OK - Am I stupid? (Loan question)

[KaBudokan]

Well, first of all, yes, I am stupid, because I have too much debt.

I've been really cutting down my debt lately, but still have a while to go. I'm talking about credit card debt. Luckily my cards are all fairly decent rates - the highest is 12.99%, and the others are lower.

I called a bank about a personal loan through the NEA, which had advertised rates of 6.9%. Well, because I am not a homeowner, the lowest rate I can get is 13.9%.

So - I'm thinking I should just keep the debt on my credit cards, and continue making large payments. However, the person at the bank told me even that though the rate was higher, I was still better off consolidating. One reason is there is no "pre-payment penalty," which I have never heard of on my credit cards. The other reason is that this is a "fixed amount" as opposed to "revolving."

My VERY natural assumption is that as long as I am making large payments (much larger than the minimum) each month on my cards, that I am better off not taking a loan at a higher rate, right? Or is it not that simple and I am missing something?

I'm an English teacher, not a math teacher, so - like I said - I may be stupid. 😛 Help me out here.

 

[isekii]

Get a new Credit card that has 0% apr balance transfer
A lot of them now give out 1 year 0 APR

You can consolidate that way

 

[Yossarian]

Credit cards don't have a prepayment penalty so to answer your question directly, the loan would be bad. What I would do however is consolidate all the debt onto one card, maybe a new one if they have a good balance transfer deal. You may want to call one of your card's companies up and see if they'll give you a deal on the interest rate since they would be making more off the larger balance anyway.

 

[FoBoT]

sounds like the bank guy is trying to snow job you to get your business, run, fast!

 

[KaBudokan]

OK - First of all - I have too much to put on one card. I've been doing that for a bit, which has been ok, but I've been looking at a more permanent solution.

Did I mention I am stupid? 😱

The other bank I talked to said they could give me a rate of 21%!!!

So, I should continue to keep my eye out for balance transfer deals, and then keep the others on the credit cards, just making huge payments each month?

Also - would I be able to get a better rate (that 7% rate) if I had someone cosign with me? (My brother - a homeowner who makes a LOAD of money.)

 

[Yossarian]

Keep looking for a better deal. This is kind of obvious, but in the meantime, pay the minimum on the lowest interest rate cards and put everything towards the high ones.

 

[weirdichi]

Maybe you can borrow money from him (your brother) and pay it off, then pay him back. I know it's always a sticky situation when family and money mix, but if you really did want to save money, that can be an option.

 

[enis083]

Which banks did you try? 21% seems kinda high... One of my co-workers did this about a year ago. I'll check with him to see what his rate is.
I kinda in the same boat. I'm going to pay off a good percentage on one card with my tax refund. I was considering taking a loan out on my 401k savings since the interest rate is much lower. Its a really bad thing to do, but I'm still young and its losing money anyways...

I'll let you know tomorrow if I get any info.

 

[smartt]

yes

 

[KaBudokan]

Originally posted by: smartt
yes

Well, at least you're smart(t). Well, except for your spelling... 😛

I am actually looking at consolidating on a few cards at pretty low promotional rates (for the life of the loan). They're not 0%, but 3.9% and 5.9, so that's not too bad at all. I think I'll be eating Ramen for a while, but I should be able to take care of this without beating myself up too much.