…and Bank of America/MBNA is a pimp.

Before I started this blog and gave myself a good slap across the face to wake up from my debt coma, I fell prey to one of the many pieces of “life vest” junk mail that I receive on a weekly basis. I think it was the familiar BoA logo that swayed me.

I opened up a ‘consolidation line of credit’ for $15,000 in order to lump all my credit card debt into one easy payment. It wasn’t long before a few of those credit cards crept back up to a dangerous level and now my savior loan is the one that puts me in a cold sweat when I review my liabilities.

Over $13,000 at 22.45%. This means that with each monthly payment (slightly over $300) the interest rate basically eats its way back up. It’s a cycle that I was a fool to enter into and one that I now can’t get out of fast enough.

In a previous post I mentioned that I once again went to the DARK SIDE in an effort to reduce my payment – this time with a new mindset.

After two calls to American Express that brought no results in terms of lowering my rate for a large balance transfer, I did something that I have never done before. I asked for a supervisor.

Once the supervisor was on the phone it was fairly easy. I explained what I was trying to do and made sure to use the name MBNA as much as possible – in case I could take advantage of any competitive mindset the supervisor/company might have.

They explained what they could do for me and though it was not exactly what I was looking for – it was a hell of a lot better than 22%

So I’m transferring $11,900 over to AMEX out of the 13,363.40 at 12.74%.

I will then split my $9,503.22 debt that is currently at 16.5% among my two new 0% interest (for 12 months) cards.

As for the snowball, I’m not sure in what order I should payoff the debt yet. The AMEX rate lasts the length of the loan, while the new cards are just for one year. I think I will end up focusing on the AmEx – then I will reevaluate where I am at the end of 2007.

Okay – so I’m not sure if I’m rightly justifying this or not, but I applied (and was approved) for a Discover Card this morning. I applied only after reviewing a list of 0% balance transfer offers on The Five Cent Nickel.

Currently my credit card debt has the following interest rates:

• $13,513.40 at 22.45%
• $9,503.22 at 16.5%
• $2,045.08 at 4.99%

Hopefully I can convince my “new friends” at Discover Card to increase my limit enough to take on my $13,513.40 balance. I’m also planning to ask American Express if they can match the current 4.99% that they gave me on a previous balance transfer.

Hopefully the answer will be yes to both my requests.

And my debt will soon look like this:

• $13,513.40 at 0%
• $11,548.30 at 4.99%

Much easier to handle I believe.

That’s the ideal plan, however. I’ll keep you posted on what happens.

Last night I took a look at my Credit Card Snowball strategy and came to the conclusion that there must be a better way to organize this debt.

Originally, I had told myself that I was not going to do anymore balance transfers, or open any more cards for transfer purposes, since it’s just becoming a way of deferring the debt responsibility.

However, my payments to my MBNA debt are being eaten by my rate, which is a generous (yes, I’m being sarcastic) 22.45%. As mentioned, I have an American Express card and being a member since 2003 I’ve decided that I’m going to test their former marketing campaign and see if membership really does have it’s privileges.

Now, I have read countless transfer/talk to your credit card company strategies in both books and blogs, but last night was my first attempt at trying to negotiate with my credit card. I called their customer service department and mentioned that I currently had a large balance at MBNA that I would like to move over to my current AmEx card – however it was about $13,000 and I only had an available balance of about $6,000 on my AmEx.

They told me that the most they could do was raise my credit limit to $14,000 – giving my about $12,000 for the balance transfer.

I then mentioned that my current AmEx balance is due to a previous balance transfer offer that they extended me which held a rate of 4.99% for the life of the balance. To which they informed me that they currently do not have any promotions like that, but they will have one coming up in about a week or so (their promotions run quarterly).

So, I will continue to make the payments on both my AmEx and MBNA debt. I plan to call AmEx back in about a week and if I’m not happy with the rate I’m given on transfers I will ask to speak to a supervisor.

Hopefully, AmEx will not only value me as a customer, but will also appreciate the idea that I would like to unload about $13,000 on them rather than their competitor.

If I can lower the rate on my largest balance from 22% to around 5% – that will obviously be huge.

As always – I will keep you posted.

For whatever reason, I was able to resist the urge to apply for a credit card all throughout college. And looking back now, I’m not only glad I was able to do that while attending college in Boston, MA – I’m amazed.

My personality is very impulsive/decisive, which is a nice way of saying that I spoil myself with nice things right when I want them.

After college is really where my trouble began.

Taking a job at a small business (12 people including myself), I was not paid very well – $24,000 per year. During this time I lived at home in order to make ends meet.

I had bought a 3-year old car from a dealer, an Acura Integra for about 13,000. And received a pretty good rate, due to my excellent credit rating (through store cards, etc – which I seldom used). My rate was 5.45%, making my monthly payments out to be about $253.

The other bill was student loans – again at very good rates. Through Sallie Mae I now owed about $17,000 and an additional $5,000 (0% interest) through my hometown.

It while sitting at my desk at this first job that I applied for an American Express Blue card online. Soon after, I used that card to buy an 40gb iPod for about $400. I also used the card to buy gas and small things – thinking that I would just pay it off right away and get the bonus cash from the 3-5% rebate paid out annually.

I was wrong.

One card became two cards and now – 5 years later I have – 6 credit cards and a personal loan from MBNA. I, of course, soon fell into the debt transfer trap. Unloading a large balance to a new card with a lower rate just to watch the now debt free card rise back up to bite me.

I have tried to get a better grip on my financial life before, but those efforts quickly failed for numerous reasons – none of which were good.

This year is going to be different, basically just because it has to be. I have spent too much of my early career trying to dig my way out of debt. With each pay raise I received my debts increased. I now make $40,000 a year, but have over $44,000 in multiple debts to credit card companies, a car loan and student loans. I have lied to myself about my situation and now, as we approach 2007, the lies end and the long hard road ahead begins.