Card Consolidation Credit Debt Debt Help

I have amassed $16,000 in credit card debt. I am contemplating the best way to tackle this debt as there are other things that I want to do with my recently purchased condo. However, I will not begin to make any improvements or take on further debt until I am totally credit card debt free.

The credit card debt is contain on (2) credit cards that have an interest rate of 9% and 12% respectively. I am considering a debt consolidation loan but preliminary research shows that the interest rates being offered are higher than my credit cards’ interest rate. The fixed payment of a debt consolidation loan is what is most appealing to me. What suggestions do you offer? Is it possible to receive debt consolidation loan at a rate lower than what is being offered? Are there other debt reduction remedies that I should consider? Let me know if you need additional information. Please help. Thank you for your time

This is actually a pretty easy answer. If you can get a consolidation loan at a lower interest rate and can afford the payment, you should do it.

Otherwise, it really is a discipline issue. Any installment loan will have a fixed payment, but the payment would certainly be higher than the combined credit card minimum amounts. Therefore, there is nothing preventing you from paying the same amount (as the would-be installment loan payment) on the credit cards each month. Depending on the balances, most would say pay the higher interest rate first but there are benefits to paying off one completely first as well. The interest rates are close enough that I really don't think it matters where you put the extra money as long as the balances are coming down each month.

The only possible benefit to getting an installment loan at a higher rate than the cards would be to try and quickly improve your credit score. This is not a given depending on your credit file but in theory, reducing your credit card utilization should have a pretty big impact on your score. This is assuming your utilization is over 35% with current balances. Paying these off with an installment loan could improve your score more than the negative impact of opening a new account and taking an inquiry or two to get the installment loan. If you do not need the bump quickly, I would NOT get the installment loan unless the rate is lower. It doesn't make financial sense and there is not a 100% guarantee transferring the debt from cards to an installment loan will improve your score.

I cannot answer your question about whether or not you can get a debt consolidation loan at a lower rate or not. That depends on so many things like credit, income, and assets that you really need to speak to a banker. I would recommend a credit union in most cases.

The only other possible thing you can do is contact the credit card companies and ask for a concession on rates or fees. If you have not been late, this is unlikely but many card issuers are working with the card holder more and more to reduce the payments, fees and interest they pay in an effort to stave off delinquency and chargeoffs. This is less likely in your case because the cards are already at a pretty low rate.

Otherwise, there really is not much more you can do that makes sense. Just apply as much as you can to the card balances each month. Just "pretend" you have an installment loan and pay that much each month - the results are the same.
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Hope that helps, post back if need be- regards



Good luck!

2009-10-17 20:56:23 by Robert Albert

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I need help with paying off my credit card debts. There are so many debt reduction /consolidation agencies that I don't know which one is good/authentic and will give the best rate (discount). For those who had gone through this experience, please advise. Thanks.

I wouldn't use any of them they are rip off artists. They take your money and do nothing, been there done that. Go to Consumer Counseling, in every city or county, it is free, non profit and they don't charge but they will contact all the places you owe money to and get you with lower payments and great ways of getting out of debt !! They are well known by all companies and acknowledge Consumer Credit Counseling as serious and good to work with .

2009-05-03 04:46:52 by hayati k

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We went to apply at a credit union and the first time the lady said that we was approved of the amount that we asked for without collateral and that the next day we could fill out the forms and get our loan. The next day we went, it was a totally different woman and story. She told use that we was not approved at all for the amount of the loan that we have asked for but that they colud offer us another amount in which was not enough to pay off one of the four credit cards that we have. It's very, very fraustrating because we pay all our bills on time and we do make the mininmum payments on the credit cards which ranges from $50-$100 but that's not enough for them. We just want to pay off the credit cards and to build our credit back up again. What can we do? We need some help!!!
We don't own or rent a home and we have a personal loan (that we pay them on time) already with the credit union that we went to to apply for debt consolidation loan.

1. You can try again in a few months after making higher than just minimum payments. Once you pay down some debt, your score may be high enough to qualify.

2. You can make higher than minimum payments for several months, and then contact your credit card companies to request a lower rate. That can help you pay them off even faster, and it may lower your payment slightly if you need a break.

3. You can use the equity in your home to get a home equity loan. This can give you a much lower rate that may also decrease your income tax burden (ask your tax adviser). It does mean that you are securing what was once an unsecured debt with your greatest asset. If you are not a homeowner with equity, then this is not an option.

2007-02-07 07:17:18 by NoNo

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A bank.

2006-11-08 11:28:13 by patosh

I currently have about $4,000 worth of credit card debt..not a huge amount, but a burden on the brain nonetheless. I make about $1,100 a month (yes..I'm in college) and was wondering what a fast way to get my cards paid down would be.

Do debt consolidation loans hurt your credit? Right now they don't sound like a good idea.

Anybody have any strategies they use to get their cards paid down?

See http://www.esuperfind.com/lowermybills.p hpp?id=hra0tt16koo9 the affiliated site is an Experian company BBB approved so very safe.
They might or they might not have you on. It depends on many factors and how big the debt is.

2009-12-15 22:21:14 by Captainpoopypants