No. of Recommendations: 0
The idea of moving your credit card debt over to a fixed loan with car loan people is definitely a good idea, for two reasons. First, it's good because the 9.9% interest is almost certainly going to be lower than your CC APR. Secondly though, it reflects more favorably on your credit rating to have debt in installment loan form instead of in unsecured, revolving debt form. Unsecured "bankcard" debt (aka credit card debt) is considered riskier b/c there is no collateral in case you decide to default. All other things being equal, your credit bureau score is likely to be a bit better if you have a $2,000 car loan than if you have a $2,000 Visa balance. (More on this in my post to last week's dueling fools board if you find this sort of info at all useful.)

As for pulling money out of mutual funds to pay CC debt, in *this* case, wouldn't it be good to leave the money in the mutual fund? Assuming that you do transfer your CC debt to the 9.9% loan from your bank, and assuming that your mutual fund is growing at least at market average, your choice is between making payments on a 9.9% loan or keeping the money in investments with an 11%+ rate of return. (And even higher than 11% these days.)

Plus, it is always nice to know you are building a nest egg...

Best wishes,

YH
Print the post  

Announcements

UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement