Balance Transfer or Personal Loan

[SSR]

Need a little guidance please. Is it better to transfer credit card balances to a 0% card for 12 months or do a personal loan and consolidate the debt. I always get my credit profile needs a installment account when I look at the items affecting my score. I guess my thinking is if I put on a 0% card and it puts that card at its limit, want that hurt my score a lot more than a personal loan? Thx!

[reluctantgarden]

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@SSR wrote:

Need a little guidance please. Is it better to transfer credit card balances to a 0% card for 12 months or do a personal loan and consolidate the debt. I always get my credit profile needs a installment account when I look at the items affecting my score. I guess my thinking is if I put on a 0% card and it puts that card at its limit, want that hurt my score a lot more than a personal loan? Thx!

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With evidence that your profile could use an installment account, I would definitely do that, which would be a double positive--expanding your types of credit and lowering CC utilization. 

[cashorcharge]

I think it depends on the interest of that personal loan and how much you owe.

If you can move the balance to a 0% for X months and be diligent about making large enough payments to pay off the debt before the 0% runs out..that is your best bet.  Put finances over the FICO points you may lose for maxing out a card.  As soon as that maxed card gets 20% paid off...you'll get those lost points back.  You can also look to taking out a loan for the sake of having a loan and use that money to pay it back (though it will cost you the interest) while using the BT on a card to pay off debt.  However, that would give you 2 maxed out credit lines.  Pay down/off your debt that look at getting the installment loan if you think you need that

[SouthJamaica]

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@SSR wrote:

Need a little guidance please. Is it better to transfer credit card balances to a 0% card for 12 months or do a personal loan and consolidate the debt. I always get my credit profile needs a installment account when I look at the items affecting my score. I guess my thinking is if I put on a 0% card and it puts that card at its limit, want that hurt my score a lot more than a personal loan? Thx!

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I wouldn't pay interest when I can pay 0% interest.

[ForwardLooking]

I just went through a similar exercise, but slightly different.  I used a 0% balance transfer from my Discover IT card to move away from a high interest personal loan. Yes, my scores tanked because of the jump in revolving credit utilization, but I expected it and was happy to not be paying 24% interest any more.  6 months later, and the card will be paid off next Friday and my scores have already recovered because I was paying aggressively (even with the card at 50% utilization right now).  Assuming you don't need any new credit in the near future, the 0% balance transfer would be the way to go if you can pay it off in the allotted time.  I had 18 months to pay mine off and budgeted accordingly, but after a nice unexpected bonus, I decided to pay it off early which will make me debt free except my car loan.

[MeredithLepore]

It depends what your goals are... if you need to boost your credit score AND you can afford the monthly payment, then it would make sense to take the personal loan. However, if you can qualify for a 0% balance transfer, then your score is probably doing fine, and you'd likely save a lot in interest going this route. That said, you should still do the calculation of how much interest it will save you and how fast you can pay off the debt to make sure it's worth the 3-5% balance transfer fee and you'll be able to tackle it before the 20%+ rate kicks in.