Consolidating Credit Cards

[Anonymous]

My husband and I have recently been shopping around for personal loans to consolidate our credit card bills. The interest rates have all gone up to 21%-30%. Our credit scores are good (700-775) and we make $110k a year. Our debt is $14k and the 12% fixed interest rate on a PL is a lot less than the high rates on our card. Our intention is to get a 48 month loan and just  pay it down in 12. We have only been approved by two banks and both approved our PL application with the conditions that 1) they pay creditors directly (fine with me!) and  2) we close all accounts we're paying off. I have had some of these credit cards for 10 years! I know we got a little over our heads with debt, but we are trying to be responsible and pay it off (full balances-no debt negotiations). Neither bank will make us sign anything that states we can't turn around and re-open any of these accounts and all of my credit card companies have stated that I can "request to revoke my action to close account" and as long as it is in good standing (they all are-never late on payments) they may re-instate the account or we'll have to re-apply but if we have a good account it shouldn't be a problem. My question is, if we take the loan offer and "close" our accounts how long does that take to hit our credit scores and if we cannot "re-instate" our accounts within 48hrs will the closing of all these accounts ruin our credit and prevent us from getting credit cards in the near future? I know it seems silly to want to keep accounts open (some will remain closed) when we got ourselves into trouble, but we both have incomes now (i was a stay at home mom for 3 years and relied on our cards occasionally for bills) and I like the coupons/interest free incentives I get with the accounts for the kids clothes and larger purchases such as 12 months no interest on an appliance or something. Please advise as to how bad closing accounts might eb for our credit.

Thanks!!

[vanillabean]

Welcome to the forum!

I'm no expert on balance transfers, but Citi is currently promoting balance transfer offers heavily I think, so if you could get one card with a $15,000 limit or two cards with $8,000 each, that'll take care of the interest. I suspect you might get approved given your good scores. And if this works, no other changes are needed.

As for closing credit card accounts, they'll still count for the average age of accounts. But the credit limits will be gone, which is bad for your so-called utilization ratio which is total dollar amount of balances to the total dollar amount of credit limits. And bad for getting new cards.

I personally wouldn't go for the bank loans unless it's the only option.

That's just my initial take on it. Others might look at it differently.

[RobertEG]

I would not accept a personal loan that dictates to you that you must close the account once paid off.  I dont think that's the bank's business.

I have done the same in the past, and merely told my CU that is was for personal business.  That is all I would tell them.

If you are thinking about closing the account, talk to the OC first.  Many will not, when a new account is opened, transfer history from a prior card. They will just issue a new account, with new number.