Quick Credit/Consolidation Question

LaOs

I went to my bank today to see about getting a consolidation loan for my two credit cards. They're about &$8100 between the two of them and on each I'm paying over 19%. I could get a loan for four years at 12.25%, but the payment is, monthly, only a couple dollars cheaper and they would have to close one of the cards (the one left open is my very first card I've had, and so my longest-running credit source).

Should I go through with it, if they approve everything today?

Endomatic

Sounds like it'd be better than doing nothing/keeping things the way they are now.

Thanatos always has good advice about this kinda stuff, so don't take my word on it alone.

Pheezer

yes do it

Even if you're only saving a few dollars on the sum of payments you're making each month, you'll actually have it down to 0 in four years. At 19% interest though, you'll take more than 4 years to pay it off, all other things held equal.

LaOs

That's what I figured, DrD... at this rate it's going to be gone, for sure, in four years, rather than sticking around randomly for who knows how long.

I was hoping Than would be around, but he appears to be offline. He'll probably say go for it. The only sticking point I've got is that they want to close one of my credit cards to do this. It's the higher-limit (and higher balance) card, but it's "younger" than the one they can leave open. I recall it's important to your credit score to have "old" credit in good standing.

Anyway, thanks for confirming my thoughts.

saint2e

If possible, see about a Credit Line. Depending on your bank, it may be an even cheaper interest rate with a Credit line as opposed to a straight loan.

EggyToast

They keep the payment at the same amount for a reason -- you're presumably able to make your current payment right now, and this way you'll be debt-free more quickly.

It's not a bad deal, and 12.25% isn't horrible, but have you only asked at one bank? You may be able to get a better rate, although with no equity you may be stuck in that range anyway.

About the cards, if you don't earn any interest on the new charges to the card, then there's technically no difference between the cards. Credit history does get a boost from long-lived cards, but, uh, it gets more of a boost from paying off your monthly bills without paying interest, or having to get into consolidation issues. Bail on BOTH cards, get a new one with better terms, and sail on from there.

The only real reason you'll likely have for having a good credit score is buying a car and buying a house. Neither of those things you'll probably be doing for the next 4 or so years, since that's the length of your consolidation (estimated).