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Pay NFCU with NavChek ??

Established Contributor

Pay NFCU with NavChek ??

DW threw a question at me last night and I'm a little stumped.

The only CC we have a balance on is NFCU Plat , it's at 12600. This is our wedding and honeymoon charges. I'm going to pay it off over the next 3-4 months. Right now it is at 10.9% interest and the minimum is $253 roughly.

I make good income but being a self employed cabinetmaker/woodworker you never really know if the bottom can drop out at any time.

She asked if I pay the full balance with NavChek , although it's at 12.5% interest, wouldn't the minimums be significantly lower in case something happened (like work drying up). We have a small LOC (2k) with our local credit union and they only want a minimum of $25 on any draw on the LOC.

I tried telling her that if you 'borrow' 12600 they are going to want more than 25 bucks a month back.

I'll never do it since I'm planning on paying it quickly anyway but what would the minimum be if I did. I'd love to just tell her it's a bad deal but I don't really have an answer.

Jax
Jax

*************************************************************************************
Then you are a fool. Be thankful that when God gave you a face, he gave you a fool's face
Message 1 of 4
3 REPLIES
Established Contributor

Re: Pay NFCU with NavChek ??

Hey Jax, Smiley Happy
 
The great thing about NAVChek is that you can repay it
either as a Line of Credit (LOC) or as an installment loan.
 
If memory serves me correctly, the LOC option requires
a minimum of 2% of the balance or $20, whichever is higher.
The only downside is that your util will be at 100% if you use
the entire amount, but as long as your utility on other credit is
low or near zero, this shouldn't be a problem FICO-score wise.
 
If you choose to repay with fixed monthly amounts, NAVChek
will convert to an installment loan and be reported as such.
 
I'd double check with Navy Fed to get exact numbes, but this is how
the options were explained to me.
 
Hope this helps. Please keep us posted on what you decide to do.
Enjoy the weekend!  Smiley Very Happy 
 
Edit to add: It's ok to use loan proceeds or one LOC to pay off another.
As long as payments are early or on time, Navy Fed is fine with it.
When I got approved for my Signature Loan I used part of it to pay off
my CC's so I could preserve my cashflow. So it's no problem whatsoever....Smiley Happy
 
 
CanDo
 
"The right attitude is everything"


Message Edited by CanDoAttitude on 08-03-2008 08:32 AM

Message Edited by CanDoAttitude on 08-03-2008 08:38 AM
Message 2 of 4
Established Contributor

Re: Pay NFCU with NavChek ??

If you run the numbers , $12600 bal at 2% comes out to be approx $250. The same as the minimum on the CC.

The only difference would be a higher interest rate and that it could report as an installment.

At least I can explain that to her and show her the difference.

Thanks CDA, very helpful.

Jax
Jax

*************************************************************************************
Then you are a fool. Be thankful that when God gave you a face, he gave you a fool's face
Message 3 of 4
Established Contributor

Re: Pay NFCU with NavChek ??

You're welcome, Jax. I'm glad my input was helpful.  Smiley Happy
 
Just out of curiosity I went to Navy Fed's website and crunched
some numbers on their calculator.
 
If you converted your NAVChek to an installment loan, you have up
to 5 years to repay the loan. Payments on $12,600 @ 12.5% for
60 months works out to $285.91, which is actually higher than the
$250 you quoted as an LOC payment. BUT....NAVChek would report
as an installment loan and you could make the first 2-3 monthly payments
and then pay off the rest (no prepayment penalty). Once your NAVChek
balance reaches zero, it goes back to being reported as an LOC (just like a credit card).
 
So if you have 10 CC's, NAVChek (LOC) and a Sig Loan, in essence you have 11
revolving lines of credit and 1 installment loan. But if you convert NAVChek to an
installment loan you'd have 10 lines of credit and 2 installment loans. As long as
your FICO scores remain in the high 600's to low 700's you'll be fine...
 
Hope this helps you, Jax. Enjoy the day! Smiley Happy
 
 
CanDo
 
"The right attitude is everything"


Message Edited by CanDoAttitude on 08-03-2008 09:51 AM

Message Edited by CanDoAttitude on 08-03-2008 09:53 AM
Message 4 of 4