I hаνе аbουt 4 outstanding balances. Abουt $8000 аt 12-15% аnd thе remaining $4000 аt 6% аnd lower (special offers). I dο nοt υѕе аnу οf mу credit cards now ѕіnсе I’m working οn paying thіѕ debt οff аnd using cash fοr everything lіkе thе gοοd οld days hοwеνеr I саn οnlу really afford a lіttlе over thе min payments rіght now. I pay аbουt $250 іn min payments each month аnd аm considering using thіѕ amount tο pay οff a consolidated loan οf thеѕе debts instead.
Iѕ thіѕ a wise dесіѕіοn οr ѕhουld I ѕtаrt saving аѕ much аѕ i саn аnd dο thе ole pay thе higher percentage οff thеn trickle down. I want tο gеt out οf debt sooner thаn later аnd lіkе thе іdеа οf јυѕt paying one loan οff bυt i dont want mу credit score tο gο bаd аnd I hear thаt consolidating саn dο thіѕ. Anу advice οn thіѕ wουld bе much appreciated thanks!!
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Tags: 12000, Card, Consolidate, Credit, debts, equaling, Wise
From experience, my advice is to do as you have been doing, pay down the highest interest debt first putting as much extra on that as you are able, and minimum payments on the rest, until you can retire the $8,000 debt.
Consolidating will lower your payments, but there is a real danger that you will not pay it off as quickly and might even add to your total debt load. It is best for you to stay on the narrow path and avoid having any temptation to start buying things again.
If you can cut back even more and pay more on the big debt, you will be surprised at how quickly you can make it disappear. Good luck!
with that much debt, no one is going to give you a consolidation loan – pay as much extra on either the highest int rate card or the highest min payment card
There are two schools of thought on how to pay off debt: 1) the highest interest 2) the lowest balance. Paying the highest interest debts will save money in the long run. Paying the lowest balance account will reduce the number of accounts owed and free up those payments for other debts sooner. Decide which account to focus on; make the minimum payments to other debts and put all extra payments toward that one. Once that account is paid, take the money you were paying to it each month and put it toward the second one on your hit list.
I like Dr Deth’s response about considering the minimum monthly payment as well! Also, check out when those special APR’s will end, what the APR will be after that date, and if they charge back-interest if the balance is not paid off completely by that time. If the APR jumps to 20-something percent, but you could pay off that account before the promotional period ends, it would definitely save you money. I agree with the previous answers; consolidation loan isn’t a great idea and see if you can cut costs in any other area to put toward debt.
Check out when the special offers end and what the interest rate will be afterwards. It will be worth channelling your efforts into getting those paid off while the interest rates are low – especially if they are going to skyrocket later. See if you can earn more – part time job, babysitting, sell anything you no longer want to keep, etc. , and cut your spending to the bone. Pay everything extra you can off that debt to get rid of it faster. Then, when the special offer debts are paid, repay most off the one with the highest interest rate – it is the one which costs you most.
You could also ask your local credit union about the benefits of being a member. Their interest rate is unlikely to be lower than the special offers, but it may be less than 12-15%. They mostly need to be repaid within 5 years, and at $250 a month plus interest, you would easily pay back the whole $12,000 within that period. They don’t charge monthly or penalty fees, and you could consolidate your debts this way, without the fees that consolidation companies charge. They help many members in situations like yours.