I’ve ended up with about $20k in credit card debt spread over two cards, both with high-interest rates around 28%. I’m not using them anymore, just trying to pay them down, but the interest is huge. I’m making monthly payments of $800 across both cards and my credit score is 691. I have a third card from my parents, but I don’t touch it. Should I open a fourth card with a lower interest rate and move some of my debt there? Or would that mess up my credit score? I’ve already tried asking for credit limit increases. I’d really appreciate any advice on paying less in interest!
If you can find a card with a 0% interest balance transfer offer, that could really help. I did this once, and it made a big difference. But be careful; adding another card could make it harder to pay everything down if you’re not strict with yourself.
@Jaden
I was thinking about that, but if I apply and get denied, doesn’t that affect my credit score?
Leighton said:
@Jaden
I was thinking about that, but if I apply and get denied, doesn’t that affect my credit score?
It’ll have a small impact short-term, but credit checks don’t stay on your report for long, maybe a year.
@Bliss
Actually, they drop off after 2 years.
Leighton said:
@Jaden
I was thinking about that, but if I apply and get denied, doesn’t that affect my credit score?
You could wait until your score is over 700 and keep an eye out for offers. Meanwhile, stick to paying it down and avoid adding more debt. Just keep using the credit cards like you usually do and pay them off.
@Jaden
That’s solid advice.
@Jaden
Yeah, I think I might do just that.
Leighton said:
@Jaden
Yeah, I think I might do just that.
You got this! Make sure every dollar you earn has a purpose. No random spending. When payday comes, plan your money and stick to it.
Check out personal loans for debt consolidation, like with sofi or discover. They may offer a discount on the interest rate if they pay off the balance directly. A personal loan over 2-3 years with 12% interest could save you quite a bit compared to 29%.
Just remember, this only works if you don’t rack up new credit card debt. If you know you’ll keep using credit cards, this probably isn’t the right move.
@Orin
Would this impact my credit score? And would it be an issue down the road if I wanted a mortgage in 10-15 years?
Leighton said:
@Orin
Would this impact my credit score? And would it be an issue down the road if I wanted a mortgage in 10-15 years?
- With a consolidation loan, it could actually help your score since it lowers the balance on your cards.
- Not really. If you keep up with payments, you’ll be fine by the time you’re looking at a mortgage. A 10-15 year gap is plenty of time!
A few options: You could try for a card with a 0% balance transfer offer. Your score might drop a little at first, but paying down the balance quickly would help it recover.
Or try calling your credit card company to ask about a hardship program. I did this once, and it cut my interest rate by half for six months. Whichever route you take, be prepared to get aggressive with those payments. That’s the only way to make real progress.
Have you thought about the debt snowball method? This way, you pay down one card aggressively while making minimum payments on the other. It’s a good option if you want to keep your oldest accounts open to help your score. After you pay off the high-interest card, you move to the next.
If you go for a balance transfer, make sure you don’t keep old cards open unless you’re ready for the temptation. Could be dangerous if it adds more available credit and makes you want to spend more.
@Drew
I’m not sure if the snowballing method would work in my case. The card with lower interest has a minimum payment around $400, which I’m already paying each month.
Right now, I make sure to pay any new charges immediately, which is only a few bucks a month when I forget to switch accounts. I’m moving everything to my debit so I’m not adding to my debt while paying this off.
Do you think there’s any reason not to move a small part of the debt to a lower-interest card if I can’t get the full amount transferred?
@Leighton
Hmm, if a single card for $20k isn’t an option, you could get the highest limit card you’re eligible for, transfer part of the balance, and focus on paying down the high-interest card. That’s still a win in my book. And yeah, adding to your debt is only an issue if you decide to keep using credit.
You could look into debt relief plans offered by certain banks. I worked with a group that helped me set up a payment plan for one card, but some credit unions may have different rules.
How old are you? If you’re in your early 20s and not looking to buy a house soon, you could consider letting your credit score take a hit by closing some accounts and focusing on paying down debt without new loans. After 7 years, any negative marks will disappear. Secured credit cards could help you rebuild if needed.
Try to get a 0% balance transfer card if you can.
A personal loan might be a good choice. Lower rate, faster payoff.