Debt Consolidation Loan

[sunshyn]

I'm currently not behind in my bills, but it's begining to amount up, had several car issues and a few other situations. I have stop using my cards and want to pay off debt. I am currently doing the snowball, but its not fast enough for me, I feel that my mind would be at ease if I didnt have to remember to pay different cards and just pay one bill. I belong to a credit union that I wouldn't have a problem getting a 4 year loan from. I'm will to cut up most of my cards, but I just don't like having this much debt. Should I continue with the snowball or would a debt consolidation loan be a benefit.

 

Any advice is appreciated

[Peekaboo]

If your credit union requires that you close your accounts, doing so will be detrimental to your credit. Cutting up the cards isn't the best idea, even if you don't close them. You do need to use them once in awhile to keep them open.

 

Other than that, I really don't see a problem with consolidating. You just have to be SURE you don't start charging up again.

[sunshyn]

Thanks! I call the CU and the accounts can stay open. How will this affect my credit? I just purchased a home last year and I just feel like I'm a little spread out.

[radi8]

How will this affect my credit?

 

Zeroing out the balances on the cards, even by moving the debt to an installment loan- will improve your credit scores, particularly if you are up above 50% utilization overall or individually.

If you are close to or at the limits, you'll probably see a substantial improvement.

[squirrelgirl]

How is the interest rate on the loan?

 

I agree with Peek, as long as you don't have to close accounts as a contingency, go ahead and go for the loan.

[Uncle Leo]

Just don't run up the cards again. Then you'd have card payments AND a loan payment.

[sunshyn]

Yeah, I'm done with running the cards up. I went 15 years without using credit and I started getting credit to establish a good credit score to purchase a home. Now I ready to go back to cash and carry.

 

the loan will not cover all of my debt, but what is left over I could pay off in 6 months or so if I'm real diligent.

[CallMeJo]

I'm currently not behind in my bills, but it's begining to amount up, had several car issues and a few other situations. I have stop using my cards and want to pay off debt. I am currently doing the snowball, but its not fast enough for me, I feel that my mind would be at ease if I didnt have to remember to pay different cards and just pay one bill. I belong to a credit union that I wouldn't have a problem getting a 4 year loan from. I'm will to cut up most of my cards, but I just don't like having this much debt. Should I continue with the snowball or would a debt consolidation loan be a benefit.

 

Any advice is appreciated

 

 

will the new loan be at a better rate than most of your cards? if not & if your issue is with making many little payments every month, then I would set up bill pay mins for everything & do an extra payment towards the card you're working on.

[sunshyn]

the rate is a little higher at 15%, I have everything on my bill pay, plus I have spreadsheets that I pay my bills from monthly. I realize that doing the loan is just moving things around, so to speak. Wouldn't the loan help my utilization?? 3 of my cards are close to the limit.

 

Just want to make the right decision.

 

Thanks!

[CallMeJo]

the rate is a little higher at 15%, I have everything on my bill pay, plus I have spreadsheets that I pay my bills from monthly. I realize that doing the loan is just moving things around, so to speak. Wouldn't the loan help my utilization?? 3 of my cards are close to the limit.

 

Just want to make the right decision.

 

Thanks!

 

I think you have several different goals & that may be clouding the issue for you.

 

I think you should put your goals down in a hierarchy. goals: pay off debt, improve FICO, feel better about finances (this is important- don't ignore it), not increasing debt (this is just as important as paying anything down)

 

Decide your hierarchy, then you should be able to figure out what is best for you. & if you still want opinions (don't we all feel better when others agree with us?), then we can chime in & our opinions will be better bc they'll be more closely tied with what you most want to accomplish.

 

(personally, I don't have an issue with cutting up cards that you know you don't want to touch for a while. you can always get your company to send you another one & if any company will close it, they close it after a year of non-use. just order your card about 9 months from when you cut it up - if that's what you decide to do - & use it 1x on something small & then cut it up again. easy)

[CallMeJo]

oops, wanted to add- I haven't used my Target in 3+ years & a Chase in at least 2 years, & neither have been closed. in fact, I go tthe Target for a discount counting on the fact that they would close it after a year & they never did. whoops.

[emoticon]

Try to get a Signature credit card with a 0% for a year APR for balance transfers. Consolidate all cards with the Signature card. It will report as "other" or "installment" and won't hurt you much. Even if it's a regular card, most offer low-rate BT APRs as a promo. Why pay 15% when you can get a low-rate BT?

[sunshyn]

emoticon that's a great idea. The only thing is I can't get a big credit limit. I can get the cards but only for $1000 - 3000.

[CallMeJo]

emoticon that's a great idea. The only thing is I can't get a big credit limit. I can get the cards but only for $1000 - 3000.

 

how much do you owe? & at what rates?

[emoticon]

emoticon that's a great idea. The only thing is I can't get a big credit limit. I can get the cards but only for $1000 - 3000.

 

 

If you ask, the card issuer might give you the amount you need to consolidate plus a few hundred more to keep you from going over your CL. It's not uncommon.

 

Try it.