Get a personal loan to pay cards off??

[DH1988]

Hi everybody, 

I'm trying to help my little sister establish & learn about credit. She currently has 2 cap 1 platinums that are maxed out. ($300 & $500 ) She also has a $300 Victorias Secret card w/ $113 balance. We locked her cards yesterday to focus on paying them down. 

She was pre-approved for a 20% APR  prosper loan for $2000. I was thinking we should accept the loan to pay off her balances and to diversify her profile. Would you take out the loan at this point or just make a plan to pay the cards off?  The loan is 3 years, fixed so I'm wondering if it's a better idea to just to open a savings account and save an extra $20 - $25 a week to put as an extra payment towards the balances. 

The goal is to pay these cards off, upgrade one to the quicksilver then eventually apply for the Apple & Uber card.

Thanks for your thoughts! 

[Anonymous]

I would skip the loan and the savings account, and direct money from checking to paying off the credit cards as quickly as possible. She can open a savings as well, but I would only use that for actual savings as opposed to a parking spot for pay off money. Also, I would hold off on opening any additional cards until she has really grasped the concept of credit cards, PIF, budgeting etc. that I'm sure you are teaching her. You dont want her to find herself in a bigger hole by adding a larger shovel before she has mastered the smaller one.

[DH1988]

I agree with you, thank you!!