Debt Options

I’ve been taking a number of options into consideration lately regarding my debt.

STUDENT LOANS

I’ve been toying with the idea of taking out a personal loan to use to pay off one or some of my private student loans.  I was recently sent some junk snail mail saying I was automatically approved for a personal loan of up to $25,000 with a 6.99% interest rate.  It made me wonder what kind of loan amount/rate I could get with my credit union.  I have pretty good credit but will my puny, part-time freelance income be enough to get approved without a co-signer?  Could I ever consolidate my private student loans without a co-signer?  Will Sallie Mae ever approve my co-signer release form?  Something tells me my debt-to-income ratio is far too expanse.  

Source: George Grinsted

I saw this CNN article this morning that says some banks are now offering refinancing private student loans. This is definitely worth looking in to.  As it stands, my private loan interest rates range from 8.25%-9.75%. Even halving those rates would be nice!

CREDIT CARDS

I have had a US Bank credit card for several years that does not offer any rewards and has an APR of 16.99%.

I keep getting invitations from my credit union to sign up for a new credit card that offers a 0% introductory rate for a year on balance transfers, 9.49%-18% after that (depending on credit), no annual fee, 10,000 bonus points and various types of rewards (cash, gift cards, air fare).  I have just under a $1,150 balance on my US Bank credit card.  I don’t even use my US Bank cc anymore.  A year of no interest to pay it off sounds tempting.  It’s kind of funny that this offer is for the same credit card my husband recently acquired, without any incentives.

Have you ever done a balance transfer?  Does it hurt your credit?

I’ll be making a trip to my credit union soon just to see what they have to offer but I remain skeptical that I’ll see any relief with my private loans.  If the new credit card has a car rental insurance clause to it like my US Bank card, I may just do the balance transfer.

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6 thoughts on “Debt Options

  1. I’ve done balance transfers a few times, and they don’t seem to hurt anything. It’s a great option as long as you get the card paid off before it expires and the rate shoots up. Otherwise, you can end up paying WAY more in interest than what you started with (and unfortunately, I’ve done this before…).

    • I think I’d be able to get a lower interest rate with my credit union than the 16.99% I have with US Bank…or is there some kind of extra fee they charge once the introductory 0% expires?

  2. I haven’t personally ever done a balance transfer, but it seems like a good idea if you can lock into a lower interest rate with a local credit union etc. As Erin said, I’d avoid the CC transfer unless you’re 100% sure you can pay off the balance in full before the end of the special promo rates.

    • I imagine my credit union would give me a lower interest rate than my current 16.99% rate with US Bank. I’m definitely going to head to the bank to find out. I’ve been paying about $100 a month on that cc and most of it goes to interest, so I’d definitely be able to pay it off in a year without any interest.

  3. Be careful with the “pre-approved” offers, I heard lots of scams where they ask you to pay a fee upfront and then tell you that you were denied for XYZ shady reason. I have done balance transfers and they didn’t hurt credit at all, you just need a calendar reminder when the deal is about to expire, to pay it off or transfer again.

    • I am very suspicious of pre-approved offers, especially when they’re not even from a company I bank with. It just made me wonder if my credit union would ever approve me for a personal loan. I filled out an application online for the credit card balance transfer with the deal they’re offering…hopefully I’ll know soon if they’ll approve me!

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