Re: NUFCU Credit Card - App or no app?
11-14-2012 04:32 PM
I have a difficult question that I can not figure out for all of you:
I decided to apply for this CC at my credit union and got approved for $3,000.
At the same credit union I have a loan at 10.8% with a payoff of $2,380.
If you saw my before post, the cash advance interest rate is 6.65%, same as purchases as well as balance transfers, with absolutely no fee for doing so.
Would it be beneficial for me to take a cash advance of $2,380 off of the card in order to pay off this loan?
I know cash advances accrue interest daily but I am having the hardest time trying to figure out the amortization schedule on what is more beneficial as to where I would pay less interest? Continuing the loan for $2,380 @ 10.8% with monthly payments being $211 and maturing on 10/21/2013...or taking a cash advance (with no cash advance fee) of $2,380 @ 6.65% and continuing to pay monthly payments of $211.
Any help would be greatly appreciated. Thanks!
PS - I talked to my loan officer at the credit union and she said that is a very good question but she could not amortize it as well so did not have an answer for me.
Well, in general a lower interest rate always wins. If you play around with a calculator, such as that on bankrate.com, that implies that you can pay off $2380 in 11 months, at a 10.8% rate, paying around $145 in interest, with a monthly payment of $210+some cents, roughly your 211. Doing the same at 6.6%, you could actually pay $205, pay off in 11 months, and end up paying about $85 in interest. If you keep paying the same, the savings will be more. So, if the balance transfer really is free, this is worth doing, even if a daily vs monthly amortization difference exists, the savings are sufficiently large to cover that.