Question by Catina S: Will it hurt my credit rating if I pay off my car & student loans with a lower interest rate credit card? My concern is that all of my loans will be in one lump sum on a credit card. There will no longer be any auto loan or student loan. It will look like I went shopping and won't look very responsible Best answer for Will it hurt my credit rating if I pay off my car & student loans with a lower interest rate credit card?:
Answer by Ryan
if you keep all your credit card payments up, then i'd say go for it.
Answer by Bogart
The credit rating is a tricky beast and is a combination of several different things. If you can save money by consolidating your debt with a lower interest rate, that's a smart move. Just be careful with the card and read the fine print-- the transactions you make with "cash" may be at a much higher rate.
Answer by stopccdebt
Yes, it will hurt your credit score. You would give up the flexible options offered through student loan providers, end your beneficial mix of an installment loan as part of your credit accounts, and see a huge increase in revolving debt. Furthermore, the low rate on the card is not guaranteed (universal default). Refinancing your car might be a better option.
Answer by SCH
Maybe or maybe not...it really depends. Having a car loan is cheaper than putting the car on the very cheapest card (because you are only paying on it for a few years and with a card you will pay forever, your payments would be cheaper but in the end you would be paying much much more in interest). Student loans are a big tax benifit and you should keep paying that and not put it on the card (you can claim the interest paid on the student loan on your taxes) Also, if you have more than 50% of your available credit charged that hurts your credit. Your best bet it to just keep paying the loans...
Answer by lizzgeorge
Your credit rating will suffer because you'll no longer have diversity in your types of accounts. This alone hurts your score. In addition, you'll have a very high debt to credit limit ratio--assuming you'll be close to maxing out the card after transferring those loans to it. That will further depress your score. However, if the interest savings are significant--say 3% or more--I would do it anyway. You'll have the debt paid off faster which will help your credit in the long run. Things to consider though: 1. Only do this if you are disciplined enough to keep making your same fixed payments or higher to the credit card. You'll end up paying MUCH more in the long run if you let that debt sit on a credit card for years and years without paying the principal. 2. Make sure the card rate is fixed and don't ever pay late, or they can jack it up. 3. Your student loan debt is tax deductible. So make sure your rate on the credit card is much lower than your actual rate on the student loan (loan rate x tax rate is actual rate you're paying).
Answer by Walter
It shouldn't because your credit report will show two major accounts such as auto loan and student loan as being paid off. It may actually improve your credit. Student loans and auto loans usually have interest rates lower then credit cards. If you are talking about a 0% introductory APR, you will need to have a plan to pay off the credit card within introductory period, or you will be on the hook for a higher rate. Also, make sure that your creditors accept credit card payments. If they don't, you will need to cash the money somehow, and that is usually associated with a cost of at least 2%. Good luck!
Answer by Land Shark
Yes, you'll take non-revolving credit and turn it into revolving credit. Two things to think about on student loans. One, you could be eligible for a low rate consolidation. check into that. Two, student loan interest is tax deductible for most so that lowers the effective interest rate, which could then be darn close to the interest rate you will pay on the card, unless it's like 0% but that usually only lasts for up to 18 months.
Answer by Dudley B
Umm, I would really doubt that you have a credit card with a lower interest rate that your car and student loan...unless it's an introductory, come-on, short-term rate. Read the fine print on the card. That "low" rate might only be for a couple months and then jump to 18%, 21% or even higher. Be careful!
Theres over 1trillion of debt in the UK. Thats 1000billion or 16666 of debt for every man, woman and child in the UK. Thats lot of shoes and handbags! Not surprising then that most people have a range of credit that they are repaying each month. Credit can take many forms: mortgages, secured loans, unsecured loans, credit cards, store cards, catalogue accounts etc. They can add up to many thousands each and for some people, debt can be a major problem as it can creep up on them and before they know it, they owe more each in monthly repayments than they earn! Well before it gets to that extent, many people decide to take control of their finances and take out a debt consolidation loan. For homeowners with a mortgage, they have the option of using some of the equity that they may have built up in their home and securing the loan against the property. For those renting their home, this is not possible, so they need to consider a different strategy. Unsecured loans for tenants are often the perfect solution for people in this situation. You can apply to a wide range of lenders but a much easier way of covering more ground and creating a better chance of finding the most suitable loan for you, is to apply for an unsecured tenant loan through a finance broker. Here, the broker will often have access to a wide range of specialist lenders and they may be able to source a provider for you when your high street bank cannot. By only applying direct to one lender, you are potentially ...
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