I have a debt of 28,000, and a loan for it for 12.99% for 96 months (611.00 payment). I have been thinking about transferring the debt to credit cards: 16000 at 1.9% for 8 months then 16.99% after, and the rest to a 5.99% fixed amount. Should I transfer the debt or keep it under the 12.99% loan?
2006-08-16 11:05:19 · 12 answers · asked by Chrissy 1 in Business & Finance ➔ Credit
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2006-08-19 08:18:49 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If I read your question correctly, you owe 28K and you are paying it at 12.99%. That is a substantial debt but the interest is reasonable if it is an unsecured loan. I have a hard time thinking any credit card is going to let you have what you describe, I just do not believe you got the facts straight. Any way, beware of credit card offers that start with balance transfers at very low rates 0% o 9% like you suggest, because they will normally credit your payments to the low rate portion of the debt first. This means that while you are making small payments to the $16000 debt, in 8 months your other $12000 of debt will remain unpaid and would increase by about $5000. If they are different loans and options, with multiple concurrent payments, a good answer would require running multiple scenarios of debt depreciation. If you understand basic finances, you can do it using web based tools. Your credit rating has a significant impact on all this.
2006-08-16 12:03:33 · answer #2 · answered by 'stavo 2 · 0⤊ 0⤋
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2016-09-26 06:15:32 · answer #3 · answered by ? 3 · 0⤊ 0⤋
The other writers are correct about what they state about credit cards. If you do have an existing balance: for example, a purchase balance of 6k and you do a balance transfer at a 1.99% for 16k, your payments will be allocated to pay off your low rate balance (16k) before paying of your higher rate balances (6k) due to it being a promotion. Secondly, a lot of credit card company can change your interest rate on 2 different levels. 1) Defaulting on/with them, which means you did not meet or agree to the terms of the agreement---late payments. 2) Default off/outside of them, which means your credit will be reviewed(typically once a month) and if they did not like what was seen, they can change the rate. Meaning, if your late with an outside lender/creditor ----- in spite of you making your payment timely with them, you could be in default of the agreement. Your best bet would to try to get a fixed loan and run from credit cards. Run far if your looking to pay off something with such a high balance. If something unexpected takes place your payments could be 3x what your paying now. If you do it..Please set up an auto payment arrangement with them. Do not trust the mail, because you do not have a grace period with credit cards. If your late...your screwed - royally! (they might waive once or twice as a good will and not effect your rate, but not guaranteed) Also, if they are with the same credit card company see if you can just consolidate the cards into one card. You can take the credit card that has the 1.99 and move the funds to the card that has the 5.99. It will give you the credit limit you need at one fixed rate that is significally lower than your existing rate. Meaning, less changes of you defaulting. Do not be affaid to ask. I do it with Citi Cards all the time. That is how I became debt free. Hope this helps!!!
2006-08-16 16:21:46 · answer #4 · answered by Emailmybroker 1 · 0⤊ 0⤋
any way to bring down the loan rate - I think that a loan debt is a better debt to have that a credit card debt. There are so many loan agencies out there - worth it to search for a better rate - keep it a constant rate - credit cards change the rate! Good luck! plus - better to pay once an not twice!
2006-08-16 11:12:19 · answer #5 · answered by Anonymous · 0⤊ 1⤋
CC rates aren't really fixed, they can be changed if you carry too much load. They're also less flexible in financing terms than a bank loan. You should look into getting a line of credit to pay off the loan with if you have equity in your home or business. Reguardless you should consult with a CPA about this to avoid possible unforseen consqeuences with your other financing or taxes.
2006-08-16 11:43:57 · answer #6 · answered by W0LF 5 · 0⤊ 0⤋
be careful , if u already a balance on ur credit card , say 8000 and u add the balance transfer , you will be paying the balance transfer first and then mean while your original balance on ur credit card will be gaining interest u wont be paying that off because u will have to pay off the loan first (balance transfer) . if u had zero balance no worries
always ask question first with ur credit card company b 4 doing this !!!!
2006-08-16 11:17:15 · answer #7 · answered by whispernikki 4 · 0⤊ 0⤋
if you have a fixed rate for the loan, then i would keep it at the loan level and not pay it off with credit cards. as credit card rates can always change, then you would have more debt than you started with.
2006-08-16 12:08:08 · answer #8 · answered by koifishlady 4 · 0⤊ 0⤋
You'd better take the loan, with credit cards, they can raise their rate for no apparent reason, it is much safer with a loan, credit card debt will kill you. I know from experience, but the oppurtunity came, where I could pay it off, my ex's 401k when he lost his job, then I left.
2006-08-16 12:03:21 · answer #9 · answered by beautie 4 · 0⤊ 0⤋
Credit cards are the devil's plastic.
2006-08-16 11:53:38 · answer #10 · answered by spackler 6 · 0⤊ 0⤋
read tips and articles on debt/credit and handling yr money better on this site
2006-08-16 11:37:51 · answer #11 · answered by Anonymous · 0⤊ 0⤋