Want to cheapen my debt expenditures. Know of any cheap money (unsecured loans)?

January 10, 2007 7:29 AM

Cheap Money Filter: I've got a moderate amount of credit card debt right now ($15k), at reasonable but not great rates (13-18%). I'll be making more money in the upcoming year, and the debt load is manageable, but I want to explore trading these loans with an unsecured line-of-credit type loan or some other loan. Advice? Suggestions on where to get a good rate (i.e. got any good junk mail lately)?

Should I even look at a credit card loan (i.e., open a new card and transfer balances)? These have the advantage of having low introductory rates, and, if the rate lasted a year, that's a year of free money (I'll probably pay this debt off in 2 years). I've got a flyer from B of A with a 9.9% fixed loan that seems like it would serve me well. It's a line of credit (unsecured). Has anybody gotten similar but better offers in the recent past? Pitfalls to avoid? If so, I'd love to hear about it. I see that lending tree can show me loans of this type, but I'm sure that means trading info for thousands of pieces of email and junkmail.

posted by zpousman to Work & Money (15 answers total)

Best answer: Bankrate will give you information on low credit card rates without taking your contact information, but unfortunately they don't sort by the balance transfer rate. They do offer some useful tips on how to avoid pitfalls.

If you want to avoid e-mail spam, try using Sneakemail for your address. To reduce mail solicitations, you can call 1-888-5OPT-OUT to tell the credit reporting agencies not to give out your information indiscriminately anymore.

Check local credit unions you can join for cheap lines of credit.
posted by grouse at 7:46 AM on January 10, 2007

Just so you know, 13-18% isn't reasonable at all, you're paying an awful lot in finance charges. If you've been making regular payments and haven't missed any then call the companies and request your interest rate be lowered. It can't hurt and can end up saving you a rather large wad of cash in the long run.

You will likely run into some difficulties transferring $15k to a new card since most come with alot less than $10k in available credit.
posted by fenriq at 8:11 AM on January 10, 2007

Best answer: Can you join a credit union? I've always got fantastic rates and a painless loan process through mine. Research your options, I love my credit union...
posted by punkrockrat at 8:12 AM on January 10, 2007

Also, if you do transfer off those old credit cards, CANCEL THEM. Keep one around (with a low limit) for emergencies, but I made the mistake of paying off a relatively high limit card, then nickle and diming it back up to being full again, like an idiot.
posted by antifuse at 8:29 AM on January 10, 2007

Not an idiot, antifuse, a human.
posted by NationalKato at 8:34 AM on January 10, 2007

I disagree with antifuse somewhat. Cancelling credit cards reduces your available credit and raises your debt-to-credit ratio, possibly harming your FICO score (and therefore your ability to get a good interest rate on a mortgage).

He's definitely right that you need to avoid temptation. By all means, cut them up, hide them in a block of ice in the freezer, get rid of any with an annual fee, etc etc--but don't cancel things outright unless you've examined the ramifications.
posted by bcwinters at 8:49 AM on January 10, 2007

Hrmm... bcwinters, I've actually heard that having tons and tons of available credit (with little debt) can also be negative on your credit score. They basically say "Well, your income-to-debt ratio is pretty good right now, but if you spent the $50,000 in credit you have available, you would totally be screwed and missing payments like crazy"
posted by antifuse at 8:58 AM on January 10, 2007

Just to echo fenriq: 13-18% are not reasonable rates. If you've been making steady payments, and especially if you have a good credit score, call them and ask for lower interest rates -- tell them you have a balance transfer offer at some very low interest rate, and tell them you want them to match it or you'll split. Their first response will probably be "we can't lower your interest rate, but how would you like a credit increase?" Say no and keep pressing.
posted by scody at 9:13 AM on January 10, 2007

Response by poster: B of A just *found* a better offer for me at 8.9%. I see that the credit union that I could easily join is not much better. So I think I'll go with that, unless anybody has a 7% offer laying around at the house. Thanks for all the advice thus far. I am considering closing some of the accounts in question as soon as I get them paid off, so thanks for that bit of advice.
posted by zpousman at 9:18 AM on January 10, 2007

Best answer: Four years ago my bank gave me a personal loan to pay off my credit card debt; I make the final payment this Friday. My interest rate was less than half of my card's interest rate. There were no pitfalls or drawbacks.
posted by solid-one-love at 9:45 AM on January 10, 2007

A friend of mine recently got an unsecured consolidation from Wells Fargo offer for just over 8%, and her credit's not even really that great.

I have about $12,000 in debt myself but it's all at 0% (I have the cash to pay it off in the bank at 5%). You should be applying for BofA's Signature Visa card that offers 0% on balance transfers for a year, and as many other cards with such offers as you need, probably only three or four. Chase, Citi, all the big banks will approve you for such cards if you are creditworthy.
posted by kindall at 9:47 AM on January 10, 2007

Solid-one-love, being out of CC debt is the new hotness.

Good for you!
posted by Wild_Eep at 10:17 AM on January 10, 2007

Just read that small print carefully on the offers, with an eye for transfer fees, what conditions invalidate the special rate, and (if it is a limited time/variable rate), what rate it will revert to when the trial period is up. There are probably better fixed rates out there if you keep looking. You might also want to look again after your income goes up, you may then qualify for better deals.
posted by nanojath at 10:18 AM on January 10, 2007

I took advantage of the Discover Card 0% APR for one year, although yes it does have the disadvantage of having a new line of credit open, if you succumb to temptation easily.

Also, congrats solid-one-love! One day, I will be where you are.
posted by Asherah at 10:31 AM on January 10, 2007

Antifuse: you may be right on that one! I guess my advice would remain "research research research" before closing cards with a long history.
posted by bcwinters at 1:38 PM on January 10, 2007