Help - best way to handle large credit card debt paydown ?!?!

[Kree]

Potential option that is risky,

Take out a loan for the two Discover Balances.  Once they are paid off, request CLIs.  Then use discover's 15 month 3% balance transfers to pay off the loan and any other card you can. Thus consolidating much of your debt at a low APR with discover.

Benefits:  Discover isn't scared of high UTI and gives big CLIs very frequently.

Malafits: If you don't get the CLIs you paid 3% or whatever the origination fee is for nothing.  (although I guess the lower apr is good still)   Risk of AA when cards paid down (less likely with discover) Discover might stop offering you balance transfers before you have the chance.  Also doublecheck that discover would allow a balance transfer to pay a discover loan, I know they will for outside loans, but I don't know about inside ones.

[raine22]

 Also doublecheck that discover would allow a balance transfer to pay a discover loan, I know they will for outside loans, but I don't know about inside ones.

They will let you utilize the loan to payoff discover cards but they have to directly send the money to your bank account and you proces the payoff.  I'm just not sure about taking a loan out and then going back and covering it with credit card transfers to Discover.  I guess I never thought about it like that ....

What is AA?  It's been awhile since I've been in the forums and I'm not sure what that means 100%.

That is a good idea to take the loan for the two cards, but seems it would make sense to include Lowe's with the high interest in that as well?  Therefore, paying off 3 of the accounts and then could use the balance transfers which I get all the time to allow more time with less interest paying off the rest either in debt snowball or avalanche.

[raine22]

Thank you for the debt reduction calculator, I'm going to check it out!

[Kree]

AA= Adverse action.  Something like lowering limit or closing account.

The reason I suggest just discover, is that the goal is to be able to balance transfer the loan back to 0% credit cards offers.   If your loan is for more than your discover and discover CLIs then this wouldn't work.

[raine22]

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wrote:

AA= Adverse action.  Something like lowering limit or closing account.

The reason I suggest just discover, is that the goal is to be able to balance transfer the loan back to 0% credit cards offers.   If your loan is for more than your discover and discover CLIs then this wouldn't work.

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Oh I understand what your saying now, that makes sense.  TY for explaining the AA to me!! 

I believe the one thing that has helped me is my cards balances are reducing and I've never missed a payment.  TY for your advice!

[UncleB]

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@raine22 wrote:

What is AA?  It's been awhile since I've been in the forums and I'm not sure what that means 100%.

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Hi @raine22, this might help:  http://ficoforums.myfico.com/t5/User-Guidelines-General/Common-Abbreviations/td-p/88458

--UB 

[Anonymous]

Wow, by the end of that loan you will have paid 35k PLUS 22k in interest!!

DO NOT DO THAT.

However, exploring other loan options is a great idea!

Are you able to return any of the purchases? Sell on ebay.. etc

Have you called any of the banks and asked for a reduced APR while youre dealing with you debt hardship?

A lot of those banks especially discover will reduce rates to help you out.

Just be honest and explain your financial goals and most will be more than willing to help.

Unfortunately, no bank is going to open up another line of credit to you with the roughly 90% overall utilization.

I recommend finding a side gig to help pay that off. 55k is a lot to handle. Especially if all you can throw at is 2k a month.

That is certainly a big challenge but I feel you will succeed as you are here reaching out for advice!! Youre going in the right direction!

Best wishes to you!

[NRB525]

OP, it is a tough spot to be in with high utilization and high interest rates. I was fortunate that my high balances were nearly all on low APR long term offers. I think the first thing you need to do is try to get some reduced interest rates. If I am calculating correctly, you are paying about $950 per month in interest charges on the balances as is. That is an incredibly strong headwind, preventing you from making much progress.

I would recommend taking the Discover loan, because it will allow you to get funds off of several of the cards such as Slate, US Bank, and if they let you, pay off at least one of the Discover cards. Do not pay off the LL Bean, AMEX, or the Lowes card with the Discover loan, because these cards won't let you balance transfer to the cards.

Once Slate, US Bank and Discover are cleared to zero, you can take advantage of the lower APR, or low balance transfer fee, options, to move amounts off of the LL Bean, AMEX and Lowes card. Getting some balances to lower APR allows you to put relatively more money toward principal.

What card are you using for daily spend? If it is one of these cards with high APR, you are just piling on more interest charges. Get one of the cards to zero or use a debit card for regular daily spend.

Have you called Discover (maybe after the Discover loan) to see if they can give you 12 months 0% APR on purchases on one of the cards? Combine this with the balance transfer and it can make that card easier to work with, simpler to pay off.

Keep paying heavily on those cards that allow BT, so that you can kill those balances before the low APR expires, then move more off of the remaining higher APR balances. This journey will not be easy, but if you commit to it, it can be done.

[Anonymous]

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@NRB525wrote:

OP, it is a tough spot to be in with high utilization and high interest rates. I was fortunate that my high balances were nearly all on low APR long term offers. I think the first thing you need to do is try to get some reduced interest rates. If I am calculating correctly, you are paying about $950 per month in interest charges on the balances as is. That is an incredibly strong headwind, preventing you from making much progress.

I would recommend taking the Discover loan, because it will allow you to get funds off of several of the cards such as Slate, US Bank, and if they let you, pay off at least one of the Discover cards. Do not pay off the LL Bean, AMEX, or the Lowes card with the Discover loan, because these cards won't let you balance transfer to the cards.

Once Slate, US Bank and Discover are cleared to zero, you can take advantage of the lower APR, or low balance transfer fee, options, to move amounts off of the LL Bean, AMEX and Lowes card. Getting some balances to lower APR allows you to put relatively more money toward principal.

What card are you using for daily spend? If it is one of these cards with high APR, you are just piling on more interest charges. Get one of the cards to zero or use a debit card for regular daily spend.

Have you called Discover (maybe after the Discover loan) to see if they can give you 12 months 0% APR on purchases on one of the cards? Combine this with the balance transfer and it can make that card easier to work with, simpler to pay off.

Keep paying heavily on those cards that allow BT, so that you can kill those balances before the low APR expires, then move more off of the remaining higher APR balances. This journey will not be easy, but if you commit to it, it can be done.

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By not paying off LL Bean, AMEX, and Lowes, and then transferring them to freshly paid cards (from the loan), you've effectively spent the same amount of money but then incurred the cost of the BT fees to get the lower APR. Paying off the higher APR cards with the loan does the same thing without BT fees.

OP- There's no need to take the full $35k of the loan, so taking $24k to cover the three cards with APR's equal to or above the loans APR would help save the overall cost on both the higher APR and the overall loan payment. I wouldn't use that money for any of the cards with lower APRs. From there I would make as realistic of a budget as possible and throw as much money at the open cards/loan as reasonably possible in whatever manner you feel would be the most motivational for you. 

I would caution the use of a home equity loan if you think there's any possibility of having another work issue and becoming delinquent in the future, for obvious reasons. With that being said, you seem to have the ability to pay and the right mentality/discipline to make it work otherwise. Good luck in whatever approach you take.

[raine22]

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@Anonymouswrote:

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@NRB525wrote:

OP, it is a tough spot to be in with high utilization and high interest rates. I was fortunate that my high balances were nearly all on low APR long term offers. I think the first thing you need to do is try to get some reduced interest rates. If I am calculating correctly, you are paying about $950 per month in interest charges on the balances as is. That is an incredibly strong headwind, preventing you from making much progress.

I would recommend taking the Discover loan, because it will allow you to get funds off of several of the cards such as Slate, US Bank, and if they let you, pay off at least one of the Discover cards. Do not pay off the LL Bean, AMEX, or the Lowes card with the Discover loan, because these cards won't let you balance transfer to the cards.

Once Slate, US Bank and Discover are cleared to zero, you can take advantage of the lower APR, or low balance transfer fee, options, to move amounts off of the LL Bean, AMEX and Lowes card. Getting some balances to lower APR allows you to put relatively more money toward principal.

What card are you using for daily spend? If it is one of these cards with high APR, you are just piling on more interest charges. Get one of the cards to zero or use a debit card for regular daily spend.

Have you called Discover (maybe after the Discover loan) to see if they can give you 12 months 0% APR on purchases on one of the cards? Combine this with the balance transfer and it can make that card easier to work with, simpler to pay off.

Keep paying heavily on those cards that allow BT, so that you can kill those balances before the low APR expires, then move more off of the remaining higher APR balances. This journey will not be easy, but if you commit to it, it can be done.

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By not paying off LL Bean, AMEX, and Lowes, and then transferring them to freshly paid cards (from the loan), you've effectively spent the same amount of money but then incurred the cost of the BT fees to get the lower APR. Paying off the higher APR cards with the loan does the same thing without BT fees.

OP- There's no need to take the full $35k of the loan, so taking $24k to cover the three cards with APR's equal to or above the loans APR would help save the overall cost on both the higher APR and the overall loan payment. I wouldn't use that money for any of the cards with lower APRs. From there I would make as realistic of a budget as possible and throw as much money at the open cards/loan as reasonably possible in whatever manner you feel would be the most motivational for you. 

I would caution the use of a home equity loan if you think there's any possibility of having another work issue and becoming delinquent in the future, for obvious reasons. With that being said, you seem to have the ability to pay and the right mentality/discipline to make it work otherwise. Good luck in whatever approach you take.

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So, this does make sense to me in order to save some money on interest as well as getting the debt paid off.

@1) Take out the discover loan for $25,000 in order to pay the cards that have equal/higher interest than the loan which would be these three @ $2,308 and apply the remaining $690.00 plus some towards the Discover Card to get it out of 90%+ utilization.  

Lowe's 8th	8th	26.99%	10,000.00	9,008.04	0.88	282.00
Amex 18th	13th	21.99%	7,500.00	7,000.00	0.93	212.00
Discover It 7th	4th	24.24%	8,300.00	7,969.07	0.96	162.00

2)  Do the debt snowball/avalanche with the remaining 4 cards paying as much as possible in order to pay them off quickly.  There will be months now through late fall/winter that I will be able to pay much more than $2,000 monthly while DH is working and sometmes gets laid off during winter months for a couple of months.  OR - if at all possible do a BT in furure if it makes sense with a better rate.

Chase Slate  10th	7th	15.99%	7,000.00	4,832.24	0.69	122.00
US Bank	1st	17.99%	7,400.00	6,500.00	0.88	165.00
L.L. Bean 4th	1st	18.24%	9,550.00	7,842.49	0.82	200.49
Discover 19th	14th	19.24%	12,100.00	11,754.44	0.97	240.00

I pay for daily expenses with my debit card.  If I do use a card for cash back i.e. cell phone, utilities I pay those back in full each month as to not incur anymore credit card debt.

This seems to be the best way after reviewing all the comments.  Thank you to everyone that took the time to read and respond with advice, I appreciate it so much.