Pay off cc with a loan?!? good idea?!?

[Anonymous]

Dh received a letter from Citi Financial about a 4500 loan that he was "preapproved" for. (I haven't looked at it yet since it came to his work address.) We had all ready discussed him getting a small 200 dollar loan from a cu in order to add a more variety to his cr. Now that this offer has came in, I started to think about a smart way to use this money (if we decided to go through with it) I'm not sure what the interest rate is (you have to call) but anything has to be better than his 21% on his current BOA CC. (mine is currently @ 17%-which isn't that great either) Our total credit card debt at this moment is $3415 and that's not including any interest charges for this month. I'm not working at this time due to a pregnancy complication so we are on a strict budget until April when I return to work. So what I was thinking the BEST thing to do right now for both our financial situation AND our high util/fico scores is to go ahead with this loan. The use the money to pay down all 3 cards (currently 2 boas and 1 cap1- my macys is pif) to 0% util. That would leave us with around 1K (assuming we get the full promised 4500) We would then take that money and let it sit in the bank and use it ONLY to pay the loan back until I am able to go back to work. (I'm thinking the monthly payment would be around 150-200 and we would pay 250-300 back a month with the left over 1k & what we would've been using to pay our credit cards) THEN, after I return to work, we should be able to pay the loan off/down within 6 months. I would like to have the loan at least 6-8 months that way it reports to the cra

So, in the end, our credit cards would be a 0% util and we would start to pif if we charge anything thus bringing up both of our scores AND dh would have a nice installment loan on his CR.

What do you guys think? Good idea or should we just continue paying down the cc slowly as we are doing now and leave the loan offer alone?

Hopefully its not one of those preapprovals where you aren't really approved-with his luck it probably is

[marty56]

I would  not do it.  I consider it a sub-prime arm of Citibank.  While I was in the DMP, I would get offers from them while I had a Citibank card in the program.

Check you scores at www.whogavemecredit.com.  If you scores are in the range of a Citbank CC, then apply.  the rates will be better and better for your credit score.  if your scores are not in the range or you get turned down, you have your answer.

Message Edited by marty56 on 01-03-2008 05:25 PM

[MidnightVoice]

CitiFinancial is usually very high interest.

From their website:

Personal loan example shown has an annual percentage rate (APR) of 18.99%, based on a 5 year term. Home equity loan example shown has an annual percentage rate (APR) of 12.50%, based on a 30 year term. Actual loan rates may vary based on credit history and qualification criteria.

[Anonymous]

Citibank does not like collections. When was your last collection? I think the only way you probably be able to find out the interest rate is to apply but if it lower then go for it. If the interest rate is higher than there is no point in obtaining the loan. I would say try to pay off as much as you can for right now, to boost your scores. Once you have a better score then app for a good CC and do a BT.

Message Edited by jaybee on 01-03-2008 05:32 PM

[Anonymous]

that may be why they didn't put how much the interest rate was in the offer haha. yea there would be no point if it was 18%. I was looking to more of a 10-13%... thanks for the advice

edit- husband has no collections
I have 1 that is pending removal.

Message Edited by AlishaR on 01-03-2008 05:33 PM

[dizzier]

is this the flex line of credit offer?

[Anonymous]

Maybe you should stick with your original plan of going to a CU; they normally have lower rates and you can still add the mix of an installment instead of getting another CC.

[haulingthescoreup]

Don't take this offer --this is a consumer finance loan, and it hurts your scores. As a rule of thumb, if the lender has "finance" in their name (CitiFinancial, Wells Fargo Finance, etc.), it's a CFL.

If DH would like to add some installment to the credit mix, go visit a local credit union and ask about a personal loan. Ask them, and make sure, that it will NOT be coded as a consumer finance loan (it shouldn't be.) Not only will it help the installment mix, plus help knock down the CC debt, it will get him in with great lenders.

* * * * * * * * * *

For anyone out there getting scared about their CC balances after the holidays, a personal loan from a CU is a great way to go. You have got to take some long, hard looks at the reasons that you got in over your head though, or you will soon find yourself with a loan to pay off, and newly re-maxed out cards. Who knows, ask the CU if they have safe-deposit boxes. Rent a tiny one and stick all your cards, except maybe one in the box. That might slow you down a bit. A lot of people treat anxiety by shopping, and if part of your anxiety is due to finances, that just makes it all worse, of course.

One way to look at things: if your CC's are mostly or completely paid off, you have credit.

If your CC's are maxed out or nearly so, you don't have credit. You just have debt.

[dizzier]

your moderatorness- is this also true of the citi flex LOC?

Message Edited by dizzier on 01-04-2008 08:38 PM

[haulingthescoreup]

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@dizzier wrote:
your moderatorness- is this also true of the citi flex LOC?

Message Edited by dizzier on 01-04-2008 08:38 PM

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Hee, hee, a new title! No, I don't think it is. I assume that's the same one that pops up on my Citi online account page. The CFL's are fixed payment installment loans and come from a different branch of the organization.

Can anyone else here confirm that the Citi flex LOC, and similar LOC's, are not coded as CFL's? Also, dizzier, you can try calling Citi, although you might need to move up a few levels of CSR's to find someone who really knows the answer, or even understands the question.