Hello. Anyone good with credit card debt? Help!?

Question

I have $31,000 in credit card debt. I have five cards, but the two with the highest balances are 11k @ 29% and 17k @ 25 and 3k @29 %. I have $8000 to pay twoards my cards, but I don't know which card to pay off or to pay down. Does anyone know how to either consolidate all my cards into one loan at a certain rate, without claiming bankrupcy? What would be the best way to go?

Answer 1

As a generic rule of thumb, when you start your debt pay-off snowball...

1. Cut up the cards
2. Pay minimum payments on all but the one with the lowest balance.
3. On the one with the lowest-balance, pay all that you can until it's paid off, then do the same to the next one, then the next one, so on.

However, I, personally, would do that in the order of highest interest-rate, but I make quite a bit more than my payments need, and have lots of room to flex.

Do NOT consolidate, unless you can take high-interest debt into low-interest, with no transfer fees. The goal here is to avoid throwing unnecessary money out the window, and actually making some progress.

If you have equity in your house, you may be able to roll your CC debt into a 2nd mortgate or HELOC (home equity line of credit), that you attack as aggressively as you possibly can until paid off.

It doesn't matter where debt is, it's still debt. The only way to get rid of it is to throw money at it as aggressively as possible. It may take years, so be patient.

Some things that can help: garage sales, selling unnecessary stuff on eBay or elsewhere, sell a car and buy a reliable used one, spend less on living, reduce other bills like cable/satellite service, etc. You need to make your income work for you. In fact, it may not be a bad idea to pick up a simple evening job as a 2nd, until you pull your head above water (pizza delivery, for example).

I hate to be so blunt, but it may take some serious sacrifice, on your part, to get ahead. Your income and determination are the only things that can do this.

Answer 2

If you will be able to get enough money later to pay off you cards and you cant do balance transfers or reduce your interest rates pay off extra every month to the cards with 11K @ 29% & 17k @ 25% and only the minimum payment for the 3K @ 29% until you are able to make bigger payments on this last card.

If you decide to consolidate your debt it wil have to be with a credit card that you are not using because all the other ones you have high interest rate with high balances. What you do is, if you have a credit card with $0 balance ask them what specials they have for balance transfers. If they have a good interest rate with a low or no transfer fee, transfer as much as you can. If you dont have enough room for all balances transfer the highest balances with the highest interest rates.

If you want to get a lower interest rate, simply call your creditors and if you've had a good and long payment history with them, they will reduce your interest rate. Make sure you opt for the fixed rate and not the variable ones.

If you are thinking about a HELOC (another mortgage on your home) I would not be so aggresive to advice you to get it. I am in the Mortgage & Real Estate business and as such professional I would not advice you to jump so quick into this decision.

I'll tell you why: If your interest rates on your cards are so high is probably because you've had some late payments I imagine therefore you credit has gone down. If you have a low FICO score you will be able to get a lower interest rate than 29% for sure but the interest rates on HELOCs are variable so you will see this interest rate go up and up and up in the coming months. The Fed Reserve will be meeting this Wed and Thurs possibley to raise rates again and then again in August so be careful.

If you decide to take another loan on your home I would suggest to get a HELOAN not a HELOC. The difference is that this is a tru fixed mortgage loan on your home. Of course the rate will be a bit higher than the Heloc but it will help you by keeping your payments the same until you pay off the debt.

Good luck

Answer 3

Yikes, those are some incredibly high interest rates. How did you manage to get such high rates? Do you realize that with those rates, you are paying about $8000 in interest every year? Anyway, pay down the highest interest rate cards first, then do whatever you can to get rid of the rest, FAST. Unless you can get a better fixed rate somewhere (without getting another mortgage on your house), leave the cards where they are and make it your top priority to pay the cards off. If you can get a better rate, I guess you could transfer the balances, but make sure the rate is not just an "introductory" rate that will go up in a few months. Good luck!

While home equity loans might give you a lower interest rate, you "raise the stakes" and now your house is on the line if you don't pay, in addition to your credit. Just be careful.

Answer 4

I want to tell you that I feel your pain. First how is your credit score. Have you ever been late or past due before. If you have your credit is already screwed. I had the same problem.. I consolidated with a credit card debt agency American financial solutions. It was easy my interest rates are 6% and lower no more late fees over the limit fees etc. It will take me 38 months to pay them off at $288 a month. A few of the companies loweren by rate to )% and lowered my principle substaintually. If you want more info try care one or AFS. Email me @ [e-mail] I will tell you more. Once you get set up on the program. I would wait about 3 months of payments through the company you can have them put the $8000 toward your reduced numbers. Thats my suggestion. I take my income tax and give them big sums I will actually be 26 months because I do that. I feel so free let me tell you. Good Luck. They also have free online classes to teach you about CC management.

Answer 5

I would put $3000 each on cards with 29% and $2000 on the card with 25%. And start paying them off as much as I can and as soon as possible. Maybe it sounds boring but it's true.
Try to make more than minimum payments - remember that minimum payment covers only finance charges and maybe a few % of your balance. The way credit cards are built is that if you're paying only minimum balance time to pay off your card will be about 30 years (like home mortgage) with finance charges several times bigger that your actual balance.
Most likely if you go to any of those companies offering to consolidate your debt, they will want a portion of your money and they work it out the way that you will end up paying them those $8000 you have to pay off your debt and you will start from "begining" with $31000 in debt. It's a waste of your money - especially it seems you don't have much!

Also be carefull with credit cards that offer transfers to lower rate. Don't be fooled- there is always a trick:either the billing cycle is short even up to every 20 days (which means you will have a minimum balance to pay twice a month!) or after couple months they will raise your APR to crazy 29% again saying that you are not paying off your debt because you're making only minimum payments. It will be written somewhere on the form with little tiny letters.
One more thing:maybe you're able to look for a job with better salary? Or maybe a part time job? That will also help to pay off evertyhing faster.
Hope I was able to help and good luck.

Answer 6

I say take $8k and pay towards the card with the 29% rate. You should maybe look into transfering the balances to a 0% APR card. Once you transfer the balance to the new account, close the old accounts so that you don't use it anymore. This way, whatever you pay towards the cards in the future, it all goes towards the balance and not interest. Also, if you're a homeowner, you may want to explore the option of refinancing, or taking out a home equity loan to consolidate.

Answer 7

Immediately pay the $8000 to the card that has the highest interest rate. If your credit isn't ruined, apply for another card, or two, which has no interest on balance transfers for a year. DO NOT USE YOUR CREDIT CARDS ANY MORE, INCLUDING THE NEW CARDS! At the end of the year, apply for another card and transfer the balance again, until they are finally paid off. Good luck.

Answer 8

Your doing it right, consolidate all the credit card debt into 1 card or 1 loan, choose the one with the best interest rate. Then put your money on that loan...If your in a position to do so take out a second mortgage on your home and get rid of the cards altogether (you can write off the interest on a mortgage but not on regular loans and credit cards) I don't envy the position that your in, once you get into credit card debt it's hard to get out, but your doing it the smart way! :-)

Answer 9

Consolidate at your bank or credit union!!! If a home owner and you can get a better rate by refinancing, go for it and pay the cards off that way. Otherwise a consolidation loan at less interest and one payment is the way to go.

Answer 10

Pay off the 3k and part of the 11k. Call the 2 remaining cards and try to negotiate a better interest rate. Failing that, call a non-profit agency who will help you negotiate more affordable payment terms.