Paying off high interest Credit Card debt

[sjg]

Hi there. Please help! I accumulated about $30k of high-interest credit card debt unexpectedly about a year ago due to a major family emergency. It's over 3 cards ($20k chase freedom unlimited, $5k chase sapphire, $5k capital one quicksilver) with 22-25% interest rate. We've finally landed on our feet and I've just been making the minimum payments the past year, about $1500 month. I am ready to tackle this high interest debt. I had excellent credit (>750) but it has fallen a bit due to my credit usage, still good though because I have no other bad debt. I've been bombared with offers in the mail but I'm worried some are predatory. Should I do a balance transfer? I e gotten several mailers from Citibank. Can I transfer more than one debt to a new card or should I just transfer the $20k debt and start there? I got a preapproval letter for a personal loan at 5.89% from DC loans. I never considered a personal loan over a balance transfer. Should I? It doesn't have a term listed for the 5.89% on the mailer. Is this a reputable company? If I should consider a personal loan is it worth shopping around with a few different companies like you would a car loan?

Please help me know what I need to be asking myself to get out of this debt. How to make a plan. And which method to use for my specific situation. At 25% interest I'll never get out. Thank you!!

[JoeRockhead]

The problem most people who are heavily in debt run into when trying to do a BT to a new card is more often than not, the card (if they can get an approval) comes with a completely useless limit. I see no realistic way you getting approved for a Citi card (or any other card) anywhere close to $20k. Your best bet, if you can't aggressively pay down your existing cards is to stop using them any more than what you can afford to PIF every month, and shop around for a low interest personal loan to pay off the existing high interest revolving debt. If you're a member in a CU, I'd start there.   

[ptatohed]

Stop using your credit cards.  Debit, cash, checks only.  Get the rates down by any means necessary.  This can be with your current cardholders (courtesy rate reduction, hardship program, etc.) or via balance transfers, personal loan, HELOC, etc.  Get those rates down.  Then make the minimum payment on the lowest rate cards/loans while sending the minimum + extra to the highest rate debt.  When the highest rate is paid off, move on to the next highest rate debt.  Don't worry about your credit scores now, concentrate on getting out of debt, your scores will rebound later.  Good luck.  

[Kforce]

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@JoeRockhead wrote:

The problem most people who are heavily in debt run into when trying to do a BT to a new card is more often than not, the card (if they can get an approval) comes with a completely useless limit. I see no realistic way you getting approved for a Citi card (or any other card) anywhere close to $20k. Your best bet, if you can't aggressively pay down your existing cards is to stop using them any more than what you can afford to PIF every month, and shop around for a low interest personal loan to pay off the existing high interest revolving debt. If you're a member in a CU, I'd start there.   

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^^^^ This

Two advantages of personal loan are that the term can be much longer than BT cards and

you ar not shopping for new BT offers every 12 months, for years.

BT's can save more money, however with high debt and it being a year old,

unlikely to get enough CL to be of value.

With 25% interest on 30k, $1500/mo will pay it off in 26 months, so it is not  "never".

If you cut you budget 1/2 of the $600/mo interest and add that to payments it could be

paid off in 21 months.

As little as a few hundred will/can start the ball rolling in the correct direction.

Pay things down for 3-6 months and then go shopping for a loan to attack the rest.

Good Luck

[Windchill92]

Yep like @ptatohed mentioned the avalanche method will be your best bet...sounds like you have enough monthly funds to attack the highest APR card while still making minimum on others.

Remember, credit cards aren't free money and you're still financially liable. Treat it like cash or a debit card. Your biggest hurdle is learning this.

[RickNATL]

I eliminate high interest rates cards with BTs (3%-5% fee), with 12-15 months at 0%, and one at 2.99%. 

You can apply for new cards that offer BTs options, personal loan (but most are hitting at 13% or more), take out equity/HELOC, etc. I would move the smaller balances onto one card for 0% if possible, and the $20K to another if you have one that can handle the limit. I've also used PLOCs to float b/c their rates were 10% to 14.5% but it was last resort. I sought out BTs with the lowest fees first.  

Have you shopped any BTs cards lately to at least lower your utilization but allow for 0% transfers?

[Gregory1776]

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@JoeRockhead wrote:

The problem most people who are heavily in debt run into when trying to do a BT to a new card is more often than not, the card (if they can get an approval) comes with a completely useless limit. I see no realistic way you getting approved for a Citi card (or any other card) anywhere close to $20k. Your best bet, if you can't aggressively pay down your existing cards is to stop using them any more than what you can afford to PIF every month, and shop around for a low interest personal loan to pay off the existing high interest revolving debt. If you're a member in a CU, I'd start there.   

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I'll have to second this. Citi is pissing me off, I had a large utilization on a card, needed to pay it down and am quite quickly, but they opened my account and gave me a ridiculous limit. They're being difficult on getting a CLI. I have 5 statements now and don't think they give me anything until after a 6th, and considering I'm not throwing much at the remaining 8k until I PIF in August I don't think they're going to care about helping me with my utilization. 9.1K limit. 

[sjg]

I haven't used the cards in a few months and don't plan to until they are all PIF. I have my auto loan through a CU so I think I will try for a personal loan through there. I think you are right about the CL of a new citi card not being enough to handle the balance transfers, I didn't even think of that. Thank you for the advice! 

[sjg]

I haven't used the card in a few months and don't plan to until they are PIG. I tried calling Chase to see if they offer any sort of hardship programs/one time rate reduction and didn't get anywhere. Since the interest rates are just about as equally high on all 3 cards I think a personal loan/balance transfers with a lower interest rate may be my best bet to get out from under the 22-25% on all three. Thank you for the advice!

[sjg]

Yes I've received several letters in the mail from Citibank for 0% balance transfers for 18-21 months with $0 annual fee. Just not sure what sort of CL I'd get approved for.