Pay off credit cards with private loan money?

[TNC]

I'm getting ready to start my first year of Pharmacy school and have 3 credit cards totalling about $13K. (some car problems and an investment in my second career later... ) I know yikes! Anyways, question is whether I should maintain minimum payments over the next four years of pharm school (which would add about $320 to a monthly budget) or take out additional supplement or private school loans, pay the balance off and then deal with it after school (consolidated with school debt)?

Any advice greatly appreciated!

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[ForcedEntry]

It's a matter of interest.

It will take you more than 4 yrs to pay off 13K using minimum payments. Minimum payments is like treading water. You don't get very far very fast.

Also, I would be willing to bet your current fixed APR (16-24%?) on that 13K is greater than that you could get on a private "school" loan (+1 over prime? = 9.25%).

So defer your current debt until after you graduate and roll it into your education...why the heck not...afterall, aren't we pursuing pharmacy for economic gains (among other things)?

 

[mike36]

It's a matter of interest.
So defer your current debt until after you graduate and roll it into your education...why the heck not...afterall, aren't we pursuing pharmacy for economic gains (among other things)?

I agree. This is what I would do.

 

[binghamkid]

In case you didn't understand what the above two posters were saying, they were advising (and I am too) that you take out additional loans to pay off the credit card debt. The only hitch is that you are only allowed to take out enough in federal loans to cover your educational expenses...you're going to have to do some major scrimping/scraping if you want to use some of your federal loans to do that. Private loans have higher interest rates, but they should still be better than the 24% interest rate credit cards charge you.

 

[sakigt]

Id leave a couple thousand on the cards to keep you scared of them. The last thing you need is a zero balance. It would just be easier to justify racking it up again. ("I can pay it off when I graduate...")

The smartest way to spend your money? Maybe not if you look at the numbers...but Im the kind of person who believes spending a little more in intrest to keep you from charging again is the better way to go...

 

[DownonthePharm]

Either pay your credit cards off, or see if you can find a credit card with 0% for the life of the transfer. The point is to choose whatever option makes you debt have the least intrest possible. You might want to consider talking to your financial office at your school, if you say that the credit card bill each month is too much of a hardship they may be able to help you find a private loan to pay it off.

 

[bananaface]

Id leave a couple thousand on the cards to keep you scared of them. The last thing you need is a zero balance. It would just be easier to justify racking it up again. ("I can pay it off when I graduate...")

The smartest way to spend your money? Maybe not if you look at the numbers...but Im the kind of person who believes spending a little more in intrest to keep you from charging again is the better way to go...

A closed card doesn't need to be scary.

If you can afford to pay off the credit card and can't use it responsibly, get a debit card instead.

 

[sakigt]

Closing a card that you have had for a while isnt a good idea, either. It could damage your credit score b/c it would change your length of history.

The main thing is to be honest with yourself about the possibility to repaying it now on your own and not racking up any more debt in the process. Using a bulk amount of money (and whats worse, its more credit) is usually the easier way out.

 

[DownonthePharm]

Once you pay off the credit card don't close the account, just chop up the card and throw it away. Closing the card will probably hurt your credit score. Actually to optomize your credit rating, keep the card and use it to pay the bills you will pay off each month anyway. Keeping about 1% of your available credit in use is the best idea. Of course if you can't resist being bad with the CC, its probably just best to go the chop up route.

 

[Shizelbs]

I'll play the role of stick in the mud.

So, I could be wrong, but you should carefully read the terms of your loans. If they are educational loans, they probably say that they must be used for educational purposes. So, I would avoid paying off those credit card debts unless you can show that they themselves are for educational purposes, otherwise, I believe what you are thinking of doing is illegal.

 

[confettiflyer]

^^i think it's hardly enforceable because there's so much mixing of money going on with the credit cards. The only time you have to really worry about qualified expenses are when the IRS is involved and you're claiming tax credits. In that case, only tuition/fees count, not room and board.

In general, "qualified education expenses" are the total costs of attending school. These expenses include:

* tuition and fees;
* room and board;
* books, supplies, and equipment; and,
* other necessary expenses (such as transportation).

You can easily justify clothes, gas, food, Ikea, car repair, vacuum cleaner, computers, etc... under the last part.

The fishy part is the "career investment" the OP noted. BUT you can argue that all the payments he made on the CC went toward that particular expense and all that remains to be paid by the loan is the "qualified" portion.

 

[Requiem]

Take out a credit card that offers a reward system. Perhaps a cash back card [i.e 2-3% on all purchases] and pay the debt off with this credit card.

That'd be equal to about $300 [if you can afford a card with that credit limit, I don't know the the entirety of your situation], following this:

Do as the other posters have mentioned: use a student loan to pay that, its simple math. The 10 percantage points you'll save with a student loan will be worth thousands, especially since you're in school and a while away from being able to pay it off yourself.

Good luck