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Frequent Contributor
firstinlastout
Posts: 339
Registered: ‎12-12-2007
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Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

Pentagon federal credit union has a 8.9% loan rate....I think for 48 months.  I believe on 6k, the payments would be 200 dollars a month.  Does anyone know if Pentagon has a pre-payment penalty ?

 

Or should I just tap into my BOA credit card.....I have a 12,500 limit and a balance of 2k on it....the interest rate is fixed at 8.9%.  Should I charge 6k to it ?

 

What is the better route to go ?

Thanks

 

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usmc58555
Posts: 1,673
Registered: ‎02-18-2009

Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

get a fixed term loan. That way the interest rate is set for the term of the loan and you do not have to worry about interest rate changes while you are paying it off. plus it add an installment line in your credit report.


No matter what you think, credit card terms are fluid and can change on a whim.

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Established Contributor
Posts: 513
Registered: ‎04-03-2007
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Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??


firstinlastout wrote:

Pentagon federal credit union has a 8.9% loan rate....I think for 48 months.  I believe on 6k, the payments would be 200 dollars a month.  Does anyone know if Pentagon has a prepayment penalty ?

 

Or should I just tap into my BOA credit card.....I have a 12,500 limit and a balance of 2k on it....the interest rate is fixed at 8.9%.  Should I charge 6k to it ?

 

What is the better route to go ?

Thanks

 


 

 One reason people got into trouble with credit cards is that they revolved balances for years instead of obtaining an installment loan. Right before the new credit card laws go into effect next year, I guarantee that the BoA interest rate will go up if you carry a 40-50% utility until then. You will also lose the no interest for new purchases advantage on the BoA card. You are currently PIFing the BoA card aren't you? :smileywink:

 

 Absent more information, I would say to use the credit union installment loan. It will also most likely generate a higher FICO score.

 

 A year from now there will be plenty of "temporary" low interest offers made by BoA and other credit card issuers for BTs. You might be able to use your BoA card (at a lower rate) to pay off the installment loan at that time. The teaser most likely could be lower than your BoA rate is right now.  

 

 Before making any decision however, the main question would be, how much debt do you currently have? The more debt that you might owe, the greater the argument against using the credit card. Have you saved any money at all for the surgery? If you have no savings, charging $6K in today's credit climate is going to be very risky. You can limit your risk by locking into a fixed installment loan interest rate.


Regular Contributor
Mark_in_Pasadena
Posts: 180
Registered: ‎12-11-2008

Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??


firstinlastout wrote:

Pentagon federal credit union has a 8.9% loan rate....I think for 48 months.  I believe on 6k, the payments would be 200 dollars a month.  Does anyone know if Pentagon has a pre-payment penalty ?

 

Or should I just tap into my BOA credit card.....I have a 12,500 limit and a balance of 2k on it....the interest rate is fixed at 8.9%.  Should I charge 6k to it ?

 

What is the better route to go ?

Thanks

 


 

Assuming this isn't medically necessary plastic surgery, then the best thing to do is save up for it for 3 years and 4 months through a dedicated purpose savings, or "club account" that many credit unions offer and pay cash for it.  Just deposit the $150 you would've paid as your fixed monthly payment to your creditor into this dedicated purpose savings/club account.

 

Instead of paying $7,165 (principal + interest at 8.99%) for your plastic surgery, you'll only pay the actual $6k that your doctor is charging you.  You might even get the doctor to knock off $500+ if you pay him cold, hard cash instead of CC payment. 

 

Put the $1,165 you saved in interest into a ROTH IRA for your retirement.  This is an example of the "PAY YOURSELF FIRST" principle, that Americans have neglected during these past bubble years, that's important that they get reacquanted with.  Delayed gratification will be re-learned by many smart people during these lean times.

 

I apologize in advance if this is reconstructive plastic surgery you're having to do after let's say a mastectomy, where you could make a good argument for needing it done sooner.

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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

In terms of scoring (completely apart from financial and other issues), you'll do better to have it on a loan. Installment util has much less impact on scores than revolving (CC) util.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Regular Contributor
jacred
Posts: 104
Registered: ‎09-21-2008
0

Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??


Mark_in_Pasadena wrote:

Assuming this isn't medically necessary plastic surgery, then the best thing to do is save up for it for 3 years and 4 months through a dedicated purpose savings, or "club account" that many credit unions offer and pay cash for it.  Just deposit the $150 you would've paid as your fixed monthly payment to your creditor into this dedicated purpose savings/club account.

 

Instead of paying $7,165 (principal + interest at 8.99%) for your plastic surgery, you'll only pay the actual $6k that your doctor is charging you.  You might even get the doctor to knock off $500+ if you pay him cold, hard cash instead of CC payment. 


 

AND if you can put the $150 a month in an account earning 2% interest, you'd have an extra ~$200 in interest EARNED after the 3 years 4 months (rather than $1165 interest spent with the 8.99% loan).

 

Good thought, Mark :smileyhappy:

Established Contributor
jaybird201
Posts: 672
Registered: ‎07-05-2008
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Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

if you don't mind me asking...what kind of plastic surgery is it?
New Member
gaeta2013
Posts: 4
Registered: ‎09-05-2013
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Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

I am fairly new to MyFico and I may be posting this question in the wrong area...I have a question. Can anyone tell me about SurgeryLoans.com. Has anyone been approved by them? If so, what score do you need. I heard it was better than CareCredit??

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09Lexie
Posts: 25,939
Registered: ‎09-13-2012
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Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

Welcome to the forum. Please start a new thread so that users can respond directly to your individual information

Thank you!
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Creditaddict
Posts: 20,884
Registered: ‎10-23-2007
0

Re: Getting plastic surgery. What's better ? 6K loan at 8.9% or using my credit card at 8.9% rate ??

OP does the DR office take Care Credit?

That would be my #1 choice if you could get 18-24 months 0% and could pay it off in that time.

otherwise choice #2 would be the installment loan so it's fixed and you have to pay it off.

3rd your credit card but try to be dedicated to making the same size payments as if it was a installment loan so you pay it off sooner rather than later.

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