Question: I was recently offered a seven-year, $15,000 personal loan at 9.9 percent interest from an out-of-state bank. Although the interest on most of my credit cards is 9.9 percent, the minimum payments on my $15,000 balances are so high that I have little left to live on until the next payday.
Unfortunately, I was turned down for the loan because I have too many credit cards with high balances. I believe I have good credit. How can I obtain one of these loans at a decent rate?
Answer: This might come as a terrible shock, but the way to get out of credit trouble is not to borrow more money.
And you, sir, are in credit trouble. Even paying the minimums on your credit cards is a strain, and you recently were turned down for a loan because you had too much debt.
Had you been approved for this loan, by the way, you probably wouldn't have received the touted 9.9 percent rate. If you read the fine print, you'll see that most of these "personal loan" offers have variable rates based on your credit. Yours apparently isn't as good as you thought because a lender looked at you and saw a considerable risk.
The answer to your problem is to stop looking for ways to make smaller payments on your debt. Instead, buckle down and make larger payments each month on your credit cards to get your debt paid off sooner. You might need to sell some assets, stop eating out or find a second job to speed things along.
Oh, yes, and by the way: Stop using credit cards to buy stuff. You should be on a cash-only basis until the last payment is made. That's essential to the whole "you can't get out of a hole while you're still digging" game plan.
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