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Released: March 19, 2013

Risks of transferring a car loan to a credit card

Source: Ann Carrns, N.Y.Times (Free Registration)

The credit card site CardHub.com recently reviewed current zero-balance credit card transfer offers and found that many cards let consumers transfer all sorts of debt — not just credit card debt — onto the new cards.

The site’s founder said several major card issuers let you transfer car loans to their credit cards — in effect, letting you trade secured debt (the car is collateral for the loan) for unsecured debt. Some cards have introductory zero interest rate periods of up to 18 months. If you use such transfers strategically,  he says, you can lower the rate on your car loan, saving as much as $1,000 in interest charges.

The catch, of course, is that you actually have to pay off the loan before the zero interest period expires. Otherwise, you’ll end up paying double-digit interest on the balance, negating any advantage from transferring the loan.

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