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CC refi/consolidation...Prosper vs app for new balance transfer card?

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lostinlala2
Valued Member

CC refi/consolidation...Prosper vs app for new balance transfer card?

Been awhile since following the forums. Need advice. Over last year we have been accumulating (understatement) cc debt. Husband in school, tuition has been killing us. Just got hired (more income + paid tuition) so we want to consolidate and get rid of this nightmare. Penfed Promise(9.9%) 16k cl 15k bal. 3 capone cards(19%+) with total cl 5500 bal 4200. Decent scores and income. 731 credit karma. 80K between the 2 of us after tax before new job, more now. Prosper offer 15k 7.69% 36 months or try to app for new balance transfer card? Also good chance we will need a car in next year or so. BTW totally ok if you tell me I'm nuts for even thinking its possibleSmiley Happy thx

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Revelate
Moderator Emeritus

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?

If you can afford the payments on the Prosper loan, it's hard to see where it isn't a straight win.  Zero out the cap one cards, take as much as you can off the the Penfed one, go on with life.  Might improve your score enough that you could get a reasonable BT card, but your balances are sort of large at the moment revolving wise, won't get that from a single approval I don't think.

 

The only issue would be the increase in your DTI is likely with the loan vs. the cards, but it's a big savings in financing, which'll help you get out of debt faster.  A car isn't terribly difficult to qualify for, if you had a mortgage coming up in the next two years you might want to re-evaluate it further... though there's nothing saying you can't pay off the Prosper loan early once you've hammered your CC debt AFAIK, think it's a simple interest loan but I don't know that side of it.

 




        
Message 2 of 7
lostinlala2
Valued Member

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?

Thanks Revelate. That's my train of thought too, but was worried maybe I wasn't seeing it clearly. Penfed has 4.99apr for life of transfer no fees deal running now so thinking pay off penfed, then transfer capones over to penfed. kind of chasing my tail, but saving $ doing it right?

Message 3 of 7
Revelate
Moderator Emeritus

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?


@lostinlala2 wrote:

Thanks Revelate. That's my train of thought too, but was worried maybe I wasn't seeing it clearly. Penfed has 4.99apr for life of transfer no fees deal running now so thinking pay off penfed, then transfer capones over to penfed. kind of chasing my tail, but saving $ doing it right?


That's not a bad idea at all, 5% better than 9% or whatever Smiley Happy.  Just be warned Penfed is awfully squirrley sometimes about that; however, if you effectively airstrike the Promise balance first, I don't think they'll take exception to it.

 

Re: chasing your tail, nah, think you're doing a smart thing.




        
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user5387
Valued Contributor

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?

I'd go for the installment loan without hesitation, and perhaps you can bump it up to cover all CCs.

 

Transferring large CC debt to installment will in general boost your scores.

 

One problem with trying to get a BT card is that your balances are high, and I doubt you'd get what you're looking for.  Also, Penfed terms say explicitly that they may do a credit check on BTs, and you might end up out in the cold.

 

I tried an installment loan calculator, and it looks like around $475 to $625 a month, assuming a loan in the $15-20,000 range.  I don't know how this impacts your DTI, relative to the minimum CC payments that are already factoring in.

 

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lostinlala2
Valued Member

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?

Thanks for the input. I think the loan is the best route too. Hubs not sold though. I think he's worried about having too much available credit--I didn't know there was such a thingSmiley Wink. Still talking it over and will hash it out I reckon.

Appreciate the info on PenFed BTs. I had read "subject to credit approval" but assumed they were referring to new apps. Definitely would not want to go through all that and then end up with the high interest capone cards still kicking our butt. Definitely will call PenFed before making any payoffs if decide to go the loan route.

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user5387
Valued Contributor

Re: CC refi/consolidation...Prosper vs app for new balance transfer card?

I checked the Penfed T&C and it does say that they may check your credit for a BT.  I don't have any experience with how this works, or whether they'd approve it.

 

I once had an Amex BT offer on a new card, that was denied when I tried to use it.

 

Another thing you could do here is get a smaller installment loan, and pay off the Cap One and a chunk (like $5K) of the Promise card.  This would get you much of the gain in terms of saving money on interest.

 

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