If I have a mortgage loan with a principal of around 50,000 and the rate I have is 7.1 %, would it be smart?

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to transfer it a credit card with a 1.9 % interest until the balance is payed off?? It seems like the right thing to do but I don’t know much about mortgage loans vs. credit cards. I understand if I slip up on paying the credit card I would be in deep sh*t.

5 Comments
  1. Reply
    Shirley M
    January 28, 2011 at 1:45 pm

    Yes, that would be better if you are sure you will NEVER miss a payment. I’ve done this before and it is good as long as there is no time limit on the 1.9%. Read the fine print.

    Also, talk to the company and tell them that you are planning to go elsewhere for a loan to pay the balance as their rate is too high. Often they will work with you as they do not want to lose your business.

  2. Reply
    jdkilp
    January 28, 2011 at 2:39 pm

    You need to provide more information … it depends.

    Usually, those cheap credit card interest rates only last 6 months. Check to see when it expires. And, remember that you can deduct mortgage interest from your taxes, but you can’t credit card payments or interest.

    If you’re able to itemize deductions, you’re effective interest rate on your mortgage will be significantly less than 7.1% … maybe about half that.

  3. Reply
    kykdidge
    January 28, 2011 at 2:51 pm

    While it might look enticing, you will have to read the fine print in the credit agreement. Here are some things you should know:

    1) the credit card payments will not be tax deductible as mortgage interest.
    2) Many of the low “teaser” interest rates for credit cards have traps that cause the rate to adjust up, up, and up. For example, if you’re late with a payment or if you don’t charge a certain amount per month/quarter.
    3) If you need a loan for some other reason, the lender will be less concerned about a 50K mortgage than a 50K credit card bill.

    On the flip side, the credit card probably can’t repossess your house (it won’t be collateral for the loan) if you fall behind.

    Assuming your credit is good, you could refinance from your 7.1% loan to a 5.625% – 6% 15-year loan. Check out this calculator to see what kind of savings that equals:
    http://www.bankrate.com/brm/calc_vml/refi/refi.asp.

    I personally would be very cautious before charging my home on a credit card. If you do charge it, look for a card that doesn’t require you to charge something every month (those purchases will have a much higher interest rate) and cut up the card so you aren’t tempted to use it for other things.

  4. Reply
    Franco
    January 28, 2011 at 3:30 pm

    The credit card rate of 1.5% is either for a very short time or it is per month. There is no credit card that will let you have a debt for long at 1.5% pa. Make sure of the facts before you jump.

  5. Reply
    felix hallam
    January 28, 2011 at 3:52 pm

    Eliminating high interest credit cards by transferring to a card with a lower rate can help you save a great deal of money, allowing you to regain control of your finances. However, it is important that you understand all of the terms and conditions of your new credit card before committing enrollment. You want to make certain that the card offer is fair and that you are truly going to benefit from it. Featured are tips that will help you choose and use the right credit card for transferring balances.

    Pre-determining interest rates

    Most balance transfer offers are good for only the first 6-9 months of enrollment. At the conclusion of the introductory rate, the card will convert to a more standard rate, typically between 14-20%. It is important that you determine what the interest rate is going to be once the intro rate is over. If you are not sure what interest rate the card is going to be charging at the conclusion of the intro offer, call the issuer and find out. Read more about it at:http://www.credit-card-gallery.com/article/173,Credit_Card_Balance_Transfer_Tips

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