Personal finance: My experiences consolidating credit card debt

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Consolidating debt is kind of a divisive topic. I’ve found that people are usually really against it or really for it.

Some financial experts like Dave Ramsey say you should never consolidate, but instead use the debt snowball method where you pay off the smallest debt to the largest, regardless of interest rate.

And I think that works for some people, but what I have found works best for me and my personality is have a fixed term, fixed rate debt payoff plan.

Seeing those high interest rates on top of already high balances with no payoff date in sight was so discouraging to me, even when I was paying more than the minimum payment to get them paid off sooner.

So, I started researching my options for debt consolidation loans.

I tried going through my regular bank, but was promptly denied because of my debt to income ratio being too high.

I looked up some alternatives to going through a typical bank and found Best Egg and Lending Club. I’ve used both to consolidate debt.

Best Egg and Lending Club are online loan servicers that fund loans through investors. The entire process is done online and the money is direct deposited to your account in just a couple of days.

At first I thought it sounded too good to be true, but I did some more research and looked up reviews and it seemed like it was worth a shot.

I used Best Egg about a year ago. All I did was put in some basic information about me and my income/employment information. I think I had a response within a day and within a few days I had the money in my bank.

I took out a loan for $15,000 with a three-year payoff term at a 16.79% interest rate. There was also an origination fee of $750. My payments are $533 each month.

My payments are deducted each month and I don’t even have to think about it. I’m already almost one year down and then I’ll just have two years left!

I used it to pay off four credit cards. (I know— it makes me want to cry, too).

What makes me want to cry even more is that a few months after getting the loan and paying off those credit cards I had to have $2,000 worth of work done on my car. Because I didn’t have any savings I had to charge it. The spiral started over again.

It didn’t get as bad as the first time, but I found myself in a similar situation this spring. So, that’s when I tried Lending Club.

It was the same as Best Egg—just a entering your info in online, waiting to be approved and then the money was deposited right to my account within days.

I got another loan, this time for $10,000. I paid off those cards and have them hidden in my apartment.

I took out $10,000 with a three-year term at 10.41% interest rate. The origination fee was $500. My payments are $325 each month.

I know using these online loan providers isn’t for everyone, but for me I found them to be a life saver. Obviously, none of this is something anyone wants to do. I wish I would have had more self control and power over my spending, but all I can do is change going forward.

Each of my credit cards had an interest rate of between 25% and 30% because my credit isn’t the best and it seemed that my payments just weren’t making a dent. At least now I know when my debt will be paid off and I can still make extra payments to get them done faster.

Disclaimer: This is in no way sponsored by either company. I just wanted to share my experience in the hopes it can help someone else.

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