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Getting a loan to payoff credit card debt
Posted on 10/9/17 at 11:10 am
Posted on 10/9/17 at 11:10 am
By the summer of next year, 3 credit cards that have significant balances on them will start accruing interest. Since I'm saving for my wedding, I'm not paying as much on them as I should. We already pushed back the wedding once and can't do it again. The interest rate on my cards are between 14-17%. According to Credit Karma, I can get a loan from SoFi with about 10-11% interest. The pros I can see are that all my balances will be on one account with a smaller payment and it will clear my credit card balances, which will help my credit score. Are there any cons to this?
5
Posted on 10/9/17 at 11:14 am to Red5LSU
quote:
The pros I can see are that all my balances will be on one account with a smaller payment
true
quote:
and it will clear my credit card balances
no. it will transfer your balances. nothing will be cleared.
quote:
which will help my credit score.
no. you will get dinged for taking out new credit, although it will probably be offset over time for the % of debt utilized going down.
quote:
Are there any cons to this?
you aren't actually making any progress in paying down your debt.
Posted on 10/9/17 at 11:15 am to Red5LSU
I acknowledge up front that I'm being pedantic, but have you considered that spending a ton of money on a wedding when you're drowning in credit card debt isn't the best of ideas?
Posted on 10/9/17 at 11:23 am to Joshjrn
quote:
I acknowledge up front that I'm being pedantic, but have you considered that spending a ton of money on a wedding when you're drowning in credit card debt isn't the best of ideas?
Holy shite this!!!!!
If you can't afford a wedding due to debt and you can't convince your wife that going to the JoP right now is what's best then your marriage is going to be in for one hell of a rocky road.
One of the best things you can do personally before going into a marriage is making sure your debt is either zero or accounted for.
Anyways, why would you use SoFi to do a balance transfer when there are 0% BT cards out there for 18-24 months?
Posted on 10/9/17 at 11:29 am to ATLdawg25
quote:
you will get dinged for taking out new credit, although it will probably be offset over time for the % of debt utilized going down.
That's what I was thinking would happen.
quote:
you aren't actually making any progress in paying down your debt
Initially, yes, but after time and saving some money, I would be paying more into the loan and I will pay less in interest than if I left the balances on the credit cards.
I probably should have told you my plan for paying off the debt. Basically, pay the loan's monthly payment and save some money for a year and then the next year double the loan payment and reduce my savings. This way, I can create a little nest egg and then focus on paying the debt.
Posted on 10/9/17 at 11:39 am to Red5LSU
If your goal is to avoid paying interest, why would you save cash and only pay minimum on the cards? Just pay towards the debt.
It's not a nest egg if it's owed to someone else.
It's not a nest egg if it's owed to someone else.
Posted on 10/9/17 at 11:47 am to Joshjrn
quote:
I acknowledge up front that I'm being pedantic, but have you considered that spending a ton of money on a wedding when you're drowning in credit card debt isn't the best of ideas?
Because we already put a deposits down on the venue, photographer, and videographer, which are all non-refundable. Also, the reason I'm in this situation is because I lost my job earlier this year and had to move for my new job. We were able to reschedule everything, but got very luck they all had dates open on one single day. It sucks, but it's the situation I'm in.
Posted on 10/9/17 at 11:57 am to ATLdawg25
quote:
If your goal is to avoid paying interest, why would you save cash and only pay minimum on the cards?
As much as I want to pay off the cards, I will still need an emergency fund. In the past, I wasn't cautious enough with my spending habits and I'm paying for my mistakes now, literally. Shite happens and I need to be prepared for it.
Posted on 10/9/17 at 12:03 pm to Red5LSU
You have the cards for an emergency though...?
In my experience, you're more likely to spend if you have large "nest egg". Just pay it towards the cards dude.
In my experience, you're more likely to spend if you have large "nest egg". Just pay it towards the cards dude.
Posted on 10/9/17 at 12:35 pm to Red5LSU
quote:
As much as I want to pay off the cards, I will still need an emergency fund.
Pay them down anyway. If an emergency comes up you can charge it.
Posted on 10/9/17 at 1:14 pm to Red5LSU
quote:Why??
for my wedding, I'm not paying as much on them as I should. We already pushed back the wedding once and can't do it again
Honest question. I fear the answer is that the wife to be just isn't having it.
Posted on 10/9/17 at 1:17 pm to Red5LSU
quote:Nevermind to my above post, you put yourself in a bad situation.
Because we already put a deposits down on the venue, photographer, and videographer, which are all non-refundable. Also, the reason I'm in this situation is because I lost my job earlier this year and had to move for my new job. We were able to reschedule everything, but got very luck they all had dates open on one single day. It sucks, but it's the situation I'm in.
I don't think getting a loan to pay off credit cards is really ever a good idea. You're just moving the debt to another place and if an emergency pops up, you'll likely compound the issue by burning through the cards again.
Posted on 10/9/17 at 8:06 pm to Red5LSU
You can have a nice reception without spending a fortune. For example, rent a venue where you bring your own food and some of her friends can do the catering. You can stock the beer and liquor yourselves (note that if alcohol is served the venue might require you to hire extra security). One of you likely has a friend who's a DJ. That can be the wedding present from him.
Posted on 10/9/17 at 10:59 pm to shel311
quote:
I don't think getting a loan to pay off credit cards is really ever a good idea. You're just moving the debt to another place and if an emergency pops up, you'll likely compound the issue by burning through the cards again.
All of this. I did this exact thing at the beginning of the year and then my wife was involved in a hit and run car accident where the other driver drove off and totalled our car. After this emergency incident - we were back to about $4,000 in credit card debt we still haven't payed off. The loan is a good idea in theory because you will have one payment and a lower interest rate. But the real problem is you are spending more for a wedding than you can afford (I did the same thing two and a half years ago so I'm not coming from a place of judgement). You and your wife will still want nice things for the wedding and beyond because that is the standard you are setting for yourself. And without making the sacrifice to pay down the debt, it will be easier to add fuel to the fire when you have an emergency come up.
From experience in a very similar situation, I would recommend you don't do this and just continue to pay down the debt with as much as you can reasonably afford. Don't just make minimum payments and start paying with your debit card for as much as you can afford.
Posted on 10/10/17 at 8:46 am to tlsu15
Thanks for the advice tlsu15. I'm just freaking out a little because my fiancee hasn't found a job since we had to move. She's applied everywhere and has been on several interviews. She has an interview Thursday, so fingers crossed. I guess I was just thinking of the worst case scenario where she never finds a job and I'm stuck with paying for everything.
Posted on 10/10/17 at 10:52 am to Red5LSU
Do you mind sharing how much your loan amount is and how much per month you can pay towards it? Also, how much in wedding expenses are you still needing to pay?
Based on the above info, maybe there is a way to move debt to new accounts where you have to pay no interest for a couple of years.
But FYI: You need to be very careful with that strategy because this is just kicking the can down the road, albeit a much smaller can. If you are meticulous, responsible and have an astute plan, you can have both things (wedding and pay off debt) and bail yourself out of this un-ideal situation this time.
ETA: If you don't want to share specific amounts, then some rough figures for this plan to work would be - $20-$25k in total expenses and you need to be able to pay between $1,500-$2,000 a month towards it.
Based on the above info, maybe there is a way to move debt to new accounts where you have to pay no interest for a couple of years.
But FYI: You need to be very careful with that strategy because this is just kicking the can down the road, albeit a much smaller can. If you are meticulous, responsible and have an astute plan, you can have both things (wedding and pay off debt) and bail yourself out of this un-ideal situation this time.
ETA: If you don't want to share specific amounts, then some rough figures for this plan to work would be - $20-$25k in total expenses and you need to be able to pay between $1,500-$2,000 a month towards it.
This post was edited on 10/10/17 at 10:54 am
Posted on 10/10/17 at 8:47 pm to Red5LSU
Honest to goodness, you sound like an excellent candidate for at studying some dave ramsey. Your situation is fixable, but you’ll need to hate debt more than you love stuff.
Posted on 10/17/17 at 7:09 am to AUjim
I totally agree. You need to check out Dave Ramsey and the baby steps. You will have that debt paid down in no time if you follow his process. It is very simple.
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