Is it smart to get a personal loan to help pay down credit card debt?? 😭

Filing for bankruptcy can provide several benefits, especially if you're struggling with overwhelming debt. However, bankruptcy also has significant drawbacks. I studied finance in college, but I’m not a financial advisor…just someone trying to share a few different solutions that might help! You should weigh the pros/cons or consult a financial advisor before making a decision about opening a loan or filing for bankruptcy.

@Kitty ☀️🌺 Yeah I have severely considered bankruptcy but my biggest concern with it right now is it drastically lowering my credit credit score😩 my score is decent right now and we’re in the process of trying to get a house which is why I’m working on paying down my debt . I have been doing good paying down my smaller card slowly but surely, it’s just the larger balance one that feels never ending lol. I’m scared bankruptcy will affect me worse and in the long run drag out our goal of trying to get into a house. Ugh yeah i definitely need to look into it all a bit more though thank you

I was in this rabbit hole once! I promise you’ll get out. Don’t get the loan!!

OP, it sounds like you're in a tough spot, but it’s great that you’re being proactive about tackling your debt and thinking ahead about your financial goals. Since you're focused on buying a house, it might be worth talking with a financial advisor to figure out the best path forward that aligns with your homeownership goals. You’ve got this! 😇🙏

@Kianna I’ve never been in this situation and I would have assumed a consolidation loan was a good move. Could you explain why not?

@Kianna id love more info on it also ^^ :)

If the loan is less interest then your credits cards then logically yes the loan will cost you less money...just are sure to read the fine print and make sure there aren't hidden fees. A line of credit is prob the best option. Whatever is lower then 28 percent is better.

Consolidation loans only “work” if you plan to close the credit cards and are disciplined enough to not take out any further credit. The problem most people have is, which Incog has stated herself, she cannot guarantee she’ll stop using the cards once the loan has cleared the balance. So what usually happens with 99% of people who take consolidation loans is they end up with twice the debt and in even deeper trouble than they were in originally. What you need to do is Incog is create a budget. Somewhere along the lines you are overspending. Write out an honest list of your outgoings. Include EVERYTHING! Then tally it with your income. My advice to you Incog is to contact the 2 credit card companies and ask them to close the accounts. What will happen is the balance will remain, no interest will be added and you should be able to just make monthly payments to clear the balance. This stops you being tempted to re-spend on them and forces you to live within your means on your income.

@Angie I’d speak to a professional financial advisor first, but honestly I just kept budgeting the best I could and kept it going because putting yourself in more debt is going to feel worse in the end. 17% interest rate is still a lot. Most cards have a financial hardship line where they’ll lower your interest in times of hardship, but they’ll temporarily cancel your cards that was the best option for me.

@Kianna will closing the cards DRASTICALLY drop my credit score also?? That’s another thing I considered but also was skeptical of lol. Both these cards I’ve had for at least 10 years which are my oldest credit lines 😩

I don’t think so your best bet is to call them and ask for the hardship program!

@Kianna I’ll look into it thank you!

With those interest rates the smartest thing to do would be to get the loan and pay off your cards, as long as you will not just rack up the credit card again. Don’t close them it’s good for your credit to have “available credit” but either cut them so you can’t use them or stash them away in your house somewhere. Whatever you do do not file bankruptcy or “consolidate” with one of those companys that say you only have to pay half or whatever they promise 😬 I understand some people can’t make their monthly payments and that’s their only option, but that is the last thing you want to do if you’re able to make your payments.

Get a loan to pay off 30% of it or half of it don’t put yourself in the same amount of debt.

@Neena and @Kianna gave some solid advice. Budgeting is key here. Idk if you know excel well but my husband and I use it to track our budget and spending. You need to have a visual on what all your spending and seeing where every dollar is going. From there you can determ what you can eliminate from spending and take that dollar amount toward what you owe and truly only spend on the nessissities till you get the debt under control.

I’ve recently done this and it’s dropped my repayments by half monthly, but to stop yourself from spending on the credit cards you should cut them up so you can’t add to them if you get me xxx

Yes, in your situation, it can help. It may not be the best option, but i think it would be better due to the lower interest rate. Also - destroy your credit cards and close one of the accounts. Only keep your second as a back up for emergencies.

@Kianna some banks will give you a hardship program for a shortness period without closing your account! But definitely a good thing to ask the bank about!!!

@Ari yeah I mentioned that. That’s what I had to do. Call the number on the back of the credit card and ask them about their hardship programs

Whatever @Neena said. You MUST close the credit cards and cut up the cards. It will be pointless to do everything in your power now to stop drowning only to pick up the cards again. Budget, go through everything and come to a point where you are fed up and angry about the situation to make the necessary changes. Lifestyle changes will be hard and uncomfortable but you can get through it and even easier as you have a partner and therefore an additional income - did I read that right? If so, maybe involve them too to come up with a plan to clear the debt and save up for your house together

No, don’t close the cards, but do put restrictions and hide it/cut it up/ give it to your husband

@ Incognito, please message me!

not a bad idea, if the interest rate is lower and you have a lower monthly payment and are able to consolidate your debt then go for it.

@Rosa Edge you can close the account right?

If you own your home, even with a mortgage, look into getting a home line of credit. The intrest is often much less than a personal loan would be and as it's a revolving debt account it would still help build and improve your credit score. With a line of credit you could cancel your credit cards and still have extra money on the line in case you need it. In my experience even a personal line of credit should have a lower intrest rate than 17%. 17% is still way to high an intrest rate, something under 10% would be better. Shop around, look for the lowest intrest rate you can find. If you can lock your credit cards do that once they're paid off so they can't be used without having to unlock them, keep them in a safe spot in case of emergencies. Or cancel one and keep the other for emergencies. Often credit unions will have the lowest intrest rates, you may pay an annual fee to be a member but it'd be less than your paying at the moment in intrest alone.