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Hello, Just curious do you think its a good idea to pay off a credit card with a personal loan from a bank. The credit card rate is 10%. Personal loan rate is 12%. Finance charges are a reason for thinking about this. Thanks for your help!
The best way to go is to get a line of credit, if you can. The interest is closer to 5%, and you can write off a LOC on your taxes.
The key to paying off the card is to first cut it up and never use it again. If you get a loan to pay it off, and at the same time are still using the card(s), you are just digging yourself farther into the hole.
Keep one card for emergencies, and pay it off at the end of every month if you do use it. If you can't control having a card, cut it up.
Hello, Just curious do you think its a good idea to pay off a credit card with a personal loan from a bank. The credit card rate is 10%. Personal loan rate is 12%. Finance charges are a reason for thinking about this. Thanks for your help!
It doesn't make sense to take higher interest loan to payoff a lower rate credit card. Pay more than the minimum every month and stop using the card.
If you own a home, take out a line of credit or home equity loan to pay of the credit cards. That way the interest rate should not only be lower but you can also deduct the interest against your adjusted gross income. If you don't own a home, shop for a credit card with a low interest rate promotion going on like 0% or 2% for six months or something and MAKE BIG PAYMENTS to pay it off as quickly as you can. You can also call the current credit card company and ask if there are any promotions going on with lower interest rates you could take advantage of. Actually, even if you own a home, I'd pursue finding a 0 percent credit card first and transfer the balance of the high rate card to that. Paying zero interest is always better than paying interest even if the interest is deductible.
The only risk with taking out a heloc is you are now converting unsecured debt to secured debt.
Also depending on the amount of debt along with the unstable real estate market you could find out by doing this that you could end up in a couple years owing more than the house is worth
If something should happen and you have to miss a couple credit card payments the only thing you risk is your credit, once it has become secured debt against the house you could possibly put your house at risk
Throw in closing costs and you need to figure if it will save you in the long run
I am a big fan of calling the cards to see if they have lower rates
then making as large a payment each month as you can to pay it off
yes i think its may be a good paln to pay off your credit card by taking a personal loan, because to maintain or to improve your credit card score u should pay off ur credit card at time for that only paersonal loan is the way. i also did this once by taking loan from [url] mod cut there service is good.
Last edited by Waterlily; 09-23-2008 at 08:42 PM..
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I hope your goal to clear the balance on your credit card with a personal loan is not to then enable you to re-charge on the credit card again because it is paid off but of course you have to do what is best for you....BUT I think when people start finding money elsewhere to pay of other debts like with a home equity loan they end up indebting themselves all the more. Why don't you just start paying as much as you can on the card each month and don't charge another thing on it?
If you have a 10% card consider yourself lucky. Pay that money sucker off as fast as possible without taking out a higher rate loan and only keep it around for an emergency. One alternative, if the balance is large enough, is to open a low or zero percent card and pay it off before the grace period. That way you are making the system work for you, not them.
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