Question: I am considering transferring the remainding balance of my car loan to one of my credit cards. The car loan is at 8%, while the balance transfer option is at 2.9%, so I would save myself $400-500 over the next year, so it seems like an easy decision. So I’m considering doing the balance xfer, then doing MINUMUM monthly payments each month, and then, at the end of the sweet 2.9% deal period (after which the APR jumps up to, like, 19%), pay off the rest in lump sum.
My only concern is how is this tactic going to affect my credit, which has always been in perfect standing. I mean, if, for the next sevaral months, I’m only paying the monthly minimum on the credit card, and have a substantial month-to-month carryover balance, will that have any negative impact on my credit? I asked the credit card company customer service rep that very question, and she said there wouldn’t be any damage to my credit. I still want to make sure.
Answer: I’m not an expert nor do I have any inside knowledge at all of how the credit rating system works. What you’re talking about doing certainly shouldn’t lead to any adverse information going on your credit report–adverse of the type that results from late payments, defaults, etc.
However, I think it could affect your credit score, that three digit number that the credit professionals have until recently been able to keep laypeople pretty ignorant about. If you are concerned, I suggest you find out your current score by getting a copy of your credit report. Then do a web search on the term “credit score” and you’ll be able to get enough information to help you ascertain whether you can afford to have your score lowered slightly by the fact of your carryover balance and making minimum payments.
Off the top of my head I’d say if you’re not planning to apply for major credit soon, like a home mortgage, you wouldn’t have anthing to worry about.
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