Credit card interest too high to afford. How to pay or refi?

Question

I need some financial advice, if you would be so kind. I can give more details, as needed, but the long & short of it is this: we've got no debt, except for our primary mortgage and a small 2nd mortgage, and an American Express "Sign & Travel" account. I recently learned some things that I didn't know about that Amex account. I didn't realize they attach any charge over $700 to it. And I didn't realize they are charging 28% interest. The interest, alone, is $3000 a month and we can't afford it. My husband says we owe $40,000 to them. We spoke to Amex and they refuse to lower the interest rate (making it more manageable for us to pay). Do you have any suggestions?
As stated, I can give you all the details you'd like, in any form you'd like. i.e.: phone, emails, etc. Please, contact me if you can offer knowledgeable assistance. Thank you.

Dearest blowry - Your email has not been confirmed so I cannot contact you.
Thank you for your thorough answer. People tend to assume we have bad credit, but our credit is outstanding... that is my reason for seeking advice now, before something bad occurs. It was our own ignorance that brought about this situation. We are Amex Gold Card holders and have an excellent relationship with them. For now, we're holding our heads above water, but I just know there has to be a way to better resolve this, without damaging our credit.

Your kind response has restored my faith.
We're in North-eastern Illinois... if you know of such a non-profit organization as you've described, please be so kind as to give me the contact information.
Thank you again.
~Deb S.

Answer 1

This should answer your questions and help for your state:

Choosing a Debt / Credit Counselor
Debt and/or credit counselors offer an important service to consumers swamped with debt. Consumers who have a difficult time staying within a budget may simply need a financial counselor's help to examine spending habits and how to follow sound budget advice. Other consumers may have suffered a major setback, such as a job loss, and need a debt-management programs (DMP), which is a plan a financial counselor puts in place to lower and eventually eliminate a consumer's debt. A reputable debt counselor will carefully examine a consumer's debt situation and suggest the best plan of action, but a caveat is in order.

All debt counselors are not created equal. The quality of counseling services may vary considerably from one counselor to the next. Additionally, the industry presently has no federal licensing requirements and only 17 states have laws regulating them (the Department of Financial Institutions oversees debt management services in Illinois, http://www.state.il.us/dfi/).

People who have received unprofessional credit counseling services complain that

they owe more debt after the counselor's services
bankruptcy was the best option for their financial situation, but they were steered into a debt-management program
the counseling agency did not make sure creditor payments were sent within the billing cycle, so consumers received late fees
in some cases, the credit counselor took consumer money but did not pay creditors at all
Consumers should also be aware that credit counseling agencies were set up for the benefit of both consumers and the credit industry, so credit counseling agencies can be properly viewed as a more friendly collection agency. Creditors pay credit counselors a percentage of the money recovered from consumers so there is a strong financial tie.

The system, nonetheless, benefits everyone when consumers are offered sound advice and professional services to help them get out of debt. Bottom line: a good credit counselor will help solve one's financial problems.

This is how to sort the professional agencies from the unprofessional agencies.


Do some homework

First, locate some of the nearest non-profit credit counselors.

The Department of Financial Institutions. Call 312-814-5145 (Chicago) or 217-782-3704 (Springfield) or go to its web site at http://www.state.il.us/dfi/ccd/licensees/Debt_Management_Licensees.HTM.


Locate the nearest member agency of the National Foundation for Credit Counseling (NFCC) at http://www.debtadvice.org/takethefirststep/locator.html.

Locate the nearest member agency of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) at http://www.aiccca.org/find.html.

Second, check the complaint records of local non-profit credit counselors to determine if you want their services.

Better Business Bureau
Call or go to its web site: www.bbb.org

Illinois Attorney General's Office
Call 1-800-386-5438 (Chicago) or 1-800-243-0618 (Springfield) or go to its web site at http://www.ag.state.il.us/.

Good Questions to ask the Credit Counseling Agency before you receive its services

Will the agency refund fees if the services received are not satisfactory?
How much training do counselors at the agency receive?
Is the agency accredited by a trade association such as the National Federation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA)?
Does the agency have an independent board of directors?
Does the agency keep clients funds in a trust account, separate from its operating funds?
How long has the agency been doing business in this area?
What types of services does the agency offer?
How long will it take to complete a debt-management program (DMP)?
What effect will working with a counselor have on my credit rating?
Are agency services confidential?
The two largest Credit Counseling Trade Associations

The National Foundation for Credit Counseling (NFCC).
http://www.nfcc.org/

Association of Independent Consumer Credit Counseling Agencies (AICCCA).
http://www.aiccca.org/

Answer 2

I would do what Elke M suggested.

I have more than ten years of experience working in and with credit departments at various financial institutions. I agree that you should consult a debt counselor. Please note that there is a difference between a legitimate, not-for-profit debt counseling service and a debt consolidator. A debt consolidator offers only to consolidate exisiting debt into one loan. This is not likely a good option for you because these loans also tend to have relatively high interest rates. Instead, I would recommend that you consult with a non-profit debt counselor that can assess your situation, develop a plan to get out of debt, and negotiate with AMEX to reduce your obligations to them. They will also be able to advise you as to whether a refi is a good option for you as part of the assessment. Please do not take the word of someone who will profit from you doing a refi.

I also advise caution in finding such a service; this can be a tricky and unscrupulous business. A legitimate debt counselor that can help you will not ask you to pay for anything. Legitimate debt counselors collect their fees (even though they are non-profit, they still have to cover their operating expenses) from the lending institutions with whom they work and not the debtors whom they are trying to help. May God bless you and help you through this situation.

If you need any more specific advice, you may contact me by clicking on my avatar and contacting me via my Yahoo! Answers profile.

Answer 3

If you own yor own homw you can refinance and pull cash out to pay off your credit card bill and raise your credit score dramatically. I work for United Lenders Group and I work with over 45 different banking companies so I could get you a mortgage loan no matter how bad your credit is or how much in debt you may be
916-606-1090
keyon

Answer 4

I would tell you to go to a Consumer Credit Counseling. Not the kind you see on TV, but the one that is Non Profit. They will look at the situation and try to help. Good Luck.

Answer 5

call them and ask if they have a program where they can lover your min or apr without affecting your credit