To Consolidate or Not To Consolidate

[CP6IH]

Hello,

I need some advice from people smarter than me. We have a CC debt of $27K, accumulated over the last 5 years. This is currently spread over 9 cards, all but one with 0%. What I've been doing for years is transferring balances from one card to another, all in order to keep them at 0%. Even though we're paying no interest, and are paying more than minimum on most of them, I don't think I'm disciplined enough to expect to pay this debt down over time.

The idea that I have is that I should consolidate this debt into one large loan (Lending Club??), close all but one emergency CC, and pay huge debt this over time. Even though I would be paying interest of (up to) 10%, I feel that if I don't have the ability to move the debt between CC's, managing debt would be much easier if I had to pay a single payment every month. Making 9 payments every month gives me a headache, so much so that I hardly look at our statements anymore.

Does this make any sense to you?

Thank you!

[Petunia 100]

Hello,

I need some advice from people smarter than me. We have a CC debt of $27K, accumulated over the last 5 years. This is currently spread over 9 cards, all but one with 0%. What I've been doing for years is transferring balances from one card to another, all in order to keep them at 0%. Even though we're paying no interest, and are paying more than minimum on most of them, I don't think I'm disciplined enough to expect to pay this debt down over time.

The idea that I have is that I should consolidate this debt into one large loan (Lending Club??), close all but one emergency CC, and pay huge debt this over time. Even though I would be paying interest of (up to) 10%, I feel that if I don't have the ability to move the debt between CC's, managing debt would be much easier if I had to pay a single payment every month. Making 9 payments every month gives me a headache, so much so that I hardly look at our statements anymore.

Does this make any sense to you?

Thank you!

Volunteering to pay 10% interest when you could be paying 0% makes no sense to me.

I do get that 9 separate payments are a lot to juggle. Consider doing this: open a separate checking account just for paying credit card debt. It can be an online checking account with no fees and a (comparatively) healthy interest rate. Deposit your budgeted monthly amount for credit card debt payments, whatever that amount might be, into this account. From this new checking account, set up 9 automatic payments to your credit card accounts. Make certain you set them up to happen after your monthly deposit comes in. You can even set up the deposit to happen automatically. You will want to keep an eye on the balances. Once a credit card account is paid in full, you will want to eliminate that automatic payment and add the amount to some other credit card's automatic payment. And you will likely still need to transfer some debt from one card to another from time to time.

A little work to set it up, but mostly automatic afterwards.

Another thought is that instead of paying more than the minimum on most of them, pay only the minimum on 8 and as much as you can on 1. Soon you will be down to juggling 8.

When it comes time to transfer a balance, see if it makes sense to transfer the balance from two onto the new account, eliminating another juggling ball.

[disneysteve]

This is currently spread over 9 cards, all but one with 0%.

The idea that I have is that I should consolidate this debt into one large loan
I would be paying interest of (up to) 10%

Does this make any sense to you?

NO! It makes absolutely no sense to move debt from a 0% credit card to a 10% loan. That's pretty insane actually.

I suggest you post your monthly income and budget information along with the details of this debt. List each card balance and when the 0% offer expires. If you do that, we'll be happy to advise you on how to actually start attacking this debt, rather than just shuffling it around.

[CP6IH]

Thanks a lot to both of you. I'll be back with this information that Steve mentioned. I'll just need a day or two to gather everything...dates of 0% APR expirations mostly.

Thanks again!

[JennyKnight]

To Consolidate or Not to Consolidate

I did the exact same thing except with a kitchen remodel, (Used a Percent cards to finance it). I racked up $40k in CC debt. I then procrastinated and let the zero % cards go to the regular interest rate. Huge mistake!I ended up in the sinking hole of never getting out of debt, until I sold an investment property and used the proceeds to pay off most of the debt. But, I still had $20k in high interest credit card debt. What I did then was apply for a Peer to Peer personal consolidation loan for the rest of the balance and I was approved for a non secured debt consolidation loan. It really organized the debt and help me get everything under control. The debt is now down to $8k. All extra income I make I apply it to this loan. I will never get in CC debt again.

Your plan sounds great! Have one credit card for emergencies, and just do not use the other credit cards. I would not cancel the other credit cards because if left unused they will help your FICO score, (Your available balance will always have a high percentage of non-usage, very good for your credit score).

There is a great blog post about real debt consolidation companies that I would highly recommend you check out before you make the decision to get a debt consolidation loan. google: Best Debt Consolidation loans.


Good Luck!