I didn't know if this is a good idea or not, but I've been thinking of taking out a personal loan to pay down my credit debt. I owe about $12,000 right now and I've been paying between $800- $1000 a month on double and triple payments, and the balances don't seem to be going down at all!!! If I get a 3 year loan, that is all I would have to pay, and with my credit union, the payment would be like $300 a month. I would love to have the cards paid off, but then I'll still have the personal loan to pay, but to me, it just seems more reasonable. I guess I'm asking for advice. Does anyone know if this will damage my credit by having a personal loan? Does it bring down my score? Or can it help? Thanks!!!! Flagirl
Well, if you are making double and triple payments and the balances arenot going down, it means you are still using your cards. A consoldidation loan is useless if you just run the card balalnces up after you paid them off and- as you pointed out you would still have the personal loan to repay. I would suggest putting together a strict budget that is heavy on debt reduction. In other words, live below your means. Paying off debts is not going to hurt your FICO score. What will hurt it is continuing to charge and obtain credit and then end up with a high debt to credit limit ratio. That happened to me last year and I am just now getting the thing to the point that I am getting low BT offers again.
I agree with keepmine, if you get a personal loan and pay off the credit card debts, do not incur anymore debt on the credit cards, and pay double or triple on the new personal loan, you would be out of debt in no time. I wouldn't do it though if I was not going to stop charging on the credit cards. Otherwise, you will quickly find yourself in double the trouble! Tuit
Quicken has a debt reduction calculator that is VERY HELPFUL. Their basic idea is to start with your highest interest credit card and pay it off....then move to the next, and so on. It also suggests that you should try and take advantage of any BT offers that are available to you. The BT game will definately work to your advantage. http://www.quicken.com/shopping/debt/
I agree with the others here.... the loan is a great way to go, but you MUST hide away those credit cards and don't use them. Takes a lot of willpower to let go of spending on the cards, but it is worth the extra effort.
