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!
Have you Consolidated in a Personal Loan? Or used Credit Counseling?
April 12th, 2010 at 03:03 pm
April 12th, 2010 at 03:27 pm 1271082454
http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary
April 12th, 2010 at 03:54 pm 1271084075
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.
April 12th, 2010 at 05:37 pm 1271090274
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.
April 12th, 2010 at 07:18 pm 1271096292