Debt Consolidation?

[dfinn]

I know nothing about this but I think it's time I try to find out more. I don't own a house, I'm not if that matters or not but I've been told that it's easier to consolidate debt if you are a home owner.

I've got about 12 grand in credit card debt and 4 grand left to pay off on my truck. The truck interest rate isn't that bad but the credit card is up around 15%. After moving cross country I finally got a good paying job. I can probably afford to pay of the CC in a year but I still think I should try to avoid paying the interest on it over that year if I can.

Is it worth trying to do some sort of debt consolidation?

Who/how/where?

[Canuk]

Go talk to your bank.

When I worked as a lender at a bank, we did unsecured debt consol's for clients all the time. Just make sure you are up to date on all your payments, and you shouldn't have much of a problem.

[Hutch]

do you have a 401(k)? if so, you may be able to borrow money from your future self and the interest goes into your account.

[dfinn]

I do have 401k but it's only about 1/2 of what I owe in debt. I plan on talking to my bank. I checked on their website and it doesn't seem like something they offer.

[ljm]

Talking to your bank might be a good idea, but I would be very wary of anything online or otherwise that promises to lower your debt significantly (type "debt consolidation" into google, and you'll see the stuff I mean). That stuff can really screw up your credit report, and if you're wanting to buy a house in the next # of years, that could really hurt.

FWIW, I'm not a financial advisor or anything, and I know some of the people on here are...(so listen to them first!) but I did spend some time researching a lot of debt consolidation and debt settlement companies, and came away very sketched.

-ljm

[mitch buchannon]

If you can avoid it, I would suggest not borrowing from your 401k. I can't imagine the interest rate on an unsecure debt consolidation loan from a bank would be massively more attractive than what you're currently paying.

I would try just paying as much as you can each month to avoid as much of the (additional) compound interest as possible.

[Obstruction]

A credit union or small bank will probably work with you to put together a plan that is advantageous. Most don't advertise this type of product because they aren't tremendously profitable ... unless the lender is looking to shove it up your poopenhausen then its extremely profitable.

As ljm indicated stay away from clip shops that masquarade a true credit counseling organizations, debt consolidation providers that advertise on late night TV and shill on the intraweb. The fees and rates will be a killer.

Comparison shop for the best deal and use an interest rate calculator to project various rate/term scenarios to see if you are really saving money. (Many small bank and CU web sites offer these).

Big banks may work with you but while they won't rip you off like the fly by nights they also are not going to market products that don't achieve sufficient yeild. Smaller institutions are better at balancing profits and conscience.

[mooseknuckle]

It is possible to get 0% rates on balance transfers for credit cards. Companies play the bet that you will feel relief, spend more money and then be locked in at a higher/shitty rate after the 0% period lapses. I'd consider doing that once or twice to keep in 0% and pay those balances down. It doens't sound to me like your balances or time period to pay it all off are that bad...

I don't think it is the best thing for your credit score to open several different credit accounts, but so long as you haven't been late on min balance payments you should be in great shape. Good luck.