Tuesday, July 26, 2011

Discover Personal Loans

So, I received an offer in the mail last week for a Discover Personal Loan. I know people have different issues with the different credit card companies, but Discover is one that I've found to be fair (for the most part) throughout the years.

The offer was to borrow from $5K-$25K as a personal loan for debt consolidation (or whatever other reason you need it). The interest rate was going to vary based on your credit rating and the repayment terms started at 36 months and went up from there. They stated that there was no prepayment penalty.

Our current plan is to pay off one credit card by the end of this year and the other around May 2012 (HOPEFULLY!). I thought that this loan may be a good way to get the interest rate down on the 2nd card. We currently have about a $17K balance on that card. About $2K is at 19.24% and $15K at 15.24%.

I went through the application process and was approved for the $17K loan. Unfortunately the interest rate they offered was 16.99%. The person on the phone tried to explain that even though this rate is slightly higher than the rate on the majority of my balance, it would probably be less that I'd pay because the credit cards compound interest daily, versus the loan company which will just add the interest monthly.

I wasn't able to find a comparison calculator online to do the math out but it just doesn't feel right. If they came back with a lower interest rate that would have been different, but it just didn't work out that way. That's okay. I'll stick to our original plan and stay focused on getting there.

Question: Has anyone else looked into consolidation loans? Did it work for you? Would you recommend it?


  1. I would stick to your original plan and just try to knock out the debt as soon as possible.

    I haven't done consolidation but from what I have heard it may reflect poorly on your fico but I'm not entirely sure how or why.

  2. yeah that sounds very shady. I've never done a personal loan, but I have transferred balances. Most of the time, I lock in a special 0% interest rate with Citicard. And then I don't pay any interest except for the 3% transfer fee, which is far less than the 8% interest rate on the original credit card. That's something you should look into!

  3. I did a Lending Club loan, and it worked out terrifically!!! We got a 7.88% loan for 3 year term. We used it to transfer about 10k from a CC that was 19.24%, and about 3k that was at 14.24%.

    If you want more info, let me know. If you decide to move ahead, I can give you a referral.

  4. I agree it sounds shady. You would be better off just continuing for your original plan or if you are a member of a credit union see if they can give you a better rate.

    When I moved the car loan and one of the credit cards to the credit union the interest rate really was much lower

    good luck

  5. 16.99%?? That's no deal and not worth the hassle of transferring. I think your gut is right - stick with your original plan.

  6. At 16.99%, I'd pass. Consolidation loans are tricky animals. I'd rather just keep plugging away at the debt with all I've got.


  7. I can't remember correctly as it was a while ago I was studying the interest rates but I think he had a point in that the credit card one will be more even though it has a lower interest rate.

    I'm no expert but I really think you should look into it carefully before tossing it to the side. Ask some professionals. Heck even some other bloggers might be able to help you out but the main thing is to look into it properly.

  8. I would stay away from it. What I would suggest though, is calling your credit card company and telling them that you received a balance transfer offer from another company and would like to know if they could lower your current interest rate in order to justify you staying with their company. They might lower it for you, especially if you've always paid on-time.

  9. stay with your plan - you are doing fantastic by yourself !

  10. Thanks for the different ideas! I ended up following Newlywed's advice and applied for a Citicard to get their zero interest balance offer. I found out today that we got approved. Yayyy!

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  12. I'm glad you passed on this. I was reading up on these and apparently they charge you the interest in full up front and you have to pay it all off. Even at the shortest term (36 months) you would have to pay over 4.8k (21.8k total) regardless of how quickly you paid it off. Pay it off in 1 year, for all they care, you're still on the hook for the full interest. Sign up for a longer term and you'd be paying even more in interest... even if you paid it off sooner than agreed.

    You dodged a huge bullet here.

  13. Personal loans with bad credit or no credit history is very difficult. Banks consider you high risk and may deny your request without collateral. To help you in your time of need, other financial institutions such as cash advance lenders are in place to provide you no credit personal loans.

  14. In 2006 I began a debt reduction plan and retired over $70,000 in credit card debt in four and a half years. Was denied credit from BOA but I was recently able to borrow $10,000 for three years at 7.99% interest from Discover Personal Loans. With this I paid off two car loans at 14.99% interest. Loving me some DPL!!

    Also got a Citibank card with zero percent interest too for 18 months. Things are looking up!

  15. Look at your credit card statements, they should tell you how much interest you will pay if you only pay the minimum payment per month. When I added all of mine up it totaled nearly 17,000 on just 7,000 debt!!

    DPL was able to offer me a fairly low rate ... when I calculated the interest they'll charge for my loan it comes to around $950. Yes, that's not cheap BUT it's certainly nowhere near 17,000.

    Also, according to my credit card statements if I only pay the minimums (which for now that's all I can afford to pay) it will take 21 years to pay them all off. With this they'll be paid off in just 4, and that's with a lower monthly payment than what the minimum payments are now on the three combines cards.

    Just like a car loan or a mortgage you ALWAYS pay the full interest, even if paying off early. I'm glad to see others have also had a good experience with DPL.

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