lainee]

Hey all!

Thanks for the help. You asked for a little more insight on my current situation, so here it is:

No BK

No judgements or collections (current or past)

One 30 day late six months ago, but no others ever

Ex = 669

EQ= 623

TU = 633

Oh - and I don't have the cash to pay that off. If I did, you bet I would. Someday......someday.....

Like I said, my main problem is just being overal maxed. There was "method to my madness" if you will. We were having some hard times and I used what I had. Lucky for me, I always could pay at least the minimum, but the result has been hard on my credit. I also just now got a wrongful collection taken off so that helped.

Any advice is very much appreciated. Thanks!

[cabledude]

OK EX is good and TU is fair. List your accounts like so:

Master Card

Limit: 300

Balance: 295

Visa

Limit: 300

Balance:295

Etc.

If we are talking under $5,000 overall you may have a shot at a BT. Utilization will hurt, but now that we know the CR now give some info on the accounts. You may be able to TX all of these balances to a generous lender depending on income since you have no derogs.

Do you own your home? If so this may be another easier option with a home equity line of credit.

Do you have a 401k at work? If you are under 40 this may be another option if your employer allows loans from it.

No matter what you have to get out from under the 28% interest. They are taking you to the cleaners. They call it legal, but I call it just plain wrong!!

[Lainee]

Thanks again! Okay, here is all my dirty laundry, and dirty it is....

Provid (Visa) 3300 28%

CapOne (Visa)1000 24.99%

Cap One (Visa) 700 14.5%

Cap One (MC) 300 0%

Store Card 1200 15%

Unsecur Loan 3000 Paid off in 4/06

Car 5000 Paid off in 12/05

My plan of attack at the moment is to pay all off with the highest interest cards going first.That makes Providian the top of the list. I just HATE to pay that kind of interest. When I got it, it was 0% and I honestly did not pay attention to what it would go up to. Stupid, I know, but hey - I was a kid and at least I've paid on time, right?

The car and loan are low APR so not really my concern, but I thought in the interest of "full disclosure" I would put them down. I do have 401k but can't borrow even though I am young enough to make it up. I could do a withdrawal, but have (in the last year) become fanatical about my credit and my retirement. I want to retire ASAP with LOTS in the bank, so a withdrawal wouldn't be good for my sanity, you know?

I'm an idiot right? No hope but to pay it off and keep paying down that 0% one and making transfers to it? Is that the way to go I guess?

Boy, it is hard to be so honest about being such a dummy. :- (

[cabledude]

Are those %'s of the balance? If so you are under 30% on all of them. Am I right? If so you should try for an MBNA or Chase asking to BT all the high interest stuff. You may just be surprised by them. MBNA approved me for a $14K CL with a 635-640 Fico. Something like that would be real appealing. If you can afford a few inquiries I say go for it.

[cabledude]

I just realized you are talking bout the interest rate. In any case your under $5k and I would still try MBNA or Chase.

[ananias]

... I do have 401k but can't borrow even though I am young enough to make it up. I could do a withdrawal, but have (in the last year) become fanatical about my credit and my retirement. I want to retire ASAP with LOTS in the bank, so a withdrawal wouldn't be good for my sanity, you know? ...

I'm willing to bet that your 401k isn't earning anything even near 28%. At best it's earning 10%. Meaning that you're borrowing money for 28% to invest it at 10%. Does that sound like a good deal? Looked at another way, you could be investing that 401k money at 28% simply by using it to pay down your Providian debt. You can withdraw all the principle you've deposited into your 401k without a penalty so I don't understand why you wouldn't want to do that. You'll have a wealthier future by doing that than by wasting money on "mafia grade" interest rates.

If you feel bad about depleting your 401k, then loan yourself the money at 28%. In other words, Suppose you take out the money and pay off your cards, you can still continue to make the payments you would have had to make on your card issuers to your 401k or newly created IRA or other investment account. The net result will be a much larger net retirement savings without giving away a lot of your hard earned money to usurious lenders.

[Lainee]

Hee hee! I don't know if y'all will believe me, but I swear it is true - My 401k from start date is earning 28.8%. Like I said, I am fanatical about it. My YTD is lower, but from the start date (a couple of years ago) it is 28.8%. I research and weigh out my investments like crazy. I know my rate of return is quite odd, but I guess I got lucky in that I bought my options at really low rates. I wonder though if it still may be the way to go. I like the paying back with interest idea a lot.

One question for those of y'all who know.......If I just close my card w/them, will it lower my credit score? I have plenty of other positive TLs that are as old or older. OR....is it better to keep it open and pay it off because it would slowly show that I have open credit that I'm not using.

Thanks so much!

[ananias]

... My 401k from start date is earning 28.8%. Like I said, I am fanatical about it. My YTD is lower, but from the start date (a couple of years ago) it is 28.8% ...

If that's how much it's grown over two years, then you're getting a roughly 14% return annually. To arrive at this figure I simply solved the equation r * (r * x + x) = 1.228 * 2 * x for r. x is the amount of money you put into your 401k each year. If today you have 1.228 times as much money as you've deposited over the past two years, then you're earning roughly 14.5% not 28.8%

If you really are earning over 20%, I think it would be very nice of you to share just exactly what your 401k is invested in. I'm sure I'm not the only one interested.

[Lainee]

Glad to share! It's not my calculation - my math stinks. I just go to the site and click on "show rate of return" and that is what I get. I keep up with it really well, but I still consider myself very new at it all, so maybe you understand better. I'm no expert by any means. I just research and sometimes get lucky I guess. I'm under 30 so I take baby steps but try to stay right on top of everything. Some of the things I have done really well with are as follows (remembering that I started in 2002 so starting today would yield quite differently):

Dreyfus Emerging Leaders - My rate of return since 2002 -34.9%

Fidelity Diversified International - 41.5%

Turner Small Cap - 46.2%

Ah! Here, this will explain it better (probably for you, it's still Greek to me). Here is what the web page I get my info from says about rate of return so maybe you can "school" me:

# What is Your Rate of Return?

Your Rate of Return shows the performance of your investments, based on your activity. It reflects the total return of your choice of investment funds, taking into account the timing of cash flow activity within your account, such as withdrawals, contributions, loans, loan repayments, etc. Your Rate of Return allows you to see the impact of all of your investment decisions for a given period.

So is it actually half of what I think it is? If so I need to get much much better at all this busines!! See.......learn something new EVERY day! Good goal to have.

Thanks all for the help!

[cabledude]

I say play the game with Providian using your 401K. Withdraw the money and you have something like 60 days to repay without penalty. Immediately pay off Providian. Wait for them to update the CRA's with a 0 balance. Immediately apply for a good 0APR card that allows a TX right to your bank. I know for sure MBNA and Citi does. Then repay your 401k. Now you have the same debt at a much lower rate!!

Heck if your under 30 you have time on your side with respect to retirement even if you want to retire early.

[Lainee]

AH-ha!

Yes! That sounds like a great idea!

You guys are the best! Thanks for the help!

[ananias]

... Dreyfus Emerging Leaders - My rate of return since 2002 -34.9%

Fidelity Diversified International - 41.5%

Turner Small Cap - 46.2% ...

I want you to understand that I'm not disputing your return. You got in at at the perfect time (as you can see from the charts the links below take you to), but I don't think you can expect such a stellar yield over a longer term:

Dreyfus Emerging Leaders (DRELX) YTD: 2.79% 5 yr avg: 6.68%

Turner Small Cap (TSCEX) YTD: -0.42% 5 yr avg: 1.32%

There are 5 different Fidelity Diversified International funds. You'll have to figure out which one you have to find the performance graph, YTD, and 5 year avg returns. I do think you should find out what your actual annual yield is. Even if they are close to 28% (which I'm virtually certain is way high) you must remember that the return generated by paying off your debt is a guaranteed 28%. The funds may or may not continue to do well, and most likely will not perform anywhere near that good over an extended period of time. If they do begin to taper off or decline, you'll be damn glad you sold out at the time you did to pay off your debt. Likewise, if they skyrocket right after you cash out you'll likely be cursing me till the day you die. I'm still 80% sure you'll be better off cashing out now and going with the guarenteed 28% you can get paying off your cards. But you might want to wait till after the election.

I also wouldn't count on qualifying for a better card even if you do pay off your Providian debt. I know people around here claim to have cards that will deposit money into your checking account but I have never been offered such a thing. The best mine are willing to do is transfer debt which is only useful if you have a debt to transfer. In my case I have HELOCs which means I actually can convert a balance transfer offer into actual cash in hand. But without that, those offers would have been impossible for me to take advantage of.

[Lainee]

Thanks Ananias! Don't worry.....I only was trying to let y'all know some of the funds that have done okay for me so far. You're right about the long term results. I really MUST pay this silly thing off ASAP and slowly get out from the other bad cards I have so I can up the line on my "good" cards. :- )