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Is it worth it to use a consolidation loan to pay off mounting credit card debt?
April 7th, 2009 | 
Author: I am thinking of applying for a consolidation loan to pay of my credit card debt. I owe much more than I can pay even though I have a full time job with a fair income. Has anyone out there dealt with a consolidation loan? Did it help you or not?
Please note-I am not asking for people to write in ads for their own credit counselling services, I have asked this question previously here and all I got was ads masked as answers. I am looking for an honest testimony of someone who is/was in a similar situation to mine if there is anyone out there wiling to share. Thank you.
I was in your situation in 1996. I took out a fixed rate loan in order to pay off about $15000 in credit card debt, a home equity loan against my (overly huge) house – not a line of credit, but a fixed rate loan with a 10-year term.
Within three years my ex-wife and I had run up all our credit cards again, and still owed over $8000 on the loan. Had we not made that mistake as many people do, the fixed rate loan would have saved us thousands. It took another three years to dig myself out of my half of that hole, and the second time I did it the hard way – lived in a trailer for the first four years of my second marriage.
Caution: Make sure you use a legitimate bank or financial service, there are a few fraudsters out there who would charge you huge fees or even just steal your money – but you seem to be a fairly wary consumer.
Now I’m going to plug an author – David Bach. He writes “The Automatic Millionaire” and “Smart Couples Finish Rich.” I’ve talked to several people who also liked Dave Ramsey’s books. The first one I mentioned is an easy read and not at all judgmental. The second is more comprehensive when you are ready for that.
Bottom line: A fixed rate consolidation loan can save you lots of money, but only if you change the habits that got you there in the first place.
Posted in Credit Card Debt Services
A consolidation loan can be a very useful tool, but only if it is managed properly. I got a consolidation loan earlier this year, and it has really helped in that I now have lower monthly payments. However, the only way a consolidation loan will be successful is if you cut up your credit cards. If you get the loan, pay off your credit cards and then begin using your credit cards again, you’ll be in even worse trouble. You have to cut up those credit cards.
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I was in your situation in 1996. I took out a fixed rate loan in order to pay off about $15000 in credit card debt, a home equity loan against my (overly huge) house – not a line of credit, but a fixed rate loan with a 10-year term.
Within three years my ex-wife and I had run up all our credit cards again, and still owed over $8000 on the loan. Had we not made that mistake as many people do, the fixed rate loan would have saved us thousands. It took another three years to dig myself out of my half of that hole, and the second time I did it the hard way – lived in a trailer for the first four years of my second marriage.
Caution: Make sure you use a legitimate bank or financial service, there are a few fraudsters out there who would charge you huge fees or even just steal your money – but you seem to be a fairly wary consumer.
Now I’m going to plug an author – David Bach. He writes “The Automatic Millionaire” and “Smart Couples Finish Rich.” I’ve talked to several people who also liked Dave Ramsey’s books. The first one I mentioned is an easy read and not at all judgmental. The second is more comprehensive when you are ready for that.
Bottom line: A fixed rate consolidation loan can save you lots of money, but only if you change the habits that got you there in the first place.
References :
http://www.finishrich.com
Sure, if you get a better interest rate than you’re currently paying. And that’s generally the case – credit card interest rates can get outrageous.
I haven’t been in the situation myself, but I’ve had at least a dozen clients who took on such loans successfully.
Cutting up the cards is a good idea – one I’ve recommended. I recently read (I think here) another smart suggestion. Put them in a glass of water and freeze them in your freezer. You can thaw them out in case of emergency but you won’t be able to use them on a whim at the mall.
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honest testimony;
I found myself in a world of credit cards, maxed out, and paying on minimum payments. I called all the card company’s and told them I was having hardship, and could not pay for the cards, I asked them if they could lower the interest rate, so I would be able to pay more on the balance, and I found that all my credit card company gave me a six month interest free, and other card company gave me lower interest rates. Try that first, and be sure to give them some story of your hardship in your financial life. Most card companies will work with you.
good luck.
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Don’t know if you’re in Canada or US but from what I’ve heard in Canada consolidating is basically the same as bancruptcy and it puts R9s on your credit report. I don’t know how the american system works but if you can possibly get approved for a line of credit at your bank with a lower interest rate I would definately try that first. R9s don’t go away for 7 yrs. whether they are from consolidation loans or bancruptcy.
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Credit Counseling Service really help me a lot, according to my experience Credit counseling is a very common form of online debt consolidation. It is also known as credit card consolidation. A credit counseling company will be able to lower your monthly payments by getting interest rate concessions from your creditors by contacting them and negotiating for lower interest rate on your behalf.
There are many on-line sources who provide credit counseling services for people have any credit situation, for your reference http://www.ezconsolidation.com my one of friend had recently consolidated his loan from there with bad credit and also with minimum rate of interest, you can try this source may this could help you.
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