Paying DVC off with credit card?

[Gabe]

I'm trying to decide if it would be a good idea to pay off dvc with my credit card. I received an offer for a balance tranfer or purchase for 5.99 apr for the life of the loan. We currently have 9.9 with Disney.
What would the pros ancons of doing this?

I would appreciate any help.

Gabe

 

[Frozenfingers]

Guess it would depend. Capital one keeps sending offers of 3.9% for a balance transfer for the life of the loan. So, your offer can be improved upon. Does your card offer meaningful rewards? such as airline miles? If your payment is late, does the interest rate jump to 20 some percent?... If you know you will be paying off the CC in short term, it may be adventagous to run it through your card, but I think most would agree that in general, it isn't the best option avialable. Have you considered a home equity loan?

 

[wdwstar]

refinance your mortgage is a better route or a second mortgage,
with a cc bal caring a hugh bal., wouldnt that effect your credit if you decide down the line to purchase a new home, car, a loan ?

 

[sap1227]

Don't forget, if you are financed with Disney it does NOT show on your credit report, if you transfer it to a credi card it does. I agree with the previous poster, if you know you are going to pay it off soon, I would do it.

 

[pumpkinboy]

If you should decide to do this, go into it with an empty credit card, ie zero balance when you start. Otherwise, your payments will be applied to the lower interest debt (in this case 5.99%) first while you continue to accrue higher interest rates on any existing balances. Also, you will want to avoid making new charges on the card, as you will have the same issues as an existing balance. Also be aware that there might be a one-time charge for the balance transfer, which might negate any savings on the rates in the final equation. Also consider that you can deduct mortgage interest from your taxes, including that from your DVC loan, but not credit card interest; so you would want to decide whether the after tax cost of the interest on the 9.9% loan is more or less than the 5.99% non-deductible interest (in a 30% marginal bracket, DVC interest rate comes out to 6.93%; is that differential worth having to deal with the credit card company rather than DVC?).

Provided that all these caveats are considered, I would see not reason not to reduce interest rates. Personally, I would recommend holding out for a better rate, maybe in the 3% range. Or go with the home equity option if feasible, as this is also lower rate but still deductible.

 

[Divamomto3]

Originally posted by sap1227
Don't forget, if you are financed with Disney it does NOT show on your credit report,.

That's interesting...I did not know that. Why would that be?

 

[HookdonWDW]

Originally posted by Divamomto3
That's interesting...I did not know that. Why would that be?

Because Disney chooses not to report to Credit Bureaus unless you are delinquent. Every company has the option to do this. We've had a few loans over the years that have not reported loans to the bureaus.

 

[Beca]

I was wondering what card this is on? Not to be nosy, but we had the same offer with Disney Card...and when I called to ask them to raise my credit limit to cover the entire purchase...they gave me a better credit offer if I "transferred" the funds to my checking account via the phone. Just a thought.

 

[Gabe]

Thanks for your help, I had not considered the transaction fee, which is 3%. As well as the fact the the interest on the dvc is deductible. I think we'll hold out for a better deal.

Oh, and the cc company is washington mutual.

Gabe

 

[wuv tigger]

Also, your payment will probably go up. You will save interest, but most credit cards have a 2% minimum. For $10,000 that is $200 per month. Ten year DVC financing at 9.9% is $131.

Also, my 0% offers allow the rate to be increased if I am late on any payment, not just the credit card I have the deal on.

If cash flow if important you may want to consider this.

David

 

[Dopey Sharon]

When I bought, we used our new Disney Visa. We got 0% interest for the first six months, and the rewards. Right before the six months ran out, I transferred the balance to a new Discover card, that has 0% interest until June. I should have it paid off by then.

 

[John VN]

Just wait for a little while and you might get a better offer from another CC or maybe even a better offer from the same company. We received an offer from Discover for 0% until early 2005 plus transfer fees and then another offer from Discover about 1 month later for 0% for the life of the transfer with no transfer fee. Just had to make min. payments on time and 2 purchases a month using the card. If late on a payment though, LOOK OUT!

john

 

[Dopey Sharon]

I'm always getting CC offers for 0% interest for a certain time period, but never charged a transfer fee.

 

[Maistre Gracey]

Adding to what others have said, some of these low, lifetime rates require one or two "qualified" purchases each month. Of course, those will be the last items paid and will accrue interest at the higher rate. The question is, what is a "qualifying purchase"? If it is $5 at the gas pump, this may be a good deal.
I have never seen this type of deal until I was sent one just this week. I am looking into this.

Good luck...

MG

 

[doubletrouble_vb]

Need to be careful with these offers. The fine print can be brutal. Cards are out there that will go up based upon other loans or the total amount of your loans. I'd pass on it unless you've read all the fine print on every unsecured loan you have.

 

[jennypenny]

Usually, if you do a balance transfer or direct deposit into your checking account, you don't earn any "points" to whatever you get with your card, but you would if dvc charged the balance to your card. And transaction fees can be high. And you can't deduct the interest, and your card has the right to apply any and all payments to the interest-free part of your balance and let anything else rack up finance fees.

If it were me (and it probably will be next year) Wait until you have the $$ to pay it off, have DVC charge your balance to the card (earning points) and then pay it off that month. If you don't have room on the card, have Disney make a couple of smaller charges (they did that for me before).

 

[nursetink]

I paid off my balance Tuesday with a credit card, but we have the money saved to pay the bill in full when it arrives.