Wednesday, August 24, 2011

Transfer A Personal Loan To A Credit Card

Transfer of personal loans to credit cards is not always financially savvy.


Assuming you have adequate credit limit room, you can usually transfer personal loan balances to credit cards. The more prudent concern is whether it is financially wise to do so. Sometimes, it makes sense and other times, it does not.


Basics


Most credit card providers offer you balance transfer options at any given time, provided you have available credit. Some send you balance transfer checks that you write from your credit card account to pay down the loan. You can sometimes send transfers electronically through your card provider.


Pros


Credit card companies often offer 0% introductory balance transfer promotions for six to twelve months in order to acquire customers with good credit. If you have a modest personal loan balance and you think you can pay most or all of it off within the promotion period, this might make sense. Be aware that card providers sometimes charge balance transfer fees, even on promotions.


Cons


Without benefit of a promotional interest rate, credit cards generally have much higher interest charges than personal loans. Thus, it would not be conventionally wise to do a straight transfer. Even with a promo card rate, your rate jumps to standard rates after the promo period. If it will take a long time to pay off the balance, your increased interest could offset any benefit in savings during the promotional period.

Tags: balance transfer, credit cards, card providers, credit card, personal loans