Credit Card Cash Advance - how to pay it off...

[Anonymous]

So, I am embarrassed to write that we have a fairly substantial credit card bill. It is not anything we will be able to pay off quickly, but we are consistently chipping away at it. But here is the thing. On about 80% of the debt we have a 12% interest rate, but on the remaining 20% we have a 25% interest rate, since that 20% was from a cash advance (which I didn't realize at the time!). Is there any way that we can pay off the cash advance part of the debt first, or does the credit card automatically hold on to that until the other debt is paid off and then pay it last, in order to make the most profit?

[Anonymous]

Do you have a HELOC on your home? If you take out the money and pay off the credit card. You'll end up paying less in the long run (you can get a HELOC for 6%+)

[Anonymous]

I have to agree, you need to consolidate and rip that card up!

Even if you can get a personal loan for 10% that would be much better. A HELOC is the way to go, but if you've gotten yourself into a bit of a credit mess or don't own, that might not be viable.

I'm also taking out of my ass because I'm not even sure if personal loans are even available at 10%

[Anonymous]

Anonymous wrote:Do you have a HELOC on your home? If you take out the money and pay off the credit card. You'll end up paying less in the long run (you can get a HELOC for 6%+)

OP here - We have no liquid assets right now and no desire to accrue new debt, which is why we are trying to diligently chip away at what we have now. Thanks for the suggestion though.

[Anonymous]

Call your credit card company and ask how to pay off that cash advance portion first. At 20% interest, I would be getting money from wherever possible to pay that 20% off pronto. (Do you have an Emergency fund? Can you sell something?)

If you don't have an emergency fund, I would recommend reading some of the tips of Dave Ramsey, Suze Orman, and Michelle Singletary. You need to start saving for an emergency fund and a "life happens" fund. Dave Ramsey has a "debt snowball" solution that is pretty interesting. Good luck.

[Anonymous]

OP, do you only have the one card? My husband and I have significant credit card debt (now just over 30K down from 55K) from when we were in grad school. We keep two cards open with high credit lines and transfer the balance (they always offer 0% on balance transfers) from one to the other so that we never pay interest. We pay a $75 transfer fee every 6 months when we do it, but at least it lets us pay it down without donating to the cc company.

[Anonymous]

Anonymous wrote:Call your credit card company and ask how to pay off that cash advance portion first. At 20% interest, I would be getting money from wherever possible to pay that 20% off pronto. (Do you have an Emergency fund? Can you sell something?)

If you don't have an emergency fund, I would recommend reading some of the tips of Dave Ramsey, Suze Orman, and Michelle Singletary. You need to start saving for an emergency fund and a "life happens" fund. Dave Ramsey has a "debt snowball" solution that is pretty interesting. Good luck.

Great suggestions. I have been reading Michelle Singletary and have been thinking a lot about the emergency / life happens fund, but contrary to her suggestion, was waiting to start it until I had more debt paid down. I checked out the debt snowball plan, and will look at it in more detail tonight, but it makes a lot of sense. Thanks.

[Anonymous]

Anonymous wrote:OP, do you only have the one card? My husband and I have significant credit card debt (now just over 30K down from 55K) from when we were in grad school. We keep two cards open with high credit lines and transfer the balance (they always offer 0% on balance transfers) from one to the other so that we never pay interest. We pay a $75 transfer fee every 6 months when we do it, but at least it lets us pay it down without donating to the cc company.

OP here - We do just have one credit card. We try to use our debit card instead. And honestly, I am really afraid that if we open another, I will just build up more debt. Perhaps if I had more discipline, your approach would make sense for me. Financially it certainly does. But I just don't want to accrue any more debt!

[Anonymous]

then cut up that card. Or at least, put it in the freezer. You do not need easy access to it, especially at 12% interest!

Can one of you get a part time job? You need to have some more cash inflow or less cash outflow right now. I was serious about selling something too--craigslist something. You need to get away from 25% interest!!!!!!!!!

And DON'T do a payday loan, for goodness sake. Those things should be illegal. Talk about high interest--it's something like 400% APR. I would ask family before I would use a payday loan.

[Anonymous]

also, get those dave ramsey books from the library--for FREE!!!!!!!!!!

Start brown bagging it.
No more cable
Beans and rice, rice and beans, as Dave says
No more eating out

[Anonymous]

Anonymous wrote:then cut up that card. Or at least, put it in the freezer. You do not need easy access to it, especially at 12% interest!

Can one of you get a part time job? You need to have some more cash inflow or less cash outflow right now. I was serious about selling something too--craigslist something. You need to get away from 25% interest!!!!!!!!!

And DON'T do a payday loan, for goodness sake. Those things should be illegal. Talk about high interest--it's something like 400% APR. I would ask family before I would use a payday loan.

OP here - We actually are increasing our income starting in Oct. (my husband has been a FT student and now is returning to FT work), so that should really help us in this process. Great suggestions re: ways to cut back. We will definitely work on them. Another one I am trying to do is carpool more. Metro isn't an option for me, but carpooling really does cut down on gas costs.

[Anonymous]

Well, the good news is that the problem is temporary, since you've ruled out all the solutions besides cutting back on consumption.

Can he get a student loan for your last bit of school debt so that more of your income can go toward paying the thing off? Yeah, it is more debt, but smarter debt (and less damaging debt to your credit score.)

[Anonymous]

there's a WTOP story by its Consumer Action (?) reporter not too long ago that some advocate groups were fighting credit card companies about this issue so that people could pay off the debts with higher interests first.

[Anonymous]

Anonymous wrote:Well, the good news is that the problem is temporary, since you've ruled out all the solutions besides cutting back on consumption.

Can he get a student loan for your last bit of school debt so that more of your income can go toward paying the thing off? Yeah, it is more debt, but smarter debt (and less damaging debt to your credit score.)

OP here - The one solution that I ruled out was taking out loans or new credit cards to pay off the debt we already have accrued (the smarter debt you mention). I did not rule out calling the credit card company to lower the rate, increasing our income, and lowering our consumption. While getting loans to pay off loans and debt may work for some, for us we really prefer to chip away at the debt we now have through increasing income and decreasing consumption (and hopefully getting the credit card company to lower the debt a bit more).

And luckily our credit score is in pretty good shape!

Thanks!

[Anonymous]

Anonymous wrote:there's a WTOP story by its Consumer Action (?) reporter not too long ago that some advocate groups were fighting credit card companies about this issue so that people could pay off the debts with higher interests first.

OP here - Interesting. That would definitely be in the best interest of the consumer, but I could see why the banks might be opposed.