Should I take out a loan to pay off credit cards and student loans?

Question

The total debt I owe for school and credit cards adds up to about $17,000.
Although I know this is far less then average, I am frustrated with paying high interest, esp. with the credit cards. Should I apply for a loan with my bank to pay it off- and if so, what kind of loan should I go for?

Answer 1

don't do it for your student loans.
if you have a home see if a home equity loan is an option

Answer 2

Really the only type of loan that you can apply for if you don't own a home is an unsecured loan. The interest rates are higher on unsecured loans, but they are fixed and may even be lower than the rates you are paying on your credit cards. I wouldn't consolidate the school loans with the credit card debt, though, because you probably have a pretty low rate already.

Now, if you own your home, then you can apply for a home equity loan or line of credit. This is the best way to consolidate debt because you will get a much better rate. In this case, I probably would consolidate the school loans if the rate offered on the home equity is lower.

You may want to check with your bank and see if they offer credit cards with low introductory rates on balance transfers.

Answer 3

Considering the national average, you're right, that's not bad. However if you decide to go for a consolidation loan, be very careful with the fine print and shop around for the best interest rate possible (preferable lower than the average rate of your cards). I was desperate, and sought a loan through MBNA (now Bank of America) for $9,000. Unfortunately, the interest rate was at 27.99%. They told me at that rate I could pay it off in 4 years at $327/mo. I accepted it only to find out later that it's more a revolving line of credit rather than a loan. Plus the interest rate killed me since I wasn't paying the loan off any faster than my normal cards. I transferred half of it back to a credit card with a lower rate and paid the loan balance off first and am now working on paying down the card. Good luck!

Answer 4

Odds are your student loans are at a MUCH lower interest rate than what a bank could offer you. You could probably get a bank loan at a lower rate than what the credit cards are at though.

So you might consider getting a loan to pay off the cards, but just leave the student loans alone at the low rate and pay them separately.

It's hard to give you a clear answer without knowing the rates and amounts you have.

Answer 5

Student loans are generally one of the lowest interest rate devices you can get. Credit cards, not the best. If you can migrate your debt to lower interest, it is always a good thing. Assuming you have the self control to not go and spend up the credit cards again. Go for a unsecured consolidation loan if you can qualify for a good rate.

Just don't get a HELOC and If you do get a loan, remember not to cancel the credit cards, leaving them open with no balance can help your credit score.

Answer 6

If your student loan interst is tax deductible, dont refinance it. You're asking for an unsecured loan anyhow-- an $17K is probably FAR more than you'll get with any decent interest rate.

Consider only refinancing credit cards or findign one with a 0% balance transfer option.

Answer 7

If you wish to consolidate visit

http://www.cheap-credit-cards.org/loans/consolidate-student-loans.php

All the best