Would getting a lower interest rate loan to pay off credit card be a smart idea?

Jess B: Would getting a lower interest rate loan to pay off credit card be a smart idea?
I have just under $ 6,000 on my card, which has about a 12% interest rate. I’ve never made a late payment and always pay above the minimum on all credit accounts/car payments/student loans. Would looking into getting a lower interest rate loan be a good idea or a naive one? I know personal loans like this are typically harder to come by, but I would like some opinions. Thanks!

Answers and Views:

Answer by froggyvrg
If you can get a lower rate, do it! But first, resolve not to use your credit card again or you’ll get into a real quagmire!

Answer by This Guys Sez
It will be tough to pay off $ 6k at 12%. Not impossible but certainly easier if you can get a lower rate somehow. Like the other poster has stated, don’t do anything until you resolve to quit your bad spending habits. Don’t spend money unless you have it to spend, period. Live within your means and make yourself rich. Live outside your means and make others rich.

Answer by fladabosco
It’s all about the math. Add up all the fees, commissions, points, etc. and compare the cost of the loan to the cost of paying off the card. If you can use your home as collateral you might be able to write off the interest payments, saving you some dough that way too.

Go your bank and ask a loan officer to do the math for you, but remember they are trying to sell you a loan. Get ALL the details.

You realize that 12% costs you $ 720 a year in interest, right? Zounds! The personal loans I have been looking at have rates about half that.

Answer by ho hummmmm
If you pay $ 500 a month on the credit card balance, at a 12% rate, it will take you under 2 years to pay if off.

If you get a loan to pay off the balance all at once, then you have to figure the amount of time it will take to pay off the loan. That depends on the interest rate and how much you pay every month. the lower the interest rate and the more you pay each month, the sooner you can pay it off.

As long as you can get a loan, i think you should try it. You can also get another credit card with a super low rate and then transfer the balance. The only problem is getting a new card with a $ 6000 limit, kinda hard to do.

Answer by bdancer222
Shifting credit card debt to another loan is not necessarily a good idea unless you can be disciplined enough to not use the credit card until the loan is paid off. Often folks just run the credit card back up and then are stuck with the big loan payment and the credit card payment too.

You may also find that it isn’t easy to get an unsecured $ 6K loan. The interest rate will be based on your creditworthiness. You may not find a loan with a better interest rate. Also, keep in mind that even if you do find a low interest rate loan, stringing out the payment over years can actually cost you more dollars in interest, than a shorter term higher interest one.

You might want to tighten up your budget and work at throwing every penny you can squeeze out of that budget at the credit card and get it paid down.