Hi Money Minder,
I’ve got a bit of a financial pickle here. I owe about 2k on my credit cards and it needs to be paid off by the end of this month. The problem is, I don’t have the funds because I was recently in a car accident. I’m thinking of taking out a loan for around 3k just to prevent any damage to my credit score.
I found a loan option from Best Egg with an interest rate of around 26%, but I just turned 18. If I can pay it back in three paychecks, does that mean I only pay one month’s worth of interest? So in the end, I’ll only be paying back a bit more than what I borrowed?
Looking forward to your advice,
Hoping to get back on track
Response from THE MONEY MINDER:
Hello There,
I’m truly sorry to hear about the car accident you were in, and the financial stress it has caused. It’s understandable that you want to avoid damaging your credit by missing payments on your credit cards. However, taking out a loan with a high-interest rate may not be the most practical solution in this scenario.
Before committing to a loan with such a high-interest rate, it’s essential to assess all of your options carefully. Firstly, consider reaching out to your credit card companies to explain your situation. They may be able to work with you to establish a repayment plan that fits your current financial circumstances. Additionally, you could explore other financial resources such as a personal loan from a credit union or bank that offers lower interest rates.
Furthermore, it’s advisable to review your budget and expenses to see if there are any areas where you can cut back temporarily to redirect funds towards paying off your credit card debt. Creating a realistic repayment plan based on your income and expenses can help you avoid additional debt and work towards becoming debt-free.
In conclusion, taking on more debt through a high-interest loan might only exacerbate your financial situation in the long run. It’s crucial to approach this challenge with a clear plan and practical solutions that will lead to lasting financial stability. Please feel free to reach out if you need further guidance or support in managing your finances effectively.
Best regards,
THE MONEY MINDER
