|
Averett
If you can get an unsecured loan, take what you can get (assuming it is a lower rate than any of your credit cards), and apply it to the credit card debt, highest percentage rate first, and work your way down (in interest rates). If you can, eliminate ALL the credit card debt. As most have pointed out, unsecured loans tend to be higher than secured loans, but right now banks and credit unions are desperate to lend money to creditworthy customers. No one is buying, and the cost of capital is low.
Like credit cards, the unsecured loan is a consumer loan, payable at any time without penalty. Pay it off as fast as you can... don't just string out short-term credit card debt over 15 years because the CU will let you. If you can, make extra payments. Remember, ever extra dollar you put on the loan EARNS you that interest rate in AFTER-TAX dollars. That means you are getting the equivalent of an investment return equal to the interest rate on the loan times your marginal tax rate (on an 8% loan, with a marginal state + federal tax rate of 25%, you are earning 10% on every extra dollar).
Finally... pay off any new credit card bill every month IN FULL. Under no circumstances should you start to build up credit card debt again. I used to give a 15-20 minute lecture to people I was counseling just about the use of their credit cards, usually restricting them to just one.
__________________
The secret to great marksmanship is deciding what the target was AFTER you've shot.
|