So about a year back, I bundled all my credit card chaos into one, thanks to a personal loan from Discover with an APR clocking in at 18.99%. This loan was for around $40K. They were adamant about a $40k minimum, so I used about half of it to tackle my auto loan. In hindsight, not the smartest move because most of my payments now vanish into their interest instead of actually chipping away at the principal amount. The APR on my auto loan is way lower. Live and learn, right?
Now, I’m left with a hurdle of $34K to jump over.
Here’s the kicker – Amex is throwing a personal loan my way with a sweet 10.89% APR. Do I grab this lifeline and wipe out the Discover loan completely to land a lower APR deal? How much of a hit will my credit score take if I go this route? For what it’s worth, my current loan won’t slap me with a penalty fee for paying early and my credit score is floating around 780.
Farewell,
Money Minder Fan”
Response from THE MONEY MINDER:
Hello There,
It sounds like you’ve been working hard to manage your debt responsibly, and that’s commendable. Regarding your situation with the Discover personal loan and the new offer from Amex, it’s essential to weigh the pros and cons carefully.
Transferring your debt from Discover to Amex at a lower APR could potentially save you money in interest over time. However, before making any decisions, consider the following factors:
- Check for any hidden fees or costs associated with transferring the debt. Make sure there are no surprises that could end up costing you more in the long run.
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Evaluate your budget and make sure you can comfortably afford the monthly payments on the new loan from Amex. A lower interest rate is beneficial, but you still need to ensure you can manage the payments without putting yourself in financial strain.
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Consider how this move will affect your credit score. Opening a new account could initially lower your score, but over time, it may improve as you make on-time payments and reduce your overall debt.
Given your current credit score of around 780, you are in a good position to qualify for the Amex loan. Just be sure to make an informed decision that aligns with your financial goals and capabilities.
In conclusion, if the terms and conditions of the Amex loan are favorable and will help you save money in the long run, it may be a wise move to transfer your debt from Discover. However, make sure to do your due diligence and consider all factors before making a decision. Remember, managing debt is a marathon, not a sprint, so take the time to assess your options carefully.
Best of luck with your financial journey!
THE MONEY MINDER
