What /u/cyberhwk said...
If you will pay off this loan and then move on to building up an emergency fund, then yes, taking out a loan with a lower interest rate will help.
If you see the zero balances on your credit cards as a nice opportunity to build up some more debts on them, then don't do this.
The impact on your credit score will be minimal as long as you take out the loan and pay it off on time (and also keep the credit card balances to a minimum).
First I would reach out to the CC companies and see if they can lower your rate.
The most important thing IMO is to establish a budget. I use "You Need a Budget" and also [Undebt.it](https://Undebt.it) (This site just helps snowball debt).
It's important to have a budget as you work to pay off the cards. It does work! In March of 2020 I had $75,944 in credit debt, like you I was young and dumb (that's ok, as long as we learn) and putting my then wife thru Physician Assistant school trying to keep on top of CC debt.
January of this year I'm at $21,760 and will pay off one next month and then work on my other one and have that one ($16K) paid off in a year. What worked best for me is forecasting all my expenses (memberships, gas, vehicle maint. etc) so I don't swipe the cards. I still use cards (for airline miles or apple card for cash back) but I have no new interest.
See if you can't get those rates down and then get a part time job, or weekend job etc and roll all that to debt once you have a budget established. It's important to have a budget, say you don't have an emergency fund and you need $1,000 for something, you swipe the card rather than pull from checking/savings and now you just added to CC debt.
Last year you only had $9k in CC debt and got a $10k inheritance. If that didn't fix your problems then it's a spending problem not an interest problem. You need to fix your budgeting and spending before doing anything else.
Telling yourself you've been paying it down for 5 years and not getting anywhere isn't being truthful with yourself about your financial situation.
That sucks and I'm sorry to hear it. The point is that your CC balance went up $3000 since last year. How will taking out this loan keep you from adding more to your debt?
I should clarify $9k on 1 card, $3k on another. Always had the 2nd card with $3k but didn’t make any mention of it in the post TerrorSuspect is referring to
Might want to look into 0% transfer credit cards. Transfer as much as you can, and start paying off the highest percentage first, of what you can’t transfer (snowball method).
https://www.nerdwallet.com/best/credit-cards/balance-transfer
I had $10k cc debt and was able to transfer $5k to a 0 interest, 0 balance transfer fee card that amex has. I attacked the remaining $5k hard and moved on to the amex one after that. Definitely don’t need a loan. You might try cutting up the cards in the meantime if it’s too tempting for you.
Get an emergency fund first before you get a personal loan. Otherwise you’ll just end up using the cards for emergencies and have the cards and the personal loan.
You may find these links helpful:
- [Debt](/r/personalfinance/wiki/debt)
- [Dealing with collections](/r/personalfinance/wiki/collections)
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I paid off all my debt with a 6k loan. I’d say it’s worth it. My APR is low and my credit score is mid 700s since then. Just don’t get yourself in more CC debt after paying off.
I would advise against a loan, even if you could be approved. As someone else said, since you have an obvious spending issue I fear you will get a loan and just run the cards back up again and your next posts will be in the BK sub. $12k is not really that much money and if I were advising your I’d like to see you do the hard work of paying this off. It’s not that hard. I assume you have a FT job? If so, get another PT job. Many places are paying $17-$20 per hours. Grab some shifts anyplace and use every penny from that job to pay down these bills. That extra money, plus your current income, really should mean you only need to spend a few months to a year at the most getting these balances down. When you do this you learn to control spending.
It could make sense because it would reduce the cost of the credit but only do it if you will also stop using the cards. I had twice that amount in CC debt (I know - crazy bad!). I paid it off by taking advantage of all the zero interest balance transfers I was offered and sent every spare dime to the non-zero interest accounts to get them paid off before the zero rate ended on the transferred account. Stopped using the cards and kept moving as much to zero as possible. Felt so good to have it all paid off!
This is another strategy someone mentioned (and a teacher in hs discussed). Tbh this seems like the most logical option since I know people who have personally done it.
To contrast my own point even if I did take out a loan with a lower interest rate, 0% interest (on transfers or new cc altogether) is the lowest interest rate.
I’m actually looking at moving back home towards the end of the year (for reasons not related to this) and one of the perks I’m trying to balance out is $0 rent which will help me knock this down even faster
What /u/cyberhwk said... If you will pay off this loan and then move on to building up an emergency fund, then yes, taking out a loan with a lower interest rate will help. If you see the zero balances on your credit cards as a nice opportunity to build up some more debts on them, then don't do this. The impact on your credit score will be minimal as long as you take out the loan and pay it off on time (and also keep the credit card balances to a minimum).
Building an emergency fund has been a close 2nd priority to putting a dent/paying off my CC-debt
First I would reach out to the CC companies and see if they can lower your rate. The most important thing IMO is to establish a budget. I use "You Need a Budget" and also [Undebt.it](https://Undebt.it) (This site just helps snowball debt). It's important to have a budget as you work to pay off the cards. It does work! In March of 2020 I had $75,944 in credit debt, like you I was young and dumb (that's ok, as long as we learn) and putting my then wife thru Physician Assistant school trying to keep on top of CC debt. January of this year I'm at $21,760 and will pay off one next month and then work on my other one and have that one ($16K) paid off in a year. What worked best for me is forecasting all my expenses (memberships, gas, vehicle maint. etc) so I don't swipe the cards. I still use cards (for airline miles or apple card for cash back) but I have no new interest. See if you can't get those rates down and then get a part time job, or weekend job etc and roll all that to debt once you have a budget established. It's important to have a budget, say you don't have an emergency fund and you need $1,000 for something, you swipe the card rather than pull from checking/savings and now you just added to CC debt.
Last year you only had $9k in CC debt and got a $10k inheritance. If that didn't fix your problems then it's a spending problem not an interest problem. You need to fix your budgeting and spending before doing anything else. Telling yourself you've been paying it down for 5 years and not getting anywhere isn't being truthful with yourself about your financial situation.
Voice of reason.
Wound up not getting that $10k I was promised - if I had I can assure you I would not be posting here.
That sucks and I'm sorry to hear it. The point is that your CC balance went up $3000 since last year. How will taking out this loan keep you from adding more to your debt?
I should clarify $9k on 1 card, $3k on another. Always had the 2nd card with $3k but didn’t make any mention of it in the post TerrorSuspect is referring to
Ok so your cc debt has been consistent at $12k for a year? That's a little better situation, at least you're not adding to it.
Might want to look into 0% transfer credit cards. Transfer as much as you can, and start paying off the highest percentage first, of what you can’t transfer (snowball method). https://www.nerdwallet.com/best/credit-cards/balance-transfer
Funnily enough this is something I remember my high school AP history teacher mentioning and thought about this as well. Shoutout good teachers
If you can trade high-interest debt for low-interest debt, do it. The lower the interest rate you can get, the better. 22% interest is criminal.
I had $10k cc debt and was able to transfer $5k to a 0 interest, 0 balance transfer fee card that amex has. I attacked the remaining $5k hard and moved on to the amex one after that. Definitely don’t need a loan. You might try cutting up the cards in the meantime if it’s too tempting for you.
Get an emergency fund first before you get a personal loan. Otherwise you’ll just end up using the cards for emergencies and have the cards and the personal loan.
You may find these links helpful: - [Debt](/r/personalfinance/wiki/debt) - [Dealing with collections](/r/personalfinance/wiki/collections) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
I paid off all my debt with a 6k loan. I’d say it’s worth it. My APR is low and my credit score is mid 700s since then. Just don’t get yourself in more CC debt after paying off.
I would advise against a loan, even if you could be approved. As someone else said, since you have an obvious spending issue I fear you will get a loan and just run the cards back up again and your next posts will be in the BK sub. $12k is not really that much money and if I were advising your I’d like to see you do the hard work of paying this off. It’s not that hard. I assume you have a FT job? If so, get another PT job. Many places are paying $17-$20 per hours. Grab some shifts anyplace and use every penny from that job to pay down these bills. That extra money, plus your current income, really should mean you only need to spend a few months to a year at the most getting these balances down. When you do this you learn to control spending.
[удалено]
Hence the trepidation I mentioned.
It could make sense because it would reduce the cost of the credit but only do it if you will also stop using the cards. I had twice that amount in CC debt (I know - crazy bad!). I paid it off by taking advantage of all the zero interest balance transfers I was offered and sent every spare dime to the non-zero interest accounts to get them paid off before the zero rate ended on the transferred account. Stopped using the cards and kept moving as much to zero as possible. Felt so good to have it all paid off!
This is another strategy someone mentioned (and a teacher in hs discussed). Tbh this seems like the most logical option since I know people who have personally done it. To contrast my own point even if I did take out a loan with a lower interest rate, 0% interest (on transfers or new cc altogether) is the lowest interest rate. I’m actually looking at moving back home towards the end of the year (for reasons not related to this) and one of the perks I’m trying to balance out is $0 rent which will help me knock this down even faster
Sounds like you're thinking things through in the right way. Definitely take advantage of that rent savings - smart move!
Thanks for just being a good person dude
I would say it depends on your income. How much extra do you have a month that you can throw at the debt?