Silly Question on Interest Rates

neilgunt · #1 (**permalink**) 06-11-2010, 01:53 PM

"Hi all,

I have the opportunity of consolidating two credit cards into a new account:

CC-1 = $14,000 @ 10.24%
CC-2 = $7,000 @ 10.24%
New = $21,000 @ 18%

The question I have is, are the 10.24 rates better or lower than what the new card rate will be? I was under the impression that Interest Rates are accumulative in their cost, meaning that the actual cost of my two cards combined is really 20.50%. So it would make sense to consolidate these into a lower interests account. However, if I'm just hallucinating, then I may be better off leaving them alone.

Any insight you may shed on this issue will be greatly appreciated!

Thanks!"

tdls17 · #2 (**permalink**) 07-03-2010, 04:03 PM

No such thing as a silly question. At least your trying by asking. Anyway, stick with the lower rates; higher rate loans should always be paid off first since they stick you the most with finance charges.

DavidBibby · #3 (**permalink**) 07-03-2010, 06:03 PM

You do NOT want to consolidate the two cards to an 18% card.. That's the same thing as raising the interest rates on each card to 18%.

You'll be paying $14,000 at 18% AND you'll be paying $7,000 at 18%.

The only time you'd want to move these two balances to a new card is if the new card has LESS than 10.24%

Don't do it.

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