0% APR Credit Card Vs. High Interest Loan

[dangcredit]

  So my DW and I have a personal loan together through spring leaf fin. and its a high interest loan. DW recently recieved a CC from discover with a CL of $4500 with a 0% APR for 14 months intro. I adviced her to pay off her CAP 1 card $750 CL with a $400 balance 24.99% APR to take advantage of the 0% on discover. This would put the discover at around 10% UTLI which is good. CAP 1 card is already in the shredder.  Am now thinking of maybe paying off the personal loan as it has a high interest as well but am afraid of :

    1. Increasing the % UTLI on the discover card

    2. Eliminating one of her open TL's since this will pay off the only personal loan she has. I have student loans open so am good on that form of open TL.

  But in paying it off, she will save on the interest she/we would pay on the loan.  What would you advice in this situation? Also if we use the card for this payments, we would need to really hold back on it's future use until we lower the UTLI again. (we have an aut loan together as well). No negatives on her file, everything paid on time. Thanks

[Anonymous]

Does she have other revolving accounts besides the Discover and Cap One? Personally I always try and reduce my interest costs, the only time I would worry about Util is if I am looking for some large loan or refinance. Also how high would the loan payoff take the Discover? If near max it might be a spook to Discover and you would want to work it down quickly to reduce the chance of AA. You state you have an auto loan together, so that should cover having an installment loan. The other factor is if you pay off the loan and it has a good current balance vs. opening balance and the auto loan is new that can have a hit to your credit as well but will come back as the auto loan drops.

Me personally I would get the interest gone, especially if you can pay it off in that 14 months (don't want to get into a high CC interest payment). The only way I would avoid it is if you are looking for some other credit in the short term. Scores will rebound fairly quickly from Util and loan balances if you keep up with payments.

[dangcredit]

   So then the auto loan will be the remaining revolving TL? Good

   Am also leaning towards eliminating the high Interest on the loan. By paying off the CAP 1 card and the personal loan, the UTLI on the new card would be at 50%-60% . We would not have issues bring that down significantly within the 0% intro 14 months, being that we currently put money into the CAP 1 card which is no longer with a bal and then we will divert the loan payment money into the new card so approx ~$150 per month into paying the card. But we would not have it to use/spend as back up. To me its a no brainer saving $8K in interest charges I guess I will have some issues trying to convince DW to spend half of her newly acquired card.

[Anonymous]

Before you pull the trigger check to see how the loan will process the payment if you use the Discover.  Some lenders process it as a cash advance which will probably disqualify it for 0% interest on the credit card.  Regardless, if the loan has higher interest than the credit card then pay it off.  That's the financially responsible decision even if you take a FICO hit on it.  Paying higher interest just to boost your FICO score isn't a good idea.

[Anonymous]

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@dangcredit wrote:

   So then the auto loan will be the remaining revolving TL? Good

   Am also leaning towards eliminating the high Interest on the loan. By paying off the CAP 1 card and the personal loan, the UTLI on the new card would be at 50%-60% . We would not have issues bring that down significantly within the 0% intro 14 months, being that we currently put money into the CAP 1 card which is no longer with a bal and then we will divert the loan payment money into the new card so approx ~$150 per month into paying the card. But we would not have it to use/spend as back up. To me its a no brainer saving $8K in interest charges I guess I will have some issues trying to convince DW to spend half of her newly acquired card.

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Are you and DW on the same page when it comes to approach to finances?  Sounds like she needs to be introduced to this place...

[dangcredit]

   Thanks RS didnt consider that it could be processed differently therefore earning us a 25% APR cash advance.

    We are on the same page in most cases but as you may know if you are married or ever have been, you dont just spring up with a new idea without some back up