Hi,

Me and my hubby have a lot of credit card debt, totaling about $16k. Not all of it is what you would consider "high interest rates" but you get the idea that we have a lot of debt. I went to my bank because the house I just purchased was having plumbing problems, so just to be "safe" I got pre-approved for a loan at a 12% rate for $20k. Now, this isn't a credit card loan, it's a pre-fixed rate, sort of like a home equity line but it's a credit line. We are getting a packet that's going to break it down for us, but basically it's like $380 a month for 5 years. Lucky us, we don't have plumbing problems. It turned out to be nothing!! So now I have this loan out there, and I'm considering taking it, so I can pay off my debts and then just have that 1 payment to make every month for 5 years and then never use a credit card as long as I live! (well, at least for things I can't afford) Right now our monthly credit card payments are more than twice that and the rates are much higher. Wouldn't it make sense to use the money for this loan to pay off my debt at a better rate with a real long term plan? IF I took it and then didn't go and get into more debt?

Thanks,
Diet Pepsi Girl

12% is pretty high. But if this is truly a home equity loan, then the interest is tax deductible so that may help.

$16K is not a lot depending on your income and if you can afford $380 month, it may be pretty high.

What I would do, is try to figure out whether you can spread that $380 out to pay off your cards and see if that will do it faster than 5 years.

But if you can truly resolve to not build up your credit card debt, a consolidation loan may be the best option.