Ask Terry Questions Credit Card options

Credit Card options

By Terry Savage on May 20, 2019 | Credit/Debt

Hi Terry,

I hope you are well. My mom referred me to you. The facts: 12,000 in debt, 4 credit cards that are at capactiy, 21-24% APR interest per month.
Here is my question: Should I take a payoff loan to pay my credit card debts which entails: 15% APR Interest (total of 1800 for 2 years) at $575 per month OR aggressivly work to pay these off? I find it a bit confusing to pay 4 separate payments and would prefer one, but looking for the best, smartest option.
Thank you in advance,

Terry Says

Ugh — you’re in a touch situation.  Please thank your Mom for sending you to me.  You don’t state your income or your living situation, so I’m just going to make some assumptions.  But if you want specific advice, immediately call  the National Foundation for Credit Counseling at 800-388-2227.  that will connect you to the nearest local office.  You can make an appointment to discuss your situation.

While $12,000 may seem like a huge amount of money to you, no matter what your salary, I know you can do this.  Don’t opt for a consolidation loan.  That will only cost  you  more in fees and interest.  Here’s the formula for getting out of debt on each card within 3 years.

Take your CURRENT monthly payment and write that amount down for each card.  Pay TWICE that SAME AMOUNT every month (not twice the new minimum payment) and don’t charge another penny and the card will be paid off in less than 3 years.   If you can’t do them all, then pick two — the ones with the highest interest rates — and attach those first.

And now, in my mind, I hear you asking how you are going to get that extra money.  There are two easy ways.  First, cut expenses in a major way. I’ll bet your Mom wouldn’t mind having you back at home for two years — saving on your rent bill!  (Yes, you might not love being back in your old room, and being asked to help around the house –part of the deal — but it will free up alot of money to pay down your debt.

Don’t like that option? OK, get a second job.  Being a waitress or driving an Uber might not be glamorous, but if you make an extra few hundred dollars a month you can pay down your debt.

No,  it’s not as easy to get OUT of debt as it is to get INTO debt!  Hopefully, lesson learned –and you won’ t do that again!  Hi to your Mom!



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