quick question about credit and loans.

[Kimo]

I have an offer for a cash advance against my credit card limit at 4.99% until paid off. The card limit is $10,000 and I can get up to $13,000 advanced. I need about $10,000 for a student loan. Is it better to take the cash advance or apply for a student loan (I think I will get a rate between 5%-6%). My FICO is about 720. I am concerned if I take the advance my available credit to credit used will increase drastically and thus drop my credit score.

Thanks

[Mike Lopez]

Depending on the type of student loan, it is usually wise to take advantage of the deferred payments, and potentially subsidized interest rate. Ask your advisor or loan counselor if they are subsidized loans. If the loan is subsidized, it is deferred until 6 months after you graduate, and the government pays the interest for you. If it is non-subsidized, you will be responsible for the interest, but still wont need to make payments until you complete your education.

If you use the maximum on your credit card, you can be denied for future credit due to the liability on a large balance. A good rule of thumb is to use your credit, but not excessively. Do not exceed 50% of your credit line on revolving accounts, or your score could suffer.