While moving may have a big price tag, it’s often necessary to fulfill work or family obligations or to attend school. If you’re planning a move and don’t have the cash to pay for it, here are a few of your other options for financing your relocation.
Using a credit card can be a good way to fund a move. Before considering this payment method, you need to find a mover that will let you pay with plastic, as you absolutely do not want to take a cash advance. Credit card cash advances often charge much higher interest rates, in addition to extra fees.
Different Ways to Finance a Move
It costs a lot of money to move. There are a ton of expenses. Between the movers, packing materials, security deposits, down payments, utilities, travel expenses and any number of other unexpected costs, it can really add up fast.
Finding a way to pay for all of that can be hard. Thankfully, you have options. No matter what your situation is, we’ve got you covered.
Let’s look at the best ways to fund your move:
1. Credit Cards – 0% Interest for up 18 month
This might sound like a terrible idea—you’ve probably been told a million times to never carry a balance on your credit cards. And it’s true, they typically have very high interest rates, not to mention the fees and penalties you might face.
What you might not know, though, is that there are a lot of card issuers that try to attract new customers by offering a promotional 0% APR period. With these 0% cards, you’ll pay zero interest on the balance you carry for a set amount of time.
As long as you make the minimum monthly card payment, you won’t be charged any fees either. In other words, it’s a free loan.
There’s gotta be a catch, right? Well, not so much a catch as limitations. But there are also distinct advantages to using the right credit card to finance you move instead of a personal loan.
2. You Can Save a Lot of Money
Let’s start with the good stuff. Obviously, with a 0% APR credit card you won’t pay any interest for a period of time. Pay off the balance before the end of that period, and your financing is free. That’s it.
With a personal loan, on the other hand, you’ll start accruing interest immediately. And a big chunk of your loan payments will go toward the interest, not the loan amount.
With an interest-free card, you can pay off the balance that much faster because every single penny you pay during that introductory period will go toward the principle.
3. Credit Cards Are Flexible
What about those payments? You’ll have a lot more flexibility with a credit card. If an unexpected expense comes up one month and you can’t put as much money toward paying off the balance, no problem.
You aren’t locked into a set payment like you are with a personal loan. All you have to do is cover the minimum card payment, which is typically quite low, and you won’t be hit with fees or interest. Easy.
Also, with a loan, you’ll receive lump-sum payment upfront. If you need more cash down the line, your only option is to try to get another loan. That might not be possible.
But with a credit card, you can always add another purchase. Flexibility is the key here.
4. The Limitations of Financing With a Card
Now we need to discuss the limitations to using a card to finance your move. Frankly, it won’t be the best option for everyone.
First, you have to qualify for a 0% APR card. You don’t have to have excellent credit, but it still has to be pretty good. If it isn’t, you may not qualify.
The other thing you have to keep in mind if you’re considering using a card to finance your move is that the promotional 0% APR period typically won’t be as long as the payment period you’ll get with a standard loan.
Interest-free credit cards usually offer 0% APR for about a year to 18 months. You may find one that goes up to 21 months, but that’s not the norm.
If you don’t think you’ll be able to pay off the card in that amount of time, you might be better off with a loan. After the intro period, you’ll be hit with standard credit card interest rates, which can be quite high and are almost certainly higher than what you’ll get with a personal loan.
Come up with a plan for how quickly you can pay off the balance. If you’ll only be a few months over the intro period, you might still be better off with a card. Don’t forget that 18 months of interest-free financing can save you hundreds, if not thousands of dollars.
5. Unsecured Loans
If you have decent credit and you need longer to pay off the cost of the move, a secured loan might be the way to go. You can easily get loans with repayment periods of 60 months. I’ve even seen places offering up to 144 months!
Granted, the longer you take to pay off the loan, the more interest you’re going to pay. And that interest starts on day one.
Another advantage to a loan is that you can, at least in theory, get more money than with a credit card. A credit card will typically have a lower credit limit than a loan, though both depend on your creditworthiness, which includes your credit score.
The nice thing about a secured loan is that you don’t have to put up any collateral. You do, however, have to convince the lender that you’re worthy of the loan. You’ll have to go through an application process, which can sometimes be quite involved. It’s typically easier to get a credit card.
If you go this route, you’ll want to shop around for the best interest rate and terms. Talk to your bank and don’t forget that there are many reputable online lenders now, too. SoFi, Earnest and LightStream come to mind.
6. Secured Loans
If your credit is in the dog house and there’s no way you can convince a bank to give you an unsecured loan, a secured loan might be your only option. While there’s nothing wrong with a secured loan, you will have to put something up as collateral of equal value to the loan amount, like a car or savings account.
In some cases, you will even get better terms and rates with a secured loan than an unsecured loan. It may be worth investigating both options.
7. To Sum Up
A 0% credit card is the right choice to finance your move if:
You have decent credit and can qualify for a card
You can pay off the balance in a year or two
An unsecured loan might be a better option if:
You’ll need more than two years to pay off your debt
You need to borrow more than the credit limit on your credit card
A secured loan will work if:
You don’t have great credit and can’t qualify for a card or a secured loan
You have collateral of some value, like a car
Whether you’re moving down the street or across the country, it can cost a bundle. Not all of us have the kind of cash you need to cover the big price tag that often comes with a move.
If you can, paying for the move with a credit card that offers an introductory 0% APR period can save you a lot money because it’s essentially a free loan. Those cards will give you up to 21 months to pay off the balance without incurring any additional interest or fees. If you need longer, a secured or unsecured personal loan might be the answer.