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Started By
Message
Can someone explain this? Credit Card Consolidation.
Posted on 2/2/12 at 4:37 pm
Posted on 2/2/12 at 4:37 pm
Coworker of mine has some CC debt around 10k. She's making timely payments and I told her she should consolidate them into a signature loan.
She talks to her credit union and was denied because she has a high revolving credit. The payments on the signature loan would be below her minimums on the credit cards. Someone explain this to me? She's reducing her monthly payments and the credit union would pay the card company directly.
She talks to her credit union and was denied because she has a high revolving credit. The payments on the signature loan would be below her minimums on the credit cards. Someone explain this to me? She's reducing her monthly payments and the credit union would pay the card company directly.
4
Posted on 2/2/12 at 4:44 pm to Golfer
For every dollar that is added in revolving debt, your risk of default slightly rises. The effect is magnified as you use a greater percentage of your available credit.
Posted on 2/2/12 at 4:47 pm to Golfer
quote:
Credit Card Consolidation
Is she able to change her behavior? Because if she hasn't or can't, she'll be right back in this situation again.
Posted on 2/2/12 at 4:48 pm to Will Cover
The issue is that the Credit Union, like I said before, knows she is living from pay check to pay check. Her risk of defaulting is high.
Posted on 2/2/12 at 4:49 pm to Golfer
I don't remember the specifics of the law, but BAPCA shields some amount of consumer cc debt in bankruptcy. Signature loan has no collateral and probably gets zeroed in a bankruptcy, or at the very least crammed down.
Posted on 2/2/12 at 4:51 pm to Will Cover
Yea. The cards are cut up.
The bank is paying the CC directly and she even offered to close the accounts. Why would a bank not take a loan on for payments of less than the CC minimums that she's been making timely.
The bank is paying the CC directly and she even offered to close the accounts. Why would a bank not take a loan on for payments of less than the CC minimums that she's been making timely.
Posted on 2/2/12 at 4:55 pm to Golfer
quote:
Why would a bank not take a loan on for payments of less than the CC minimums that she's been making timely.
Risk to reward ratio?
Transfer of liability? The bank isn't willing to accept ownership of the debt?
Posted on 2/2/12 at 4:57 pm to Will Cover
I suppose. Maybe I'm not understanding of a true borrower.
ETA: I'm assuming since that bank denied the loan, she'd be SOL at another bank/cu
ETA: I'm assuming since that bank denied the loan, she'd be SOL at another bank/cu
This post was edited on 2/2/12 at 5:00 pm
Posted on 2/2/12 at 5:23 pm to Golfer
quote:
I'm assuming since that bank denied the loan, she'd be SOL at another bank/cu
Pretty much
Posted on 2/2/12 at 5:28 pm to Golfer
quote:
I'm assuming since that bank denied the loan, she'd be SOL at another bank/cu
You could always "gift" her the money.
Posted on 2/2/12 at 5:29 pm to Will Cover
Yea, I don't have 10k to loan to anyone right now...
Posted on 2/2/12 at 5:39 pm to Golfer
quote:
The bank is paying the CC directly and she even offered to close the accounts. Why would a bank not take a loan on for payments of less than the CC minimums that she's been making timely.
No collateral, probably a high D/I ratio. Regulators are tough on banks these days, thing might go on the watch list day 1.
Posted on 2/2/12 at 5:42 pm to Golfer
quote:
Why would a bank not take a loan on for payments of less than the CC minimums that she's been making timely.
Probably b/c there is nothing to stop her from turning right around and getting more credit cards. People have been known to do that.
Posted on 2/2/12 at 8:24 pm to Golfer
Does she have a high interest rate on the card(s)? If that is the issue, she could try to get the CC company to close the account(s) and lower the interest rate and pay it off in a specified amount of time. My wife and I got into a pickle and this is what we did. Our rates went from the high 20s to under 8% and we agreed to pay a set amount over 5 years. It gave us something manageable, but also boosted our credit scores because we were paying timely monthly payments. In 2 more years, we will be free of all debt outside of mortgage, student loans, and one fairly low car note.
Posted on 2/2/12 at 9:10 pm to LSUSUPERSTAR
quote:
Does she have a high interest rate on the card(s)?
Yea, she's paying a little more than the minimums and honestly probably the most frugal person in the office. Really has everything in check.
I'll tell her this might be an option to cancel the card...thanks.
ETA: did the Credit Card company consider this a "default" or something similar that could negatively impact your credit?
This post was edited on 2/2/12 at 9:11 pm
Posted on 2/2/12 at 9:59 pm to Golfer
Our scores were already low for nonpayment. It shows up on our credit report now like an installment loan. Over time it will increase her scores by paying each month and lowering debt.
Some companies are dicks and won't work with you. They tell you that you have to go into nonpayment before they will put you on the program. They may not go for it, but I think it wouldn't hurt to try.
Some companies are dicks and won't work with you. They tell you that you have to go into nonpayment before they will put you on the program. They may not go for it, but I think it wouldn't hurt to try.
Posted on 2/2/12 at 10:03 pm to LSUSUPERSTAR
quote:
Our scores were already low for nonpayment.
So you were behind on these cards?
Posted on 2/3/12 at 3:11 am to Golfer
Yes, we were behind. She can always ask if they have a program, or see if they will give her a rate reduction for a certain period if time.
Posted on 2/3/12 at 12:50 pm to LSUSUPERSTAR
Sounds like you need to switch to that new lsu credit card, it comes with les miles and no points.
Posted on 2/3/12 at 2:43 pm to LSUSUPERSTAR
She talked to the card companies today. Both of them referred her to Money Management International...
Thoughts?
Thoughts?
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