Converting 8.9% Variable Credit Card to 3.4% Variable Equity is Bad Deal. George

“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 🙂


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.


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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.

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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.



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.

Mike Killian is founder of Learning Credit and Debt Management. He has been writing and teaching about credit and debt management issues for over 12 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.He has an MS in counseling and is a nationally certified as a Personal Finance Counselor. Mike can be found at LearnCreditManagement.com/.

1 thought on “Converting 8.9% Variable Credit Card to 3.4% Variable Equity is Bad Deal. George”

  1. I agree with Mike, but with a different, additional, thought. At the rte you are going, you should be able to tackle this in less than 2 years. I agree that the savings doe not outweigh the risk as you’d save little more than $1000 over that time.
    On the other hand, if you get a decent zero interest transfer offer, read the fine print, and consider it.
    .-= JoeTaxpayer´s last blog ..This Week’s Roundup =-.


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