# Credit Union loan to pay off my Credit Card Balances



## aoa321 (7 Oct 2004)

Hi all,

I have been reading the posts here and just now realising the actual cost of Credit Card borrowings.  I have also seen some posts that give the Credit Unions a bit of a bashing from time to time but for the purposes of this question assume that the Credit Union is my only source of funds.

The problem is that my wife and I have allowed our credit card balances climb up to over 5K, I am working hard to clear these balances now.

My question is ... should I pay as much as I can to the credit card company directly from my current account OR should I take a loan out from my Credit Union to pay off the balances and then put all my energy into clearing the Credit Union loan ?


----------



## daltonr (7 Oct 2004)

If you can avoid using the card until it's paid off then you should consider trasfering it to a card with a 0% balance transfer option.

If as you say the credit union is your only option in terms of borrowing then, yes, getting a loan perhaps over a year (or as short a time as possible) is probably going to save you money.

BUT this only works if you don't run up the balance again.
THe worst possible scenario is that you end up with a loan from the CU that you must pay back, and at the same time your Credit Card Balance creeps up again.

The bashing of CU's only relates to the fact that the interest rate they quote isn't necessarily an APR.  

-Rd


----------



## Dearg Doom (7 Oct 2004)

It's always better to borrow at the lowest interest rate possible. If the credit union is the cheapest borrowing you can get, then use this to pay of the high cost borrowing (credit card) and then pay back the CU. Depending on the timeframe in which you intend to pay of the CC balance and if  you could transfer the balance to a card with a very low introductory rate and pay that off.


----------



## Elcato (7 Oct 2004)

I would take the CU loan immediately and pay off balance. The interest rate of the CU will always be way cheaper than the CC (at least half the amount). You could use the balance transfer to a new CC company which offer a low rate usually around 2% and make sure you pay off the lot in the given 6 months. This is your best option as the 40 euro spent on the transfer will be a lot cheaper than your present interest payments on 5k. WARNING: On balance transfers make sure you don't use the CC at all as this may make you liable for interest on the lot. So put the card into a bowl of water and put at the bottom of your freezer till you have the outstanding balance paid.

Doh ! Post crossed woth the lads above.


----------



## aoa321 (7 Oct 2004)

Thanks for the replies on this and another thread I started this morning.  I have decided to take out a CU loan to pay off the balance and put the Credit Cards away, only to be taken out in case of emergency (I am reluctant to actually close the CC accounts because they may be needed for internet transactions etc.).

Because my wife and I both need personal funds, I have to replace the CCs with something.  I will open 2 new Laser Card accounts - at least then we can only spend what we have and there is not the temptation to spend hundreds of Euros because it is available even though it doesn't actually exist.

I resisted doing this earlier in the year because of the charges on the Laser Card accounts, presumably there will also now be extra government duties as well.  I will just have to put these costs out of my mind, put them down paying for a service and realise that I am probably paying more in interest on the Credit Cards balances at the moment.


----------



## Guest (7 Oct 2004)

> I resisted doing this earlier in the year because of the charges on the Laser Card accounts, presumably there will also now be extra government duties as well.

Credit cards are subject to a €40 stamp duty charge. Laser cards are subject to a €10 SD charge. Combined Laser and ATM cards are subject to a €20 charge.

If you are having problems keeping your spending within your means then you should read these links:


----------

