bank personal loan to pay off credit card debt question?

Deal Score0

My wife and I have been working on re-building our credit scores. Between Taxes and selling stuff we have paid off $ 10,000 in debt. All we have now is 1 car loan, a mortgage, and a discover card. We need a loan of the discover card and we would be completely out of credit card debt. We were approved for the discover loan ($ 10,000) on the condition that the card is closed.

I Have a problem with this. This is the only “long standing” major credit card we have. Every other card is little $ 1,000 limit store specific cards. This card has been open for 11 years has a $ 10,000 limit and has always been paid on time.

? is What should we do? Take the loan….we can’t pay it off on our own we paid everything else off with all our money…? Look for somewhere else to loan us? I have no clue? Our credit will take the hit with closing that account…..

Please Help!

Also, in 2006 we had a Providian Card with a $ 7,000 limit that we canceled to buy a house and our credit went down almost 50 points because of it. 🙁

5 Comments
  1. Reply
    Age of Reason
    May 19, 2011 at 2:13 am

    You can post this 10 times but the answer is the same. You want the loan you close the account otherwise you find another way of paying off your debt. Try your bank see if they will give you a personal loan

  2. Reply
    knowitall
    May 19, 2011 at 2:34 am

    Taking a loan to pay a credit card will not raise your credit score. Closing an account will lower it. The amount of credit you have minus the amount owed has a large influence as well as any late payments. Debt to income ratio is the rest. Owing a bank instead of Discover will not make it better.

  3. Reply
    Dakkin
    May 19, 2011 at 3:09 am

    Hi — I don’t think you should do the bank loan. Just set up on a similar payment plant to Discover and pay it off. I’m sure the interest rate is quite a bit higher, which is probably why you want to get it paid off, but for $ 10,000…interest rate isn’t the end of the world factor. If you focus to pay it off, and make progress each month, the interest rate will become a non-issue. I too would keep the card open, and not have any other cards. As you pay it down, your score will increase, due to to not being close to the limit for the balance. Let me know if I misunderstood. Thanks.

  4. Reply
    SoccerRefToo
    May 19, 2011 at 3:25 am

    Chris

    Consolidation loans are often considered a ‘danger’ loan. They are concerned of what is called a debt pyramid. That you borrow the $ 10,000; payoff the credit card; and then run up the card again…. thus doubling the debt. Terminating the card is one way of avoiding that potential.

    Unless there is a dramatic savings with the loan vs the card, I would just payoff the card on my own… as you have the other debt. I believe that having one major credit card line is essential for an emergency!

    Soccerref

  5. Reply
    Love my Meyer
    May 19, 2011 at 4:00 am

    I understand your dilemma, I always recommend keeping only 1 major credit card. Talk to the bank and she if the underwriter will make the exception to let you keep it open, it can be done. The problem is that the bank doesn’t want that risk that you would just spend another $ 10K and than someone might now get paid. If the bank still won’t let you, ask if they would feel better about it if you got the limit decreased on the card. Than they might be ok. You can always ask Discover for an increase at a later time.

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