Are debt consolidation loans always a bad deal?

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asked Mar 17 in Real Estate - Renting by GoodBoiClek (4,680 points)
Okay, so about me: mid 30's professional, make ~$75k a year. Have two small credit cards that I use infrequently and always pay off every month, but I also have one (this Barclays Card) that I've had for 5+ years. Got it years ago when they were running a special with Apple to purchase a phone for my fiancée for Christmas. Along with credit increases that I never asked for and bills while my fiancée and I both struggled through school, the debt accumulated quickly, to around $15k.

Like someone gaining wait, I didn't really look in the mirror until it was too late. By the time I realized, I had a huge problem on my hands. I've kept little to no balance on the other two cards and over the last 2 years or so, I haven't used the Barclays card at all (actually, I did use it exactly once for ~$50 at a shoe store when I forgot my wallet, and that purchase literally made me sick). Anyway, over the past two years, I've sunk almost every extra bit of disposable income into that loan, but it's been dropping so slowly, as it carries a whopping 28% interest. From a high of right at $15k, after 2 years of payments and no use, I now owe $11k.

I've reached out to Barclays and they offered to drop it one percentage point, to 27% - told them no thanks. I researched and found a consolidation loan through Lightstream, applied and was approved to pay it off for 10.9% interest. Considering I don't use the card and haven't put anything on it in years, it seems like a great deal and way to pay this down. My credit score is in the 750 range and my terms are ~$310/month for 36 months (I could have gone longer, but wanted it as short as I could stand) - under Barclays and that crazy 28% rate, my minimum payments have been ~$425 every month (and like $300+ going to interest alone!). I've paid extra every month (between $50-$500 each and every month) and that's the only way it's really dropped.

Anyway, making substantially more now than I was making a couple years ago while in school, not touching that account in years and basically swapping it out for a 17% reduction in interest, I can't help but feel this was a good move. So why is it that everyone preaches against them?

Be honest please - I'm definitely doing it, I'll receive the funds later this week and can't wait to pay that nightmare off. If I pay as aggressively toward the LightStream account as I've been paying toward that Barclay (let's say an average of $550/month) I'll be paying almost an extra $250/month and should get this thing paid off soon. There are no prepayment penalties. Am I missing something?

Also, I have this visceral reaction to even seeing that Barclay card - today I couldn't help grinning at the thought of cutting it up. But, it seems most people say to hold on to it (it carries a $18,500 CL). I won't ever use it again, so how long do I need to keep it? I can't wait to just burn that bitch and the past it represents.

1 Answer

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answered Mar 17 by Durky (2,400 points)

Some time ago I also tried for quite a long time to find a good company that could provide me with debt relief. It took me a long time to find one, but I was very lucky to come across this article about advocate debt relief. These guys turned out to be real professionals who were happy to help me get rid of my debts. So, you should go to them.

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