Can I Have a Loan Put on My Credit Card?
Credit cards often offer bonus programs or zero percent interest offers, which can make them seem like an attractive option for paying off your loan. It's possible to have a loan put on your credit card, but it isn't always the smartest thing to do. Bankrate.com suggests that doing so is a big mistake.
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How to Do It
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Most loan companies will not allow you to pay off the loan with a credit card directly. However, you can use one of the "convenience checks" that your credit card company offers. These are blank checks that come in the mail and you would simply write the check for the balance of your loan. You may also be able to get a cash advance from your credit card, then use the money to pay off your loan.
When to Do It
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This might be a smart option for you if you can get a significant reduction in interest rates by moving it to a credit card. Take all of the fees into consideration before making the move, though, as the difference may not be as big as you think. You may also want to do this if you plan on paying off the loan quickly and want to earn bonus points through your credit card, whether you get cash back, airline miles or anything else.
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Costs
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In order to use the convenience checks or receive a cash advance from your credit card, you must pay a fee. This is a percentage of the amount that you're using. For example, if the fee was 6 percent and you are paying off a $2,000 loan, you'll have to pay $120 in fees to get the money. Additionally, the money may be subject to higher interest rates, which is particularly detrimental if you will take a long time to pay back the money.
Potential Disadvantages
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You may be trying to transfer the loan to your credit card because you want to take advantage of a zero percent introductory loan, but this rate lasts only a short period of time. If you take longer to pay back the money, you may be subjected to higher interest rates. Additionally, many credit card companies will increase your interest rates if you are late making a payment. Always read the fine print before you agree to anything.
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