Maxed out credit cards.

Submitted by sunil on Sun, 06/14/2009 - 11:10

We have about $20,000 in credit card debt, and for the last 6 months have had to resort to one of them to help w/ weekly expenses. All but one is maxed. Haven't been late on pmts, however, don't have enough to put any dents in the debts and now need to free up cash to maintain life, instead of charging. Our credit is low 600's, and needto know if I should consolidate debt or try for a "bad credit" personal loan. We are a one income family and hubby is secure in his job. I have a son who will be going to college in 2011, don't want to hurt chances of that when the time comes. Any advice?

Hi Sunil,

I think debt consolidation will be a better option, as long as you make timely payments for your current credit card bills. By taking a personal loan you can pay off the credit card debts, but you will not be debt free until you repay the loan. Whereas by consolidating the debt, you can have reduced monthly payments. You will also make only one payment for multiple debts. It will be easier to budget your expenses, if you have to make only a single monthly payment.

Mon, 06/15/2009 - 12:07 Permalink

Hello, Sunil.. Nice to see you.I also think that debt consolidation will be a better option.Your credit utilization for each active revolving account, such as credit cards and some home equity lines of credit.Credit utilization across all active revolving accounts.You can also set online payment and can pay same day as you charge the account.I believe your problem is more fundamental and you need to get back to the basics of spending less than you earn and saving some money.

Mon, 06/15/2009 - 12:23 Permalink