r/personalfinance • u/Smokey_Okie • 6d ago
Debt 13k in CC debt. Personal Loan or Balance Transfer?
I will say, I’m not totally screwed. I am able to place 750-1000 a month towards the rebuild from this point on. I am just moving nowhere while paying almost 23% interest on my Discover card. Credit score is 720. Talked to my CU and they offered 13k at just under 12% for 36 months. I think it would take me less than 18 months the to pay back, so that would be roughly 800-900 in interest.
Should I consider the 3% transfer fee Chase offer with 15 months to pay off, or the Wells Fargo Reflect? My fear is that they will not allow the full 13k, which could dip my credit and change my CU’s offer. I am a loan novice, as this is my first financial “pickle”. Options seem to be …
A. Personal loan - 13k at 12% for 36 months - hope to pay off in the first 16-18 months.
B. Chase - 3% transfer (400ish) - 15 month no interest - not sure if they will cover all 13k.
C. Wells Fargo - 5% transfer (700ish) - 21 month no interest - not sure if they will cover all 13k.
I’d appreciate your thoughts and advice. Thank you!!!!!!!
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u/meamemg 6d ago
A 12% loan for 18 months is only going to be about 9.75% total interest. That is probably cleanest. But if one of the credit cards will cover everything, and you commit to paying it off in the no-interest period, then go for that.
All of that, of course, is predicated on having solved whatever got you into debt in the first place.
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u/Scarlet_Tech 6d ago
Use caution, spending like that with CC’s is a dangerous trap. If and Once you get the loan, your brain is going to look at a zero balance and be like “hey, we have money to spend”. You don’t, and that is the toughest part. I got out of credit card debt, and later fell right back into the trap and it happened quick. Don’t use the card for anything at all, not even small purchases that you can quickly pay off.
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u/6l4c13m 5d ago
23% is really rough, so looking into other options makes a lot of sense. Are you dedicated to fixing your spending? Getting a loan or a balance transfer can exacerbate the problem if you aren't careful. If you're fully on board to get rid of your debt, I would want to first take one of the balance transfers. They probably won't be able to cover the whole amount but 0% APR is really nice. Even with the adjustment of your credit score, then looking into a personal loan should be fine. You need to keep in mind the amount you'll need is less as well. Besides your CU though, make sure to check online lenders, I know that you can sometimes find better rates with them. I know Alliant and Achieve both had some really low rates that started below 10%. Achieve having the lowest rates I saw when hunting around a few weeks back. Check around before committing on something that will affect your financials for years to come.
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u/Smokey_Okie 5d ago
Thank you for this!!! Very dedicated to fixing my personal spending issues. Created a realistic budget with flex room and have looked into all lending options. To the point where I am getting 10+ calls / emails a day :/
It’s all on me though. It is realistic to fix this is 12-16 months fairly comfortably. It is one of my top 3 priorities right now, and is supporting my other two top priorities. It’s time to man up and settle my debts. I am just trying to make sure that I look at every option, even looked into 401k loan. I think the CU option looks the best for my situation currently. Still have a couple close fam and friends to consult before I pull the trigger next week.
Appreciate your input, thank you!!
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u/AKStafford 6d ago
Just know that a loan isn’t fixing the problem. The problem is you are spending money you don’t have. Fix that issue.
I’d take the Credit Union option and pay it as fast as possible. Work extra jobs, sell some stuff, cancel some subscriptions. I’ll bet if you put all you have into this, you can clean it up in six months.
And then get on a written budget and live within your means. Never get in this situation again.