The Finance Blogger

Questions about Credit Cards vs. Lines of Credit?

Credit Cards vs. Lines of CreditWe received a question about credit cards vs. lines of credit from a reader and will answer his questions in our next post. They wish to know if it is better to charge everything to their credit cards or if they should just arrange for a line of credit and use the line of credit to pay for all of their renovations that they are planning to complete in their home. This is a fairly common question that many people have as they plan upgrades and renovations to their homes.

Credit Cards vs. Lines of Credit

Question to Debt Counselor:: We are planning on doing some renovations around our home. The kitchen will cost about $8000 , the bathrooms about $5000 each and then we are planning to upgrade the floors to hardwood. They have carpeting which has seen better days. The roof also needs to be repaired. In total we are spending about $30,000 and we are wondering if we would be better off using our credit cards to pay for these renovations or arrange for a line of credit to pay for them? We do not have a line of credit now, but could arrange for one at the bank.

Our credit cards have enough room on them that we could charge all of this to the cards, but it would take some time to repay these amounts. It would mean that we would carry an unpaid balance on the credit cards for several months. We probably would pay some interest on the unpaid balance at whatever interest rates that they charge.  This is our question.

Profile Review

Do you currently have a mortgage? :: yes, almost paid off

Home/Mortgage Loan Amount :: $25,000

Other Loans, Including Credit Cards:: a Car loan, a couple of credit cards with zero balance

Are you employed and for how long:: Work at GM for the past 10 years

Your credit rating to be – excellent, fair, or bad? :: Excellent

Gross Amount Per Paycheck ::  $2400 every two weeks

Do you agree to have this information published online, without your PRIVATE information of course? :: yes, as long as my personal information is not released

Extra information here please (some detail):: I have worked at GM for the past 10 years except for the time when they went through the restructuring, which was about 6 months. I make a good salary and so does my wife. We are not that savvy when it comes to loans and that is why we are wondering whether we should consider credit cards vs. lines of credit as a means of borrowing money.

We will answer this question about Credit Cards vs. Lines of Credit in our next post.

If you have a question about debt, loans , mortgages or other financial situations, please feel free to leave a comment with as much detail about your situation as you can. We will try to answer your question in our next post.

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2 Responses to “Questions about Credit Cards vs. Lines of Credit?”

  1. now i understand the difference between a credit card and a line of credit. thanks, i do not have the credit rating to get a line of credit now, but some day

  2. Just learned from CNN that when a credit card company increases your credit card company increases your credit limit on a credit card that it actually is a good thing provided that you do not run the credit card up to it’s limit and you pay it off every month. Amazing

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