Passbook Savings Loan / Secured Loans - what do you think I should do?

CuriousCash

Hey everyone.  I'm looking for some thoughts and ideas before I take the plunge and opt to do something I've not done before.  I've got some credit card debt that has just been rolling along for nearly two years now.  I never seem to be able to pay down the balance completely.  I'm thinking about taking out a secured loan with a credit union to pay it off, and then I'll have to repay the secured loan within a set time period.  It's only a couple of thousand, so I'm hoping to get it cleared by the end of next year.  The question is whether people think it's worth it?  I have to secure the loan against some cash savings that I also have, but this means I'm getting a really low rate on the loan itself.  Before anyone asks the obvious question - I don't really want to use my cash savings to pay off my credit card bill (a) because it isn't enough to cover it, and (b) because I lost my job last year and although I've found other work I'm terrified it's going to happen again and I don't want to be left high and dry and not able to pay my rent.   Also, it might be worth mentioning the credit card debt is currently on a 0% balance transfer but this is going to time out in August this year.  

I've not used a credit union loan secured against cash savings before, so I'm a bit nervous.  Any ideas, thoughts, encouragement etc very gratefully received!  TIA.

sourcrates

Personally I would never consider further borrowing to repay existing debt.

The reason I say this is because that debt accrued somehow, and you now appear to be struggling to repay it, by consolidating, your continuing the cycle which led you into debt in the first place, its not always good practice to run your finances in this way, your financial behaviour needs to change in order to move forward.

How much credit card debt do you have ?

You should first consider cutting back on other non essential spending, to pay down the debt quicker, or try and take on some extra work, in fact anything except consolidation, posting an SOA (statement of affairs) will tell us more.

gizmo111

I don't see the point of tying up your savings and securing against a debt that will be higher interest than the 0% debt you currently have.  I'm assuming that your savings would not be accessible whilst they are security for the outstanding debt?
I would continue to pay 0% until August and then either transfer to another 0% deal or use savings to pay the balance.

enthusiasticsaver

No I would not take a loan out to pay off a credit card which is at 0%. You need to ask yourself why the debt has been rolling along for two years. Are you still using the card for spending? How much do you repay monthly and how much would the loan repayments be? The usual scenario with those who struggle to pay debt off is they take out a debt consolidation loan which is what you are considering then before long they take out another credit card and before long the debt is increasing again. Without changing spending habits moving the card to a loan is pointless particularly if you are not paying interest. I would use these next 4 months to really try and get the card balance lower then move to another 0% in August if it is not gone by then.