I am currently debt free except for one thing, my one credit card (American Express), which has a large limit, and is nearly maxed out. I can just barely make the minimum payment each month, but at the high interest rate (around 11%), I feel like I will never get it paid off. Currently I am in grad school full time (hence the reason I can barely make the minimum payment), and have one semester left. Thankfully, because of scholarships and working along the way, I haven't had to take any school loans thus far. So I'm thinking about taking out a student loan for the amount due on the credit card, and then I'll have until 6 months after I graduate to start paying on it, with a lower interest rate. I have never gotten a loan before so I'm not sure about this. It seems like a smart thing financially but I am afraid with my credit card free I'll just rack up a big ballance again, and then I'll be in twice the trouble I'm in now. Any thoughts?
Be a fucking man and show some self-discipline. The situation you're describing is like saying you're slamming your balls in a car door and you're considering letting a 9 year old girl punch you in the stomach but you are worried that while the 9 year old girl is punching you in the stomach you'll go out and find someone to slam your balls in a car door. Do the smart thing and get the lower interest rate and then have the willpower to use the credit card the way it was intended (and only carry what you can pay off each month).
Only problem with getting a loan through my bank is I have to get a cosigner, and I don't really want to do that - my debt is no one else's problem but my own. And my parents won't cosign because they don't belive in doing that, period. I don't want to get a loan through the school because their interest rate sucks.
Well there you go then. Although that is a completely different issue than what you started the thread about. Are you sure you aren't just looking for someone to tell you "It's all right. There's nothing you should do"?
From my school: Get the loan through the school. Even if the interest rate sucks, there's no way it sucks as much as a credit card. You should put the credit card debt on the school loan if you can since it will be a lower interest rate, you won't have to worry about payments for a while, and possibly won't even have to worry about interest for a while. Just don't double your debt by spending on your "freed up" credit card.
How many credit cards do you have? If you don't have a whole lot, go to a sporting event. Up here, every time I go to a Calgary Flames game, I always get free shit because Mastercard is always there giving away free shit if you sign up with them. And they'll give a credit card to any schmoe who already has a credit card. Anyways, the point is, Mastercard usually sends these "blank checks" every few months. They say "write yourself a check for anything, and enjoy a 1.25% annual interest rate. Of course, the interest rate goes back up to 21% or so after the first year. They do that to sucker you into spending money, and hopefully, you'll carry that debt into the next year, where they can really make money. If you get one of these, you can use the money you are using on paying interest now to hopefully pay down the balance during the 1.25% year. That 11% rate sounds kinda low. I'm used to seeing the annual rate between 20% and 24%
Get a loan. Cut up the card. Once your financial situation has stabilised, get a low limit credit card and teach yourself to be responsible with it.
What everyone has said so far, except for the "hookers and blow" part! (That can wait until you're financially solvent).
This is a good idea except for potential loopholes and the fact that it will shred your credit rating, yes?
The other beautiful thing about those cash advance checks? Every credit card company I've dealt with, that gets paid off last--after you've paid off your credit. So say you took a $50 cash advance, interest on it was $2, and you spent $500. Your statement comes, you write the check for $552 and mail it off. But from the time the credit card company printed up the statement to the time they cashed your check, you've put $75 onto the card. The next month your statement will show that you still owe $50 for a cash advance and another $2 in interest.
School fees, bills, gas, books, etc. All school related, nothing frivolous. The stipend they pay me is not enough to live on, even with being frugal. The card never carried a balance on it until this past year. I only have the one credit card, and have never taken another loan for anything - paid cash for my car, worked through undergrad ect. But because I don't have other loans, I can't get this one w/o a cosign. I think that is messed up. Also, those "blank checks" that the credit cards companies give you (I've had plenty sent to me from AMEX), BAD idea. If I could pay the balance off in a year to avoid the rediculous fees and rates I would just keep paying the balance off on the card I have now.
School expenses should be paid for with student loans. But be careful, since student loans can't be discharged in bankruptcy, whereas credit cards can. I'd look into getting a student loan, and in the short term, transfer your CC balance onto a new card with a zero percent APR. And if you can, try to take in some extra money to pay down the balance. Student loan debt is good debt. I've been paying mine off for nearly nine years, and I have about a year to go. But credit card debt is a quagmire. I've never carried a balance. I don't even know what my interest rates are.
