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<<Thinking of using a home equity (bill consolidation) load with Providian to pay off all my credit cards...which is around $20,000. The deal with this company is that the rate is 7.5% plus the prime rate which is around 2.25%...therefore the "floating rate" is currently at 9.75%. That is half of what my current APR is with all of the credit card companies!! However, I am not too familiar on how volatile the prime rate has been over the past several years. To my knowledge with the economy doing so well, the prime rate has been very stable. Have we ever seen the prime rate above 7 or 8% over the past 5 years? Anyone have any good or bad experiences with this type of loan? This loan goes for 15 years and can be paid off at any time without any penalties.>>

Time Out! First Down! Prime rate is 7.75% today. What the loan rate they offered you prime (7.75) plus 2.25%? As far as volatility of the primerate is concerned that depends on What the Federal Reserve/Alan Greenspan says. The Federal Open Market Committee meets about every two months among other things they talk about what they want to do to the Discount Rate, and the Federal Funds Rate. If either rate goes up Prime goes up, if either goes down Prime MAY jgo down. The Federal Reserve uses the two rates to control how much money is available and hence control inflation. If you want a better description than that basic overveiw you will need to find someone with a much better understanding than me.

I agree with Leviathan a consolidation loan won't help one bit until you control spending, and spend less than you make. You can't borrow your way out of debt, the the only justifications for a consolidation loan are so you can only make one payment, and to get a better rate so you can get to zero debt faster. A consolidation loan is NOT so you can "free up" space on a credit card so you can buy more.

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