I just finished college. Right now, I've got three student loans, for
$17,000, $5,000, and $3,500, respectively. The third loan has a high
interest rate, and one outside-the-box option I'm considering for
reducing the interest rate on that portion of the debt is to move it
over to credit cards. That is, I get a couple credit cards with low
interest rates, then take $3,500 off them, and use that cash to pay
off the $3,500 student loan. My concern is that this might hurt my
credit rating. It wouldn't actually increase the total debt I have,
but I get the feeling credit card debt is somehow worse than student
loan debt. Plus, I already have two credit cards. Do you think moving
the debt over to new credit cards like this would hurt my credit
rating much?

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Clarification of Question by beatle-ga on 16 Dec 2003 08:24 PST

I do have a lot of federal loans with a 3% interest rate, but the
specific loan I'm thinking of moving over to a credit card is a
private loan with a 9% interest rate, and can't be easily consolidated
to get a lower rate. If you know of someone who gives good rates for
consolidating private loans, let me know (I asked that as a seperate
question, just search for it).

The problem with juggling around credit card debt is that you have to
be on the ball.  Most credit cards offer low introductory rates ? as
low as 0% - then after the introductory period is over they raise your
rate.  The fine print on an application will tell you how much the new
APR will be.  Then if you have a late payment, your APR raises.  If
they decide to change the terms of the arrangement for whatever
reason, your APR raises.  They want to make as much money off you as
possible.

Once I reviewed the fine print on a new credit card bill and realized
they took the liberty of upping my APR without notice.  Suddenly I had
24.99% on a credit card that began at 10.9%.  I called the company and
their reason for raising it: my debt-to-income ratio was too high. 
Basically they knew they had me in a corner.  My credit was bad, so I
wasn?t going to be able to transfer the balance.  I was stuck with
whatever they gave me.

My advice: Stick with keeping the student loan debt in the student
loan category.  Student loans offer the lowest interest rate I know
of.  You can consolidate your loans into one place and pay less than
3% for the life of the loan.  Late fees are only a few dollars and
your rate is consistent, provided you don?t default for extended
periods of time.  Also, if you?re unemployed during any part of your
repayment, you may request a forbearance and not have to make payments
during that time.

Shop around if you like, but here?s one place to get you started:
http://studentloan.citibank.com/slcsite/fr_r_con.htm

Credit card debt is considered revolving debt. Your totals and
payments can change from month to month depending on how much you put
on your credit card.

Student loans are installment lines your credit history and potential
creditors know that these are fixed debts. That is, you have the same
payment over a fixed period of time. It can be considered more
desirable to have installment credit over more revolving lines, but
that is going to vary.

Potential creditors are attuned to the common practice of people
moving their debt around. They also commonly calculate your potential
indebtedness. Depending on what kinds of credit you intend on applying
for in the near future, this might be critical. If you aren't
contemplating a home or car loan, than you may be all right. It's hard
to say.

Is it possible for you to try and pay off the higher interest loan
first? Or could you apply for a low-interest loan from the bank in
order to pay off this student loan? That would still be considered
installment credit.

Best of luck to you.

Regards,
luciaphile-ga

It seems that you are talking about taking a cash advance from a
credit card to pay an installment loan.  CHECK YOU CARDHOLDER
AGREEMENT very very carefully.  Cash advances are usually treated much
differently than regular purchases--Much higher rates and automatic
fees!

I don't think that you will find many credit cards with ongoing rates
lower than your 9% loan that you wish to transfer. Introductory rates
are generally for a few months to a year. If you plan to pay it off in
that time it may be a good idea. You are probably better off
consolidating the loan as 620rgb recommended. Reading all the terms
and conditions is also good advice. Often Credit card companies can
raise your interest after being late on a single payment, I know
because it happened to me, there goes that great introductory rate if
you are still in that period. If you are still intent on going the
credit card route shop around for the best rate and read all the terms
and conditions. Try www.topwebcredit.com  there is a section just for
student cards as well as some credit builders.

Good Luck