Balance transfer vs personal loan

[Anonymous]

Hello,

As I was rebuilding,I acquired a $4500 personal loan with a hiiiiiiigh interest rate. Just this week my credit union was able to approve me for a personal loan with a fixed rate under 9%, with a 4 year term to refinance. They also offered to role up my $2000 credit card balance in that. At the same time of searching for deals, I was also approved (through another credit union) for a credit card with 0 balance transfer fee and 0% interest for 12 months. The credit card limit is $10k. I’m wondering now if I should use the credit card with BT offer to pay off the loan within 30 days. My score now ranges from 710-730 depending on the source, etc. once the $2k credit card is paid off by the new loan, my credit card utilization will be 0. So while the BT credit card would essentially be at 60% utililization, my other cards would be 0, and they total about 20k worth of limits (30k limits total with the new BT credit card limit included). I have a car loan at $14k. I’ve been working on repairing my credit for 2 years and have done well. The question is, pay off the $6k (new) personal loan with the $10k limit new credit card or not? After the twelve months I could refinance what’s left into a personal loan or do another BT? I’m curious with how this will look ok my credit as I understand it’s good to have a mix of loan types, but paying 0% vs. even under 9% is also appealing. Thanks for the help myFICO community!

[Anonymous]

It's really going to depend on whether or not you need to apply for anything while carrying the balance transfer. Your scores will be a bit better having that $6k as an installment loan vs. in your revolving utilization.

If a few points aren't that crucial, 0% is always going to be the way to go in my book. I'd try to rework my budget to pay $500/month on it and just be done with it all before the 12 months are up. Should that be too much of a stretch for your budget, do the best you can and deal with the remaining balance when the time comes. Hopefully it's gone or so low that a month or two of even standard CC interest isn't going to be a big deal.

[SouthJamaica]

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@Anonymous wrote:
Hello,

As I was rebuilding,I acquired a $4500 personal loan with a hiiiiiiigh interest rate. Just this week my credit union was able to approve me for a personal loan with a fixed rate under 9%, with a 4 year term to refinance. They also offered to role up my $2000 credit card balance in that. At the same time of searching for deals, I was also approved (through another credit union) for a credit card with 0 balance transfer fee and 0% interest for 12 months. The credit card limit is $10k. I’m wondering now if I should use the credit card with BT offer to pay off the loan within 30 days. My score now ranges from 710-730 depending on the source, etc. once the $2k credit card is paid off by the new loan, my credit card utilization will be 0. So while the BT credit card would essentially be at 60% utililization, my other cards would be 0, and they total about 20k worth of limits (30k limits total with the new BT credit card limit included). I have a car loan at $14k. I’ve been working on repairing my credit for 2 years and have done well. The question is, pay off the $6k (new) personal loan with the $10k limit new credit card or not? After the twelve months I could refinance what’s left into a personal loan or do another BT? I’m curious with how this will look ok my credit as I understand it’s good to have a mix of loan types, but paying 0% vs. even under 9% is also appealing. Thanks for the help myFICO community!

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What I think would best suit your purposes is (a) leave the loan in place, (b) do a $2900 balance transfer from the loan to the credit card, and (c) don't use the card for anything you can't pay off immediately.

[RobertEG]

An additional factor would be how the "balance transfer" is actually done.

Some BTs involve notice to the creditor of which account to send the transfer of debt to.

In that case, you dont get the $$ in your hands, and it is truly only a shifting of the debt deck chairs.

However, some BTs provide, for example, the issue of checks to you, which you can then use either to pay off existing debt, or to use for any other purpose.  If you succumb to the temptation of using the courtesy check for other purchases, then the "balance transfer" actually becomes a debt increase.

Are you going to shift the deck chairs only, and use the entire amount to pay other existing debt, or are you planning to use some of the "transfer" for other purchases?

[Anonymous]

I would simply transfer from the instution that interest is acquiring to the one that is offering is zero interest.

[Anonymous]

Interesting option to consider, thank you.

[Anonymous]

I would love to pay $500 a month but not sure I really could stretch that.
I think if the points would really only drop a few points, then I like the 0% option best. Thank you for your input.