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Valued Contributor
bs6054
Posts: 1,673
Registered: ‎11-11-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?

That's a nice fixed rate!

 

I wonder what score you need for the lowest rate, and how high it goes for lower scores.

Valued Contributor
maiden_girl
Posts: 2,005
Registered: ‎12-29-2011

Re: Large Purchase: Credit Cards vs. Personal Loans?

[ Edited ]

That sounds tooo difficult. I don't know what store would let you buy something for 20k and only give you 12 months pay off time...that itself sounds cRaZy!

 

EDITED:

 

I may have read that wrong so I'm gonna read it again! LOL!

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Contributor
RonDawg
Posts: 322
Registered: ‎10-19-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?


greenpang wrote:
To finance a large purchase ($20K), I previously believed a personal loan would be necessary. However, now having learned more about credit, I'm starting to think that using credit cards may be a better option.

 

Let's assume I want to make the $20K purchase in July 2013 (with increased scores and CLs) and pay it off over the next 48 months. I could likely get a loan with a 3-4% APR.

 

Or... I could do something along these lines:

7/2013: Open new credit lines with introductory 0% APR for 12 months: say, Citi ThankYou Preferred and Citi Dividend. Hope for 10K CLs on each; if short, DH can open them too. Make the $20K purchase, split up between the new Citi cards. Pay off 1/4 of the $20K balance over the next year, leaving $15K by the end of the intro 0% APR period.

7/2014: Open Chase Slate (DH open another Slate if CL <$15K). Transfer $15K balance to Slate(s) and continue to pay over the 15-month 0% APR period, leaving $8750 when it expires in 10/2015.

10/2015: Open Citi Diamond Preferred. Transfer $8750 balance to Diamond and pay that off completely over the 18-month 0% APR period.

 

Provided Chase is still offering the 0% BT fee in 7/2014, that means the only financing fee I'm paying is the BT fee for transferring the $8750 to Citi Diamond Preferred: 3% fee for a grand total of $262.50 cost of financing $20K over 4 years!

 

If I took out a personal loan for $20K with a 3.5% APR for 48 months, I'd pay a total of $1750 in financing charges. So the credit card BT plan seems like a better option.

 

Am I missing something? Is it reasonable to plan to self-finance a large purchase with the intention of opening new BT cards until it is paid off? If so, why ever choose a personal loan over this method?


I suppose no matter how you look at it your going to take the UTL hit on your CRs but ..... Loans usually have a fixed interest rate where as credit cards have var interest rates.  If your going to BT your balances to -0- financing then perhaps the credit card maybe a better options but if your thinking paying off in the long term then a personal loan may actually serve you better.

 

Credit Cards are mostly for short term credit needs where as Loans serve an exact perpose.  Sometimes a Line of Credit might be a better options depending on how long your going to keep the balance.  

 

I am sure there are those out there that will argue one way or the other but keep in mind it is a personal choice and in the end your the only one that has to answer for the choice being made.

 

If everything goes as planned with no hickups then a credit card will do but if your not sure of the future perhaps a personal loan or LOC might be a better option.  Just my opinions :smileyhappy:

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Established Contributor
tennisfan78
Posts: 629
Registered: ‎09-18-2011

Re: Large Purchase: Credit Cards vs. Personal Loans?

[ Edited ]

RonDawg wrote:

greenpang wrote:
To finance a large purchase ($20K), I previously believed a personal loan would be necessary. However, now having learned more about credit, I'm starting to think that using credit cards may be a better option.

 

Let's assume I want to make the $20K purchase in July 2013 (with increased scores and CLs) and pay it off over the next 48 months. I could likely get a loan with a 3-4% APR.

 

Or... I could do something along these lines:

7/2013: Open new credit lines with introductory 0% APR for 12 months: say, Citi ThankYou Preferred and Citi Dividend. Hope for 10K CLs on each; if short, DH can open them too. Make the $20K purchase, split up between the new Citi cards. Pay off 1/4 of the $20K balance over the next year, leaving $15K by the end of the intro 0% APR period.

7/2014: Open Chase Slate (DH open another Slate if CL <$15K). Transfer $15K balance to Slate(s) and continue to pay over the 15-month 0% APR period, leaving $8750 when it expires in 10/2015.

10/2015: Open Citi Diamond Preferred. Transfer $8750 balance to Diamond and pay that off completely over the 18-month 0% APR period.

 

Provided Chase is still offering the 0% BT fee in 7/2014, that means the only financing fee I'm paying is the BT fee for transferring the $8750 to Citi Diamond Preferred: 3% fee for a grand total of $262.50 cost of financing $20K over 4 years!

 

If I took out a personal loan for $20K with a 3.5% APR for 48 months, I'd pay a total of $1750 in financing charges. So the credit card BT plan seems like a better option.

 

Am I missing something? Is it reasonable to plan to self-finance a large purchase with the intention of opening new BT cards until it is paid off? If so, why ever choose a personal loan over this method?


I suppose no matter how you look at it your going to take the UTL hit on your CRs but ..... Loans usually have a fixed interest rate where as credit cards have var interest rates.  If your going to BT your balances to -0- financing then perhaps the credit card maybe a better options but if your thinking paying off in the long term then a personal loan may actually serve you better.

 

Credit Cards are mostly for short term credit needs where as Loans serve an exact perpose.  Sometimes a Line of Credit might be a better options depending on how long your going to keep the balance.  

 

I am sure there are those out there that will argue one way or the other but keep in mind it is a personal choice and in the end your the only one that has to answer for the choice being made.

 

If everything goes as planned with no hickups then a credit card will do but if your not sure of the future perhaps a personal loan or LOC might be a better option.  Just my opinions :smileyhappy:


Speaking of LOC, did you happen to apply for the USBank LOC?  I have been thinking about applying for it too.

 


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Contributor
RonDawg
Posts: 322
Registered: ‎10-19-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?


tennisfan78 wrote:

RonDawg wrote:

greenpang wrote:
To finance a large purchase ($20K), I previously believed a personal loan would be necessary. However, now having learned more about credit, I'm starting to think that using credit cards may be a better option.

 

Let's assume I want to make the $20K purchase in July 2013 (with increased scores and CLs) and pay it off over the next 48 months. I could likely get a loan with a 3-4% APR.

 

Or... I could do something along these lines:

7/2013: Open new credit lines with introductory 0% APR for 12 months: say, Citi ThankYou Preferred and Citi Dividend. Hope for 10K CLs on each; if short, DH can open them too. Make the $20K purchase, split up between the new Citi cards. Pay off 1/4 of the $20K balance over the next year, leaving $15K by the end of the intro 0% APR period.

7/2014: Open Chase Slate (DH open another Slate if CL <$15K). Transfer $15K balance to Slate(s) and continue to pay over the 15-month 0% APR period, leaving $8750 when it expires in 10/2015.

10/2015: Open Citi Diamond Preferred. Transfer $8750 balance to Diamond and pay that off completely over the 18-month 0% APR period.

 

Provided Chase is still offering the 0% BT fee in 7/2014, that means the only financing fee I'm paying is the BT fee for transferring the $8750 to Citi Diamond Preferred: 3% fee for a grand total of $262.50 cost of financing $20K over 4 years!

 

If I took out a personal loan for $20K with a 3.5% APR for 48 months, I'd pay a total of $1750 in financing charges. So the credit card BT plan seems like a better option.

 

Am I missing something? Is it reasonable to plan to self-finance a large purchase with the intention of opening new BT cards until it is paid off? If so, why ever choose a personal loan over this method?


I suppose no matter how you look at it your going to take the UTL hit on your CRs but ..... Loans usually have a fixed interest rate where as credit cards have var interest rates.  If your going to BT your balances to -0- financing then perhaps the credit card maybe a better options but if your thinking paying off in the long term then a personal loan may actually serve you better.

 

Credit Cards are mostly for short term credit needs where as Loans serve an exact perpose.  Sometimes a Line of Credit might be a better options depending on how long your going to keep the balance.  

 

I am sure there are those out there that will argue one way or the other but keep in mind it is a personal choice and in the end your the only one that has to answer for the choice being made.

 

If everything goes as planned with no hickups then a credit card will do but if your not sure of the future perhaps a personal loan or LOC might be a better option.  Just my opinions :smileyhappy:


Speaking of LOC, did you happen to apply for the USBank LOC?  I have been thinking about applying for it too.

 


Actually I did last year when I thought I was going to have to use it.. I had surgery and I was not sure how high the bill was going to run so I selected it and applied took about 20 seconds for them to come back and say I was approved with 14.5k and 9.25% interest rate.  I really do like US Bank they tend to take care of their customers.

AMEX Platinum, AMEX Blue cash (10k), AMEX Delta (10k), US Bank Premier Line (14.5k), US Bank Cash + (7.5k), Chase Freedom (5k), Fred Meyer Rewards Visa (7.5k), US Bank Flex Perks Travel Rewards (5k), Discover IT (9.5k), Chase Sapphire Preferred (8k), Alerus Financial Visa Signature issued by Elan (10k), BofA Cash Rewards (10k), Citi Thankyou Pref (6.5k) TU FICO Score = 807, EQ FICO Score = 780, EX FICO Score = 780,
CreditKarma score = 785, CreditSesame score = 773, Vantage = 903
Valued Contributor
jsickz32
Posts: 1,987
Registered: ‎06-25-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?

am i the only one that wants to know what costs 20k at a store??

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Valued Contributor
bs6054
Posts: 1,673
Registered: ‎11-11-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?


RonDawg wrote

Actually I did last year when I thought I was going to have to use it.. I had surgery and I was not sure how high the bill was going to run so I selected it and applied took about 20 seconds for them to come back and say I was approved with 14.5k and 9.25% interest rate.  I really do like US Bank they tend to take care of their customers.


Is that fixed rate?  The Northwestern site posted earlier has LOC at 7% but that is a variable rate.

Frequent Contributor
jake619
Posts: 496
Registered: ‎11-13-2012

Re: Large Purchase: Credit Cards vs. Personal Loans?

For that much to be financed you should be looking for a fixed APR and stay mindful of the current economic state of the US.  Our interest rates will be rising once Bernanke realizes he can't print (I know it's electronic) enough money to maintain rates at current historic lows.  If you revolve that purchase and pay prime + X you have no idea what X could become over the life of the balance.  Think it through, maybe borrow against a 401K and at least pay yourself back + interest.  Last I remember reading a 401K load would cost me 4%.  YMMV.


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Valued Contributor
maiden_girl
Posts: 2,005
Registered: ‎12-29-2011

Re: Large Purchase: Credit Cards vs. Personal Loans?

[ Edited ]

jsickz32 wrote:

am i the only one that wants to know what costs 20k at a store??


I'm thinking it's something like a home remodel...lol

The truth is out there...
FICO scores: 740 (EQ) 738 (EX) 750 (TU) 4/14 | Goal score: 750+ (all 3)
Tradelines: Capital One (5.0k) | Discover IT (5.0k) | Walmart Discover (5.0k) | Chase Freedom NPSL (7.3k) | Citi Simplicity (9.3k)
--------------------------Gardening until my credit recovers...NO MORE INQUIRES TIL 2015
Established Contributor
tennisfan78
Posts: 629
Registered: ‎09-18-2011

Re: Large Purchase: Credit Cards vs. Personal Loans?


RonDawg wrote:

tennisfan78 wrote:



Speaking of LOC, did you happen to apply for the USBank LOC?  I have been thinking about applying for it too.

 


Actually I did last year when I thought I was going to have to use it.. I had surgery and I was not sure how high the bill was going to run so I selected it and applied took about 20 seconds for them to come back and say I was approved with 14.5k and 9.25% interest rate.  I really do like US Bank they tend to take care of their customers.


Thats awesome. That is a pretty good LOC. Do you happen to remember if you applied online or at the local branch?

 

I have an expense of about $10,000 coming up, and I am thinking about my options between a personal loan and LOC. Even though the interest rate may be a bit higher, I am leaning more towards LOC. Hoping that I would get approved when i do apply!


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