Hi…my name is Alex and I currently live in Tanzania, E Africa. We’ve been here for about 18 months now.
I have a few questions regarding credit card debt. First, when we came here we had quite a bit of credit card debt. Over the past 18 months we have managed to reduce that to about $9000.00 and we hope to pay at least half of that off in the next 6 months. We have one problem. Our interest rate on the card is crazy…around 23%. We’ve had this card since the beginning of our marriage (when we weren’t as careful with our payment dates). I CAN’T get them to lower the interest rate…and no other card will give me a limit high enough to transfer the entire balance.
So it seems as though I am stuck with that rate. So my question is…could I take out a personal loan with a lower interst rate to pay it off…It would just be a loan to pay off the debt on the higer interest rate and basically transfer it to a lower rate. Second…would this negatively affect my credit score? My score is actually good at the moment (713) and I don’t want it to go down. And last…if the personal loan isn’t a good idea…any suggestions?
My calculations say that you hope to pay about $900 a month then, yes? I got that by figuring out what you’d have to pay to get from $9000 to $4500 in six months at 23% APR.
If you could get someone to lend you the dough, then yes. With the assumptions above, I calculate you could save about $1000 in interest over the life of the loan if you could get something at 0% (good luck there); you’d end up paying off about one payment early: 10 months instead of 11.
Naturally, as the APR of the new loan climbs, the savings drops. I calculate that a 11.5% APR (half of current) refinance would save about $600 over the 10/11 months of the loan, or about $60/month. Not a heck of a lot of difference over the life of the loan.
I don’t know the answer to this one, but don’t see why it would. You’d get dinged if you got behind, and also — eventually — if you stopped borrowing at all. If you just shift it around, I dunno…