Personal Loan for credit card consolidation?

[jld034]

Hi all,

I apologize if this is in the wrong section. Please move if it is.
I'm interested in cosoldiating my credit cards into one loan to help with utilization. I am trying to improve my scores as my wife and I want to buy our first house in the next 2 years. We are getting ready to move across the country. I recently sold a business and have another lined up to to get started once we move this Fall. I made some dumb decisions with my credit cards and best i can figure the high utilization is killing me.I have the cash to pay them off but really want to keep that cash as an emergency fund for the move and transition
Current scores are:
EQ: 673
Tran: 689
EXP:687
 
Credit cards are:
Chase Freedom $1884 ($2000 limit) 24.99% interest
Chase Prime $6886 ($7000 limit) 24.24 % interest
Capital One Platinum $6111 ($6300 limit) 25.15 % varible interest

My credit union (PenFed) offered me a pre-approved [personal loan. Up to $25K fixed rate at 17.99 % for up to 60 months. No origination or early pay off fees.
I looked at other debt consolidation loans and the rates were similar but with more fees.

Would this be a wise move score wise? I plan to pay this loan off (approximately $15K) over the course of 18 months. I know Im not saving much money wise but I'm hoping this will improve my score since my revolving utilization will go to $0. Thanks for any insight or advice you can provide!

[Anonymous]

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@jld034 wrote:

... Would this be a wise move score wise?

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Yes. Your scores will jump 50-75 points. Maybe more.

Others will be along to tell you they wouldn't take out a loan @17.99%, but based on YOUR scenario that you've layed out, it seems an easy decision to proceed. 

Good luck & update this thread please with your results.

[JTC-137]

Not sure you need the loan if you’re planning on paying the debt off in 18 mo and not buying a home until 24 mo. Alternately, you can pay on the cards until your move/transition is complete. If all goes well use your cash. I wouldn’t pay debt by taking on another debt (with similar APR at that) and risk running the cards back up.

But to answer your question, yes paying down your revolvers will lower your util and raise your scores. In your case it’ll be quite a decent bump.

[tcbofade]

I did this last year... it worked for me. 

[Anonymous]

The other thing that might happen is that taking the loan and paying off your revolving debt might make your score skyrocket enough that you can get a new loan at a much lower rate to pay off the 17.99% one.

Just be VERY careful not to start running those cards up again.

[CreditCuriosity]

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@Anonymous wrote:

The other thing that might happen is that taking the loan and paying off your revolving debt might make your score skyrocket enough that you can get a new loan at a much lower rate to pay off the 17.99% one.

Just be VERY careful not to start running those cards up again.

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+1 you are maxed on those 3 cards you listed.. A personal loan will indeed increase your score, but I would cut up those cards until you get a hold on your spending that caused them all to be maxed.  Personally if you have the cash I would just pay them off and save either 24.xx interest on 18kish debt per month or even at a personal loan at 17.99 which is still pretty high you would be saving alot of interest on that amount of debt.  

[RSX]

So your current monthly interest is $310 total on the $14,881 at 25%

your loan would be $223 on the $14,881 at 17.99%

if you can pay the $833/ month that you are planning on, then within 7 months you will break even on the monthly int.  $11k at 25%

so it comes down to is it worth getting a long term loan at slight lower rates and lower monthly payment, or just crushing this debt monthly at $833 

loan will be a total of $2569 interest if you make the $833 payment for 21 months

existing CC will be a total of $3926 for 23 months

I think the loan wins.  But I wouldn’t just make the minimums on it.  

[jld034]

Thank you all for the feedback. We decided to take out the loan and move the credit card debt over. 

[Anonymous]

I think its a great move as long as you dont run up your cards again ( I would recommend using only 1 and keeping it at 20 percent utilization or less) and you commit to paying more the minimum loan payment every month. Good luck on whatever you decide!