OT- The Finance Thread

[darksabre]

I was going to post a thread entirely to serve myself but I figured maybe a catchall thread for everyone would be better.

 

Essentially I am soliciting for advice on a financial issue before I go talk to people who just want my money.

 

As some of you know I'm recently back in school. I had some savings but thanks to unexpected car repairs and the fact that I can only work part time, I've managed to accumulate some credit card debt that I don't expect to be able to pay off anytime soon. I've never been in this situation before and I want to do something about it becomes a big problem what with interest charges and such.

 

My question is how do I handle this? Should I take out a loan through my financial institution (M&T) or someone else? What should I look for in a lender? Is there a better option?

 

I honestly just don't know what my options are but I figure someone here probably does.

 

 

[MattPie]

I believe that taking out a loan negatively affects your credit rating. That sounds crazy to me, as to me it would be a sign that you're being responsible and managing your finances well. Aapparently it means that you were in over your head or something. I know in the past I'd use those "1% APR on balance transfers!" deals when I needed to, but I don't know if those still exist (I haven't kept a CC balance in awhile).

[nfreeman]

If you're diligent enough to manage it, the best option is to find another credit card offering a promotion for 0% on transferred balances for a year, transfer the balance, and do the same thing every 11 months until you pay it off. But don't add to the principal balance if you can help it and don't think you just found a free pot of money.

[Drunkard]

If you're diligent enough to manage it, the best option is to find another credit card offering a promotion for 0% on transferred balances for a year, transfer the balance, and do the same thing every 11 months until you pay it off. But don't add to the principal balance if you can help it and don't think you just found a free pot of money.

This is your best option, although it will also drop your credit score as well. First because the card company will do a credit check on you which dings your score temporarily (although) it will recover pretty quickly and the second reason is because it will drop the average age of your credit. If you've had one credit card for 10 years then add a second one it will make your average age of credit equal to 5 years. On the other hand the ding to your credit could be offset by having a lower utilization of your total credit. Say you had a $2,500 balance on a card with a $5,000 limit (50%) then you transfer that balance to a new card with a $5,000 limit your utilization percentage drops to only 25% as long as you keep the other card active by just using it a few times a year for minor purchases and paying it off whenever you do.

Edited September 26, 2014 by Drunkard

[Derrico]

I have a line of credit that I don't use too often but it's there for when we rack up too many charges on the card and wouldn't be able to pay it off on time. Atleast this way the line of credit interest rate is much more reasonable then the 18 percent plus the credit cards charge.

[TrueBlueGED]

I'm sure some will frown upon this, but taking out extra on student loans is a viable option to handle some credit card debt, if done responsibly (as in, don't take out an extra 10 grand because you want a new car). It can be a slippery slope, but so can opening a new card every year.

 

Also keep in mind that when you balance transfer, even if it's a 0% interest rate, there's almost certainly going to be a 3% or so fee on the transfer. Do you have any ETA on how long it would take you to pay it off? If it's under a year, just get a 0% card if you can. If you think it's longer term, still get the card, but take out additional student loans to pay the card off for next academic year. Just keep track of what the charge was and pay that principle off the loan before you graduate and start paying interest.

[darksabre]

The zero interest card probably makes the most sense. I've already got the maximum out for government loans so I'm not sure I could get much more that wouldn't just be a standard loan. I'll look into it though.

[Hank]

Any stock guys on here? I'm thinking of putting 2K into Clean Coal Technologies (CCTC) and 1K in Avago (AVGO). Advice?

[wjag]

I can tell you first hand, that the age of your credit cards will effect your credit score. When you open new cards, the age of your credit history (they average your cards) drops and so does your score.. Not that that should matter. Getting ahead of your debt should be your first consideration.

[Derrico]

Any stock guys on here? I'm thinking of putting 2K into Clean Coal Technologies (CCTC) and 1K in Avago (AVGO). Advice?

 

I just got into stocks this year and still learning but feel like I had to start somewhere. I've only invested in canadian companies on the tsx so far but it's been a great start. I'm into dividend reinvestment plans to take advantage of the very low transaction fees myself.

[darksabre]

I can tell you first hand, that the age of your credit cards will effect your credit score. When you open new cards, the age of your credit history (they average your cards) drops and so does your score.. Not that that should matter. Getting ahead of your debt should be your first consideration.

 

My HSBC card is over a decade and my M&T one is just over two years I think. I don't know if I'm doing too much damage but I don't expect to need my credit score to be any good in the next year or two. I'm not buying a house or financing a new car.

[Iron Crotch]

Any stock guys on here? I'm thinking of putting 2K into Clean Coal Technologies (CCTC) and 1K in Avago (AVGO). Advice?

 

CCTC is delisted. I like to gamble on penny stocks in sectors that I know (mainly telecom), but delisted stocks should almost always be avoided like the plague. Outstanding shares often get canceled when/if these companies restructure.

 

Don't know AVGO, but analysts seem to like it. Go with your instincts!

[shrader]

When we bought a car last month, the finance guy had a little contest to see who had a higher credit score. She beat me by one stinking point. It surprised me because I have essentially no debt in my name and she still has a good chunk of college loans left.

 

Sorry, it doesn't answer your question, but the thread made me think of it.

[Andrew Amerk]

 

 

My HSBC card is over a decade and my M&T one is just over two years I think. I don't know if I'm doing too much damage but I don't expect to need my credit score to be any good in the next year or two. I'm not buying a house or financing a new car.

 

Use Credit Karma. It's free, and can give you insight into how credit works, as well as help you monitor everything.

 

As far as the debt - got any family members that you could get money from and pay back instead?

[wjag]

Use Credit Karma. It's free, and can give you insight into how credit works, as well as help you monitor everything.

 

As far as the debt - got any family members that you could get money from and pay back instead?

 

I use Credit Karma. They're the reason I know my score dropped four points just for opening a new card. They give you explanations on how your score is built and how important the various components are to your composite score.

 

And as Andrew Amerk says, it is free.

[SwampD]

My HSBC card is over a decade and my M&T one is just over two years I think. I don't know if I'm doing too much damage but I don't expect to need my credit score to be any good in the next year or two. I'm not buying a house or financing a new car.

You actually need good credit for more than just that. Some employers will check credit before hiring someone, landlords, as well.

We have done the credit card balance swap forever. We've had over 15 cards over the past twenty years and our credit is really good. Assuming your credit is currently good and you are getting offers, you just have to wait for the right one, like 0% on transfers with no transfer charge (sometimes it's as much as 3%). Just keep on top of it and make sure you close the previous card.

[Weave]

I wouldn't sweat your credit score getting dinged a few points for a credit application. Those dings are fairly short lived. The bulk of your credit score is determined by a combo of your history of making payments and your debt load relative to your ability to pay it,

 

If you have a high degree of faith in your ability to NOT use new credit cards then opening a new card to transfer your debt into a 0% card is a very good idea, but if you are the type (or are in a situation) that is likely to see you using that card then a new card isn't such a good idea.

 

A loan is not a bad idea either. Anything that will get you into lower interest rates is a good idea overall. If your credit score isn't hot, getting an unsecured loan might be difficult at decent interest rates though.

 

As for lending institutions, I am a fan of credit unions. If you are not in one, most only require $5 or so to open an account. Their interest rates on loans are usually lower than commercial banks.

Edited September 27, 2014 by weave

[darksabre]

I wouldn't sweat your credit score getting dinged a few points for a credit application. Those dings are fairly short lived. The bulk of your credit score is determined by a combo of your history of making payments and your debt load relative to your ability to pay it,

 

If you have a high degree of faith in your ability to NOT use new credit cards then opening a new card to transfer your debt into a 0% card is a very good idea, but if you are the type (or are in a situation) that is likely to see you using that card then a new card isn't such a good idea.

 

A loan is not a bad idea either. Anything that will get you into lower interest rates is a good idea overall. If your credit score isn't hot, getting an unsecured loan might be difficult at decent interest rates though.

 

As for lending institutions, I am a fan of credit unions. If you are not in one, most only require $5 or so to open an account. Their interest rates on loans are usually lower than commercial banks.

 

I'm pretty good with how I manage my credit cards and I assume my credit score is good since I've never had any issues in the past with paying bills and such. This will likely be the first time I take any kind of hit to my score.

 

And yes, that's definitely the key goal.

 

You actually need good credit for more than just that. Some employers will check credit before hiring someone, landlords, as well.

We have done the credit card balance swap forever. We've had over 15 cards over the past twenty years and our credit is really good. Assuming your credit is currently good and you are getting offers, you just have to wait for the right one, like 0% on transfers with no transfer charge (sometimes it's as much as 3%). Just keep on top of it and make sure you close the previous card.

 

Good tip on the transfer charge bit. Not like I want to pay more money.

[darksabre]

I use Credit Karma. They're the reason I know my score dropped four points just for opening a new card. They give you explanations on how your score is built and how important the various components are to your composite score.

 

And as Andrew Amerk says, it is free.

 

Fired up a CreditKarma account today. Interesting stuff. My credit score is very good. I'm glad. :lol:

 

I'm almost wondering if I should get some more work done on my car first before I transfer to a zero interest card...

[Hank]

 

 

CCTC is delisted. I like to gamble on penny stocks in sectors that I know (mainly telecom), but delisted stocks should almost always be avoided like the plague. Outstanding shares often get canceled when/if these companies restructure.

 

Don't know AVGO, but analysts seem to like it. Go with your instincts!

 

Potato, thanks for the insight. I will definitely hold off on CCTC.

[shrader]

 

 

Fired up a CreditKarma account today. Interesting stuff. My credit score is very good. I'm glad. :lol:

 

I'm almost wondering if I should get some more work done on my car first before I transfer to a zero interest card...

 

Remember that it is just an estimation and not a real score. In my story earlier, credit karma had me a bit higher than my wife.

[Hank]

Here's a financial tip - New Zealand plays Argentina in Rugby at five. 500 on NZ wins you 50 at Bovada. That's free money.

[wjag]

Here's a financial tip - New Zealand plays Argentina in Rugby at five. 500 on NZ wins you 50 at Bovada. That's free money.

 

How much did you invest in the Netherlands during the WC?

[Hank]

 

 

How much did you invest in the Netherlands during the WC?

 

Nothing. I didn't find bovada until after the WC. So far I've been killed by Man-U and the big ten. But two weeks ago I hit a seven team parlay on the NFL and last week I hit on five of seven. Overall I'm up about 400, my bets are usually 5-10 unless I see what I would consider to be a sure thing, like NZ.

[cdexchange]

I love Credit Karma. They can also help you search and find the best CC deals based on criteria you specify (such as low balance transfer rates and such). Such a useful site, and completely free.