consolidating credit cards - has anyone done this?

Re: consolidating credit cards - has anyone done this?

• flyingfoxes member

  

  April 2014

  I think that sounds like a sound plan - you will have an end date to get it all paid off.  The only caveat would be - would you be able to make sure you won't charge up the credit cards again? 

  
  
  
  

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• SJM7538 member

  

  April 2014

  @gmda76 if I consolidate the debt I will cancel the cards. Maybe only keep the one with the lower balance for emergencies and make Sure we keep it in the safe and not in my wallet

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• KatWAG member

  

  April 2014

  I have never done this. But good for you for taking control of your finances. Is the problem that you are spending too much or that your current paycheck cant cover your basic needs? Obviously the first is easier to fix.

  FWIW, can you waitress or bartend on nights and weekends? You have the potential to make a lot more money than you would in retail. Plus, having done both jobs, I think waitressing is a much easier way to pass the time.

  

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• emmaaa mod

  

  April 2014

  My mom did this recently and she is very glad she did. All of her debt was consolodated and makes it less confusing to pay towards.

  Also, as for a PT job: I was awaitress for about 8 months and made great money while working FT. I made more doing that than at retail and the extra money really helps out.

  
  

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• JCbride2015 member

  

  April 2014

  Fi did this exact thing to consolidate his credit debt.  He now has a lower interest on that balance, a set amount to pay each month, and a solid end date in sight.  Unfortunately Hurricane Sandy pummeled us and he charged up another card, although not nearly as high as before.  I still think those expenses were necessary, though.  And we would have been in much worse shape after Sandy if he had been carrying all that CC debt and no room on the CC for emergencies.

  
  

  
  

  
  

  "I'm not a rude bitch.  I'm ten rude bitches in a large coat."

  
  

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• jenna8984 member

  

  April 2014

  My FI got into some debt before I met him and his way out was a personal loan. Let me tell you, they raped him so hard. His loan was 23%!!!!! He had no idea about finances before he met me and he didn't know how terrible that move was. But also, that rate is what most banks charge for something hat has no collateral. It's not being used on a car that they can repo or a home that they can repo. They are blindly giving you money because you were irresponsible with money. So not really in their best interest unless they are going to make a killing in interest. (not saying you were irresponsible, it may have been medical or funeral or whatever but banks don't care).

   I couldn't stomach him making those payments anymore and I paid it off with my cash that he is going to pay me back over time. (Honestly, we're getting married so I don't even require him to pay me back, I consider everything to be ours not mine/ yours but he insists on paying me). Anyway, I guess all this rambling is really just to say if you can really find a decent interest rate(under 8%) then I'd do it but you may have a hard time finding/qualifying for that. Also, if you get any kind of tax return definitely apply that to it each year and you'd have it paid off possibly a whole year sooner!

                                                                   

  
  

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• daria24 member

  

  April 2014

  My best friend did it and she was able to pay off her debt much faster BUT something to be aware of-your credit rating takes a MAJOR hit. So if either of you need a credit check for jobs, or to get an apartment, or a car loan, or a mortgage-I would think very carefully before doing it. It took my friend about 5 years until she had a healthy credit rating again-and then it was just "good/very good" not "excellent."

  

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• MrsMack10612 member

  

  April 2014

  We (H) has 2 credit cards that we use for all kinds of stuff.
  
  We unfortunately, had to put some wedding expenses on one of them and we put more of the honeymoon on the other than I realized.  H just sort of booked things and I didn't know he was putting so much of it on the card.
  
  What we did was a large portion of our cash wedding gifts went to the cards and then the money that we had been saving towards the wedding, went to the credit cards.  We did several spreadsheets and worked the numbers out to determine what was the best split to pay off the cards with that money. 
  
  So rather than getting a personal loan, we just redistributed money that we already had or were saving anyway.  Is this something you could do?
  
  Or as PP asked, is it that current income can't cover basic needs? 
  
  We found that by going straight from saving for wedding to paying off cc's we didn't really miss the money.  We easily had 5 figure cc debt and we will be done paying it off by July, so it will have taken us right around 1.5 years.  That includes a few major car repairs and some condo assessments we had to pay i.e. not all of it was wedding debt.  One of the cards is already done.
  

   

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• sarahufl member

  

  April 2014

  jenna8984 said:

  My FI got into some debt before I met him and his way out was a personal loan. Let me tell you, they raped him so hard. His loan was 23%!!!!! He had no idea about finances before he met me and he didn't know how terrible that move was. But also, that rate is what most banks charge for something hat has no collateral. It's not being used on a car that they can repo or a home that they can repo. They are blindly giving you money because you were irresponsible with money. So not really in their best interest unless they are going to make a killing in interest. (not saying you were irresponsible, it may have been medical or funeral or whatever but banks don't care).

   I couldn't stomach him making those payments anymore and I paid it off with my cash that he is going to pay me back over time. (Honestly, we're getting married so I don't even require him to pay me back, I consider everything to be ours not mine/ yours but he insists on paying me). Anyway, I guess all this rambling is really just to say if you can really find a decent interest rate(under 8%) then I'd do it but you may have a hard time finding/qualifying for that. Also, if you get any kind of tax return definitely apply that to it each year and you'd have it paid off possibly a whole year sooner!

  jenna8984 unrelated to finances, can people agree to not use terms like rape when discussing credit card debt? This is very inappropriate.
  

  
  

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• gmcr78 member

  

  April 2014 edited April 2014

  Do it.  I have worked in the credit card industry for 14 years and this is a sound plan.  Cancel both your cards as you said, or keep one open for emergencies and don't use it.  You can call them and ask to lower your line if you feel like you have to much exposure with a higher credit line. 
  You will be saving a lot of money in interest in the long run, and saving on monthly expenses in the short run.  Your credit report will not suffer in the long run.  Credit is always affected whenever a new account is opened/new debt is acquired, but this isn't going to be a serious issue if you aren't trying to buy a house or a car within the next 6 months or so.   It's a win-win.
  
  ETA: edited for clarity
  

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• jenna8984 member

  

  April 2014

  @sarahufl Noted. Apologies.

                                                                   

  
  

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• chkmeowt member

  

  April 2014

  I also had some issues with credit cards. What I did was enroll in a Debt Management Plan. You should check into financial counseling through your credit union and see if there may be something similar. What they do is consolidate the debt, negotiate a lower rate and become your lender. 

  
  

  Good luck!  I'm 2 years away from being CC debt free.

  
  

  

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• CMGragain member

  

  April 2014 edited April 2014

  Get the lower interest rate loan and pay off your credit cards.  Then put your credit cards in a plastic bag, fill with water, and put them in your freezer.  Do not use them unless you have a true emergency (medical)
  Put about 6 to 10% of your joint net income into a savings account, or better yet, credit union.  Budget your money and stick to that budget.  After you have paid off your personal loan, you can unfreeze your cards.  Never charge anything that you cannot pay for at the end of the billing cycle!  Never!
  Canceling credit cards can actually hurt your credit rating, so don't do that until you talk to a financial adviser.  You might just want to buy a house someday.
  I do hope you aren't planning an expensive wedding with this credit card debt on your back.
  
  "Use it up, wear it out,
  Make it do or do without!"
  

  

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• theartistformerlyknownas member

  

  April 2014

  I did this about 2 years ago and it's going great so far. Couple points though:

  
  

  1 - DO NOT cancel your other cards! Cut them up so you aren't tempted to use them, but leave the lines open. It's good for your overall credit to have credit available to you which you are not using - helps your overall debt-to-credit ratio.

  2 - My consolidation loan was with a credit union, which required me to set up a savings account with them in tandem with the loan. So what I did was set up direct deposit to take a % of every paycheck to go directly to that account, and then the loan would autopay from that account each month. I deposit more than what's needed for the payment, so each month or two I log-in and make an additional big payment with the excess. Nothing to keep up with, no temptation to spend that extra money on other things because it's already at the CU (and hard to otherwise access).

  3 - This wasn't a huge blow to my credit. I got a new car last year without issue.

  4 - Make sure it's not a variable/adjustable APR!

  
  

  Good luck!

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• ElcaB member

  

  April 2014

  The only credit card I own is a for-emergencies-only credit card I've never used, so I can't give you much advice. 

  
  

  The best advice I can give you for information like this is to read Dave Ramsey's books. I believe they explore this very topic, among many others that are incredibly useful. 

  

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• CMGragain member

  

  April 2014 edited April 2014

  ElcaB said:

  The only credit card I own is a for-emergencies-only credit card I've never used, so I can't give you much advice. 

  
  

  The best advice I can give you for information like this is to read Dave Ramsey's books. I believe they explore this very topic, among many others that are incredibly useful. 

  If neither you nor your FI/DH has ever actually used a credit card, you may find that you will have trouble qualifying for a mortgage when you want to buy a home.  My son-in-law found this out the hard way.  He always paid cash, and had a great job and $50,000 in the bank.   He was turned down for a mortgage loan from every source he tried because he had not established credit history.
  It is OK to use your credit card, but pay it off at the end of each billing cycle.  That will solve any future problems with your credit rating.
  

  

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• AprilH81 member

  

  April 2014

  I echo the PP about NOT cancelling the credit cards, especially if you have had them several years.  Part of your credit score is your debt to credit ratio (so not having a balance on these cards will help).  Another part is length of your credit history/lines of credit.  If you cancel cards you have had open for a long time your available history drops and your debt to credit ratio drops and it is a double whammy.

  Cut them up, freeze them in ice, put them in a safe deposit box, do whatever it takes to make sure you don't use them on a whim and then leave them alone.

  Every few months use them to buy a tank of gas or something small and immediately pay it off.  That will keep the card active and the timely payment will also help maintain your credit score (or increase it if you have any issues with late payments).

  

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• pinkshorts27 member

  

  April 2014

  CMGragain said:

  ElcaB said:

  The only credit card I own is a for-emergencies-only credit card I've never used, so I can't give you much advice. 

  
  

  The best advice I can give you for information like this is to read Dave Ramsey's books. I believe they explore this very topic, among many others that are incredibly useful. 

  If neither you nor your FI/DH has ever actually used a credit card, you may find that you will have trouble qualifying for a mortgage when you want to buy a home.  My son-in-law found this out the hard way.  He always paid cash, and had a great job and $50,000 in the bank.   He was turned down for a mortgage loan from every source he tried because he had not established credit history.
  It is OK to use your credit card, but pay it off at the end of each billing cycle.  That will solve any future problems with your credit rating.
  

  This. I use my credit card for everything due to the protection (easy to challenge a charge, and my credit card company texts me anytime I use it) and to build credit. But I never ever ever charge anything that isn't in my bank account. I never assume I'll have the money later and I never assume I'll pay next month. I also save 10 percent of what I own (while I'm in school and have no money). During the summer when I'm making money I save 30-50 percent because I am accident prone (medically) and will be facing loans when I get married in December. 

  
  

  

  
  

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• Sugargirl1019 member

  

  April 2014

  Don't cancel the cards! Just cut them up. When you cut back on how much credit you used, let's call it 100 outstanding credit, and now you only use 10% of it, it looks so good that you don't need all of what you are given.
  
  It will hurt you if you cancel them.

        
  

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• ktjanesmom member

  

  April 2014

  I understand what everyone is saying regarding not canceling the accounts.  But trust me, if you do not close the account you will use them and end up with credit card debt on top of your personal loan and you will never get them paid off.  What if you lower the limits on them so you can't charge them up so  high?
  

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• gmcr78 member

  

  April 2014

  Absolutely have them lower your lines if you feel like it's too much exposure for you and you won't be able to keep from charging them up.  All it takes is a phone call.
  

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• theartistformerlyknownas member

  

  April 2014

  Who's to judge anyone else's level of self-control? Just cut them up. Your credit score is far too valuable to jeopardize, and you obviously value your financial future or you wouldn't be asking for advice.

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