If you are fortunate enough to own a home, a Home Equity Line of Credit would help a lot on your interest expenses which will translate into a quicker payoff of debt. A Home Equity line of Credit is different than a Home Equity Loan. Check out the interest rates in your area. The Home Equity Line of Credit at ThirdFederal Savings & Loan in my area is currently 2.25%. The cost for the loan was only for the Doc stamps to record the documents. Banks differ on this. Shop around. That amount varies with the size of the credit amount you get approved for. This is the advice I gave my daughter and it is working out great for them. They were in a similar situation. Pay off your credit card debt using the line of credit and stop using all of the credit cards except for the one with the lowest interest rate. Set that one up with autopay of the statement balance and be sure you always have enough in your account to cover it. Otherwise, draw on the Line of Credit to cover the one card you use to make the payment before due. Try to make it your goal to eliminate paying interest on your credit cards.
For anyone that may be reading this, don't get sucked into these offers to transfer debt from one card to another and only pay 0% interest. It seems every offer I have received had an up front transaction fee of 3% or more. That just puts you further in debt. Read the fine print carefully before accepting such an offer. If you do transfer funds under one of these offers, try to pay the card that is offering 0% on transfers off before making the transfer(s) to that card. There are usually stipulations as to where your payment is applied, like either towards purchases or special offers first. Then, do not use that card for anything else until it is paid off in the period specified in the offer. In most cases, 1 year. May be less. However, Keep in mind, that transferring the debt to a Line of Credit with even a higher interest rate than the 3% paid up front to receive the 0% rate could result in a lower total payout of interest on the debt because the dollar amount of interest owed reduces each month. This is especially apparent when you pay above the minimum due.
In this case, You owe approximately $13,000. Transfer that to a 0% credit card offer with a 3% transaction fee. That is an additional $391.59. That equals $13,391.59 paid out over the corse of one year would be $1115.97 per month approximately. Interest cost on a Home Equity line of Credit on $13,000 with putting up the same $1115.97 per month payment is only $209.73 at 3%, the interest expense is $281.38 at 4%, and you are still saving money at 5% because the interest cost is $353.91. I figured it out that in this case, the 3% transfer fee is really costing you 5.5% if transferred to the other credit card and paid off in one year. Costs are way more if not paid off.
Do not get a Home Equity Loan. Go for the Home Equity Line of Credit. They are very flexible and you do not have to carry any debt. It is there to act as buffer to get you out of debt and maybe for the occasional large purchase, within reason. Hope you find this helpful.
