Should I get a debt consolidation loan for my $14k high-interest credit card debt?

S

SpeedSamprince

New Member
I own my home and car—with loans on both. I have the following standing credit card debt...

$7k at 0%

$14k in cc debt ranging 17.6%–27.2%

Would a debt consolidation lloan make sense for the $14k? I haven't used cards in a few months and have been focusing on paying off—but the interest rates are so high that it feels like I won’t get ahead... I don’t care if they close; I just want to get rid of them.
 
A few years back, I took ou a personal loan to combine $42k in debt. The rate was high 23% but it was lower than most of my credit cards. Also, loans are installment plans, not revolving credit. That means you don’t get interest on top of interest like with cards. So even with a similar rate, the payments are easier to handle.

A year later, my credit score had jumped from around 660 to about 720. I applied for another personal loan to pay off the rest of the first one. This time, I got a much better rate 9% and the loan will be paid off a full year sooner.

Now my balance is down to about $25k. My monthly payments dropped from roughly $1,400–$1,500 (the old card minimums) to $1,130. I’ll be completely debt free in just two years!
 
Haven't used the cards? Just been trying to pay them off? Go for debt consolidation.

Got a clear timeline for paying them off? Maybe roll the balance to a new card. One with a zero interest intro period like 12 to 18 months. Could save you some money.

But if you can't pay it off by then? The loan might be the safer path.

Only do this if you're sure. Sure you won't add more to that balance. It's a tightrope walk.
 
Added context the $7k are special offer, limited time credit card transfers...I was using them to knock out some of the compiled debt. These are structured to be paid off by the deadline, but I won’t be able to use them for additional transfers moving forwaard. The breakout of the remaining debt is as follows:

$5k @ 21.15%
$4k @ 27.24%
$5500 @ 9.99%

I also have a personal loan with $2950 remaining at 17.68%.

I haven’t closed cards up to this point because I wanted to preserve the credit history when purchasing my home but now...I’m prioritizing speed of payoff and savings on interest above all else.
 
For me, I'd probably focus on the card with the highest interest rate first. Just make the minimum payment on the one with no interest until you've cleared that high interest card. I know a lot of folks talk about the debt snowball, but you've got a card that's costing you $40 to $50 in interest every month so I'd knock that one out ASAP.

And seriously, I'd steer clear of a debt consolidation loan.
 
Back
Top