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I have two large credit cards at 12.95%. I can get a loan for the balance at 13.95%. Am I better to consolidate the debt of both cards or just pay off the cards as is.

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    You have two apples for which you paid 50 cents each. Someone asks you to give him the two apples, so that he can give you two different apples, and asks you to pay him for this 5 cents. Does that make sense to you? – littleadv Sep 18 '14 at 7:35
  • more to the point, why do you think that paying a higher rate is better? – JTP - Apologise to Monica Sep 18 '14 at 7:44
  • This question extends past simple mathematics. For example someone may have been in the same position and found consolidating the cards into loan and cancelling the cards was a good way to go because of xyz or alternatively it was a bad decision. – maxum Sep 18 '14 at 9:00
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Look at the interest rates.

You are paying 12.95% interest now. You would be paying 13.95% interest for the loan.

How could it make any sense whatsoever to take the loan?

Things that you can do:

Look for a loan for less than 12.95% interest. Find a new credit card that lets you transfer debt and is interest free for some time, looking very carefully at any fees and at the interest rate later. You can always edit your question here if you find something.

Best solution: Destroy your physical credit cards so you don't enter into more debt. Then pay off your debt as fast as you can. If there are things you want to buy with your credit card, don't buy them. Debt is BAD for you.

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  • Certainly debt at these rates is BAD for you, if it's for more than a minimal amount or more than a minimal time. – keshlam Sep 18 '14 at 12:53
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    Alas, destroying the physical credit cards merely stops new impulse buying; it does nothing to stop the automatic monthly charges to the card from various companies where one has signed up for services (cable, phone, internet, movies-on-demand, dial-a-porn etc). – Dilip Sarwate Sep 18 '14 at 13:29

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