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I repaired my credit several years ago with the help of these forums. Same story as everyone, DH had a bad work year and we turned to credit cards to make it. Now I have a large amount of credit card debt I need to get out from under and be debt free other than our mortgage. I do not trust myself as to make the best decision on how to handle the scenario and need the help of the financial gods in this forum once again. Also, limited options due to high utilization bringing down my credit scores. Here are the numbers and not sure which would be the best option - i.e. am I thinking it through before making a mistake!
Current Fico scores: 712, 690 & 693
Total credit card: 11
Cards with balances: 7
Total CC debt: $55,188
Creditor - Interest Rate - CC Limit - Balance - % utilization - Min. Monthly Pmt.
Chase Slate 10th | 15.99% | 7,000.00 | 4,832.24 | 0.69 | 122.00 |
US Bank | 17.99% | 7,400.00 | 6,798.31 | 0.92 | 165.00 |
L.L. Bean 4th | 18.24% | 9,550.00 | 7,842.49 | 0.82 | 200.49 |
Discover It 7th | 24.24% | 8,300.00 | 7,969.07 | 0.96 | 162.00 |
Amex 18th | 21.99% | 7,500.00 | 7,167.26 | 0.96 | 212.00 |
Lowe's 8th | 26.99% | 10,000.00 | 8,825.01 | 0.88 | 282.00 |
Discover 19th | 19.24% | 12,100.00 | 11,754.44 | 0.97 | 240.00 |
Option 1 ) Yesterday, I thought I would apply for a debt consolidation loan through Discover Card Services. I was approved for $35,000 @ 21.99% rate 60 months @ $966.46/mo. This doesn't quite cover everything so I could pay off both Discover Cards, Lowe's & Amex leaving me to still pay monthly payments towards the remaining cards - LL Bean, US Bank, Chase Slate. Also, rate is high just makes it simple having less payments to keep track of (not a big deal really)
Option 2) Debt Snowball - using $2,000 a month (this may not always be an option if DH is laid off durning winter months) payoff in 2021 total paid back 76,888 (21,787 in interest).
The only other thing I can think of possibly doing is to keep paying down and possibly take out a home equity loan at better interest rate but not sure it's possible to do that until some of this is paid off and my scores are up.
I know there is no simple answer and it takes dedication and hard work to pay it off. I'm just not sure if I should just continue debt snowball or do the discover loan and at least combine a few even if it isn't really saving that much in interest! Just looking for thoughts, advice or possibly a suggestion I'm not thinking of -
Thank you!
I do have a Chase Freedom - not sure if that matters. Zero balance $3,500 credit line. I've never had a BOA card - I could check that as well. I'm just worried about interest rates jumping because I'm searching for credit with credit pulls?
Yes, I was referring to the current cards I have going higher in interest if it looked like I was searching for more credit and my score taking hits from the hard pulls. Thats definately something I can check into , thank you for the information - I'll have to see what they tell me. It would be worth it to get rid of some of the high interest to help out with the snowball method.
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That rate kinda sucks, most of your cards have lower rates. I know balance transfers can be a bit playing with fire, but you could consider product changing your Chase slate to a freedom, then opening another slate for the 0% interest, no balance transfer fee offer. If you still have more, the bank of America americard has a similar offer with 0% interest and intro no fees on balance transfers. Each of these offers 15 months at 0%.
OP is going to have a hard time getting another card at this point, due to utilization on those 7 cards.
wrote:I repaired my credit several years ago with the help of these forums. Same story as everyone, DH had a bad work year and we turned to credit cards to make it. Now I have a large amount of credit card debt I need to get out from under and be debt free other than our mortgage. I do not trust myself as to make the best decision on how to handle the scenario and need the help of the financial gods in this forum once again. Also, limited options due to high utilization bringing down my credit scores. Here are the numbers and not sure which would be the best option - i.e. am I thinking it through before making a mistake!
Current Fico scores: 712, 690 & 693
Total credit card: 11
Cards with balances: 7
Total CC debt: $55,188
Creditor - Interest Rate - CC Limit - Balance - % utilization - Min. Monthly Pmt.
Chase Slate 10th 15.99% 7,000.00 4,832.24 0.69 122.00 US Bank 17.99% 7,400.00 6,798.31 0.92 165.00 L.L. Bean 4th 18.24% 9,550.00 7,842.49 0.82 200.49 Discover It 7th 24.24% 8,300.00 7,969.07 0.96 162.00 Amex 18th 21.99% 7,500.00 7,167.26 0.96 212.00 Lowe's 8th 26.99% 10,000.00 8,825.01 0.88 282.00 Discover 19th 19.24% 12,100.00 11,754.44 0.97 240.00
@Option 1 ) Yesterday, I thought I would apply for a debt consolidation loan through Discover Card Services. I was approved for $35,000 @ 21.99% rate 60 months @ $966.46/mo. This doesn't quite cover everything so I could pay off both Discover Cards, Lowe's & Amex leaving me to still pay monthly payments towards the remaining cards - LL Bean, US Bank, Chase Slate. Also, rate is high just makes it simple having less payments to keep track of (not a big deal really)
NO! Absolutely not! First of all you would be taking out a loan to pay off some cards that have a lower interest rate than the interest rate on your loan. And the minimum payment on those cards is only $896 so you actually end up paying more money by taking out the loan. IF you really want to take out the loan, I would only consider it for the Discover IT and the Lowe's card if the monthly payment was less than the minimum payment on those two cards.
Option 2) Debt Snowball - using $2,000 a month (this may not always be an option if DH is laid off durning winter months) payoff in 2021 total paid back 76,888 (21,787 in interest).
I personally found this Debt Reduction Calculator to be really helpful when trying to figure out a strategy for repaying my student loans. For my situation, the Avalanche method is best, but play around with it and see what works for you. You are definitely at risk for AA, so you may want to get everything at least under 89% and then start a payoff plan rather than leaving some of them so close to maxed out.
The only other thing I can think of possibly doing is to keep paying down and possibly take out a home equity loan at better interest rate but not sure it's possible to do that until some of this is paid off and my scores are up.
This might be an option to explore, but you will definitely need to pay things down before you can do anything.
I know there is no simple answer and it takes dedication and hard work to pay it off. I'm just not sure if I should just continue debt snowball or do the discover loan and at least combine a few even if it isn't really saving that much in interest! Just looking for thoughts, advice or possibly a suggestion I'm not thinking of -
Thank you!
Echo hintzmk10's advice to not take the consolidation loan (and consider the rest of her/his advice to be sound).
EQ | 841 | 5 INQ (Auto, CC, HELOC, 2 mort) | 7y2m |
EX | 812 | 5 INQ (2 CC, 2 mort, HELoan) | 6y11m |
TU | 829 | 4 INQ (3 CC, 1 mort) | 6y6m |
5/24 | 3/12 | AoYA 0m | AoOA 23y6m | ~3% |