Associate Student Credit Card, need advice?
Okay, so I have a large outstanding balance on my student loan at
8.25% This provides me with approx. $220 worth of a tax deduction.
I received an offer to transfer balances to credit card at 5.99%.
According to may math, I will save money with this transfer, even
taking into consideration the deduction (which seems to have little
impact on my overall bracket).
My question is: on a credit report, is any and all debt (outside of a
mortgage) equal in its evil or is a student loan better to carry than
a credit carcd balance?
-Im in UK so dont know if it applies where you are.......
Having however much credit you got and with which type of financial
institutions, isnt 'evil' in the sense you mean it. Its when you miss
payments or underpay minimum amount (or defualt entirely) thats causes
problems.
As far as i know, it makes no difference to anyone else who looks at
your file, how much crdit you got or with whom. Just make sure you pay
at leat minimum, on time and dont do something silly like move house
and changhe your name.
-First of all, I can only offer the advice of someone with student loans,
personal loans, and credit cards. Hopefully someone with more formal
knowledge of rules and standards can weigh in, but what the hell -- at the
very least I can offer someone points to refute.
IIRC, student loans don't show up on your credit report -- I can't remember
from the last time I looked at mine. If that's true, there's an obvious
advantage in keeping your original loans instead of selling them to credit
card company. Either way, I've always had the impression that a bunch of
student loan debt doesn't bother lenders as much as the same amount of
standard debt. There are special rules associated with student loan debt
that you'd wipe out if you just transferred it to a CC.
Also, I believe a part of your credit score is based on your amount of
available credit vs. the balance you carry. So you're better off with a
$5000 balance on $15000 of available credit than $3000 out of an available
$3500. That's especially important if, in fact, student loan debts don't
show up on your credit report.
Once again, I could be dead wrong on all those points, but at the very least
you should look into the implications of changing the classification of your
debt from "student loan" to "credit card balance." I don't think the
difference in APR's is the only, or even the most important, factor to
consider.
Personally, I leave my student loans as they are, even as the rates climb,
because I like the repayment flexibility and tax break -- plus, now that I'm
going to grad school, I'm glad I didn't transfer the balance because I can
suspend repayment while I'm on a stipend that's much less than what I make
now. The difference between a 8.25% and 6% APR could be all but negligible
depending on your balance. On a $10000 balance, that's just about the $200
you get back in taxes.