Should I apply for a fixed rate loan to pay off credit cards?
July 8th, 2009 by Lenny
I have ,000 in total credit card debt (3 cards). Interest rates are 4.99, 5.99 and 11.74. The card with the highest balance is also the highest interest rate. According to a debt calculator I used, I can pay them off in 42 months with my income. I have been offered a fixed rate personal loan of ,000 at 7.74%. I would pay off the credit cards and use the rest for legal fees (personal situation). Using the same debt calculator, I can pay the loan off in 48 months easily and probably sooner.
Is it worth it to apply for the loan? Will it hurt or help my credit? I do need the extra cash and do not want to take it from my home equity or put more on credit cards. Thank you for your responses.
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Why would you take 2 credit cards that interest rate is LESS than the fixed rate loan and transfer them to a higher rate?
Use the loan to pay off the highest interest card……pay the minimum on the 2 lower cards but take the payment you were making on the 11% card and send it to the fixed rate. This should help bring that balance down faster. When the fixed rate loan is paid, take that payment and add it to next higher interest card until paid off and then take THOSE payments and send them to the lowest card. Make sense? OR…see if you can do a balance transfer of all 3 cards onto a 0% credit card and go from there. It would only make sense to transfer all 3 if you can.
[...] Joe Wallace wrote an interesting post today onHere’s a quick excerptWhy would you take 2 credit cards that interest rate is LESS than the fixed rate loan and transfer them to a higher rate? Use the loan to pay off the highest interest card……pay the minimum on the 2 lower cards but take the payment you … [...]