Discover Personal Loan Question

[falcon7xx]

My Fiance has about $15k in CC debt and she was offered a Discover Personal loan. She was thinking about using the loan to consolidate the debt. Is this a good idea and a good place to get a debt consolidation loan?

[notfancy]

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@falcon7xx wrote:

My Fiance has about $15k in CC debt and she was offered a Discover Personal loan. She was thinking about using the loan to consolidate the debt. Is this a good idea and a good place to get a debt consolidation loan?

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Depends. How high is her AAoA? Will her payments be manageable? How many accounts will the loan pay off? What is the interest rate of the loan verses her cards? What are the terms?

[user5387]

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@falcon7xx wrote:

My Fiance has about $15k in CC debt and she was offered a Discover Personal loan. She was thinking about using the loan to consolidate the debt. Is this a good idea and a good place to get a debt consolidation loan?

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Other choices would be local CUs, Lending Club, and Prosper.

I've received offers for the Discover loans, but I seem to recall that it was hard to determine what APR you'd get until you actually apply.

In general, moving revolving debt to installment is a good idea, that will boost scores, but individual situations may vary.

[falcon7xx]

1. The Payments will be around $400 per month over 36 months, but we can pay it all off at the end of the year.

2. It will pay off about 5 different Credit Cards.

3. The average interest rate on those cards is 22% compared to 7% for discover.

[notfancy]

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@falcon7xx wrote:

1. The Payments will be around $400 per month over 36 months, but we can pay it all off at the end of the year.

2. It will pay off about 5 different Credit Cards.

3. The average interest rate on those cards is 22% compared to 7% for discover.

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Then the answer seems pretty obvious. Also like the previous poster stated, 15k in a loan would affect her score less than 15k in revolving CC debt as long as she doesn't get to that point again with them.

Also as suggested, bring that consolidation offer to a local credit union and see if they can beat the rate.

[emptypockets]

Just be aware, they say rates "as low as 7.99%" but in actuality, most people do not qualify for that rate. In the past, I apped, and was approved for 13.99. At the time of the app, my scores were similar to those in my siggy. They pull each bureau for approval before they tell you what rate, and what amount you qualify for (you may or may not qualify for the full amount you need).

Check into CU's as well, many have bill consolidation loans for around 9.99% (Pen Fed).

She has to be sure not to run balances on the cards after paying them off (I am sure you know this, just saying), because 400 a month for a fixed payment plus another few hundred for ongoing CC bills per month can be a real budget buster.

[axledobe]

I think this is a fantastic idea but would certainly want to know the final APR of the loan.  I'm with the above poster in that once you have zero balances, I would not use but one of the CC's and make a rule not to put more than $100 on it and PIF every month (no exceptions).  It would be quite counter productive to get them all to a zero balance and go on a few shopping sprees.  

Good luck.  From my personal experience, Discover's customer service is truly second to none.  Whether they have the best rate for personal loans, I have no clue.