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Valued Member
Posts: 27
Registered: ‎05-22-2007
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Best Way to Reduce CC Debt?

I need to reduce my CC debt and improve my credit. My bank closed my oldest (and highest balance) card. I need to get that paid off, plus some other cards. All currently have insanely high rates. Am I better off opening a new card, with a 0% balance transfer rate and transferring what balances I can? Still probably won't be high enough to cover all my debt so do I apply for 2? Or try to add a bank loan? Or should I start by trying to get a bank loan of some sort - would have an interest rate, but probably able to pay off more credit... We are currently making payments on the CCs - but it's mostly going to interest... and I'd like to pay down more of the principal with my payments... I'm not sure what my credit scores are - would that affect the best course of action? If so, can you suggest some guidelines based on various ranges? I will check my scores soon - just can't do it quite yet. Any insights/suggestions would be greatly appreciated. Thanks.
Valued Contributor
Posts: 2,708
Registered: ‎10-16-2008
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Re: Best Way to Reduce CC Debt?

BeritL, IMO it's difficult to help you to get where you're going if you don't know where you're at right now.  I'd recommend pulling your reports and checking your present scores, otherwise you're just spinning your wheels and any other recommendations would be pointless. 

 

 

Valued Member
Posts: 27
Registered: ‎05-22-2007
0

Re: Best Way to Reduce CC Debt?

OK, Thanks. I will do that and check back when I do.
Valued Contributor
Posts: 2,708
Registered: ‎10-16-2008
0

Re: Best Way to Reduce CC Debt?

We'll be here!   Smiley Happy

Valued Member
Posts: 27
Registered: ‎05-22-2007
0

Re: Best Way to Reduce CC Debt?

I just checked my Equifax FICO score. It's 705 - honestly better than I thought it might be. I think my length of credit history (oldest card, which they closed on me (but still has a large balance), 16 years; average age 9 years). And mostly good credit - just recently (last 2 years or so) the balances began and continued to increase, and a few late payments - but still mostly on time. The only thing the FICO score kit suggested - was that I have too high a level of debt (66% of revolving credit) and that I should be making payments on time, and try to pay off 90-100% of my debt over the next 24 months - which I would like to do - just would like to pay it off more effectively. Anyway, I checked our statements, and we are paying right now what the statements say would be required to pay the cards (all of them) off in 3 years. But I would like to either - lower our monthly payments and/or pay less on interest (CC rates are currently 25%). Just trying to decide whether opening a new CC account with 0% balance transfer (promotional rate) is better or applying for a loan? It would be joint with DH - not sure what his credit is. And actually, half our total credit is on my account (the card that closed). The other half is on his account - card still open. Both cards have high rates (25%). Other than that, I have some small cards (Mine are mostly older, store cards, with zero balance) - and a couple joint cards with small credit limits. There are other loans, as well (car, home, school) between DH and I. So I'm thinking I might want to open another card, anyway, to keep my credit history going (since my main card was closed and will fall off eventually, anyway)? But that still would not be enough to pay off my card completely, probably. But I suppose every bit helps. I guess since my credit is better than I thought, I could try applying for a loan - but I'd have to see where DH falls (and I don't know what the other credit bureaus show on me or DH). Any suggestions are greatly appreciated. Thanks. Berit
Regular Contributor
Posts: 219
Registered: ‎01-04-2010
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Re: Best Way to Reduce CC Debt?

I was in almost the same situation. I would say try to get another cc and transfer your highest apr to that card. Or, what I did was get a secured loan from my local bank, I owned my car, so they gave me a loan based on what that car is worth. Then I paid off my highest cards with that. Just keep paying the most high apr cards first, and work your way down. Pay as much as you can. Pay only the mins on the ohers untl the highest is gone.


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Valued Member
Posts: 27
Registered: ‎05-22-2007
0

Re: Best Way to Reduce CC Debt?

Thanks.  That might help. 

 

Unfortunately, I have way more debt and both cards are almost the same rate... and the car loan idea would work (we just paid one off so we do own it)- but wouldn't even come close to being enough.  But at least those ideas would help get the high rate balances lower.

 

 

Regular Contributor
Posts: 187
Registered: ‎05-07-2010
0

Re: Best Way to Reduce CC Debt?

If you want the lowest rate, your best bet may be a Home Equity line of credit.  (assuming you have a decent amount of equity in your house.)  Plus, the interest you pay is tax deductible, so that lowers the effective interest rate more.  With a HELOC, you are turning unsecured debt into secured debt, so it does have its risk, you can't just walk away from the debt as eaily as credit cards if for some reason you can not make the payments, and if you do, they can try to forclose on your home. 

 

A personal line of credit is also another idea.  Higher rates, not tax deductible, but you can get it unsecured.

 

 

 

 

Valued Member
Posts: 27
Registered: ‎05-22-2007
0

Re: Best Way to Reduce CC Debt?

Thanks. I may have to look into that.
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