I have a two credit cards that are almost at the max limit totaling 20K. I have been making the minimum payments but the interest rates are average of 6%. I am wondering if I should take out a personal loan to pay down half. Is that really buying me anything? Trying to look out for my credit score.
2007-06-13 13:28:32 · 9 answers · asked by MATW 2 in Business & Finance ➔ Credit
Conslidate Debts With Home Equity Loan
There are various ways to obtain debt consolidation loan. You could apply for personal loan or any unsecured loan with reasonable and lower interest rate as compare to your current debt's interest rate and consolidate your debts into this loan. But, to obtain an unsecured loan, you need to have a good credit score else you loan application most probably will be rejected.
The best way to consolidate your credit card debts or any other high interest debts is using a home equity loan. Of cause, you need to own a home in order to apply for a home equity loan. Home equity is ideal for you to consolidate your credit card debts because the interest is much lower interest rate than credit card and other unsecured loan. And the best part is it normaly have different terms or repayment periods for you to choose from. The longer the repayment terms, the lower the monthly payment is. If your current financial is tight, you could choose the longer repayment term and pay more when you are at better financial situation.
With a home equity loan, your equity works as the collateral. If your home equity is $50,000, you could obtain a loan up to this amount. You could use this home equity loan to clear up all your credit card balances plus other loans; and you just need to focus on making a single monthly payment to your home equity loan. Read more from: http://www.credit-card-gallery.com/article/134,Consolidate_Credit_Card_Debt_And_Eliminate_Debt_With_A_Home_Equity_Loan
2007-06-13 20:43:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
here is the deal if you get a loan to pay a loan you still have the same amount of debt and now you show another trade line and two open credit cards which can be charged up again so no you would make it worse. If you are at 6% you are not paying a bad rate at all. just don't charge anymore and try to pay more each month- double if you can.
It will not help your score to get a loan as i explained above. just pay off what you have an make sure to make the payments on time. :-)
2007-06-13 14:08:40 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Banks may not loan you the money. If you owe close to 20K and are only making the minimum payments, they mat consider you a risk and deny you. Why are you only paying the minimum? Is that all you can afford or is that just what you've been doing? If you can pay more....do it. You can also get a second job if you don't already have one. Number 1....STOP using the cards NOW before they are maxed out. Even if you have to cut them up and throw them away....STOP using them. You cannot afford it. I don't know your financial situation, but taking out a loan doesn't seem like the solution because you're still going to owe the same amount of money either way. 6% interest is really good actually. Mine were over 28%.
2007-06-13 14:03:02 · answer #3 · answered by First Lady 7 · 0⤊ 0⤋
Credit card debt consolidation adds up all your unpaid balances and converts them into a single payment. This payment is far lesser than each of the individual payments.
When you finalize a plan with a debt consolidation company, the company repays your dues to your creditors. Then you make a single payment to the consolidation company every month. Your average new interest rate is much below the old interest rate.
All credit card debt consolidation loans include some type of credit card and debt counseling. You have to trim your lifestyle to eliminate unnecessary expenses.
2007-06-14 00:18:16 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Credit card debt- Need more income to clear the debt. You can earn extra money in a very easy way.
2007-06-15 05:13:23 · answer #5 · answered by Anonymous · 0⤊ 0⤋
If you take out a loan with a smaller interest rate and combine your debt into one place and then destroy your cards it will work.
But if you don't destroy your cards it will just put you deeper into the hole.
Your lucky if your interest is only 6%, its 27% here!
2007-06-13 13:36:11 · answer #6 · answered by unknown friend 7 · 0⤊ 0⤋
why only pay minimum? you will never pay it down if you don't exceed the minimum. at least pay minimum PLUS finance charge so the primary balance goes down every month
2007-06-13 14:42:08 · answer #7 · answered by twosey ♥ 5 · 0⤊ 0⤋
You need to change your behavior. You need a debt snow ball. See site below.
2007-06-13 14:16:40 · answer #8 · answered by Anonymous · 0⤊ 0⤋
You can't borrow your way out of debt. Do a written budget instead.
2007-06-13 13:56:51 · answer #9 · answered by Anonymous · 0⤊ 0⤋