So question. I applied for a cc. The interest rate on the cc vs my personal loan is like 5% lower. So I have a personal loan of 800. Should I pay it off with the cc and then pay half of the cc this month and next month. Then do it again on my other loan that's like 500. I don't need the cc. But im trying to build my credit back.
Credit card?
- Posted:
- 3+ months ago by Gibby305
- Topics:
- personal, card, interest, credit, question, loans, credit card, personal loan
Details:
Responses (1)
Can't tell from the wording, but I'm assuming your personal loan is ~5% less than the credit card's interest rate. If you're paying it off in a couple of months, it doesn't matter either way from the interest rate perspective. However, concerning the credit rating, I have heard from credit councilors that paying off a loan does not look as good as maintaining a balance that you pay the minimum on. Preferably a very low balance. The reason why is that if you pay it off immediately, they make less money and so prefer to loan to someone who doesn't default and who also doesn't repay in full.
Maybe you could do an experiment and pay off the $800 in two months using the credit card (this would be two quick payoffs - the original loan and the two month credit card payoff) and see if your credit takes a small hit. If so, transfer the 500 over next and get it to $50 or so and just pay the minimum and look again in a few months.