This Guy Had a Crippling $26K in Credit Card Debt. Here’s How He’s Paying It Down
Some of the links in this post are from our sponsors. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.
On a Saturday night this past January, Nick and his girlfriend Leigh cozied up next to her fireplace and commenced a solemn “credit-card-cutting ceremony.”
Between the duo rested a stack of plastic cards and a bottle of Champagne leftover from New Year’s.
As Nick (who asked that we omit his last name) cut each card, his girlfriend offered words of encouragement — how one day he’d be able to buy a house, invest money, give back.
For Nick, 27, these financial goals have felt far out of reach.
At 18, he was roped into opening his first credit card. Over the years, he spiraled into about $26,500 worth of debt.
“I felt like I was drowning,” he says. “I was able to make monthly payments, but every time I did, the majority of the payments were going to interest charges.”
Hoping to fix the problem, he attempted to consolidate his debt. But each time, he was denied a loan. Until he read about Upstart, a lending platform founded by former Google employees that offers what it calls “smarter loans” through partnership with participating banks.
Rather than solely judging borrowers on their credit scores (though it does require a 620 credit score), Upstart’s underwriting model can incorporate factors such as education, area of study and work history to better understand a borrower and their propensity to repay a loan.
Nick took a shot and applied for an Upstart loan. Within 40 minutes, he was approved. Less than two hours later, Upstart initiated a transfer of funds. His loan funds would be available to him the next business day.
Cue the ceremonial credit-card cutting — because he vows to never let credit card debt take over his life again.
How This Guy Plans to Pay off $26K in Credit Card Debt
The more than $26,000 in debt Nick managed to collect was mostly from his younger, more financially reckless years, when he’d buy the latest and greatest electronics or take vacations and spend too much money.
“I completely misused [credit cards] and was not financially responsible at all,” he says.
Within 10 years of opening his first credit card, he owed six creditors a lot of money. His total monthly minimum payments hovered around $800. Much of that went toward interest and fees.
For example, one card called for a $160 minimum payment, but only $65 of that went toward the principal.
“How crazy is that?” he says. “I felt as if I was going nowhere, simply spinning my wheels in the mud, truly not able to make any momentum.”
He’d attempted to refinance with several lenders, hoping a loan with a lower interest rate would help him gain some traction. But each time he applied, he was denied.
Then he read about Upstart on The Penny Hoarder. It was the story we told about Kelsey Buxton, who found herself in a similar situation, with about $22,000 in credit card debt. Because Nick related all too well, he felt like he had a chance.
He applied for the loan, and the process moved forward quickly. He rattles off email timestamps:
- Upstart sends confirmation that it received his application at 11:53 a.m. Jan. 8.
- At 12:33 p.m. that same day, an email indicating his loan approval pops into his inbox.
- Then, at 2:10 p.m. — only a few hours later — Upstart lets him know it has initiated the transfer of funds into his account.
- When he wakes up Jan. 9, sure enough, the loan is in his account, and he immediately begins making payments toward his credit cards.
“It was such a relief — like a giant weight had been lifted off my shoulders,” he says.
This new loan meant Nick could go from paying a minimum of $800 a month to a minimum of $667, thanks to the difference in interest. With his credit cards, he was paying up to 24% in interest. His new loan boasted a 19% interest rate.
Rather than blowing that extra $133 a month, though, he puts it toward his five-year loan, which means he’ll be able to pay the loan off in about three and a half years — at most. His job also allows for overtime, so he plans to put some extra time in and put any additional income toward the loan.
“Truly, my goal is to have this loan paid off at around two and a half years,” he says. “I think I am on my way!”
Additionally, he has vowed to never slip into credit card debt again. That’s helped by cutting up all his cards — except one he keeps locked in a safe, only for emergencies.
Upstart Loans Review: He Has Renewed Hope
Nick says he can finally see a light at the end of the tunnel.
He is able to more aggressively pay off his credit card debt through his Upstart loan, and his credit score through Experian has increased from 630 to 742. He suspects it’ll only continue to increase as he pays his debt down.
Nick feels thankful for Upstart — and that it took a chance on him.
His less than perfect credit score didn’t mean he wasn’t capable of taking strides to get his finances in order. Instead, Upstart’s technology analyzed other factors, like his job history in public service and his education, an associate degree.
“It has shown a light at the end of a dark, treacherous, financially disappointing [tunnel],” he says. “I finally feel like I’m moving forward.”
As soon as Nick pays off his credit cards, he wants to purchase a house.
“Upstart has provided me the opportunity to dream about my future without lingering credit card debt.”
How to Apply for an Upstart Loan
We send a genuine thank you to Nick, who emailed us about a week after his loan approval to share his story.
“I really want to be able to give others hope, like I was given,” he says. “I thought I was never going to be able to get out of debt.”
If you’re curious, you can get a free quote from Upstart within minutes. Checking your rate won’t affect your credit score.
Simply navigate to Upstart and select your goal. Do you want to pay off credit card debt like Nick did? Tackle student loans? Pay for personal expenses, like medical bills or rent?
You’ll enter some basic information on the rate check form: how much you wish to borrow ($1,000 to $50,000), your name, address, highest level of education and primary source of income.
There are no prepayment penalties, so you can take strides to pay your loan ahead of time, like Nick.
Learn more about Upstart and secure a free quote all online.
This story is a reflection of one individual’s experience and doesn’t necessarily reflect the experience of all applicants.
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder. If an Upstart loan has renewed your financial hope, she’d love to hear from you.