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mzIndecisve | Which is better, get a loan or another credit card? |
ok i got 2 credit cards i really need to pay off ASAP cuz their APR rates are wayyy to freakin high!!
im deciding on wether to find a credit card that has a low rate for a year or something and transfer my balance to the new credit card
OR...
get a loan from my bank so i can get rid of paying those ridiculous interest rates and pay off my loan at a lower rate
i just want any ideas or suggestions or reccomendations which is preferrable
yes, i know its a horrible decision ive made so far in my life, messing around with my credit . im just a young adult that thought credit cards were cool just cash u didnt have to pay till for later.. but im surely wrong
I SERIOUSLY NEED HELP!!
Additional Details
IF I DO GET A GOOD LOAN .. WHAT ARE LIKE THE GOOD RATES ON AVERAGE?
AND WHAT IS COLLATERAL? IF I DO GET A LOAN?
SORRY IM A NEWBIE AT THIS CREDIT FINANCIAL STUFF.. |
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lupering
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I would consider consolidating your debts. |
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Andy A
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The answer here is to not pay off debt with more debt, but instead to find extra cash in your budget to pay off the cards. The best way to get out of debt is to "snowball" it. Let me explain... Say your highest rate credit card is 24.99% APR and you owe $65.00 a month and your second card is 20.00% APR and you owe $65.00 a month. You will want to pay off the highest rate card first, because the interest is going to kill you long term. Over a 5 year period, you will pay $1247.50 more in interest on a $5000.00 balance on the higher rate card. So only pay the minimum on the lowest APR card and take all the money you can (don't eat out) and pay as much as you can toward your highest rate card until it is paid off. Then, take all that money you were paying on that card and apply it toward the next highest rate card, so on and so forth, until you have all your cards paid off. Also, do not use them! Cut them up!!! Don't go all over town trying to get other unsecured loans and credit cards, because you will just mess your credit up even more with all those inquiries (it shows you are desperate for credit.) If you are a home owner, you might look into a home equity loan or line of credit (with rising interest rates, I recomend a fixed term, fixed rate loan.) The interest on these may be tax deductable. Do not go and get an unsecured loan. Your rate will not be that much better. You also might look into getting a second job if you cannot afford to pay off the debt (I work at a bank and a grocery store to support my family.) Good luck and work hard; there are no freebies in life.
To answer your other questions:
Rates on unsecured loans are typically higher, ie. 18%
Collateral is something that you have to put up front in case you default on the loan, ie. a house, cash, a car, etc. They take and sell this property if you default. |
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Don't Mess
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definatley loan.... |
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Sappho
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Hopefully you have learned your lesson, that there is no free money and you need to pay every penny of it back, and always with interest. Credit card companies are there to make money, not to give it to you.
Now that you are in a tough situation, first you have to look at your credit score. If you have been paying your bills on time, at least the minimum for each month, your credit should be in good shape. This means that you will be able to get a new credit card at a much lower APR.
Loans are complicated and generally require a proposal and collateral - if you don't own a house, you might not be able to get one, other than student loans if you are in school (and it's illegal to use student loans for anything other than school and living expenses).
I would reccomend getting a new credit card. Find one that has low or no APR for the first 6 or 12 months, and transfer the entire balance of both of your current credit cards to the new one. It will add a bit of interest to the whole thing, but from here on out you will start to accrue much less interest. Then, cancel the old cards, as you certainly won't be using them anymore.
The key is not to keep looking for lower interest rates, it's to pay off your debt before you owe a lot more than you spent to begin with. Never pay only the minimum balance due unless you absolutely have to - if you pay more, you'll end up owing much less in the long run, and you'll also build up your credit score much faster.
If you ever absolutely have to miss a payment, call the credit card company and explain the situation to them. Usually if you do this, they will add a charge to your card for late payment, but it will not damage your credit score.
Always pay off as much as you can. If you make extra money one month, put it towards the card. You may have to go without that new article of clothing or CD for a while longer, but it will be well worth it when you get out of debt. Don't use the card you get unless it is a true emergency, just focus on paying it off.
If the credit card company raises your spending limit because of your good payments, call them and tell them to lower it back down. You should never be that far into debt anyway, and if someone steals your card, the higher the credit limit is, the more they can screw you for.
And if you ever think you need quick money agian, try talking to your parents or other trusted elders who can give you advice from experience. And be sure to pick ones who are good with money. ;)
Good luck, and I hope you learned a valuable life lesson! :o) |
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Dan
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I would highly suggest that you do not take out another credit card to pay these 2 off. If your bank will give you a loan at a decent rate (it will definetely be better than your CC interest rates), do this. If you have an emergency fund you could temporarily tap into that as well. Other than that, do your best to cut your expenses. Cutting a few bucks here and there will go a long ways into getting you out of debt. You seem to have learned from your mistake and someday when your older and wiser you will look back at this experience and laugh at yourself! |
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anjelniki
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The only difference in credit card,you have to pay in advance to your credit card company,If you take a loan you will pay later.Otherwise there is no difference in both.In both you will pay extra amount.If you take a loan you will have control on your expences as ypu have to pay your monthly instalments you will reduce your other expences.TAKE A LOAN. |
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parental unit
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get the loan, if you can. The bank may ask for collateral (like a car). But if you get a loan, you won't run the risk of running up more debt like you can with a credit card. |
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carlos
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I'd go with someting like a "6-months no-interest " major credit card, and try to pay back the more I can.
Then I'd get another "6-months no-interest " credit card and put the balance on it.
... and so and so... until my debts are over !
Good luck ! |
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Martha-freakin-Stewart
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The loan will probably have a better interest rate. |
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The Grand Inquisitor
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Using credit to pay credit is usually a bad idea. Now if you worked out a budget that would clearly show you can pay off the lower interest CCard within the intro period, then maybe you should try it. But the second you break from your plan you will have screwed up again. It is dangerous. |
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andrewdoane
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What kind of loan are you going to get from your bank? They will probably want collateral. You might not have any. So another credit card is probably your only option. But cut up the old ones and the new ones, and just keeping paying on them. Then you debt can only go down. |
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horses
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First of all, don't beat yourself up!!! What's done is done & most of us have been there, too.
Get a loan from the bank to pay them off and then close them. With your checking account get a debit card for the times you need a card. This way you take it right from the account and don't have a bill with interest. |
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nevyn55025
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Another credit card is the best way to go, because it will actually impreove your credit rating as you will have more credit available. A Bank loan will help a little but you will need some kinda collateral as well as once you pay it off it no longer does you any good. |
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E Y
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Try to get a 0% credit card to transfer those balances and pay off ASAP. Do NOT use your other credit cards. Try to pay for everything in cash. If you do use your credit card, only buy if you have the money in the bank. Good Luck. |
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HamTownGal
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Probably a loan, depending on the rate you can get based on you credit rating which probably isn't good. Your most important priority is to go on a STRICT budget. There are always places where you can trim your expenses. Put every extra cent you can into paying off your cards. So many people are doing this, young and old, that it is frightening. I feel lucky because I've always lived within my means. If I didn't have the money, I didn't buy it. |
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Mike
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id get a loan. if you decide to get another card, you might end up using that one too. apr is probably lower on personal loans also. |
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Sim
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I would do loan or try and get help from a family member or a friend and be sure to pay them back |
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MEL T
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If you can get a credit card with a high enough limit do it that way. Open the account and then request checks (or over the internet) to pay off other blances. Most credit cards have a deal on this of about 2.7% until it's paid off. (There's sometimes a $50 charge for this - it's still worth it.) It'll also give you the option of paying a little less if you run short on funds one month.
The loan from the bank is unsecured and will therefore have a higher interest rate. Also you will have a fixed payment, unlike a credit card where you can pay less, if you need to. |
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r202950
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obviuously a loan. More moeny and lower interest. |
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mukesh padhya
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credit cards have higher rate of interest, loan needs collateral but a loan is always better then credit cards if you intend not to fall in the financial mess. |
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