Credit Card Debt Consolidation Loan

Due to a family tragedy, my husband and I are currently in $26,000 of credit card debt. All of the payments are current and the cards are paid on time with the accounts still open (we are not still charging, though). We are looking to seriously pay this down before the interest eats us alive. My husband wants to take out a bank loan and pay the cards off that way, but I am wondering about the debt consolidation programs you hear about (I know some of those are scams and some are real). Any advice or experience?

A bank loan will require some form of collateral, like a house. If you can't pay the loan, you lose the house.
Debt consolidation will trash your credit score.

You are better off negotiating with each credit card. Mention to them that you may have to declare bankruptcy due to the high rate and could they lower the rate. In most cases, they would do that.

2008-02-10 19:32:32 by honhill

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I have a bunch of credit card debt and am looking to consolidate it. I don't use my credit cards anymore and i have a perfect payment history on all my accounts on my credit report. Never one late payment on anything. I am looking for some way to consolidate the credit cards to one loan with a reasonable interest rate since some of my cards are very high interest( over 21% for one of them). The problem is being in a lot of debt i dont get enough credit when i apply anywhere to transfer the balances. I have some equity in my home but not nearly enough to tap into it or i could risk being "upside down in it" Does anyone have any suggestions how someone with a perfect payment history but hight debt to available credit ratio can consolidate?
It is nice for people to try to help but i dont even know if the person who replied read what i said. I dont need my credit repaired i have a perfect credit history just lots of debt.

I'm in debt management and if you've never missed a payment then your best bet would be to call each credit card and ask to see if you could get onto an internal program. That will lower your interest and maybe even the payment. Keep sending the same amount don't send the lower payment obviously. But the internal programs are for a limited time only so ask how long it will last. Before you do that, you may want to check how much more you could pay a month. The other would be to consolidate with a debt management company but that would close all the accounts. I wouldn't recommend it unless you feel you can't afford the payments and expect to start struggling. We help with credit counseling if you would like.

2008-04-27 11:53:29 by crappa

Price: $4.99

I am planning to consolidate about $4000 in credit card debt by personal loan. What are the best lenders to approach?

What keeps most people in debt is the fact that they keep spending more money than they make. They look at the "monthly payments" instead of the total debt loan that they are carrying. People need to stop spending now and concentrate on becoming debt free. Please do not consolidate or use a debt reduction company . It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. Student loans are the only debt that can garnish your wages for non payment without taking you to court first. Just list them out on a piece of paper or a spreadsheet and follow the plan. If you work the plan, the plan will work for you.

A. Have a garage sale and sell anything that you no longer need or want.

B.Get a temporary part time job, if you have one, get another.


Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment

Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment

Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

You can do it and it isn't as hard as you think. Just follow the plan

2010-02-25 22:50:05 by case2485

Price: $14.95

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

I am confused. What is credit card consolidation? What is loan consolidation? What is a debt consolidation loan?

A loan consolidation and a debt consolidation are the same. A bank loans you enough money to pay off credit cards or loans (like a car loan). They group it all into one single loan through them (hence the word "consolidation"). So they take all your outstanding "debt" and put it in one single loan with a fixed monthly payment.

A credit card consolidation can be one of two things:

First - You take a credit card and "transfer" the balances of all your other credit cards onto it. Then you have only one single credit card bill.

Second - A debt consolidation loan where you get a loan through a bank to pay off credit card debt. Sometimes the bank will want you to cancel the cards too. Not always.

Hope this helps!

2009-03-18 15:24:54 by