To consolidate credit debt or not?

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I'm in credit recovery after a really awful time in my life. My old long since stiffed accounts have fallen off my credit report and they few I kept up on are coming down every month. The CreditKarma and Creditwise app are reporting that my Credit Score is just above 700 for all 3 bureaus. Right now I have like 15k in credit card debt and like 2500ish in federal student loans. I normally put 3500 a month towards my debt. Now every time I stop in my credit union (PFFCU) they keep trying to push me to consolidate my credit card debt with them. Now part of my credit recovery is just not getting any new credit but some of the interest i'm paying is kinda high. Generally speaking, is it a good thing to consolidate? 

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4 hours ago, Goody_Ouchless said:

Wish I had $3500/month! More details will get you help.


Hahah man i'm just a wanna be RN that settled for an LPN because I was goofing off to much in school. Got lucky and  fell into some good paying gigs. Gonna go back to school this winter when I have all my debt paid off. Also helps I work 70+ hours a week! I take home like 5500/month. live on about 2k, sometime a little more, sometimes a little less depending on whats up. 


Anyways, what more details do you need? The CC debt is over like 5 credit cards, all high interest. 

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What interest rate is the credit union offering you on the debt consolidation loan?  If the credit cards are at 25-29% interest and the consolidation loan is at 11% then it might be beneficial to pay off all the cards and have one payment at a lower interest rate to the CU.  Do the math on how long the loan is.  If the payment on the consolidation loan is $500 a month for 5 years at 11% (using generic numbers not specifics) and you don't use the cards after you pay them off then you could potentially pay off the consolidation loan in a year or two saving thousands in credit card interest and the loan with an early pay off.

Do the math and see what works.

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Of course, even with your high interest rates, if you really DO have $3500 a month to use to pay down your debt, you'll be debt free in 6 months....  :p

As part of your credit recovery program, you may want to try adding a mix of different kinds of credit, so you may want to grab that credit union loan.

That would give you something other than just credit cards in your credit mix and as Clydesmom said above, would save you a boat load of interest.

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The consolidation loan is PROBABLY a good idea, and credit unions generally won't rip you off, but:

Are there fees involved in getting the loan?  If not, go for it.  If so, consider whether the cost of the fees are more than what you would save.  In general, the fees for this kind of loan are 0 or very small.

Is the interest rate much lower than the CC?  This is USUALLY the case.  Almost always.  However, during my bad times, I had some debt with a USAA card that was 6%, so that was the last card I paid off.  


Are there any pre-payment penalties.  Generally, either there are not, or else the penalties are so low you don't need to worry about it.  If the loan payments are $500 a month and you want to pay off $3500, then you really need to make sure there aren't any pre-payment penalties.


If there aren't any red flags, this is probably an excellent idea for reasons other posters have already stated.



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