topic Re: Balance Transfer Credit Card or Loan? in Credit Cards

Balance Transfer Credit Card or Loan?

Repairman — Mon, 18 Feb 2019 02:25:51 GMT

Ok guys, I just recently joined a credit union with both a balance transfer credit card option and a balance transfer loan available. My scores are currently mid 600s which isn't horrible but isn't great. I want to get wither the loan or the credit card from my cu in order to pay much less in interest on my current high interest cc debt.

Since my scores aren't fantastic, I'm wondering if I'd have a better chance on being granted a higher limit Balance Transfer loan from my credit union as opposed to a credit card to perform the balance transfer to. What do you think?

Re: Balance Transfer Credit Card or Loan?

Anonymous — Mon, 18 Feb 2019 02:47:25 GMT

I’ve gotten quite a few balance transfer in the last 4 years for one reason or another. It would depend on how much credit debt you want to transfer and what the interest rate is. Personally I would go with a loan instead of a balance transfer unless you can pay that balance off in the time allotted. The longest one I have had was 18 months. My loan I picked 5 years and I’m glad I did since in the midst I lost my job.

You may be able to get a good loan at your credit union it also is something to look into. It also depends how much you are wanting to transfer. What is your utilization at?

Re: Balance Transfer Credit Card or Loan?

Repairman — Wed, 20 Feb 2019 07:18:10 GMT

The amount of time isn't a factor as the credit card option is a 6 month period of 2.9% interest and then the APR changes to and stays at 7.9% interest. The "Balance Transfer Loan" which they offer specifically for members to pay off credit card debt, is a fixed 8.9% rate. On face value, the cc option is better, but I'm concerned about approval and balance due to my scores. I am looking to transfer as much as $25,000. I'm wondering if I would be likely to receive a much larger loan than a credit card limit. I'm probably sitting at about 66% utilization.

Re: Balance Transfer Credit Card or Loan?

Anonymous — Wed, 20 Feb 2019 21:00:09 GMT

Do you have military experience or family with military experience?

If so, I would think Navy Federal Platinum Card would be a good bet.

Has the features you need: lenient underwriting and no balance transfer fee.

You might not get approved and might not get limit you want, but if Navy won’t then I do not know who would.

Re: Balance Transfer Credit Card or Loan?

Repairman — Wed, 20 Feb 2019 21:10:18 GMT

I am eligible to join Navy Federal Credit Union, but I already am a member of another credit union that is offering what I described. I actually haven't ever compared NFCU's products and rates.

Re: Balance Transfer Credit Card or Loan?

Anonymous — Thu, 21 Feb 2019 05:37:21 GMT

I have been offered more on loans than a credit card in the past. But that doesn’t always mean it is the Better option. The interest portion the credit card would be a better option but the loan is specifically set up at your credit union for this. I would talk with a personal banker at your branch and see if you can get more information. If I were the one looking into it I would do the loan because it does report a tad different on your credit bureau. I transferred about $20,000 of cc debt when I got mine and my utilization for that loan isn’t considered but it is stated that the balance is still high compared to what was lent. Of course I have only been making the minimum monthly payments and round up to make it even. I’ve only have it 13 months now. A couple things to think about.

Danielle

Re: Balance Transfer Credit Card or Loan?

Repairman — Thu, 21 Feb 2019 14:41:14 GMT

missd1985 did your score go up at all when you transferred your cc debt to the loan?

Re: Balance Transfer Credit Card or Loan?

Anonymous — Thu, 21 Feb 2019 17:39:33 GMT

Yes it did. My score went down when the loan hit my credit as a new account. Than once all my cards got reported it went down and as my utilization hit lower I got some score jumps for that as well. I think all together it went up about 40 points or so. I got one loan and 8 months later I got a second loan to pay that off and to pay the rest of my America express card since the first loan didn’t pay everything. When I closed out the first loan my score dropped about 15 points. When the new one came through and everything was paid it went up another 25 or so.

Re: Balance Transfer Credit Card or Loan?

Repairman — Thu, 21 Feb 2019 18:11:31 GMT

Your score jumps are great! I'm confused though, as to what you mean about closing the 1st loan? Excuse my ignorance, as this will be my 1st loan experience. Do you mean when you paid it off in full, your score dropped? Or after you paid it in full, the funds were still available for you to use again, but you instead had to literally close it, and that caused your score to drop?

@Anonymous wrote:
Yes it did. My score went down when the loan hit my credit as a new account. Than once all my cards got reported it went down and as my utilization hit lower I got some score jumps for that as well. I think all together it went up about 40 points or so. I got one loan and 8 months later I got a second loan to pay that off and to pay the rest of my America express card since the first loan didn’t pay everything. When I closed out the first loan my score dropped about 15 points. When the new one came through and everything was paid it went up another 25 or so.

Re: Balance Transfer Credit Card or Loan?

Anonymous — Thu, 21 Feb 2019 18:32:35 GMT

No the first loan I got was for $10,000 but it left about $6,000 left over that wasn’t paid. About 8 months later I got an email to check my rate. I was going to save me 5% interest and it would be enough to pay my current loan off in full and my remaining credit card debt. The account once paid off was closed and new one was opened for $15k. So that closure is what dropped my score.

Re: Balance Transfer Credit Card or Loan?

Repairman — Thu, 21 Feb 2019 18:39:57 GMT

@Anonymous wrote:
The account once paid off was closed and new one was opened for $15k. So that closure is what dropped my score.

When you say "the account once paid off," what account are you talking about? The loan or your credit card? I'm not understanding if you're saying the loan being paid off lowers your score, or if you're saying once you paid off your credit card, you closed the card and that lowered your score.

Re: Balance Transfer Credit Card or Loan?

CreditInspired — Thu, 21 Feb 2019 19:35:57 GMT

Hi OP
With scores of mid 600s and 66% UT, I think it would be difficult to get a either a loan or CC limit of $25K unless you have a large income.

Re: Balance Transfer Credit Card or Loan?

Kforce — Thu, 21 Feb 2019 19:54:42 GMT

Regular loans generally let you borrow a larger amount.

I ran the numbers for you to see the difference

Re: Balance Transfer Credit Card or Loan?

Repairman — Thu, 21 Feb 2019 21:40:44 GMT

@CreditInspired wrote:
Hi OP
With scores of mid 600s and 66% UT, I think it would be difficult to get a either a loan or CC limit of $25K unless you have a large income.

I do have a large income, and I will be applying for the loan through a credit union, that specifcally offers a loan fo this purpose.

Re: Balance Transfer Credit Card or Loan?

Anonymous — Thu, 21 Feb 2019 23:27:41 GMT

Oh wow! I’m sorry I totally confused that didn’t I? I had an installment loan and when it was paid off early it closed the account. So that was why I dropped points on my score. But once the new installment hit my report it jumped my score again.

Re: Balance Transfer Credit Card or Loan?

Repairman — Fri, 22 Feb 2019 00:09:03 GMT

@Anonymous wrote:
Oh wow! I’m sorry I totally confused that didn’t I? I had an installment loan and when it was paid off early it closed the account. So that was why I dropped points on my score. But once the new installment hit my report it jumped my score again.

Ok cool, thanks for clarifying!!! Would your score had not dropped if you let the loan run it's full term? I'm just curious how that works.

Re: Balance Transfer Credit Card or Loan?

Anonymous — Fri, 22 Feb 2019 00:25:10 GMT

I think it would have because with installment accounts once they are paid in full they close. So it shows one less account and it has a negative effect. I have never had a loan run it’s course that loan I paid off early was my first. I wonder how that will change if I let it run it through the entire term.

Re: Balance Transfer Credit Card or Loan?

601flyguy — Fri, 22 Feb 2019 11:23:58 GMT

10% of your fico comes from your credit mix, the ability the manage different types of credit. Credit cards are revolving credit while loans are installment credit. This is why the other person's score rose when the loan reported but fell once they paid it off.