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Home > Have you Consolidated in a Personal Loan? Or used Credit Counseling?
 

Have you Consolidated in a Personal Loan? Or used Credit Counseling?

April 12th, 2010 at 07:03 am

We are thinking of consolidating our credit card and overdraft debt or a portion of it into a personal loan. I figure that there's a good chance that at least a portion of our credit card debt is at a higher interest rate than we could probably get for a personal loan. I like the idea that we would then have everything on a term loan with a set end date instead of just revolving...even if that end date was five years out. In doing some of the online calculators, it looks like we would only pay about $14 more a month than we are now to cover all of the debt (if we got about 13% APR) AND have that end point. I am a little nervous about applying for one. I know some people here have gotten one before, is it difficult?

I need to look more to understand what the differences are between trying to do this and going the debt counseling route. I just think having an end date, knowing it's a term loan, would bring peace of mind. If we go this route, all credit card will be cut up and I would talk to my husband about closing them as well. We would keep one credit card as an "emergency" card.

Any advice would be very much appreciated. Thanks!

5 Responses to “Have you Consolidated in a Personal Loan? Or used Credit Counseling?”

  1. snshijuptr Says:

    I have never done these things, but I do know that this is the list of HUD approved credit counselors:

    http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary

  2. creditcardfree Says:

    I would definitely do this, if you can make the payment. Make sure you get a loan that allows prepayments of principal, too.

    The big things is that your habits HAVE to change. So many people have done consolidations and then have racked up more credit card debt. If that is you, I would advise against it because you will wind up in a worse place.

  3. ceejay74 Says:

    I did this with a Capital One loan. I actually consolidated a HEL and a couple credit cards into the loan. The rate I got was higher than one of the cards but lower than the other two debts, 8.99%. It was a 5-year term and I paid it off early, by two years I think.

    My reasoning was the same--I wanted a fixed payment so that I wouldn't give into the temptation to do minimum payments like on a credit card, where the minimum payments mean you could take decades to pay it off.

    The loan also didn't have a balance transfer fee or any kind of closing costs--that's one thing that turns me off of credit card consolidations or home equity loans.

    I recommend it--it worked out great for me! But yeah, you MUST change your behavior--I promised myself I wouldn't run up the CC balances again, and I didn't.

  4. Personal Finance Student Says:

    Thank you for the link and for the information/advice. I am feeling better about doing this. We have not charged anything new on credit cards for a while and after much thought I think this would work really well for us. Thanks again!

  5. Jerry Says:

    As long as the behavior that leads to these predicaments has been COMPLETELY changed, then this can offer some insurance of a solution, but if not then it can make things worse over time! Only you can tell if you are ready to take that step, but if you are then go for it and do not look back until you are debt free! Good luck...
    Jerry

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