What is the best way to payoff my credit card debt?
Credit Card
sundrop_rulz asked:
I currently have around 10,000.00 dollars of credit card debt on three different cards. I am paying 29.99% on two of them, and 22.99% on the other one.
I currently have around 10,000.00 dollars of credit card debt on three different cards. I am paying 29.99% on two of them, and 22.99% on the other one.
I have tried to get a card with a better rate to transfer my balances to, but the issuers won’t give me one because I am using so much of my available credit now. I have not had any late payments on my credit accounts, tho.
Should I try to get a home equity loan to pay off the cards, or is that a bad idea, too?
I know that I got myself in this situation, and I am wholly responsible. I do not feel right about declaring bankruptcy, but really want to get out of debt somehow.
If I am unable to get a lower rate, then I don’t see a way to rid myself of the debt. Any advice?
Herbert
January 12th, 2009 at 3:43 pm
I would go with the home equity loan.
January 15th, 2009 at 3:06 am
Apply for a Home Equity Loan so that you can manage your payments better. The interest will be income tax deductible. You’ll breathe easier each month. Get a fixed rate if you can.
However, be sure that you don’t get back into this mess.
I called Citibank. They did the rest of the work. Took about 30 days.
January 15th, 2009 at 8:58 pm
The only way I know is to get a job or 2 or 3 and work your ass off and don’t let this happen again. No fun I know but you had your fun getting into debt in the first place.
A home equity loan will just put you farther in the hole. You can’t get rid of debt with more debt.
January 17th, 2009 at 5:15 pm
I used to work for a large credit card issuing bank, so I feel I can offer some advice.
Bankruptcy is not an option for you- unless you are unable to work hard to repay your obligation. If you are capable of working a decent paying job, you will regret bankruptcy for the next 7 years or longer. That’s probably a lot longer than it would take if you sucked up some tough months and paid your bills.
It’s not likely for you to obtain a credit card with a lower interest rate- at least not one which can accomodate your total debt. You don’t indicate what your credit history is, nor do you indicate your credit score.
However, there is something not quite right because you indicate you’re paying 22 percent on your cards. Incedentally, 29.99 percent falls into usury in most states- in other words, you’re paying more interest than the value of the loan. That’s considered illegal and the creditor cannot pursue collection of debt from you.
Some states allow the market to dictate the usury limit, but again, most states do not allow above 24 percent.
In any regard, there must be something sketchy about your payment or credit history if you’re paying more than 8-12 percent for credit card debt.
The best two options would be a home equity loan- you can usually get a much lower rate- but consider this- are you looking to make any improvements or possibly move over the next few years?
Also, look into a consolidation loan from your bank. It’s not debt management, so it won’t appear on your credit report as such. Debt management companies negotiate with your creditors to accept lower payments in an effort to pay your obligation. Good for your wallet, bad for your credit score.
A consolidation loan will pay your creditors in full while you make payments to your bank. Your bank will most likey ask you to close your accouts, which is good because you won’t generate further interest, and your accounts will show as “paid in full as agreed”. It will also cut off any temptation you may have to use your cards as credit becomes available, since they’ll be closed.
Once you pay off the debt, you’re in the clear to re-apply for new cards, and you will be in better position for new rates.
Make certain to ask if you pay more than the monthly amount whether it goes to principal or to interest. If it goes to principal, pay as much as you can above minimum each month. You’re going to have to suck it up and grow up a little- live frugally and poor.
I also suggest not opening more than one card. A good rule of thumb is to live below your means, that is if you plan on saving for the future. If you can’t pay in cash, (a house or a car being two exceptions) you don’t need it right now.
The advantage of a consolidation loan over a home equity loan is that you’re not using the equity (or your home) as collateral.
Good luck.
January 19th, 2009 at 7:13 pm
It sounds like you own a home. The best thing to problary do is to refinace your home and include your debt with it. Also try to pay more than your min. payment. Good Luck
January 21st, 2009 at 4:01 pm
Interest rate to high it is.
Crooks who charge this rate they are.
Bankruptcy best option it is.
January 22nd, 2009 at 1:01 am
Whatever you do,don’t go with DebtFree! They will screw you around. Be Blessed! Monica
January 23rd, 2009 at 11:41 pm
I think it’s easier to pay off debt little bit at a time, if you were to set a side an amount (small percentage 5%-15) out of your monthly income. You should be able to pay off in a few years, if you can limit you usage.
January 24th, 2009 at 8:12 am
A home equity line is an ideal way to consolidate your credit card debt while putting money in your pocket at the end of every month. It will provide a much lower interest rate, offer some tax benefits, and with $10,000 at 30%, definitely save you money every month.
Keep in mind that the home equity loan will spread your debt out over an extended period of time and the key to it being an effective tool to get rid of credit card debt is to remain disciplined in not developing additional credit card debt.
The are several companies that specialize in working with customers with less than perfect credit. Personally, I am a fan of Beneficial finance.
January 25th, 2009 at 11:43 pm
The key to having ‘good’ credit is to not use it very much… duh! If you demonstrate to your creditors that you can live within your income and pay them back on time, they will encourage you to go further into debt with them… just don’t do it. They are very nice when you don’t owe them much, but when you start to over-do it, or miss a payment, they turn into Guido the butcher, and they will send some guys around to help you find your checkbook, if you know what I mean. Don’t play the game by their rules or they will crush you. Pay off all your credit card debt before you do anything else expensive, like take a vacation or buy an appliance. It would probably help if you destroyed your cards so you can’t be tempted to use them again. Once you have a zero balance, call them up and tell them you want to cancel your account… then they will most likely offer you a better APR just to keep you on the hook. My credit score is currently hovering around 800 because I just let it accumulate and I DON”T EFFING USE IT EVER. $20 here or $30 there is all you need to use it for… don’t ever let the balance get over 20 % of the max. And pay them on time… even if it is just the monthly minimum. If you are already in over your head there are non-profit organizations to help you. Try google and enter “Crippling Credit Card Debt” or something like that.