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Should I consolidate my credit card debt?



Question: I have a $4,000 personal loan that I took to pay my credit card debt. I’m still paying off that loan, but I wound up using credit cards again – and now I’m about $7,000 in debt. I want to get this paid off and raise my credit score. Should I take out another loan for $10,000 to pay off everything? Should I close my credit cards so I’m not tempted to use them? Should I keep one for emergencies or travel? I don’t have family to borrow money from, and I live paycheck to paycheck. At 58 years young, I want to start living better. I’m also looking to move soon, and I don’t want all of this to affect my credit score – and therefore my rental opportunities?

Howard Dvorkin, CPA and chairman of, responds…

When I’m asked questions like this, I usually dive into the math. The right answer typically depends on crunching the numbers to find the perfect solution.

Not with you, Lisa.

The answer here is simple, and all because of 14 words you wrote: “I’m still paying off that loan, but I wound up using credit cards again.”

That’s all I need to know.

The Credit Card Dilemma

You took out a $4,000 personal loan to pay off your credit cards, but as you admit, “I wound up using credit cards again.” So let me ask you a question: What makes you think a $10,000 personal loan will turn out differently?

I’ve been counseling Americans about their debts for more than two decades, and I’ve learned that much of my advice depends on their psychology as much as their finances. Yours is a perfect example of that.

If you had told me that you fell back to the lure of credit cards because of an emergency – an illness, accident, or natural disaster – then I’d chalk that up to a one-time situation. However, you took out a $4,000 loan and now have $7,000 in credit card debt. This shows me we need to address the disease, not the symptoms.

Credit Card Addiction

My diagnosis, Lisa: You’re addicted to credit cards. Like all addictions, there’s nothing to be embarrassed about, and there are treatment programs readily available.

In fact, credit card addiction is easier to cure than almost any other form of addiction. For starters, the treatment is cheap. It’s called credit counseling. With one phone call to a nonprofit credit counseling agency, you’ll receive a free debt analysis from a certified credit counselor.

Should I Consolidate My Credit Card Debt?

What’s that mean in plain English? Basically, an expert who must pass a financial test every two years studies your income and expenses. Then they tell you about your options, from do-it-yourself to getting some professional help.

Now, Lisa already tried DIY, and with $7,000 in credit card debt (and presumably climbing), a good option is likely to be a debt management program. A DMP, as it’s called, can cut your monthly payments by 30 or even 50 percent depending on your circumstances. Best of all, it goes easy on your credit score, which is a priority for Lisa (other debt solutions really beat up your credit score, from debt settlement to bankruptcy.)

DMPs charge fees, but you’ll save many times what you spend. Best of all, the quality nonprofits that administer DMPs offer you financial training – so you don’t relapse into the same problem. So how do you find a quality credit counseling agency? will do it for you. We partner with debt-solution providers who adhere to our Code of Ethics, so you don’t have to spend hours researching online reviews and then wondering if they’re accurate or planted there by the company itself.

For Lisa and anyone else who is finding it tough to get out of debt on their own, there’s no shame – and actually, much to be proud of – in seeking professional help from experts who do this sort of thing for a living.

Is credit card debt keeping you from success? Learn how to get your debt under control.

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