Thinking of consolidating my credit card debt… is this a good move?

Seeking Advice
1

Hey everyone. I’m looking to consolidate and pay off around $35K of credit card debt with my wife. Our credit scores are around 660+, with mine at 700. Here are the APRs on our cards:

Chase Sapphire: 27% APR, $6700 balance
Amex Delta SkyMiles: $6700 balance
Amex BCE: $1900 balance
BOA Travel Rewards card: $4500, 23% APR
Citi Double Cash: $600 (not a concern)
Cap One: $7000 balance with 0% APR ending this month
Store card: $3300 with 0% APR

I’m considering a consolidation loan of around $40K with an APR between 10-18% (not sure why the range). Payments would be between $800-$1500 per month depending on the loan term. Our combined annual income is $120-$130K, and the only other debts we have are a $730 car note and $2900 mortgage. Do you think this is a good idea? Any advice or thoughts?

2

I’d suggest looking into a debt management program (DMP) to get the interest rate down to 9% or lower instead of taking out a loan. A DMP will consolidate your credit cards and lower your monthly payments, helping you pay off the debt faster. Just be careful, a DMP isn’t the same as debt consolidation. You can also try reaching out to your credit card companies directly and ask about hardship programs.

3

@Rory
With a DMP, wouldn’t I lose the option to use my credit cards if needed? I know the point is to get rid of the debt, but I might still want to use a card for smaller things like groceries.

4

Paxton said:
@Rory
With a DMP, wouldn’t I lose the option to use my credit cards if needed? I know the point is to get rid of the debt, but I might still want to use a card for smaller things like groceries.

You don’t have to put all your cards into the DMP. You can choose which ones to include.

5

@Rory
Exactly! I just did this yesterday. I kept the smallest card out of it. It still has a high rate, but I’m focusing on getting it down to zero in a couple of months.

6

@Rory
Do you mind sharing which DMP company you went with? I’m also thinking of consolidating my credit cards.

7

Paxton said:
@Rory
With a DMP, wouldn’t I lose the option to use my credit cards if needed? I know the point is to get rid of the debt, but I might still want to use a card for smaller things like groceries.

Yeah, you can choose which cards to include in the DMP. I’m doing that now, and I kept one card open for emergencies with no balance.

8

If you don’t stop using the credit cards, you’ll end up in the same situation. You need to cut back on spending.

9

Mica said:
If you don’t stop using the credit cards, you’ll end up in the same situation. You need to cut back on spending.

For sure, that’s the plan. I’m treating credit cards as a last resort and only spending what’s in our checking account. If we use a card, we’ll make sure we can pay it off without interest.

10

@Paxton
Try cutting your spending to the bare minimum. If you can, try earning a bit more too.

11

My wife and I make $220K combined, and we had $60K in credit card debt. We joined a debt management program with MMI, which reduced our monthly payments from $2000 to $1300. We’ll be debt-free in about 4 years instead of 32. We kept two cards out for emergencies with zero balances. I highly recommend it—it was such a relief to finally start making progress.

12

Have you fixed the reason you got into credit card debt in the first place?

13

Ellington said:
Have you fixed the reason you got into credit card debt in the first place?

A lot of it came from bad decisions I made years ago, but I’ve learned from that. I’m more careful with spending now and no longer see loans as free money.

14

@Paxton
It looks like a good plan. Just be careful not to run up the debt again. Some of your cards have 0% APR, and those are newer, so they could be harder to keep under control.

15

Ellington said:
Have you fixed the reason you got into credit card debt in the first place?

Is that score from Credit Karma or Experian?

16

Ellington said:

Ellington said:
Have you fixed the reason you got into credit card debt in the first place?

Is that score from Credit Karma or Experian?

It’s from Experian.

17

@Paxton
That’s good—it’s more accurate.

18

The variance in APR is probably because they haven’t done a hard pull on your credit report yet. You’ll get the final APR once they do, but generally, 10% is for excellent credit and 18% is for good or fair credit.

19

I’m in a similar situation. My wife and I have separate finances, and I’ve told her I don’t want her to use her income to pay off my debt, since it was all before we were married. I took out a loan with SoFi last month for $19K at 11.67% APR to pay off all my credit cards. The payment is $911 a month, and I’m hoping to pay it off quickly. I have to cut discretionary spending to make this work, but the overtime from my job will help.

20

Before going with a DMP, try contacting your creditors to see if they have a hardship program. All of them offer this. Compare it with the DMP’s rate to see if it’s better. If you manage your own debt, you can keep the cards you still want to use, and some DMPs require you to put all your credit card debt into the program.