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I currently have about $36,0000 in CC debt that I am paying roughly $350 interest on monthly. I am never past due or have any problems paying it I am just struggling to get the principal down. My question is if I should get a loan and pay it all off at once at 9% interest or just commit more $$ to paying it off on my own. I know this might seem like an easy question I have just never found myself in a situation like this before

thanks

Steve
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Those who transfer credit card debt are more likely to run up credit card debt again. It isn't an absolute, just more likely.

Your current average rate is 11%. 2% is $720 a year. Not insigificant, but also not a silver bullet.

Can you do better with low interest balance transfers? What are the separate account balances and interest rates?
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I currently have about $36,0000 in CC debt that I am paying roughly $350 interest on monthly. I am never past due or have any problems paying it I am just struggling to get the principal down. My question is if I should get a loan and pay it all off at once at 9% interest or just commit more $$ to paying it off on my own.

So, if you are paying $350/month in interest, the rate on your credit card debt is about 10% on average, right?

So from a strictly mathematical standpoint, it would make sense to get a fixed loan at 9%, assuming that you can afford the payments and that you can actually get an unsecured loan for a fixed 9% rate.


I know this might seem like an easy question I have just never found myself in a situation like this before

Actually, there's a lot more to answering the question than the 'simple' math part of it.

- How did you get this debt?
- Have you resolved/changed the issues that resulted in accumulating the debt?
- Have you stopped using the credit cards? (If not, or you say you "can't" stop using the credit cars, then you might want to just leave well enough alone, and pay the credit card debt off yourself, little by little.
- How will you use the credit cards after you pay them off? (Does no good to pay off the cards if you're just going to charge them up again.)
- Have you examined your budget/spending plan to see what additional funds you can funnel to the credit card debt each month?
- Will there be any fees associated with the new loan?
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small correction

I am paying 15% on $28,000 and 13% on $2,700

I pay $200 a week on the $2,700 and do not charge on the card any longer

thank you!
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- How did you get this debt?
The 28Kwas when AMEX offered me pay over time and I abused it, I use to pay every single month in full and then just got behind, the other was more calculated

- Have you resolved/changed the issues that resulted in accumulating the debt?
YES!
- Have you stopped using the credit cards? (If not, or you say you "can't" stop using the credit cars, then you might want to just leave well enough alone, and pay the credit card debt off yourself, little by little.
I stopped using one and its almost paid off, the other I still use and the one I am having the most trouble with
- How will you use the credit cards after you pay them off? (Does no good to pay off the cards if you're just going to charge them up again.)
I will pay in full
- Have you examined your budget/spending plan to see what additional funds you can funnel to the credit card debt each month?
in 8 weeks I will be able to pay 1,000 a month towards the 28k

- Will there be any fees associated with the new loan?
No
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I am paying 15% on $28,000 and 13% on $2,700

I pay $200 a week on the $2,700 and do not charge on the card any longer


Have you stopped using both cards? If not, you need to do so immediately. And if you feel iike you 'have' to use a card, at least use the one with the lower interest rate, add enough money to your payment to cover any new charges that week to the $200/week you are currently paying.

How much are you paying the the card with $28k on it?

From a strictly mathematical standpoint, you would be better off paying just the minimum on the card with $2700 on it, and putting the rest of the $200/week toward the card with $28k on it.

That said, at $200/week, you should have the $2700 card paid off in early August (first or second week, depending on if you've made your payment this week already or not). You can then add the extra $200/week ($867/month) toward paying off the $28k card.

Assuming that the minimum payments on the card with $28k on it are about $630(and you have also stopped using this card), by mid-August your balance will be about $27,150. Making payments in August of $1150 toward this debt (to account for what you need to pay off the other debt) and beginning in September, paying $1500/month toward this debt, you will have it paid off in April, 2015. If you could find additional money to put toward the debt, you could pay it off earlier.

AJ
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I am paying 15% on $28,000 and 13% on $2,700

I pay $200 a week on the $2,700 and do not charge on the card any longer

Have you stopped using both cards? If not, you need to do so immediately. And if you feel iike you 'have' to use a card, at least use the one with the lower interest rate, add enough money to your payment to cover any new charges that week to the $200/week you are currently paying. I am still using the card with $28k on it and it is the only card I use. I could switch to the other card with the lower rate

How much are you paying the the card with $28k on it?
I am making the minimum payment plus anywhere from 200-300

From a strictly mathematical standpoint, you would be better off paying just the minimum on the card with $2700 on it, and putting the rest of the $200/week toward the card with $28k on it.

That said, at $200/week, you should have the $2700 card paid off in early August (first or second week, depending on if you've made your payment this week already or not). You can then add the extra $200/week ($867/month) toward paying off the $28k card.

Assuming that the minimum payments on the card with $28k on it are about $630(and you have also stopped using this card), by mid-August your balance will be about $27,150. Making payments in August of $1150 toward this debt (to account for what you need to pay off the other debt) and beginning in September, paying $1500/month toward this debt, you will have it paid off in April, 2015. If you could find additional money to put toward the debt, you could pay it off earlier.


SO would you rec paying the 2700 off first or just attacking rh 28k starting now?
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SO would you rec paying the 2700 off first or just attacking rh 28k starting now?

The rates are pretty close. If you are insistent that you need to have one cardit card available for use, it's not gong to cost you that much more to pay off the 13% card before the 15% card. That will give you a card with no debt on it that you can pay in full every month.

But, it's ultimately up to you, and what will motivate you. Do you want to save a few bucks? Or have a paid off card earlier?

AJ
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I am paying 15% on $28,000 and 13% on $2,700
I am paying roughly $350 interest on monthly



The numbers don't add up:

$28,000 * .15 /12 = $450
$2,700 * .13 /12 = $29
_____
$479 monthly interest
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I want to pay it off as fast as possible.
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I want to pay it off as fast as possible.

First, stop using either of the cards for any new charges at all, then. Adding additional debt to cards that you are trying to pay off as fast as possible is completely going in the wrong direction.

Then start paying the minimums on the card with the lower interest rate and put every cent that you can lay your hands on toward the higher rate card.

If you can get a loan at a lower rate without paying any fees, and you continue to make the same payments that you have been making to both debts, that would speed your payoff and save you money. If there are fees for the new loan, you would need to run the numbers to see if there really was savings.

AJ
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I would definitely stop using either card for now.

Realizing the reality of a plastic culture:

1. Pay off the smaller balance one as soon as possible and then use that one for your monthly expenses. That way you can see if you are truly able to pay it off every month or if you just think you can.
2. Draw up a list of what is allowed to go on the monthly card. If you have a list, you're less likely to just randomly charge on it. I would make the list really, really short in the beginning so that it never feels like a stretch to pay it off each month.

For example your list might be:
a. airfare, hotels, and rental cars
b. out of town purchases when traveling
c. online purchases
d. large ticket repairs items until you can get home and transfer from the emergency fund (within 48 hours)
e. anything you are submitting to work for reimbursement

That's it. No quick cups of coffee, no dinners, no "oops I can't cover groceries until pay day".

$36,000 is a heck of a lot of "falling behind". People would be more willing to say "yeah, refinance and pay it off" if it was a one shot expense like medical bills or "I was out of work for 9 months but now have a steady job again" and not a continuous drip, drip, drip. Unfortunately for a lot of people months of gritting their teeth and cussing under their breath about "I can't believe how much money I'm throwing away in interest F***!" as they send in payments and live on bare bones is the only way they will change their behavior long term.

Lara Amber
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I once had 6 figure CC debt. I did use balance transfers to help me get it paid off (paid it all off a few years ago).

I used balance transfers (I did have to pay fees for some zero percent transfers but I owed enough and the payout was long enough that that worked out for me). Once I balance tranfered something I wouldn't use that card at all. That is, a card I was in paydown mode on I only paid on and would not charge on.

I did continue regularly charging stuff, but I used a different card that I would pay in full each month.

Obviously to do this you have to have the self-discipline not run up new debt that you don't pay off each month.
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I had a lot of CC debt 10 years ago. Like $30-35k at one point. Like determinedmom, I found it extremely helpful to payoff some cards, then use balance transfer offers to move money around to lower interest rates (hopefully with promotional balance transfer rates). Never purchase anything on a card holding a balance sitting at a promotional rate. Lock them away in a drawer and forget about them. Keep track of when the promotional rates expire, and be prepared to pay them off or transfer the balance to another card as needed. Include transfer fees in any calculations you do to decide if an offer is any good or not. If you have good credit, it's not necessarily a bad idea to open a new card to get a special balance transfer offer - but only if you are disciplined enough to NOT use the card you are clearing.

As far as your loan option, I don't think 9% is not low enough to lock my money in. I would pay off the smaller card first, then hope for a balance transfer offer from them (or any other empty cards you may hold). When I was paying down my CC debt, I was able to get my debts down to an average of about 1.5% spread across 3 cards. It may not be as easy today, because cc companies aren't as generous with credit lines and teaser rates as they once were.

I just saw a balance transfer offer yesterday from Discover for 4% APR for two years and no fee. Best I've seen in years, but I have no need for it. All of my cards are paid in full every month.
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cashinasnap,

You wrote, Debt results when you as a client of a credit card company purchases an item through the card. Debt accumulates and increases via interest and penalties when you don't pay the company the money you have spent. The late payment penalty increases the amount of debt with each passing time.

I realize you're new; but if you're going to post in response to a thread, please make it on-topic - preferably answering the post you're replying to. Also, I'm pretty sure people understand more or less how credit cards work by the time they get here. Insights such as these are anything but.

If you're posting just to hear yourself talk, there are boards for that ... or you could start a new thread ... and TMF let's you start your own board as well.

- Joel
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"Also, I'm pretty sure people understand more or less how credit cards work by the time they get here. Insights such as these are anything but."

Really?

I've been reading these boards for well over a decade now. It's pretty clear that there are a lot of people who fail to understand even the basics of money, credit cards, and personal finance in general.
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That post actually looks like it was made by a bot, or someone who is trying to pad their post count for some reason.

Is there some board functionality that is disabled before a user has hit a set number of posts? maybe it's that.

on topic:

As someone who recently paid off over $60K in CC + Auto Loan debt, my suggestions are going to sound like much of what's been posted in here already [these are the same folks who supported me through my repayment-THANK YOU, Fools!]

1-Do you have a cash cushion for emergencies? I see you're still using a CC for spending even with large balances. This is manageable, but it is DANGEROUS. You got yourself in debt, you are capable of doing it again and with balance transfers / personal loans, the new damage can be even more catastrophic to your financial health and future. Look deep within yourself and find the source of your inner spender. Until you can resolve whatever it is that got you to this point, you're in danger of going down before you climb back up.

2-Don't look at all your remaining cash after basic bills as "snowball" money. You NEED to earmark some money for expenses, both regular AND irregular. There are some great "best of" posts here on Budgeting and LBYM. Get comfortable with those topics and post your budget for Fools to shred. It's a humbling experience, but it will help you look at your situation in ways you've not considered. Even if you don't take all the advice and apply it to your situation, you will be wiser for the process.

Best of luck. One payment at a time. Don't forget to reserve a little cash for fun! Completely cutting yourself off from life's little enjoyments is a great way to relapse.

cheers,
Mike
debt free for the first time since 1997
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