There's not too much in there. My penalty would be $550 but my credit card debt is over 10K. I'd like to pay off at least half. Currently a student so paying credit card is a chore. Working only part time now.
Credit card A: about 9.99% interest on 5K owed.
Credit card B about 14% interest on 6K owed.
Also, is it wise to open another (third) credit card with 0% interest to put the remainder of my cc balances? My credit card B was opened for that purpose but the date has passed so the APR is now at 14%. And when is it good to close an account, better to leave open with a zero balance?
2007-09-10 13:45:26 · 5 answers · asked by lunchlady 1 in Business & Finance ➔ Credit
If you can get another credit card with a 0% rate for even a year then do so and slide your balance to that one (or as much as you can without going over 50% of the credit limit on the new card).
It is better to leave a credit card with a zero balance open because if you close it you will also lose the credit line, which means that your total available credit lines will be less, and withthe balance owed on other cards remaining the same, the ratio of available credit to debt will be lower and would negatively affect your credit score.
The hit you will take by making a premature withdrawal from an IRA will not be worth it.
2007-09-10 13:52:45 · answer #1 · answered by Anonymous · 0⤊ 0⤋
What has the return on the IRA money been? The mathematical financial answer here might not be the same as the psychological one. As a point-in-time decision it is probably not worth paying th 10% penalty and foregoing tax free appreciation. If there was not the penalty the financial answer might be different. Psychologically, though, what would you do if you paid off the card at 14%? It sounds like since you are asking about a third card that you are already expecting to run up another $5K of debt (?)
Any new income should go towards paying down the 14% card.
2007-09-10 21:23:56 · answer #2 · answered by Anonymous · 0⤊ 0⤋
do the math. Figure out what you will save by taking the money out of the IRA. Of course if you can pay it off, the 0% is better, but look where you are right now. It is always better to have an account closed with a $0 balance.
2007-09-10 20:51:04 · answer #3 · answered by bpl 5 · 0⤊ 0⤋
You should definitely consult with a financial advisor on this one. Don't make any rash decisions about taking money out of your retirement account. It is not wise at this point to take on an additional credit card, considering your previous spending habits and history. You are likely to end up running up that one too, leaving yourself in even more high-interest debt. I recommend that you find a person who will not profit off of your decisions to give you sound financial advice.
2007-09-10 20:52:20 · answer #4 · answered by drshorty 7 · 0⤊ 0⤋
call credit card A and tell them you want to pay off B with them and ask fro a better interest rate on both, if you have good credit they will lower it right then, if not tell them you will be looking elsewhere for a better card to pay all off, it works really! they want you to pay them forever and are willing to reduce just to keep you.
2007-09-10 21:03:36 · answer #5 · answered by Anonymous · 0⤊ 0⤋