Has anyone ever consolidated credit cards into a personal loan?

Forum|Forum|7 years ago
July 31, 2018
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Hi! I am looking for advice on lowering my debt as it seems my credit cards keep rising up and up. I pay off my min. balance very month but my balance only seems to go up and not down. I have 5 cards and I heard from a friend that I could get a personal loan to pay them off and then pay the loan. Curious if anyone has ever done this or it would something like this help me????

Any advice would be great.

Thanks!

Best answer by Lady1scorp

Yes. Your friend is correct, I have done this before with my credit union. You have to apply for a personal loan, they ask how much you would like or they obtain a copy of your credit report. Whatever is your total credit card balance, let's say $5000 they pay off $5000 and you make low monthly payments on the loan amount and in return your credit cards are at a $0 balance.

Remember this is subject to approval from your bank.

Show previous replies

tova

You can also apply for a credit card balance transfer, they should give you 12 to 18 months interest free. Great way to bring down the balance faster and put all the credit cards on one payment plan.

tova

Nate86

I’ve personally never consolidated my credit card debt. However, if your balances on 5 cards is so high that making your minimum payment doesn’t pay any of the cards down, then a debt consolidation loan may be for you. If some of your cards are getting paid down you can keep doing what your doing, once a card is paid off, apply that amount to the next card nearest to being paid off, and so on and so fourth. Once you get to the 5th card, you’d be applying the same amount each month to that one card as you were to all 5 together. It is important that whether you get a loan,or use the snowball method I just described, you need to stop using those cards. The last thing you need when your trying to get out of your hole is a bigger hole. Once you are free and clear of that debt, don’t use your cards for just the sake of thinking you have money to spend. Purchase only what you can afford to take care of each month, such as gas or groceries, and pay it down each billing cycle. Be sure to put those expenses in a separate account as you make your credit card purchases to ensure that those monies are available when the bill comes in. Maintenance in that fashion will keep you free from this kind of situation again, and keep credit available for an emergency such as a new transmission for your car or furnace for your house. Good luck on your endeavor!

Abraham 11

In my experience in my personal life I feel like I could just give you an opinion because at the end of this opinion, follows your decision. So is important to get that since the beginning. What do I mean? Well because my opinion follows with a pad that we don’t want to take, and that includes totally the opposite of what brought you to this confusing situation. If we try to get off from debt to have a peace of mind it will sink you deeper if you don’t follow up with your plan of making just one payment. Regardless of good loan that you where able to get with good credit history. At the end it all comes to your decision. If you know yourself and you know you can maintain by not going more into debt then it makes since, but still live room for unexpected sircumstances like water damage I got to replace the whole floor but your the only one that knows what you may have problems later. In my situation was not enough income and that payment I couldn’t do because of sircumstaces that we know it could happen but we go on in life like it will never happen to me. Sorry if my opinion confuses you more but I was about to exit from this app and I saw this question. God bless

Sjadams

Highly recommend you do that, you will not be sorry! I did it a couple years ago. With a loan you will get much lower interest rates than you probably get on the credit cards. I highly recommend using a credit union though rather than bank if you do decide to go this route. I got a loan from Wells Fargo to pay off my credit cards. Wells Fargo was only charging me17% interest. But my 13 credit cards all ranged from 19.99-29.99% so figured 17% was better than 20%+. After paying on that loan for about 7 months we opened up a savings at a credit union, (just needed to deposit $5 in the savings and keep it there to keep account open) so I called the credit union to see what terms were for personal loan through them and was able to get same $ amount with interest at 8%. My payments were almost cut in half and it amazes me how fast my balance continues to go down every month. I know how discouraging it is to feel like yourmonthly payment is just going to interest and the balance barely goes down if at all. I was so pleased I did the same with my car loan. The bank was charging me 18% interest and whenwe switched over to the credit union they did it with interest at 3%. And again, I’m amazed at how fast the balance continues to drop!

Mrsladyj

A deletion expert told me that I could get a loan pay off the card then pay him with the card and my loans so it'll be one payment

CJL8959

I’m trying to pay off all credit cards, if I get a personal loan pay off then credit card and then turn around to pay the deletion expert. I would be back in the same position using my credit cards.

CST63

This should be a last resort option. If you can only make the minimum payments then you are spending more than you can afford. Start by putting your credit card(s) somewhere other than your wallet. Look at the interest rates on your cards and start by paying extra on the highest rate card. Even if you pay $5 or $10 extra a month that will help pay down your balance. Ideally you should look at the amount of interest you are paying each month and paying at least that much extra to help lower the interest paid. Pay the minimum due on the other cards until you get one card paid in full. Then take the amount you were paying on that card and add it to the minimum payment on the next highest interest rate card. Continue this until you have paid off all your credit cards. If you have a car loan add the amount saved from the paid off cards to your car payment until you pay it in full. This will reduce the amount of interest you pay as well as the amount of time on the loan. When you are debt free take the amount of the car payment and put that in your savings account to be used for emergencies. You should have at least six months worth of income set aside for emergencies, a year's worth is much better.

Tax laws are changing so keep an eye on home mortgage interest, within the next couple of years we may not be able to deduct this from our taxes. You might want to look at setting up a fund for your mortgage that can be used to pay down your mortgage if we can no longer deduct the interest.

MattyIce

I just did that last week and I’m glad I did. Just make sure you are not paying more than what you have been paying separately with the payments all together with you credit card debt or it’s pointle

CJL8959

Who did you go through, my concern is being scammed. Since there seem to be so many choices.

CreditCarl

Did that last year, didnt want to wait for my refund to pay off my card so I got a very low interest loan from my bank (it was low becuase I choose the 3 year pay off.) If I payed it off before the first year I would haveto pay a charge, so I used the money to invest (becuase my refund at that point could pay it off at any time) and payed it off after the end of 1rst year. Hiked my credit score too to around 750!!

Smccue3060

Yes, I have done it in a couple of different ways. First thing you must be committed to is to change your spending habits before you consider doing a consolidation loan. Never spend more than you can afford to pay off each month on any cards that now have a zero balance. If you do, you'll find yourself worst off in a year than you are now.

My first method was a balance transfer loan from another credit card company. They offered 0% for 24 months. There was a 3% transfer charge. So say if my credit card balance was 10,000, the total loan was 10,300. I was committed to getting this paid off in the 24 months so I made equal payments of roughly $430 a month. If you go this route, you must be COMMITTED to get your spending under control and pay off in the allotted time. Otherwise interest rate increased to over 20% apr after 24 month period. I probably saved thousands of dollars with this method.

I have also used Prosper to consolidate my CC balances. Depending upon your credit rating, you can get a 3 to 5 year loan from around 6% up to 15% apr. Both methods will benefit you if you dont put new charges on your existing CCs. It will definitely hurt you if you continue to accrue balances on your CCs.

Do some research and find out what will work best for you. If you have a long standing history with your bank or credit union, you may get a lower interest rate on a loan.

Good luck. It feels great not having all that CC debt looming over you every month. BTW, my credit rating went up considerably a few months after I paid off my CCs. My CR is in the low 800s now. One more advantage to paying them off!

konajode

I know this thread is old but for anyone considering it I wanted to recommend checking out Best Egg because I was denied a bank personal loan but got approved with them and I have been really happy with them overall! There are no early payoff fees, hidden interest, etc. They even have flexible payment options if you need to skip a payment (I don't recommend doing this but its nice they offer it so your credit doesn't get hurt if you cant make the large payment one month trying to pay down your debt quickly) I did a 3 year term to get my debt paid of quickly so the monthly payment is very high but it is worth it if you want to get out of debt! I agree with everyone's advice too about keeping your credit card accounts open but cutting up your credit cards and trying to change your spending habits. It is really hard once you get this loan because you still have the same payments each month and cash flow is still just as tight and now you have these open cards it is really tempting to use them. Just keep moving in the right direction and paying off debt the best you can. Good luck to everyone out there in this same battle! Our generation got started off on the wrong foot with all this student debt and it creates a mess for the rest of our finances right out of the gate.