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Mido

Maxed out on my CC. Should i get a personal loan to consolidate?

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Hello CB family,

 

Looking for an advice

 

My cc APR is 14% and my current balance i owe is $15700 out of $16000 card limit Monthly minimum payment been around $400

Never missed a payment though but i am slowly drowning.

Would you suggest me applying for personal loan to consolidate my cc debt? or its not worth it since i might end up with higher rate? should i consider BT cc or stay where i am at?

Any ADVICE would be highly appreciated!

 

Thank you

 

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My opinion on that really relates to what else goes with the plan there. As to that high utilization, definitely need to get it down. My understanding by that post is that that is your only revolving line of credit. What are you current scores? How much are you able to pay a month? Have you looked at trimming expenses or increasing income at this point? I can speak from experience that all those things were on my list, and have been done as I am trying to blaze through my initially 5-year plan.

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STOP MAKING ADDITIONAL CHARGES ON THE CARD and pay more than the minimum.

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STOP MAKING ADDITIONAL CHARGES ON THE CARD and pay more than the minimum.

 

+++ 1000

 

don't know how you got to this point, could be living on card while unemployed, extenuating circumstances,

 

but yeah, you need to cut expenses, sell some thing, take a 2nd job and pay it off

 

then rebuild your credit with more cards to spread the load over and keep your Utilization down to 16% and pay in full each month online before the statement cuts

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Anything you can do to lower your APR is good as long as it doesn't come with origination fees or some garbage.

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you aren't going to be forced into a loan. you'll be offered the terms before you accept (and potentially before they even offer you final approval). so you'll be making an educated decision. you can even shop around on it.

 

but it may be tough to find a better deal with that high of a utilization.

 

and as others have mentioned, paying it off is one thing. making sure you don't double the debt it by continuing to spend is another. but I'm not here to judge.

Edited by bradk14

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My opinion on that really relates to what else goes with the plan there. As to that high utilization, definitely need to get it down. My understanding by that post is that that is your only revolving line of credit. What are you current scores? How much are you able to pay a month? Have you looked at trimming expenses or increasing income at this point? I can speak from experience that all those things were on my list, and have been done as I am trying to blaze through my initially 5-year plan.
STOP MAKING ADDITIONAL CHARGES ON THE CARD and pay more than the minimum.
 
+++ 1000
 
don't know how you got to this point, could be living on card while unemployed, extenuating circumstances,
 
but yeah, you need to cut expenses, sell some thing, take a 2nd job and pay it off
 
then rebuild your credit with more cards to spread the load over and keep your Utilization down to 16% and pay in full each month online before the statement cuts
Anything you can do to lower your APR is good as long as it doesn't come with origination fees or some garbage.
you aren't going to be forced into a loan. you'll be offered the terms before you accept (and potentially before they even offer you final approval). so you'll be making an educated decision. you can even shop around on it.
 
but it may be tough to find a better deal with that high of a utilization.
 
and as others have mentioned, paying it off is one thing. making sure you don't double the debt it by continuing to spend is another. but I'm not here to judge.
Thanks y'all for the advice.
Sorry I Haven't responded on time I was away for couple of months.

As for the charges I haven't added ANY charges at all once I hit that limit. My minimum payment is around $300 /month and i always pay $450 but what gets me is as soon as I make the payment by due date I see my statement adds an extra $190 for interests. It's like my extra payment goes toward the interests and I have to start all over again and it's really frustrating. I'll be working on Uber/lyft and the extra $$ will put it towards the CC.

Sent from my SM-G892U using Tapatalk

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18 minutes ago, Mido said:

Thanks y'all for the advice.
Sorry I Haven't responded on time I was away for couple of months.

As for the charges I haven't added ANY charges at all once I hit that limit. My minimum payment is around $300 /month and i always pay $450 but what gets me is as soon as I make the payment by due date I see my statement adds an extra $190 for interests. It's like my extra payment goes toward the interests and I have to start all over again and it's really frustrating. I'll be working on Uber/lyft and the extra $$ will put it towards the CC.

Sent from my SM-G892U using Tapatalk
 

Your monthly interest is about $183.  The rest goes to principal and lowers your debt.  So if you pay $400/mo your balance should drop about $2500 over the next year. And it will drop faster the year after that.

 

I agree it's time to stop charging on the card. Try to build up cash reserves and use that to pay unexpected expenses that come up. Freeze your credit card in a large block of ice to discourage impulsive use. Only you know how you got there and what will work for you to reduce spending.

 

Probably impossible to get a consolidation loan at anywhere near 14% currently but once the balance drops below 8k or so you might get some offers for 0 interest transfers and better personal loans may be available too. They can be great so long as you what closely. Banks count on people still having a large balance when they end.

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Your monthly interest is about $183.  The rest goes to principal and lowers your debt.  So if you pay $400/mo your balance should drop about $2500 over the next year. And it will drop faster the year after that.
 
I agree it's time to stop charging on the card. Try to build up cash reserves and use that to pay unexpected expenses that come up. Freeze your credit card in a large block of ice to discourage impulsive use. Only you know how you got there and what will work for you to reduce spending.
 
Probably impossible to get a consolidation loan at anywhere near 14% currently but once the balance drops below 8k or so you might get some offers for 0 interest transfers and better personal loans may be available too. They can be great so long as you what closely. Banks count on people still having a large balance when they end.
Thx. I don't even carry the card. It's hidden under my socks
I don't even know/remember how things got out of control like this.
I'll keep making extra payments and I'll put my next year tax refund towards this CC balance to drop it down.
Thanks again.

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1 hour ago, Mido said:

Thx. I don't even carry the card. It's hidden under my socks emoji3.png
I don't even know/remember how things got out of control like this.
I'll keep making extra payments and I'll put my next year tax refund towards this CC balance to drop it down.
Thanks again.

Sent from my SM-G892U using Tapatalk
 

You would be much better served adjusting your withholding NOW to prevent a tax refund, and use the additional money every pay period to pay immediately on your debt.  Don't even wait for the due date.  Make extra payments with the extra money on payday, every payday.

 

Most cards calculate interest on your average daily balance, so if your payment is due on the 20th but you have the money on the 12th, make the payment on the 12th.

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You would be much better served adjusting your withholding NOW to prevent a tax refund, and use the additional money every pay period to pay immediately on your debt.  Don't even wait for the due date.  Make extra payments with the extra money on payday, every payday.
 
Most cards calculate interest on your average daily balance, so if your payment is due on the 20th but you have the money on the 12th, make the payment on the 12th.
@CV91915
My withholding is already the lowest I can get and I can't lower it than what is it now.

So, if I'm gettin paid twice a month (the 15th & the 30th) of each month and this CC due date is the 15th what am i supposed to do again?

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Maxing out the card is a bad place to be.

Pretend it doesn't exist for awhile, and throw as much money as you can at the balance until it is paid to zero.

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Your statement has a box that gives you a number to pay each month (assuming no further spending on the card) if you want to have it paid off in 36 months.  I believe it also shows a number if you only paid the minimum amount due and the difference in savings. 

 

With a 14% APR, you KNOW that you are looking at a bit over one percent of the balance each month that is going to nothing but servicing of the debt.  Anything above that goes to the actual principle.  The earlier in the month you MAKE the payment, the less interest is accumulated in a given month.  You should also be able to make multiple payments. 

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3 hours ago, Mido said:

@CV91915
My withholding is already the lowest I can get and I can't lower it than what is it now.

So, if I'm gettin paid twice a month (the 15th & the 30th) of each month and this CC due date is the 15th what am i supposed to do again?

Sent from my SM-G892U using Tapatalk
 

First, no matter what you do, between the statement date and the payment due date make sure that you make payments totaling at least the minimum due.

 

Beyond that, don't save up small amounts of money throughout the month in order to make one large payment.  Make multiple smaller payments as the money comes in.  

 

This will result in the interest being calculated on a smaller average daily balance... which equals less interest and less time until you get to the finish line.

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3 hours ago, Mido said:

@CV91915
My withholding is already the lowest I can get and I can't lower it than what is it now.
 

No, it's up to you how much you have deducted from your pay and if you expect a big refund then it for sure isn't the lowest you should be paying.

 

So, if you expect to get a "big refund" next year then you need to file a new W4 with your employer.

 

There's a worksheet on the form 's instructions so you can estimate how much tax you need to pay. If you do it correctly you won't get a big refund but instead get the extra in each paycheck. BTW, there is no set maximum you can enter to reduce withholding but if you wind up paying too little they can add a penalty tax on the underpayment but it's likely less than the interest you are paying on the CC.

 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

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26 minutes ago, cashnocredit said:

No, it's up to you how much you have deducted from your pay and if you expect a big refund then it for sure isn't the lowest you should be paying.

 

So, if you expect to get a "big refund" next year then you need to file a new W4 with your employer.

 

There's a worksheet on the form 's instructions so you can estimate how much tax you need to pay. If you do it correctly you won't get a big refund but instead get the extra in each paycheck. BTW, there is no set maximum you can enter to reduce withholding but if you wind up paying too little they can add a penalty tax on the underpayment but it's likely less than the interest you are paying on the CC.

 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

Right.  I'm thinking OP might have the W-4 set to zero exemptions.  You can't go lower than zero, but it's actually increasing the number of exemptions that drives down the amount of tax withheld (which results in a higher paycheck).

 

I am still fiddling with ours to find the sweet spot (defined as a small amount of taxes due when we file) but it's impossible to predict our tax liability since we still have investment income earned in Turkish lira.  

 

 

Edited by cv91915

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3 minutes ago, cv91915 said:

Right.  I'm thinking OP might have the W-4 set to zero exemptions.  You can't go lower than zero, but it's actually increasing the number of exemptions that drives down the amount of tax withheld.

 

I am still fiddling with ours to find the sweet spot (defined as a small amount of taxes due when we file) but it's impossible to predict our tax liability since we still have investment income earned in Turkish lira.  

 

We can have sizable gains in Turkish lira that become losses in US dollars when you account for the difference in the exchange rate from when the assets were purchased vs when they were sold.  

 

So we pay income tax to the Turkish government and then deduct the loss on our US taxes.  It's maddening. And tax prep costs a fortune.  

Yep, no negative exemptions. :o But if you are really gung-ho you can gift the government extra money.

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22 hours ago, centex said:

Your statement has a box that gives you a number to pay each month (assuming no further spending on the card) if you want to have it paid off in 36 months.  I believe it also shows a number if you only paid the minimum amount due and the difference in savings. 

 

With a 14% APR, you KNOW that you are looking at a bit over one percent of the balance each month that is going to nothing but servicing of the debt.  Anything above that goes to the actual principle.  The earlier in the month you MAKE the payment, the less interest is accumulated in a given month.  You should also be able to make multiple payments. 

Thanks. I never looked at it before "Paperless Guy in here"

You're totally right, I saw this box today and it says making $550 a month (assuming No charges on the card) the balance will be paid off in 3 years. 

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21 hours ago, cv91915 said:

First, no matter what you do, between the statement date and the payment due date make sure that you make payments totaling at least the minimum due.

 

Beyond that, don't save up small amounts of money throughout the month in order to make one large payment.  Make multiple smaller payments as the money comes in.  

 

This will result in the interest being calculated on a smaller average daily balance... which equals less interest and less time until you get to the finish line.

Thanks cv91915 .. My jaw dropped learning about making multiple smaller amounts MAKES A DIFFERENCE when it comes to the interests. WOW. Always thought making payment in one amount is the same.

21 hours ago, cashnocredit said:

No, it's up to you how much you have deducted from your pay and if you expect a big refund then it for sure isn't the lowest you should be paying.

 

So, if you expect to get a "big refund" next year then you need to file a new W4 with your employer.

 

There's a worksheet on the form 's instructions so you can estimate how much tax you need to pay. If you do it correctly you won't get a big refund but instead get the extra in each paycheck. BTW, there is no set maximum you can enter to reduce withholding but if you wind up paying too little they can add a penalty tax on the underpayment but it's likely less than the interest you are paying on the CC.

 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

Currently, I'm set at 8 exemptions. The IRS worksheet is what i used and the calculations led me to 8.

21 hours ago, cv91915 said:

Right.  I'm thinking OP might have the W-4 set to zero exemptions.  You can't go lower than zero, but it's actually increasing the number of exemptions that drives down the amount of tax withheld (which results in a higher paycheck).

 

I am still fiddling with ours to find the sweet spot (defined as a small amount of taxes due when we file) but it's impossible to predict our tax liability since we still have investment income earned in Turkish lira.  

 

 

That's pretty funny (zero exemptions) lol but my W-4 now is set at 8 exemptions. The IRS worksheet is what i used and the calculations led me to 8 allowances

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1 hour ago, Mido said:

Thanks cv91915 .. My jaw dropped learning about making multiple smaller amounts MAKES A DIFFERENCE when it comes to the interests. WOW. Always thought making payment in one amount is the same.

 

Interest is often calculated daily based upon the balance at the time of the calculation.  As such, the lower a balance, the less interest there is to accumulate. 

 

Some will show you the average daily balances as well...but I don't believe anyone is calculating interest accruals based on just the average daily balance.  However, I readily acknowledge I have not spent much time paying the attention that I should to those fields since I don't pay interest.  Your card will tell you how the actual calculation is being performed...

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1 hour ago, centex said:

Interest is often calculated daily based upon the balance at the time of the calculation.  As such, the lower a balance, the less interest there is to accumulate. 

 

Some will show you the average daily balances as well...but I don't believe anyone is calculating interest accruals based on just the average daily balance.  However, I readily acknowledge I have not spent much time paying the attention that I should to those fields since I don't pay interest.  Your card will tell you how the actual calculation is being performed...

The impact is a few dollars per month.

 

Most all cards use the average daily balance to calculate interest. It is the same thing as adjusting purchases and payments daily and calculating the daily interest on the balance but not adding it to the running balance until the next statement date. Making 4, evenly spaced $100 payments over the month with the last one on the payment due date, will save about $1.60 per month with a 17k balance and 14% annual interest rate. If they were to add the daily interest (compounding daily) to the balance each day it would add another $1 at the end of the month. I don't have any cards that do that though. May not seem like much but adds up over the years.

 

Basically, any time you have spare cash over the rainy day fund, pay any ongoing balances ASAP.  Warning: this does not typically apply to mortgages and term loans.

 

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1 hour ago, cashnocredit said:

The impact is a few dollars per month.

 

Most all cards use the average daily balance to calculate interest. It is the same thing as adjusting purchases and payments daily and calculating the daily interest on the balance but not adding it to the running balance until the next statement date. Making 4, evenly spaced $100 payments over the month with the last one on the payment due date, will save about $1.60 per month with a 17k balance and 14% annual interest rate. If they were to add the daily interest (compounding daily) to the balance each day it would add another $1 at the end of the month. I don't have any cards that do that though. May not seem like much but adds up over the years.

 

Basically, any time you have spare cash over the rainy day fund, pay any ongoing balances ASAP.  Warning: this does not typically apply to mortgages and term loans.

 

The impact of changing behavior for one month is relatively small, but it does accelerate repayment and the difference over months and years can become significant.  

 

The disclipline can also spill over into other areas of life, which yields other benefits.

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38 minutes ago, cv91915 said:

The impact of changing behavior for one month is relatively small, but it does accelerate repayment and the difference over months and years can become significant.  

 

The disclipline can also spill over into other areas of life, which yields other benefits.

Yep, it may not seem like too much but is still a few hundred bucks over a 6 year payoff. You wouldn't just toss a couple Benjies in the sewer.  But right, far and away, the discipline is the true value and pays off in a lot of life's endeavors.

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On 7/26/2018 at 7:16 PM, cashnocredit said:

Yep, it may not seem like too much but is still a few hundred bucks over a 6 year payoff. You wouldn't just toss a couple Benjies in the sewer.  But right, far and away, the discipline is the true value and pays off in a lot of life's endeavors.

 

On 7/26/2018 at 7:16 PM, cashnocredit said:

Yep, it may not seem like too much but is still a few hundred bucks over a 6 year payoff. You wouldn't just toss a couple Benjies in the sewer.  But right, far and away, the discipline is the true value and pays off in a lot of life's endeavors.

 

On 7/26/2018 at 6:37 PM, cv91915 said:

The impact of changing behavior for one month is relatively small, but it does accelerate repayment and the difference over months and years can become significant.  

 

The disclipline can also spill over into other areas of life, which yields other benefits.

 

On 7/26/2018 at 4:35 PM, cashnocredit said:

The impact is a few dollars per month.

 

Most all cards use the average daily balance to calculate interest. It is the same thing as adjusting purchases and payments daily and calculating the daily interest on the balance but not adding it to the running balance until the next statement date. Making 4, evenly spaced $100 payments over the month with the last one on the payment due date, will save about $1.60 per month with a 17k balance and 14% annual interest rate. If they were to add the daily interest (compounding daily) to the balance each day it would add another $1 at the end of the month. I don't have any cards that do that though. May not seem like much but adds up over the years.

 

Basically, any time you have spare cash over the rainy day fund, pay any ongoing balances ASAP.  Warning: this does not typically apply to mortgages and term loans.

 

 

On 7/26/2018 at 3:23 PM, centex said:

Interest is often calculated daily based upon the balance at the time of the calculation.  As such, the lower a balance, the less interest there is to accumulate. 

 

Some will show you the average daily balances as well...but I don't believe anyone is calculating interest accruals based on just the average daily balance.  However, I readily acknowledge I have not spent much time paying the attention that I should to those fields since I don't pay interest.  Your card will tell you how the actual calculation is being performed...

Thank you Folks.

Since i am trying to save money. I called NFCU to refinance my Toyota Auto Loan with them and here is the thing I would like your opinion on:

*I owe Toyota $8000 on 6.95% interest and my monthly payment have been $465 and my loan will be paid off 2020

*NFCU Auto loan will refin those $8000 on 14% interest and my monthly payment will be $279 for 36 months.

It will extend my mature date from 2 years to be 3 years but will definitely reduce my monthly payment from 465 to 279 and overall will save me total of $1,116 by the time i pay off with NFCU

 

I am confused of how am i saving money with NFCU even though i will be paying higher interest rate. Please advice

Edited by Mido

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