Taking out a loan for credit card debt?

Adore · Jun 25th, 2008, 05:31 PM

I don't even know where to begin with this. But the one thing I really want to make sure of is this: if I take out a loan to consolidate all my credit card debt, would that at all hurt my credit score or anything? I already have loans out for school, I believe 2 (the bills for those just started coming)

I don't even use my credit cards anymore, now that I am working full time and making money I don't even WANT to use them (it's been since December and I don't even use them, except when I had a pet emergency that cost me a few hundred on the spot which I didn't have-- okay, and gas a few times). When I was in college, I had nothing and wanted way too much and figured I'd just pay it off after school was over. And now I'm left with the bills and although I'm making money, I'm paying so much for the interest and minimum payments and I feel like it's not going anywhere.

Does anyone know if that sounds like a good option? I don't want it to hurt my credit (I don't even know much about that area, but I want to make the best decision!)

I heard from someone that it helps with the minimum payments per month being consolidated but ESPECIALLY the interest. 24% I'm talking here for one of my cards. I don't want it to hurt me being able to get either an apartment in another couple of years (by 1.5-2 years from now, my money will be more stable from this) or a house later on... just want to make sure a loan for this wouldn't hurt me more.

Thanks for any insight!!

gloss_gal · Jun 25th, 2008, 05:57 PM

How much debt do you have. A loan should not hurt you but it depends on the loan term. I think there may be better options and it may not be the first way to go. You should not be paying 24% interest for anything. Give us more details if you don't mind (balance, interest rate).

socalgem · Jun 25th, 2008, 07:53 PM

A loan won't hurt you if the interest isn't high and you won't go out and charge the cards up once you have paid them off. I've known people to get HELOC's to pay off CC's and after they were paid off they charged them back up again.

Adore · Jun 25th, 2008, 08:37 PM

The interest rates for 3 cards I have balances on are I think 19% and then one is 24%. I have been getting nowhere and I don't know why I kept balances on them. I've got about $9,000 which is absolutely ridiculous, I don't even know why I let it get like that but not even using them anymore for MONTHS, I've gotten nowhere fast because of the interest.

I'm afraid to get other cards because I know they will only be like $1,500 or something. But a loan I know I could still have a low amount (well, I don't know this but it would just be my luck I'm sure). But any interest rate lower is better than what I have.

I am highly considering doing this. I don't know how to exactly... do I go to my bank to do it? Do I try and go to different banks and look around at different percentages and terms? I don't even know where to begin... I have to do this ASAP because the interest is getting me nowhere!

bnjj · Jun 25th, 2008, 08:50 PM

Consolidating can be a good thing AS LONG AS you don"t wrack up your credit cards again.

Is that 24% one a dept. store card? Dept. store cards have the highest rates of all cards. I would pay it off and cut it up but wouldn't close it as that can hurt your credit score.

twiggers · Jun 25th, 2008, 08:51 PM

Adore: I would suggest doing a couple things.

#1: Call your credit card companies NOW and ask them to lower your rates. They probably will!!!

#2: If that doesn't work, and you cannot get the interest rates below 10%, then contemplate trying to find a credit card with a lifetime low balance transfer interest rate (something less than 5.9%). You'll ding your credit initially when you open the new CC, but it'll help you financially in the long run.

Most banks will not give out personal loans for something unsecured, especially with the current credit crisis. Your best bet is to get those interest rates lowered and find a low balance transfer.

That said, every single spare penny should go to those CCs. The interest is so high that I wouldn't be aggressively saving right now (except for an emergency fund). Sell some stuff if you can to pay those off. Honestly, 19% is outrageously high for a credit card. Chop up those credit cards!!!!

You can totally get out of debt :-) I've paid off more than $36000 in less than 6 months!

Check out our curbing consumerism club :-)

pidgeon92 · Jun 25th, 2008, 09:17 PM

Quote:

Originally Posted by twiggers

#1: Call your credit card companies NOW and ask them to lower your rates. They probably will!!!

Great minds think alike.

This was going to be my first suggestion.

In regards to a loan: Just don't do it. You are simply taking on more debt; you can get yourself into that much more trouble. $9000 is NOT insurmountable.

Make a list of everything you owe. Pay the most on the card with the highest interest rate. Pay more than the minimum on all the other cards. Pay OFTEN. Now that online banking is free, there is no reason to send only one payment per month. Send it twice a month, or weekly if you can. The balances will drop that much quicker. Keep track of every payment on your list, you will see results soon, which should inspire you to keep it up.

Adore · Jun 25th, 2008, 09:31 PM

oh wow, I had my mind set on a loan but it sounds like keeping the cards might not be so crazy! I will DEFINITELY do that tomorrow by calling up about the APR. Is there a certain way I should say it to get the percentage down?
If it comes down to transferring to another card, is there one anyone knows of that has a good APR?

Thanks so much for all the help! I'm definitely following that Curbing Consumerism thread!

I just feel like this is going to take me forever to pay off... I'm really down about it and upset. Right now (although my pay goes up consistently as I progress in the company I work for) I'm only making 23,000 a year as I'm right out of school. By the end of this year I could MAYBE be making $26,000... it's so hard too with my student loans that have just come in. That is $250 a month minimum =\ Another thing too in school is I had it in my head I'd be starting from the top! And I'm certainly starting from the bottom and working my way up... which takes a while of course.

I will do that, I will be sitting down and figuring this all out. The interest screws everything up... I am selling a few things on eBay and I'm feeling like that is definitely going to help if I consistently do that, and just keep putting amounts on them.

socalgem · Jun 25th, 2008, 09:45 PM

Selling things you don't need is a great idea.

Low interest balance transfer card is a great idea, but not sure how easy it will be with credit companies being extra careful with giving cards out.

I know 9k is probably a lot to you, but you can pay that off. You just have to not add to it. Can you double your payments? Can you transfer the higher card to the lowest interest card you have? How much are the payments on the cards now?

gloss_gal · Jun 25th, 2008, 09:50 PM

I agree with Twiggers. When calling the credit card companies, tell them you want to have the interest rate on your card lowered. If they say no, tell them you have another credit card with a lower rate and are considering a balance transfer and closing out the account. You would really like to stay with them but, blah, blah, blah... If they sttill say no, ask to speak to a manager.

Also, consider a credit card with a 0% (no more than 5%) balance transfer for at least a year. Check out Citi and AMEX. Watch out for the balance transfer fees, try to find one that is 0% but you may have to pay a fee. WARNING: STAY AWAY FROM CAPITAL ONE. We don't like them. If you can get one, transfer as much as you can over to the new card. As the OP mentioned, it will ding you (not severely) for a moment but you will rebound. This is the better way to go. Loans are unsecued. If you cannot pay the loan, the bank cannot take anything from you. Interest rates are higher with loans.

After one or both options are in place. Create your budget (this should be first). Setup online bill pay. Schedule an payment to the creditors on your pay day. If you get paid every other Friday, set up you payments to go at every other Friday. Bill pay systems have become more flexible with dates. By setting up payments when you get paid, you don't see the money and don't have the option to use the money for something else. If you get a bonus, send it to the credit card. If you get a raise, increase payment you send to the credit card.

Don't close any credit cards.

Check back in and let us know how it goes. Good luck.

pidgeon92 · Jun 25th, 2008, 10:18 PM

Adore, you have a good attitude! I have no doubt you can erase the balances in a year or so.... Selling off things you no longer need is a great start. A part time job or some freelance work could make a huge dent in your debt.

Adore · Jun 26th, 2008, 08:09 PM

hmm what about Bank of America? I was able to go on their site and see what I was actually pre-approved for without having to apply to find out... I think there is a fee to transfer, but 0% for 12 months and a $3,000 limit. I'm so afraid of getting a card that is only going to be like $1,500. The Citi one I could get doesn't appear to have a transfer fee, but I have no clue what I'd have for a limit... can't I find a way to contact them and ask? Right now I'm looking for a number on their site somewhere.

I get card offers in the mail all the time and it's like they are all different from online =\
Considering the balance and if I can't get the APR lowered, would getting two new cards to transfer to hurt me?
Now that I'm out of school, 1 year is definitely enough to put a dent in it I think.

pidgeon92 · Jun 26th, 2008, 11:53 PM

Ooh, hold on, I came across this one today.....

http://ihateboa.com/

blessedb318 · Jul 5th, 2008, 04:44 PM

I guess I'm in the minority, but I think consolidating debt with a loan is a great idea. Right now I'm working on simplifying my finances (like closing out extra savings and checking accts, etc.) so making one payment versus several payments to my debt is the way I'd prefer to go. Right now I'm waiting for my credit score to get a little better and then I'll go through my credit union for the loan so I can get the best rate possible.

Jazz · Jul 6th, 2008, 01:57 PM

What about a credit union? PenFed, USAA, they are REALLY good about 0% offers

Jun 25th, 2008, 07:53 PM	#3
socalgem Because I can... Joined: Apr 2007 Location: California Posts: 4,388	A loan won't hurt you if the interest isn't high and you won't go out and charge the cards up once you have paid them off. I've known people to get HELOC's to pay off CC's and after they were paid off they charged them back up again. __________________ Life is too short to drink cheap champagne.

Jun 25th, 2008, 08:50 PM	#5
bnjj ♪ Jovi Junkie ♪ Joined: Apr 2007 Location: Bon Jovi Blvd. Posts: 3,601	Consolidating can be a good thing AS LONG AS you don"t wrack up your credit cards again. Is that 24% one a dept. store card? Dept. store cards have the highest rates of all cards. I would pay it off and cut it up but wouldn't close it as that can hurt your credit score. __________________

Jun 25th, 2008, 08:51 PM	#6
twiggers Earning my PhD Joined: May 2006 Location: The Library Posts: 19,868	Adore: I would suggest doing a couple things. #1: Call your credit card companies NOW and ask them to lower your rates. They probably will!!! #2: If that doesn't work, and you cannot get the interest rates below 10%, then contemplate trying to find a credit card with a lifetime low balance transfer interest rate (something less than 5.9%). You'll ding your credit initially when you open the new CC, but it'll help you financially in the long run. Most banks will not give out personal loans for something unsecured, especially with the current credit crisis. Your best bet is to get those interest rates lowered and find a low balance transfer. That said, every single spare penny should go to those CCs. The interest is so high that I wouldn't be aggressively saving right now (except for an emergency fund). Sell some stuff if you can to pay those off. Honestly, 19% is outrageously high for a credit card. Chop up those credit cards!!!! You can totally get out of debt :-) I've paid off more than $36000 in less than 6 months! Check out our curbing consumerism club :-) __________________ Check out my new blog.....and see how I eliminated $50,000 in credit card debt in just 7 months.... COME JOIN THE COOLEST CLUB AROUND...THE CURBING CONSUMERISM CLUB

Jun 25th, 2008, 09:45 PM	#9
socalgem Because I can... Joined: Apr 2007 Location: California Posts: 4,388	Selling things you don't need is a great idea. Low interest balance transfer card is a great idea, but not sure how easy it will be with credit companies being extra careful with giving cards out. I know 9k is probably a lot to you, but you can pay that off. You just have to not add to it. Can you double your payments? Can you transfer the higher card to the lowest interest card you have? How much are the payments on the cards now? __________________ Life is too short to drink cheap champagne.

Jul 6th, 2008, 01:57 PM	#15
Jazz All That Jazz Joined: May 2006 Location: Midwest, USA Posts: 619	What about a credit union? PenFed, USAA, they are REALLY good about 0% offers __________________ There is no spoon.

Jun 25th, 2008, 05:31 PM	#1
Adore Member Joined: Sep 2006 Location: USA Posts: 1,188	I don't even know where to begin with this. But the one thing I really want to make sure of is this: if I take out a loan to consolidate all my credit card debt, would that at all hurt my credit score or anything? I already have loans out for school, I believe 2 (the bills for those just started coming) I don't even use my credit cards anymore, now that I am working full time and making money I don't even WANT to use them (it's been since December and I don't even use them, except when I had a pet emergency that cost me a few hundred on the spot which I didn't have-- okay, and gas a few times). When I was in college, I had nothing and wanted way too much and figured I'd just pay it off after school was over. And now I'm left with the bills and although I'm making money, I'm paying so much for the interest and minimum payments and I feel like it's not going anywhere. Does anyone know if that sounds like a good option? I don't want it to hurt my credit (I don't even know much about that area, but I want to make the best decision!) I heard from someone that it helps with the minimum payments per month being consolidated but ESPECIALLY the interest. 24% I'm talking here for one of my cards. I don't want it to hurt me being able to get either an apartment in another couple of years (by 1.5-2 years from now, my money will be more stable from this) or a house later on... just want to make sure a loan for this wouldn't hurt me more. Thanks for any insight!!

Jun 25th, 2008, 05:57 PM	#2
gloss_gal Member Joined: May 2006 Posts: 2,439	How much debt do you have. A loan should not hurt you but it depends on the loan term. I think there may be better options and it may not be the first way to go. You should not be paying 24% interest for anything. Give us more details if you don't mind (balance, interest rate).

Jun 25th, 2008, 08:37 PM	#4
Adore Member Joined: Sep 2006 Location: USA Posts: 1,188	The interest rates for 3 cards I have balances on are I think 19% and then one is 24%. I have been getting nowhere and I don't know why I kept balances on them. I've got about $9,000 which is absolutely ridiculous, I don't even know why I let it get like that but not even using them anymore for MONTHS, I've gotten nowhere fast because of the interest. I'm afraid to get other cards because I know they will only be like $1,500 or something. But a loan I know I could still have a low amount (well, I don't know this but it would just be my luck I'm sure). But any interest rate lower is better than what I have. I am highly considering doing this. I don't know how to exactly... do I go to my bank to do it? Do I try and go to different banks and look around at different percentages and terms? I don't even know where to begin... I have to do this ASAP because the interest is getting me nowhere!

Jun 25th, 2008, 09:31 PM	#8
Adore Member Joined: Sep 2006 Location: USA Posts: 1,188	oh wow, I had my mind set on a loan but it sounds like keeping the cards might not be so crazy! I will DEFINITELY do that tomorrow by calling up about the APR. Is there a certain way I should say it to get the percentage down? If it comes down to transferring to another card, is there one anyone knows of that has a good APR? Thanks so much for all the help! I'm definitely following that Curbing Consumerism thread! I just feel like this is going to take me forever to pay off... I'm really down about it and upset. Right now (although my pay goes up consistently as I progress in the company I work for) I'm only making 23,000 a year as I'm right out of school. By the end of this year I could MAYBE be making $26,000... it's so hard too with my student loans that have just come in. That is $250 a month minimum =\ Another thing too in school is I had it in my head I'd be starting from the top! And I'm certainly starting from the bottom and working my way up... which takes a while of course. I will do that, I will be sitting down and figuring this all out. The interest screws everything up... I am selling a few things on eBay and I'm feeling like that is definitely going to help if I consistently do that, and just keep putting amounts on them.

Jun 25th, 2008, 09:50 PM	#10
gloss_gal Member Joined: May 2006 Posts: 2,439	I agree with Twiggers. When calling the credit card companies, tell them you want to have the interest rate on your card lowered. If they say no, tell them you have another credit card with a lower rate and are considering a balance transfer and closing out the account. You would really like to stay with them but, blah, blah, blah... If they sttill say no, ask to speak to a manager. Also, consider a credit card with a 0% (no more than 5%) balance transfer for at least a year. Check out Citi and AMEX. Watch out for the balance transfer fees, try to find one that is 0% but you may have to pay a fee. WARNING: STAY AWAY FROM CAPITAL ONE. We don't like them. If you can get one, transfer as much as you can over to the new card. As the OP mentioned, it will ding you (not severely) for a moment but you will rebound. This is the better way to go. Loans are unsecued. If you cannot pay the loan, the bank cannot take anything from you. Interest rates are higher with loans. After one or both options are in place. Create your budget (this should be first). Setup online bill pay. Schedule an payment to the creditors on your pay day. If you get paid every other Friday, set up you payments to go at every other Friday. Bill pay systems have become more flexible with dates. By setting up payments when you get paid, you don't see the money and don't have the option to use the money for something else. If you get a bonus, send it to the credit card. If you get a raise, increase payment you send to the credit card. Don't close any credit cards. Check back in and let us know how it goes. Good luck.

Jun 25th, 2008, 10:18 PM	#11
pidgeon92 Member Joined: Feb 2006 Location: Waukegan, IL Posts: 1,311	Adore, you have a good attitude! I have no doubt you can erase the balances in a year or so.... Selling off things you no longer need is a great start. A part time job or some freelance work could make a huge dent in your debt.

Jun 26th, 2008, 08:09 PM	#12
Adore Member Joined: Sep 2006 Location: USA Posts: 1,188	hmm what about Bank of America? I was able to go on their site and see what I was actually pre-approved for without having to apply to find out... I think there is a fee to transfer, but 0% for 12 months and a $3,000 limit. I'm so afraid of getting a card that is only going to be like $1,500. The Citi one I could get doesn't appear to have a transfer fee, but I have no clue what I'd have for a limit... can't I find a way to contact them and ask? Right now I'm looking for a number on their site somewhere. I get card offers in the mail all the time and it's like they are all different from online =\ Considering the balance and if I can't get the APR lowered, would getting two new cards to transfer to hurt me? Now that I'm out of school, 1 year is definitely enough to put a dent in it I think.

Jun 26th, 2008, 11:53 PM	#13
pidgeon92 Member Joined: Feb 2006 Location: Waukegan, IL Posts: 1,311	Ooh, hold on, I came across this one today..... http://ihateboa.com/

Jul 5th, 2008, 04:44 PM	#14
blessedb318 Member Joined: Mar 2008 Posts: 23	I guess I'm in the minority, but I think consolidating debt with a loan is a great idea. Right now I'm working on simplifying my finances (like closing out extra savings and checking accts, etc.) so making one payment versus several payments to my debt is the way I'd prefer to go. Right now I'm waiting for my credit score to get a little better and then I'll go through my credit union for the loan so I can get the best rate possible.