“Dear Steve,

I have $22K in credit card debt(on one card) with an 8.99% variable rate. Minimum payment is about $450/month. I have recently began to pay more than the minimum(last month i paid $1000) since I would love to pay this off or at least bring it down so my minimum payment isnt so high. I recently received a letter/offer in the mail from the bank that i have my mortgage through offering a 3.74% variable APR Choicequity line of credit.

Is it a smart move to transfer my cc balance to this?? Would this save my a lot of money and what effect would it have on me?

Thanks very much Steve :)

George”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big Hug!

@GetOutOfDebtGuy

Hi George,

I will answer your question as best I can but I first want to support your accelerated payment. It is the best way to pay off your debt the fastest.

A significantly lower interest rate is always an idea to check into. But you definitely need to consider a couple other things. First of all a variable interest rate can just as easily go sky high as many mortgage holders have learned. But I am trouble by a second issue. It appears to me that you will be transferring $22k of unsecured debt into a secured debt that I am certain is why the offer is being made. They can always raise the rate later but they cannot always get an additional $22000 attached to your house. Converting unsecured debt to secured debt is rarely a good deal for the client and I would never recommend it. Hold out for a fixed rate 3.74% without converting to secured debt and you will have too good a deal to pass up.

I suggest continuing on your present course until that “unbelievable deal” really comes your way. You may be interested to know that a simple increase can dramatically reduce the total interest and time to pay off the debt. For example, if you have a $5000 debt at 17% interest and pay $100 per month, you will pay $11304 in interest over 40 years. That same interest and amount with a minimum payment of $25 more will reduce the amount of time to pay off the debt and the amount of interest by nearly ½.

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

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Read the full article at GetOutOfDebt.org, click here: Converting 8.9% Variable Credit Card to 3.4% Variable Equity is Bad Deal. George