Credit cards vs Personal loans. I need to be educated!

[Anonymous]

I have a personal loan for a little over $5,000 left at 13.99%. I recently got approved for a CC at 8.40% with a CL of $23,000. No BT fee and 12 months interest free. I was planning on BTing a little less then $8,000 over from a couple other of my CC's so I just have one payment. My question is would it be a good idea to also BT my personal loan? If I have a remaining balance at the end of the 12 months would I save or lose money on interest using my CC versus personal loan? Does CC interest work different than personal loan interest? Thanks in advance. I want to go into this as educated as possible.

[AllZero]

Not knowing which lender or card you were approved for, I would recommend reading your terms and conditions form.

If you're able, BT the loan would be a good idea if there are no penalties.

[Anonymous]

The CC is BECU and personal loan is Affinity Federal CU if that makes any difference.

[Gollum]

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@Anonymous wrote:
I have a personal loan for a little over $5,000 left at 13.99%. I recently got approved for a CC at 8.40% with a CL of $23,000. No BT fee and 12 months interest free. I was planning on BTing a little less then $8,000 over from a couple other of my CC's so I just have one payment. My question is would it be a good idea to also BT my personal loan? If I have a remaining balance at the end of the 12 months would I save or lose money on interest using my CC versus personal loan? Does CC interest work different than personal loan interest? Thanks in advance. I want to go into this as educated as possible.

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I suggest that you discuss these things in person with someone at each of the relevant banks / credit unions. Credit card debt and personal loans are similar in that they are both unsecured loans, so they are essentially the same thing.

Regarding transfering credit card debt to only have one payment: [Edit] Everything else being equal, paying off, in order, whichever debt has the highest interest rate makes more sense according to the arithmetic.

[dogmeat]

Some CCs will back-charge all prior months interest if the balance is not paid in full by the end of the promotional period.  That's why you should always read the terms carefully.  As I understand it, that is the more predatory / subprime lenders, and that would typically not be a CU.  BECU has some BT info here:

https://www.becu.org/articles/understanding-balance-transfers

Note the ALL CAPS paragraph at the bottom.  You may already know this, but you should make no further charges to the card after you transfer balances during the introductory promotional transfer period, if you want to avoid paying interest.

It appears to me that BECU will just increase the interest rate in month 13 to 8.90% (their lowest rate, nice work).  Which means you'll save 13.99% on the 5k for  year 1, and 5% on it in subsequent years (compared to the current loan rate).  Sounds like you should do it.

Note also that 8k + 5k puts you at 13k of 23k (56%) util on the destination CC, will is still over 50% and not optimal for scoring, but it's possible that 56% is a lower utilization than either of the donor cards, in which case you may see a small score bump (and expect another one when you get it under 48.9%). 

One other thought, if this is your only loan, and you care about and would like to keep the score benefit from having a open loan (commonly ~20-30 FICO8 points I believe), it may be worth considering if you can pay it down to $250-500 and continue to make smaller payments on it.  It'd be better of course to open a secured loan and pay it down to a small balance, but it's an option available to you for $30-$55/yr interest right now.

[CreditInspired]

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@Anonymous wrote:
I have a personal loan for a little over $5,000 left at 13.99%. I recently got approved for a CC at 8.40% with a CL of $23,000. No BT fee and 12 months interest free. I was planning on BTing a little less then $8,000 over from a couple other of my CC's so I just have one payment. My question is would it be a good idea to also BT my personal loan? If I have a remaining balance at the end of the 12 months would I save or lose money on interest using my CC versus personal loan? Does CC interest work different than personal loan interest? Thanks in advance. I want to go into this as educated as possible.

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Congratulations on your approval and a monster SL, no BT fee, and 12 months 0% interest. 

So first, bottom line--for me anyway. Paying less money in interests trumps scores any day of the week! Period. 

So, with that being said, what is the individual balance and interest rate on the other 2 cards you're thinking about? I'm thinking they're than 13.99%. 

Second, how long do you have to do the BT--(60 days?). If yes, you could think about doing the 2 cards first if they carry higher interest rates, then 30 days later do the personal loan. 

Third, what is your timeline for getting the BT paid off if less than 12 months and what type of payments are you planning on putting on the card. So for example, if you're considering BT $13K, divide that by 12. How close to $1,083 can you come to paying a month? Dont even think about making minimum payments! 

Since you got a bomb 8.40%--and I'm super jealous by the way--you are still way ahead of the curve even if you are still carrying a balance at the end of the 12 months because the interest on those other 2 cars probably are much higher than the PL. 

IMO, I say "go for it!"  If it were me, I certainly would. 

[Anonymous]

The only time I carry a balance on any of my CCs is if I have a 0% interest promo. The only cards that I have that have deferred interest are cards that are Lowes or Care Credit type cards. That personal loan and Care Credit were from a surgery I had almost two years ago and a vet bill. Care credit does deferred interest so I've been throwing money at that before the promo ends. I only owe a couple hundred dollars on it now.
We already have loans, mortgage and car. We bought the house almost a year ago so we have a couple cards with the 0% promo ending soon. We got a little over zealous with home improvements 😳.
BECU gives 90 days to do BTs. I applied for this card just for the low interest rate in case I needed to carry a balance after the 12 month promo. There is no prepayment penalty on the personal loan.
I do plan on paying over $1,000 a month towards the card. I'm paying that now it's just spread out. Between my credit and my husband's we have a 18-month plan to pay of all credit except mortgage and cars.
I am not too concerned with my credit score taking a nosedive in the next few months because I do not plan on applying for anything. I know it will recover within 6 months as I pay down the balance.
After the 12-month promo if I still have a balance because sometimes life happens I just want to make sure it was a smarter move to transfer the personal loan over. I believe I would save money on interest but I was slightly unsure if personal loan interest and credit card interests were differently.

[seattletravels]

Sounds like you've got a solid plan place! Please let us all know how it goes! I've been thinking about joining BECU.

[Anonymous]

I waited till my TU score got to 760 before applying at BECU. I applied for their low interest rate credit card and was surprised to get their lowest rate.This card is my lowest interest rate and highest CL. I use my FICO forum to do my research on CC's with low interest rates in case I needed to carry a balance in the future. I am trying to strategically plan my way out of debt with paying the least amount of interest as possible. I think I am going to BT that personal loan. Even if I carry it past the 12 months I will still be saving money on interest. This forum has been an absolute godsend.