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Discussion Starter · #1 ·
Hi everybody, would it be smarter to get a low interest rate loan and pay off all the credit cards, and cut them up, or just keep paying the credit card bill, and still cut up the cards? Any tips? Success stories? I don't have that much debt, but I'm thinking if I can get a low interest rate I should, and it would be nice to have one statement, instead of multiples.

By the way, don't worry or anything, I'm asking this mainly for my friend who somehow managed to put herself through college with less than 10,000 in debt (she worked so hard, I don't know how she managed), and the dogs have an emergnecy savings account.
 

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Well I will try to answer without causing more questions.
I used to workas a Marketing Rep. in the Marketing Dept. of an International Company. My company, Bombardier Capital, financed things for people who had less than perfect credit. They also financed there own products SeaDoos and SkiDoos. You have all heard of them.

Whatever you do do not go through one of those agency's that claims to get your credit in good shape. The reason I say this is because if you then decide to look for credit the credit consolidation's company name will be on your credit report and send a red flag to creditors. It says to them, "Oh this person gets themselves in over their head."

It also depends on how much interest you are paying on your credit cards. For example: if you have a card and you are paying 9% APR but you only owe $100 then if you move it to a card that charges 5.9% APR but boosts the months to pay off to 36 then you would end up paying more in the long run. I hope that makes since.

It is a great idea to pay the cards in full each month, that way you use their money for free for 30 days or whatever the grace period/billing period is.

If you have several cards with balances then you may be at an advantage to move them to one card if you can keep the number of months it takes to pay off to a minimum. Have you thought about one of those cards that offers cash back and 0% interest for 1 year on transferred balances? This is how it works. You transfer all of the balances to the one card. If the transferred balances is over a certain dollar amount then you get some cash.....I think about $50 depends on the rules, and then the balances (become one on one card) and there is 0% interest for one year, or whatever the terms specify on the card. You would know that going in up front.

I hope I haven't confused you even more. I do not know what your credit rating is or what kind of card you can qualify for but you probably have a good idea. You can go online and look at different cards and deals. This site will let you compare and tells you what kind of credit you will need.
http://www.creditcards.com/cash-back.php
Whatever you decide make sure there is not fee for balance transfers, no annual fee for the card, and no penalty for paying it off early, also make sure that if you do not pay the balance within the 0% period that the interest is not retroactive.

What you want is a cash back or a dividend card not a rewards card. Dividends pays you cash back for money you spend............Rewards gives you points towards stuff that not many people use because it takes a gazillion points to buy anything.

Hope this helps.
 

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I, too, have some questions about credit and debt. (I am too embarrassed
to ask my Dad what to do, he would just lecture me about responsible money handling... I want to take care of it on my own! -- or actually, with the help of non-family members -- you guys!)


I actually just recently developed credit card debt for the first time in my life... I have always paid the entire balance off every month, but lately it's been building (getting Jack and all his things, his neuter, and also of course my rent is outrageous) ... I have two cards. One has $1000 on it, with a limit of $3800, and another one that has a $3500 limit, that has $700 on it. The first card has an offer of "transferring my other balances" to its "low APR of 3.99%!" Is that a good idea? Is that even a good deal? I plan on paying off the entire debt within 6 months... What should I do?
 

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Cindysilver, I would not recommend transferring the balance on your credit card to another card...that simply prolongs the cycle of credit card debt. Instead, put the two cards away and concentrate on paying them down now. Look at your statements...see which card has the highest interest rate. Pay that card off first, making as large a payment as you can afford. Pay at least the minimum on the second card so you avoid any additional charges beyond the finance charge (late payment, underpayment, etc.) Set realistic goals for yourself...don't expect to pay off the debt in 3 months if you can only afford to make $75 payments, for example. While you are paying off the cards, keep them out of your handbag so you won't be tempted to use them. Once the cards are paid off, never ever use them to buy things like gasoline, groceries, food or entertainment. Use them only for things you can see, not things you consume. That way, you will have something to "show" for your money. And never be tempted to buy things with three easy monthly payments...or that are impulse buys. If you don't have the cash to satisfy your impulse, then don't buy it. Just think about how long it takes you to earn $1700. And did I mention, don't use the cards again until they are paid off!
 

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Another big tip guys for those of you that are worried about your credit score (and that should be everyone) Do not close your accounts, pay them off, cut them up, whatever you want, but keep them open.

This is a common good intentioned mistake alot of people make without realizing it.

One of the biggest factors looked at when your credit score is calculated is the % of your credit that you are maxed out on. Lets say you have 2 credit cards, both with 5000 limits. Both have 2500 on them. So the total you owe is 5000, but the total credit line is for 10,000. So... you owe %50 of your possible debt, Now lets say you decide to consolidate all your debt onto one card with a lower interest rate (good idea) but... you close your second account. Now.. you are maxed out... %100 5000, on a 5000 card... This looks very bad on your credit score.

Hope that helps.
 

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I agree on keeping a few cards open, but here is the other scenerio. It is bad when a person a lot of open accounts with high credit lines because creditors think.......if this person decides to max out all of the cards then they will not be able to pay. So keep your cards to the ones that will actually benefit you.
 

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Discussion Starter · #7 ·
Thanks for the advice everyone! My friend and I both had a credit card cutting party last night. We got out the cards we don't need to use and cut them up, keeping only one card each for emergencies (real ones, not imagined ones
) and even worked out budgets, we thought if we knew when the cards would be paid off, we would have something to look forward to. We're going to leave the cards open for now, and then when everythings paid off, permanently close the ones we don't use anymore. I also want to open a savings account (besides the one for the dogs) but I guess it makes more sense to pay off the card and then save.
 

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Thanks you all!! I paid half the balance on the higher-interest card, and I will pay the rest of it next month while still making minimum payments on the lower-interest card... and until then-- no more toys for Jack!!
 

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Yeah! I am so proud of both of you. I wish you both luck and in no time you will see how truly wonderful being debt free can feel.
 

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I am proud of both of you for making mature decisions.
Debt free is a wonderful feeling!
Jack won't mind is he has to wait a while for a new toy. He would rather have your attentin anyway.
 
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