Question about interest rates on loans.

[coolred]

I have a private student loan that I have been repaying for over a year. I still have over 7500.00 to go, its currently at an 8.75% variable. And then Iget a letter saying rates are abotu to go up, so I should consolidate my loan. I figure okay and give it a shot, well since my loan is private it does not qualify.

So I was just wondering how they calculate the interest on the loan, is it the same was as with a credit card, or similar. If so would I be better off paying off the loan with a credit card(assuming one with a lower APR)? Or does it not work in the same way, and doing that would make me pay more?

 

[FoBoT]

some student loan interest is tax deductible, if you move it to a CC , you will lose that. find out from whoever does your taxes if this loan interest qualifies for the tax deduction before you decide. in general, i would say do not do this, keep the student loan a student loan and not CC debt

 

[kranky]

The odds are overwhelming that it works the same as a credit card. Each month you are charged the monthly interest rate on the outstanding balance. So moving it to a lower-rate CC should save you money.

You should check to make sure (just in case) there's no prepayment penalty on the private student loan.

One minor consideration is that if you have late payments on the student loan, there's a possibility it may not show up on your credit report. It will certainly show up if you have a late payment on a CC. But if you are paying on time, every time, this is a non-issue.

 

[d3n]

You can usually make up for the intrest on your tax deduction. Keep it on its current loan. Its the only loan besides my mortgage that I havent paid off. Thats even after cashing out on two previous closings.

 

[coolred]

Yeah I think the interest maybe tax deductible, but its never helped me, since I have always been at 0 tax liability by that point, so therefore I already owed nothing, so deducting more doesn't help. I suppose I will just leave it as it is for now at least. But if my payment gets much higher, then I will reconsider. I already pay 115 bucks a month and the dang thing won't be payed off for like 6 more years at that rate. Hopefully I can afford to start paying more on it though, with my new job. Thanks