pesonal loan...just as bad as credit card debt?

Question

my boyfriend has about 5500 in a personal loan w/ aobut 29% interest, with a mim. of 230 a month

and he has about 500 on a credit card w/ 22 % interest

i tell him that he should just pay off the credit ASAP cuz the interest is high THEN start paying over on the loan....but at least he only has one bill to pay..

what do you guys think?

also, isnt personal loan just as bad as a credit card? he doesnt seem to think so.

he can pay off the credit card in one sum, but he keeps putting extra on his loan.

i think he should just pay off the freaking credit card, then focus all of his energy on the loan.

Answer 1

The personal loan may be listed with the credit bureaus as an installment account or open account. The credit card is definitely listed as a revolving account. The more revolving accounts you have the worse your credit score. Thus, the personal loan is not as bad as a credit card. The credit card is worse.
As well, the credit card company can increase the interest rate higher than his present 22% even if he never makes a late payment on it. In the terms and conditions of the account it allows the credit card company to increase his interest rate,due to increased credit risk, and that can be as simple as any past due amount or late payment to another company that shows up with the credit reporting agencies, such as TransUnion, Equifax, and Experion. It can also include his overall outstanding debt amount and how much he pays per month to lower that debt. The credit card companies are given alot of leeway on how to calculate the "increased credit risk" factor.
I suggest paying off the credit card, but he must consider if the personal loan is from his personal bank he must be sure to protect his credit there, so it's best to speak to them in person so he can minimize any negative reporting or listing on his account with them.

Answer 2

People with poor credit feel that it is difficult to get personal loans. However, there are many financial companies and banks that provide loans to bad credit applicants. Bad credit personal loans are generally soughtThe interest rates on secured loans are lower than unsecured loans. However, there is always the risk of losing your house or property if the loan is not repaid.

Answer 3

obviously the personal loan is way worse than the credit card because the interest is 7% higher!!! i understand what you're saying about just getting the credit card paid off and out of the way, but in this case, it'd be smarter for him to pay the minimum on the credit card and whatever extra he could on the loan, unless he can just pay off the whole credit card in a month or two... then i'd say pay off the card and then focus on the loan... definitely get rid of that sucker!!! that interest must be eating him alive!!! i swear, i don't think it should be legal for companies to charge that kind of interest!!!

Answer 4

Both of these are bad debt. From a management perspective, it would be mentally pleasing to me to knock off one creditor and focus on the other. Since the credit card is only $500, take care of that first and get rid of it.

Answer 5

Debt is Debt. I agree with you. Pay off the credit card and then Pile cash on the personal loan and get rid of it asap.

Debt is Dumb!

Answer 6

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