Best place/ways to consolidate debt?

[LOLyourFace]

I have about $7000 in debt in CCs. Here are some Qs for you:

1. What is the benefit of consolidating debt besides making it into one bill? Let's say I'm approved for another CC with 0% APR, how is debt consolidation with 0% APR better than this?

2. Does debt consolidation ruin your credit?

3. How is it different from credit cards in terms of payments?

4. What are some good places to apply?

 

[Jfrag Teh Foul]

Debt consolidation will not hurt your credit. The trick is to use that debt to help you in the end. I had several grand wrapped up in CC's and decided to consolidate. For the consolidation I used a piece of property that I own and plan to build on as collateral. I took out a 15 yr mortgage (for the low interest rate) that balloons in 3 yrs so as to keep the payment way low in case of hard times. The mortgage is a good thing because I can use the interest as a tax shelter. So I made my mandatory payments go from 400 a month drop to a mandatory 140 a month and I get the tax shelter as an added benefit. I pay more than the obvious 140 a month so as to pay it off sooner, but if your credit has suffered any then you need to pay it out over a longer period of time. The reason is that if you pay it quick... it can actually hurt your credit as opposed to paying it out over a span of time... because it shows you are willing to repay on schedule.

There is a such thing as good debt.

 

[boyRacer]

How did you accumulate that much debt? Girls? 😛

 

[LOLyourFace]

Originally posted by: Jfrag
Debt consolidation will not hurt your credit. The trick is to use that debt to help you in the end. I had several grand wrapped up in CC's and decided to consolidate. For the consolidation I used a piece of property that I own and plan to build on as collateral. I took out a 15 yr mortgage (for the low interest rate) that balloons in 3 yrs so as to keep the payment way low in case of hard times. The mortgage is a good thing because I can use the interest as a tax shelter. So I made my mandatory payments go from 400 a month drop to a mandatory 140 a month and I get the tax shelter as an added benefit. I pay more than the obvious 140 a month so as to pay it off sooner, but if your credit has suffered any then you need to pay it out over a longer period of time. The reason is that if you pay it quick... it can actually hurt your credit as opposed to paying it out over a span of time... because it shows you are willing to repay on schedule.

There is a such thing as good debt.

how about for a college student with no 'property' 🙁

 

[Jfrag Teh Foul]

Do you have a good car that is paid off? Use it for collateral. Just be careful not to reload on debt... could get hairy.

I mentioned it in another thread, but go to www.fool.com. There is a bunch of good financial stuff there. They have a card from MBNA (or whatever) that you can get for a fixed 8% rate.

If you can get your percentage anywhere around 8% or lower then you are good to go.

 

[JEDI]

going to a debt consolidation company WILL hurt your credit!

if u can do it yourself, try!!!

 

[Jfrag Teh Foul]

I was simply talking about using a bank, dude. Use a note to pay off debt... That will not hurt your credit.

 

[Ameesh]

using a intro rate or a balance transfer rate that is low or nill (0%) is a great way to get a handle on your debt, just keep shuffleing the debt between 2 cards back and forth until your debt is paid off. When i got out of college i had about $17K in CC debt and i was able to pay it off over two years and i only paid the CC companies $300 over the 2 years in interest. it was a bit of a pain but it works really well. the other nice thing is that once you make regular payments, your credit rating should get better too as you are using a lot of your credit but paying it off on time as well.

 

[Jfrag Teh Foul]

Originally posted by: Ameesh
using a intro rate or a balance transfer rate that is low or nill (0%) is a great way to get a handle on your debt, just keep shuffleing the debt between 2 cards back and forth until your debt is paid off. When i got out of college i had about $17K in CC debt and i was able to pay it off over two years and i only paid the CC companies $300 over the 2 years in interest. it was a bit of a pain but it works really well. the other nice thing is that once you make regular payments, your credit rating should get better too as you are using a lot of your credit but paying it off on time as well.

Agreed. A pain in the arse, but very effective if you keep dilligent.