Paying off VISA advice?

Question

I have a $10,000 VISA debt at 18% interest due to some stupid choices made earlier in my life. My bank which I have my VISA with has offered me a 5 year loan for the 10,000 at 9.5% interst and I am still able to use my card with a $2,000 limit.

My monthly payments would be 300, which is great because I can only afford to pay 300 or 400 per month.

It sounds like a great option to me but is there anything I should be wary of with this offer? I do feel good about it because it is with my main banking institution.

Answer 1

My advice would be to get rid of the credit card.  You have 10k of debt playing the credit card game. You're just going to get deeper in debt with the credit card. That's all they are good for.

Credit cards are the financial worlds cigarette and Building your credit score is the biggest joke of the 21st century.

If you pay as you go. If you live on less money than you make. You will not have payments. You will have money and you will not have to worship at the alter of the almighty fico score.

Answer 2

Take the 9.5 loan, you will not find any lower than that.  You will be paying down your debt much quicker.  Best advice is  not to use any credit card till you are debt free.  

Answer 3

While paying off the debt at a much lower interest rate is beneficial to you personally you will see a drop in your credit score. When you have a higher credit limit that is lowered it does not help your score. Will it have a tremendous impact on your credit? Hard to say, if you don't have alot of bad credit out there other than this high credit card balance then you should not see to big of a hit. Maybe 50 points if everything else in your report is satisfactory.  I would take the deal you will get it paid off much faster this way and your payment will likely be lower than what it is now. Just bear in mind your credit may take hit for a while. Best of luck!

Answer 4

Take the banks offer but don't use the card...just put it away.