Would I save $ putting the balance of a car loan on a lower % CC?

Question

Hi all,

I am presently paying 6.49% on a fixed 5 year auto loan. I recently received a credit card offer for 1.9% for the entire life of a balance transfer. Now I already contacted the credit card company and verified that it would count as a balance transfer, however do credit cards and auto loans compound interest differently? Would it be smart to transfer the balance to the credit card and continue making the same payments every month?

My first assumption would be that in the end I would pay off the car quicker. But I dont know how the interest works out.

Thanks,
-T

Answer 1

DO NOT transfer a fixed loan to a credit card. Credit cards have a revolving rate and can change without you even knowing about it. I garuantee that if you call a credit card company you have that your interest rate has changed since you opened the card. Even if the fixed rate is higher it is still better than a revolving rate. Credit Cards are nothing but a scam and it's mind boggling how they aren't illegal. The interest rate you are sold on changes if you miss a payment or send a late payment. It can get as high as 20-30%. If you send a payment late, it changes your rate. Credit cards are slick in the fact that the time on the due date is normally 12 noon or 1pm. So even if your payment gets there the due date, if its after that time its considered late. They also have double-cycle billing. If your due date is on March 10th and you pay on March 1st, your payment is early. But, if you pay next month's bill on April 10th, then it's late because they count 30 days from the day you make your payment, not the due date. Also law has been passed to where if you're late any payment that has nothing to do with your card (such as a utility bill) then they can raise your interest rate. With a fixed rate you know a future date for it to be payed off. Credit cards are designed for you to pay them for the rest of your life. That's why they have a minimum payment; that's only the interest you're paying. Capitol One's CEO made over $200 million last year because of the advantage they take of consumers' lack of knowledge. PLEASE DON'T MAKE THAT MISTAKE!

Answer 2

You should probably ask the credit card company how it compounds that 1.9% interest rate. I would also make sure I had the agreement in writing and read all the fine print. Maybe you have a friend in the finance business who can read it too or tell you what phrases to watch out for.

However, you may not be able to transfer a loan to a credit card. I know my car loan company doesn't take credit. Also, be aware of how many credit cards you have since opening a new account could negatively impact your credit score.

Answer 3

It is a better deal. BUT, something many people do not know is that if they are late for one payment the credit card company can raise your rate to usurious levels. Think 24%
If that happens, the 6.49% would surely look good again.