Getting a loan to pay off credit cards?

[TeamCoachellaHellYeah]

Has anyone done this? Is it a smart idea? I am in the process of doing it to consolidate our CC debt into one payment. I need details people!

[fiyahhh!]

My girlfriend had a ton of credit debt with high interest rates on many cards, so she dipped into her 401k to pay them off. I know this move is unpopular with money gurus who are adamant about not touching the 401k, but the amount of interest to pay back the 401k is way lower than the interest she was paying to the credit companies every month. It's a risky move because if she gets fired or quits she has to pay back the lump sum of the loan upon leaving the company. (knocks on wood)
I had looked into credit consolidation myself, but decided against it. The one thing I kept running into was that once your cards are consolidated, you can't use them. I've heard before that it's better to leave your accounts open once the balance is down rather than close the accounts. Leaving the accounts open will give you longer credit history and thus, boost your credit rating. If you can get a loan with a low interst rate, do that and pay the cards off. Cut the cards up after, but leave the accounts open. This might not be good advice, it's just my experience.

[C DUB YA]

Or just have one card, and use it on the regular. People get into trouble when the multiple card thing comes into play. I haven't had any debt for about 12 years now. The only thing I pay on is my mortage.

[canexplain]

i owed a lot on credit cards and refinanced my house (actually two times) and it saved me tons of money ... one thing you have to look out for is starting to use them again for "emergencies" like a concert dah .... i also got dinged on my credit rating for having my credit cards open for so many years even though i always paid them on time ... not sure why that was the case .... fucking credit cards ... when i was young it was so hard to get one and now they beg you to have one .... i think the old days might have been smarter in this instance ..... x****

[faxman75]

I will be declaring bankruptcy this year. I recommend that. Then fuck all the cards, live off of cash. Me and my ex refinanced the house twice in order to pay off all of our credit cards. I had the trifecta after we broke up, this year I had the house foreclosed on, did a voluntary repo no my SUV and in the next month or so I will do the bankruptcy.

Live is good.

[TeamCoachellaHellYeah]

Ok so here is my story. After a triple hit of our Wedding and APW AND my Wife going part time, I need less bills. We racked up 13k on our credit cards together, now I know it is not much compared to some (especially for someone who never had this much debt), but it freaks me out. We are supposed to get a loan for 60 months @ 6.99% for the 13k. Is this better then just paying on the cards? We do plan on keeping the cards open and plan on using just one card, if we do we the loan. Should I do this? Yay or Nay?


EDIT: Damnit I broke my lucky 7777 post...

[faxman75]

TCHY, yes, the loan at a fixed rate is definitely better than making small payments for 20 years or whatever on your cards. You get the loan, pay off the cards, CUT UP THE CARDS, then you have one nice low payment a month. I'm telling you don't keep any of the cards open. Close them all and cut them up or you will find reasons to use them over and over again. If you absolutely must keep one card, keep the one with the lowest limit. I have known lots and lots of people who have the logic of keeping them open to try and improve credit. It's not worth it, it doesn't happen. You will owe these banks for the rest of your life because in life stuff happens and people want things. Don't do it. If you are going to do this loan which is a good idea, don't keep your cards open. Fix it move forward and be more responsible. I have been through this at least 4 times now *lol* If I would have closed and cut up the card after the first time, I wouldn't have continued to be in this situation.

Good luck.

[Pixiessp]

i paid off my credit cards with a loan from my 401k. Actually, I've done it twice now. Had absolutely no problems as it came out of my weekly checks and I got to decide how long I was going to take to pay off loan.

[Pixiessp]

and.....any interest I paid went right back into my 401k account.

[JustSteve]

i guess i have been lucky because i just keep receiving those 0% offfers. i have had about $6,000 in debt for the last 8 years or so. it fluctautes a little, but i tend to pay off my monthly bill regularly. i just don't have enough to actually pay down the original 6 grand. i haven't paid one penny in interest this whole time, though, since i just transfer it to a new 0% offer once the original one is about to expire. just got one on the mail with 0% for 15 months. once my gf closes another house, though, we will probably just pay it off and be done with it. with 2 kids and zero debt it will be pretty amazing.

[TeamCoachellaHellYeah]

i guess i have been lucky because i just keep receiving those 0% offfers. i have had about $6,000 in debt for the last 8 years or so. it fluctautes a little, but i tend to pay off my monthly bill regularly. i just don't have enough to actually pay down the original 6 grand. i haven't paid one penny in interest this whole time, though, since i just transfer it to a new 0% offer once the original one is about to expire. just got one on the mail with 0% for 15 months. once my gf closes another house, though, we will probably just pay it off and be done with it. with 2 kids and zero debt it will be pretty amazing.

I tried to play this game and it didn't work for me so much. Alot of the offers I got ended not being what they claimed and were 0% for a few months and then jumped to 13% to 20%.

[captncrzy]

I feel the need to weigh in here, not because of previous trouble I've gotten myself into but because I spent 10 years as a financial counselor. I can't tell you how many times I've had to answer this same question.

Ok so here is my story. After a triple hit of our Wedding and APW AND my Wife going part time, I need less bills. We racked up 13k on our credit cards together, now I know it is not much compared to some (especially for someone who never had this much debt), but it freaks me out. We are supposed to get a loan for 60 months @ 6.99% for the 13k. Is this better then just paying on the cards? We do plan on keeping the cards open and plan on using just one card, if we do we the loan. Should I do this? Yay or Nay?

What kind of loan are you talking about-a secured loan or an unsecured loan..meaning, are you putting up collateral for this loan? If you're talking about a secured loan, don't do it. What you're doing is putting up your house/car/whatever as a guarantee to pay back credit card debt. If you default on a credit card payment, there's not much they can do other than ruin your credit and maybe sue you (depending on the balance) for the remainder. If you default on a car/house, they'll do the above, plus repossess the collateral. It's never smart to transfer unsecured debt into a secured loan.
If you're talking about an unsecured loan, it's not a bad idea...IF YOU LOSE YOUR CREDIT CARDS. Keep one if you must with like a $1,000 limit so you can use it to guarantee hotel rooms and rental cars and whatnot, but get rid of the rest. If you don't, you're obvious spending habits will direct you right back towards your credit cards. Within two years of people doing this kind of thing, they're usually stuck with the loan they took out, and the exact same amount of credit card debt they had before. Then they're screwed. Trust me on this one.

TCHY, yes, the loan at a fixed rate is definitely better than making small payments for 20 years or whatever on your cards. You get the loan, pay off the cards, CUT UP THE CARDS, then you have one nice low payment a month. I'm telling you don't keep any of the cards open. Close them all and cut them up or you will find reasons to use them over and over again. If you absolutely must keep one card, keep the one with the lowest limit. I have known lots and lots of people who have the logic of keeping them open to try and improve credit. It's not worth it, it doesn't happen. You will owe these banks for the rest of your life because in life stuff happens and people want things. Don't do it. If you are going to do this loan which is a good idea, don't keep your cards open. Fix it move forward and be more responsible. I have been through this at least 4 times now *lol* If I would have closed and cut up the card after the first time, I wouldn't have continued to be in this situation.

Good luck.

Fax, you know I love you more than my luggage, but don't give financial advice when you're filing bk.

Also, you're wrong. You can cut up the cards, but don't close the line of credit with the company. Just keep it open. It creates a credit history. They create your credit rating based on numerous things, including how long you've had credit. Say you opened a credit card 8 years ago, and another one a year ago. If you close the line of credit you've had open 8 years ago, the only open credit they see is from one year ago-therefore lowering your credit score because they only see a year of open history.

i paid off my credit cards with a loan from my 401k. Actually, I've done it twice now. Had absolutely no problems as it came out of my weekly checks and I got to decide how long I was going to take to pay off loan.

Again, not a smart move. Aren't you in your 40's? Most people that do this pay back the money they owe, but don't add to it because they're paying back what they owe. Say you're putting 100 a month into a 401k and you decide to take a loan out against it and the payment is 100 a month. The only way you continue to contribute to your 401k rather than pay back the loan is if you increase your contributions to 200 a month. You're taking years out of your retirement account-not a good idea for someone who's supposed to retire in 20 years.

[TeamCoachellaHellYeah]

we are applying for a usecured loan...not a secured loan...

[captncrzy]

Then go for it, but make sure you cut up those other cards. You'll be fine.

[TeamCoachellaHellYeah]

Then go for it, but make sure you cut up those other cards. You'll be fine.

What about keeping one card, just in case?

[Pixiessp]

thanks for the info Capt. you have a very valid point.

[faxman75]

Fax, you know I love you more than my luggage, but don't give financial advice when you're filing bk.

LOL ok

Also, you're wrong. You can cut up the cards, but don't close the line of credit with the company. Just keep it open. It creates a credit history. They create your credit rating based on numerous things, including how long you've had credit. Say you opened a credit card 8 years ago, and another one a year ago. If you close the line of credit you've had open 8 years ago, the only open credit they see is from one year ago-therefore lowering your credit score because they only see a year of open history.

I understand all that but I also know people. They leave them open and cut up the cards and then something comes up they really want to do or think they really need and they simply call and order the cards again. I'm just trying to save him the strife of having twice as much debt on cards he could have closed but yes, if we are talking about someone who is "reformed" and no longer able to make bad decisions regarding their credit, yet it will make their credit score look more pretty by leaving them open. I just know that I and others have done this and ultimately charged them all up again.

[gaypalmsprings]

you can cut up the cards but don't close the accounts - it will lower your FICA score

[TheGunner'sDream]

Declare bankruptcy. An opportunity to start off fresh.

[ThomThom]

I'm in a bit of a fucked up situation myself. My credit has shot to shit because of not paying my credit cards for about 6 months, at the time I could not afford it with a new townhome and some really unexpected emergencies, now that I am out of that bind and ready to pay my debts, they have all soared to ridiculous amounts. I can't get a loan from anybody to pay off the debt because my credit history has been fucked and I can't get approved. I have only been able to reach settlements with the small balances, but the big guys will not budge.

Also, Marco... I think getting an unsecured loan is the best way to get out of your debt, you just have to make sure that you cut those fucking cards up, keep one stashed away for hotel rooms/car rentals or emergencies, otherwise DON'T USE THEM. I wish I could get an unsecured loan, if anybody can point me to the right direction in getting one I would greatly appreciate it.

[captncrzy]

What about keeping one card, just in case?

Keep one card; make sure the limit is low-no more than you can afford..I'd say a thousand is sufficient-that much will cover you in emergencies. Cut the rest up and when they send you new ones, cut those up too.

[captncrzy]

LOL ok



I understand all that but I also know people. They leave them open and cut up the cards and then something comes up they really want to do or think they really need and they simply call and order the cards again. I'm just trying to save him the strife of having twice as much debt on cards he could have closed but yes, if we are talking about someone who is "reformed" and no longer able to make bad decisions regarding their credit, yet it will make their credit score look more pretty by leaving them open. I just know that I and others have done this and ultimately charged them all up again.

Yeah, but out of sight, out of mind. It's easy to forget what cards you have open when they're not in your wallet. I have like a Sears account that I opened 10 years ago or something to get a percentage off of a purchase and never used again, but I keep it open because it's old.

[captncrzy]

Declare bankruptcy. An opportunity to start off fresh.

Idiot. BK is for people that get into sincere trouble that can't do anything else to get themselves out of it. He doesn't need that on his credit report for the next ten years when he's young and just starting out-it's no way to start a marriage. And frankly, $13k isn't that much these days. If it was $50k, and they were both working two jobs and still couldn't get it taken care of, that would be a different story.

[captncrzy]

I'm in a bit of a fucked up situation myself. My credit has shot to shit because of not paying my credit cards for about 6 months, at the time I could not afford it with a new townhome and some really unexpected emergencies, now that I am out of that bind and ready to pay my debts, they have all soared to ridiculous amounts. I can't get a loan from anybody to pay off the debt because my credit history has been fucked and I can't get approved. I have only been able to reach settlements with the small balances, but the big guys will not budge.

Also, Marco... I think getting an unsecured loan is the best way to get out of your debt, you just have to make sure that you cut those fucking cards up, keep one stashed away for hotel rooms/car rentals or emergencies, otherwise DON'T USE THEM. I wish I could get an unsecured loan, if anybody can point me to the right direction in getting one I would greatly appreciate it.

S-you never want to do a settlement unless its with the IRS... the amount that doesn't get paid gets written off the books as an uncollectable debt--aka a charge-off. Half the time that amount gets sent to an agency and they start to collect on it again. It's not worth it. Honestly, your best bet is to A) contact each credit card company, explain that you're ready to start making payments and make an arrangement to get out of arrears or B) contact a (reputable) non-profit company like the one I used to work for and let them make the arrangements for you. Or at least go through a session and get some advice. www.moneymanagement.org.

[ThomThom]

S-you never want to do a settlement unless its with the IRS... the amount that doesn't get paid gets written off the books as an uncollectable debt--aka a charge-off. Half the time that amount gets sent to an agency and they start to collect on it again. It's not worth it. Honestly, your best bet is to A) contact each credit card company, explain that you're ready to start making payments and make an arrangement to get out of arrears or B) contact a (reputable) non-profit company like the one I used to work for and let them make the arrangements for you. Or at least go through a session and get some advice. www.moneymanagement.org.

I have technically only settled with 3 small accounts, they sent me letters of agreement that upon making the settlement payment the actual debt is considered "settled" and thus closed and reported as a "R5" to the credit bureau's and again considered "settled". If for whatever reason they try to fuck me later by collecting the remainder of the non-settled amount I have the letter of agreement to shove up their asses. Also, Jen how would I be able to know whether one of those non-profit companies were reputable or not? I remember my sister was scammed for about $6,000 by one of those debt management companies a few years ago.

[TeamCoachellaHellYeah]

I really really hope we get approved for this loan.....less stress for me.

[BROKENDOLL]

I tried to play this game and it didn't work for me so much. Alot of the offers I got ended not being what they claimed and were 0% for a few months and then jumped to 13% to 20%.

Combine 6 credit cards and the phrase, "Life is short, live it to the fullest," and you have me prior to filing bankruptcy last year. "Living to the fullest" ended up being 4 of those cards at 32% interest, paying the phone company for a phone I was afraid to answer, and realizing that even if I hid the cards and never used them again, there was a balance that would never go down unless a miracle were to happen. I actually hoped someone would steal my identity! "Here, take it, jokes on you, asshole! This game sucks!"

Then go for it, but make sure you cut up those other cards. You'll be fine.

If you still have the opportunity to consolidate your debt at a reasonable rate, by all means do it, but follow the Capts. orders...Put those friggin' cards away, cut 'em, whatever, but DO NOT USE THEM!

What about keeping one card, just in case?

If that's the case, make it your debit card that you carry on you and the "just in case card" can be retrieved for a real emergency. Had I used my debit card back then, I probably wouldn't have had so many "emergencies!" (Buying both pairs of shoes because you can't decide on which pair is not considered an emergency!)

Declare bankruptcy. An opportunity to start off fresh.

Yeah, it is a fresh start...BUT, you don't just lose the cards that are fucking things up for you. You forfeit every single one for the next 10 years, including any for emergencies. And, don't forget trying to purchase a vehicle, or a home, or getting any kind of a loan... If you can in any way avoid doing what I had to, by all means, look into it. My fresh start means hoping no crisis comes up and having to accept the fact that not only can I not buy both pairs of shoes, I may just have to wait to buy one pair.

I'm in a bit of a fucked up situation myself. My credit has shot to shit because of not paying my credit cards for about 6 months, at the time I could not afford it with a new townhome and some really unexpected emergencies, now that I am out of that bind and ready to pay my debts, they have all soared to ridiculous amounts. I can't get a loan from anybody to pay off the debt because my credit history has been fucked and I can't get approved. I have only been able to reach settlements with the small balances, but the big guys will not budge.

Also, Marco... I think getting an unsecured loan is the best way to get out of your debt, you just have to make sure that you cut those fucking cards up, keep one stashed away for hotel rooms/car rentals or emergencies, otherwise DON'T USE THEM. I wish I could get an unsecured loan, if anybody can point me to the right direction in getting one I would greatly appreciate it.

ThomThom, go talk to someone, a consultation. That's the same boat I was sinking in, (Sorry) and in the meantime, those fucking card companies were exposing me to more and more of their sneaky small print bullshit. You have your townhome, but don't reach the point of risking that. An attorney can explain it and point out your options.When I faced the Bankruptcy Judge and courtroom, there were people who had 2 new cars, a house payment, etc, that didn't lose those things. They only lost their debt and the ability have any credit in the future. (10 years.) Everybody's situation is different. Bankruptcy seems an easy way out, but it too will cost you.

Idiot. BK is for people that get into sincere trouble that can't do anything else to get themselves out of it. He doesn't need that on his credit report for the next ten years when he's young and just starting out-it's no way to start a marriage. And frankly, $13k isn't that much these days. If it was $50k, and they were both working two jobs and still couldn't get it taken care of, that would be a different story.

Yep, I had reached the point in realizing that either way, "The life that was to short that I was living to the fullest," had reached it's end. And after everything l learned through out this lesson, I wished I had known then that living within my means isn't as hard as it sounds. ( I also wish I had known about this board back then...it may have prevented many of those uneccessary, "Gee, I'm bored, I think I'll go check this place out "emergencies!")

[JustSteve]

i think people who file bankruptcy should also have to forfeit a majority of the goods they purchased with those cards. you are basically a thief at that point. i actually think before you are allowed to file there should be some program where you sell back a lot of your items. that big screen tv you bought for a couple thousand? gone. the designer clothes? gone. all that money can be used to pay down the original debt before it is released.

the problem is that no one feels like they have to work for anything anymore, everyone is entitled to what the next guy has. wrong.

[BROKENDOLL]

i guess i have been lucky because i just keep receiving those 0% offfers. i have had about $6,000 in debt for the last 8 years or so. it fluctautes a little, but i tend to pay off my monthly bill regularly. i just don't have enough to actually pay down the original 6 grand. i haven't paid one penny in interest this whole time, though, since i just transfer it to a new 0% offer once the original one is about to expire. just got one on the mail with 0% for 15 months. once my gf closes another house, though, we will probably just pay it off and be done with it. with 2 kids and zero debt it will be pretty amazing.

i think people who file bankruptcy should also have to forfeit a majority of the goods they purchased with those cards. you are basically a thief at that point. i actually think before you are allowed to file there should be some program where you sell back a lot of your items. that big screen tv you bought for a couple thousand? gone. the designer clothes? gone. all that money can be used to pay down the original debt before it is released.

the problem is that no one feels like they have to work for anything anymore, everyone is entitled to what the next guy has. wrong.

Okay, not all of my debt was because of shoes or designer clothing, and no, there isn't a big screen in my livingroom. I guess I should have mentioned having no insurance and medical bills. Speaking of which...Due to health reasons, you don't work. I'm assuming you have insurance, right? Had you not been so lucky, and your girlfriend had to cover all your debts and medical bills, and you couldn't work, would you feel the same way? I think the term thieving is abit harsh considering I'll be paying for my stupidity for the next 10 years and still face a risk of medical crisis. Yeah, consider yourself lucky...REAL LUCKY.

[TheGunner'sDream]

ummm