What is the difference? What should I go with to help pay off my debt quickly?
Little background – Decent credit (690-710 range). Husband has several credit cards and I don’t know the total debt, I have 1 (with a $1400 balance). To combat the high CC rates, we managed to get a line of credit, with an interest rate of around 16%. We moved some off to that, but have ended up adding a little more debt to the CC (hospital bills and such). We always pay more than minimum on the cards, and the LOC has a base minimum, but we have an auto payment that pays, I think, $50 over minimum.
What’s my best strategy? Trying to stick with it with the LOC, moving things over as the balance gets lower and paying above minimums on the highest interest rate cards, etc…or trying to throw this to a debt management company?
I would really LOVE to find a consolidation loan on my own that’s lower than the LOC rate. I just want to pay this debt back quickly and with the lowest rate possible.
The L.O.C. payment is also adjustable, it changes each month as the balance gets lower, its always a % of the balance remaining, that’s why we tacked on the $50. I can’t really change that to a set amount, though that does allow us some flexibility in moving cards over later on.
Oh and my credit card account is closed, so I cannot negotiate a better rate to pay them off, according to their CS rep. Is this true?
Tags: Background, Credit Cards, Rate Cards
Create a video blog…instantly.
I would not consider a debt consolidation loan- as that is just going to turn unsecured debt into secured debt- and does not really do anything to help your current situation. Debt management companies like Consumer Credit Counseling- can lower your credit score.
The best solution I have found is called the Automatic Debt Eraser or ADE. This is the only program that I know of that raises your credit score- and dramatically reduces your actual rate of interest.
As for reducing the interest rate on your cancelled credit card- that can also be lowered- you just need to know the proper way to do that. Interest Rate Reduction Mentoring is a part of the ADE program.
If you have any questions, you may contact me directly.
Courtney Kostelecky
founder DebtFreeNews.com
Author Credit Card Secrets THEY DO NOT Want You To Know.
debt consolidation
Try to stay away from debt management companies. Not only will you end up spending money for what you could have done yourself, but debt management plans are considered to be a precursor to bankruptcy and inability on your part to handle your finances by future creditors whol look at your credit reports.
The first rule in getting your debts paid off is not to accumulate new debt. Unless you stop borrowing more, any repayment plan is not going to work. First, make a budget of your income and fixed expenses so that you have an idea as to how much money you have to pay back these loan accounts. Bills.com offers a free budget guide available at, this will be a good place to start.
You will need to make list of your outstanding debts and their respective interest rates. Now you will have an idea of what the total mount of debt is. Target the debts with higher interest rates first so that you pay them down first. Then, move to the debt that has a lower interest rate and so on. Generally, unsecured accounts such as credit cards and personal loans should be paid down, followed by secured loans such as automobile loans. I am not including any mortgage payments in this plan.
You may choose to give each creditor an equal amount or you may choose to pay a larger portion to the creditors you owe the most money, or a larger amount to the creditors you owe the least money. The amount paid to each creditor is confidential. Creditors do not have to know the amount other creditors are being paid. You can use calculators such as the ones available on bankrate.com (http://www.bankrate.com/brm/calsystem/calculators/debtpaydown/default.aspx?caret=42) to calculate your payments and chart out your strategy
Once you make your plan, you will need to stick to it and monitor the progress every now and then. If you feel that certain changes need to be made then you should implement the same. For more information and tips on debt help, I encourage you to review the debt help section of our website available at.
Website content
To be honest don’t believe all of the hype that you hear surrounding DMPs. Negative hype I mean. I myself am currently in one and for those of you that are not, or have never been, please refrain from giving others advice that is not accurate. All you will do is scare people.
Do understand though that most companies charge a SMALL fee for their services. They negotiate with your creditors for you to get you a lower interest rate. This is something that you can do on your own but not with ALL creditors. I will not name names, but a few of my creditors refused to lower my interest rates until my DMP contacted them in my place. After this is completed you are expected to pay the agreed amount each month to the DMP and the DMP then disperses this amongst your creditors. You’ll want to make sure that you pay the DMP at least 2 weeks before the original due date of your creditors since that is how long it seems to take the DMP to pay everyone. Debt consolidation is bit different since it combines all of your debts and pays them off with a loan that you pay back over time.
Just so you know my credit score is NOT trashed. I’ve always monitored it closely and noticed that yes, my score (started at 698) had dropped significantly at the beginning of the plan (to 630), but after four to five months of consistent solid payments, my credit score rose up to 680. So no, bad credit is not something that will haunt you the rest of your life with a DMP. You won’t be able to use your cards, nor should you incur any more debt while you are on the plan and you will notice a significant drop in your accumulated debt. My plan began in January of 2007 and will end in July of 2010.
I believe that a lot of people confuse debt management with debt settlement. With debt settlement, they can charge large fees (found out through research) and your credit score does have the potential to plummet. Debt management is not a precursor to bankruptcy; debt settlement is.
Hope this helps somewhat.