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Mulling over some concerns about BTs...
I need an online calculator that helps one figure out the benefits of saving with balance transfers. I have a zero percent card that will reset to about 19% percent in the summer. Read below to see what I am looking for, please.
I keep getting these offers on my paid off cards to use their BT offer for long term. One is 4% APR for 24 months with no transfer fee. While I think that probably is worse than 0% with a fee, I would like to see the conversion comparison in black and white, no gray wondering. I only have one card with a zero balance that offers a 0 percent for a shorter term right now. I'll take the insult posts with the helpful one that answers the question. I got my DH's W-2 yesterday and while I can rejoice about how much he made, I am looking at a tax bill I will dread. I may have to pay for tax help this year. Haven't had to do that since 2006. Anyway, I may need a short term loan through my credit card. What's this got to do with travel points, miles, perks etc? I'll have to get back with ya on that!!! @:-) Anybody got a suggestion link, please? TIA! :) |
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Another thing to take into consideration is the credit lines. You don't want to transfer a balance that will put you over 50% on any one card, I'd keep it below 25% myself but don't know what the best number might be.
How this relates to points, don't tie up your best point earning card! The way they apply payments to a BT means you pretty much need to ice the card while you have the BT balance on it. |
Credit card interest compounds while balance fees are one offs and on the balance only. I'm sure there's a point at which the balance fee becomes the more expensive option, but it's probably so high you wouldn't consider it anyway.
The calculators mentioned upthread look good; alternatively, you could ask anyone who passed 8th grade to help you with the math. |
My suggestion: Don't do a balance transfer. Instead open a card or cards with 0% interest on purchases for 12-18 months and use MS to transfer the balance; the rewards from nearly any card will more than cover the MS costs.
My second suggestion: spend less on yourselves and more on your debt until it is gone. Good luck! |
Originally Posted by KennyBSAT
(Post 22222166)
My suggestion: Don't do a balance transfer. Instead open a card or cards with 0% interest on purchases for 12-18 months and use MS to transfer the balance; the rewards from nearly any card will more than cover the MS costs.
My second suggestion: spend less on yourselves and more on your debt until it is gone. Good luck! No problem with the 2nd admonition. This is debt left over from the 18-month+ unemployment years (actually 2 years but had some interim temp jobs and didn't apply for unemployment payments, either) where we barely held on to the house. We have paid off thousands in 2013 and anything we couldn't paid off, did the BT for a year. Hence, the reason for the next strategy as I insist we have a substantial emergency fund untouched. I figured I would be misunderstood here but again trying to make wise comparisons to do what is best next. Attention to detail in managing money is daily for me. I give myself most Sundays off, however. :D OH, and one more thing about the first suggestion. I did something unwise just recently. I clicked on the Amex Gold pre-approved icon that led me to an app. I thought I was finally going to qualify for the 25k MR points that were elusive for years!. Did the app and realized I didn't have the app with the bonus. A hard pull for virtually nothing except an AMEX Gold, no AF. With that one application, I figure the score decreased so I hesitate to pull the bow back again. Might miss the target for a card with 0% on purchases right now. |
Originally Posted by itchyfeet123
(Post 22220935)
Credit card interest compounds while balance fees are one offs and on the balance only. I'm sure there's a point at which the balance fee becomes the more expensive option, but it's probably so high you wouldn't consider it anyway.
The calculators mentioned upthread look good; alternatively, you could ask anyone who passed 8th grade to help you with the math. Touche!! I left myself open for that one.... I over analyze perhaps or generally have a lack of confidence when making decisions. The good thing is my DH still loves me! :) |
Originally Posted by ddallas
(Post 22220420)
http://www.creditcards.com/calculato...e-transfer.php
http://www.bankrate.com/calculators/...alculator.aspx Thank you. :) |
Originally Posted by Haleyb
(Post 22220677)
Another thing to take into consideration is the credit lines. You don't want to transfer a balance that will put you over 50% on any one card, I'd keep it below 25% myself but don't know what the best number might be.
How this relates to points, don't tie up your best point earning card! The way they apply payments to a BT means you pretty much need to ice the card while you have the BT balance on it. Thank you, Haley. Generally, I do make sure I don't combine BT with spending. Good call! :) |
You also have to keep in mind the fact that interest compounds on a declining balance. For example, if you were to pay off the whole balance in a year rather than the 24 months, you wouldn't be paying 4% of the initial BT, but rather 4% of a steadily decreasing balance. Depending on your payoff schedule, it may make more sense to pay the interest than the fee on the whole balance.
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Originally Posted by ntr91
(Post 22222555)
You also have to keep in mind the fact that interest compounds on a declining balance. For example, if you were to pay off the whole balance in a year rather than the 24 months, you wouldn't be paying 4% of the initial BT, but rather 4% of a steadily decreasing balance. Depending on your payoff schedule, it may make more sense to pay the interest than the fee on the whole balance.
THANK YOU! Exactly how I was seeing it. Just couldn't express it as well as you did. :-: |
That's a good point. If my math is right, and using a 3% BT fee 0% APR card as comparison, you pay a smaller amount above the principal with the 4% APR if you pay in full in 17 or fewer months. At 18 months the 0% APR becomes a better deal.
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Originally Posted by itchyfeet123
(Post 22222704)
That's a good point. If my math is right, and using a 3% BT fee 0% APR card as comparison, you pay a smaller amount above the principal with the 4% APR if you pay in full in 17 or fewer months. At 18 months the 0% APR becomes a better deal.
In round numbers, let's say it's $3500 at maturity this summer. Goes to 19% thereafter. Having no access to a long term 0%, 3% fee at the moment, how does this shape up with 4% APR for 24 months vs a 0% (with fee) for 12 months if I find such an offer? Or does this require a specific payment amount every month to know for sure? BTW, I plan to offset some of the expense of the APR or the fee by using a $100 bank account bonus I obtained during a BF promotion for an online checking account. It took over 50 days to obtain but Cap 360 kept its word! And, I got free checks to liquidate my opening deposit. |
Originally Posted by jan_believes
(Post 22222834)
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In round numbers, let's say it's $3500 at maturity this summer. Goes to 19% thereafter. Having no access to a long term 0%, 3% fee at the moment, how does this shape up with 4% APR for 24 months vs a 0% (with fee) for 12 months if I find such an offer? Or does this require a specific payment amount every month to know for sure? Of course with a number that small you could easily bounce the debt back and forth between two points/cashback cards that have closing dates about two weeks apart, using two BBs. Not that I recommend doing so for any long period of time. |
Originally Posted by KennyBSAT
(Post 22222878)
How can you not find a single card with 0% on purchases? I am still convinced that the way to do your BT is by buying VRs or GC with a new card and paying off the old one. Especially with a manageable number like $3500. It could be opened by either you or SO.
Of course with a number that small you could easily bounce the debt back and forth between two points/cashback cards that have closing dates about two weeks apart, using two BBs. Not that I recommend doing so for any long period of time. Thanks for the response. I guess I don't have an answer right now. Maybe with some digging, time will tell. I don't have the BB yet. I am trying to find out if having had a SERVE keeps me from having a BB. Something I read somewhere....sigh. Oh, good, Sunday is almost here! :D |
Originally Posted by jan_believes
(Post 22222834)
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In round numbers, let's say it's $3500 at maturity this summer. Goes to 19% thereafter. Having no access to a long term 0%, 3% fee at the moment, how does this shape up with 4% APR for 24 months vs a 0% (with fee) for 12 months if I find such an offer? Or does this require a specific payment amount every month to know for sure? BTW, I plan to offset some of the expense of the APR or the fee by using a $100 bank account bonus I obtained during a BF promotion for an online checking account. It took over 50 days to obtain but Cap 360 kept its word! And, I got free checks to liquidate my opening deposit. What about Citi Simplicity? I believe they have 18 months at O%, and a competitive BT fee. If you use KennyBSAT’s technique, then something like Wells Fargo could work. 0% on purchases for 12 months plus 5% cashback for 6 months. If you really want to do a real BT, Chase Slate has 15 months and CitiSimplicity is 18 months. |
In my opinion, to make an informed decision, you need to review several key pieces of information:
1) how much do you plan to put towards your balance each month? (the minimum balance due, a fixed amount monthly, or the minimum payment plus some additional extra payments at fixed schedules, or the minimum payment plus some additional extra payments at random times?) 2) Who is the current card issuer where you carry the balance. Banks will not let you complete a balance transfer from one of their cards to another card they also maintain, so for instance if your current balance is on a Chase card then that precludes you from completing a balance transfer to any other Chase card. It works the same way with all banks, Bank of America, Citi, Wells Fargo, Capital One, Barclays, etc. (This doesn't mean that you can complete manufactured spend on another card issued by the same issuer as your current card (Chase to Chase for instance) with a 0% purchase APR and use that to pay down your card with a balance. However, this does involve more work, time, gas, and risk. Once you understand your expected payment schedule and verify that the cards you have promotional offers on are not issued by the same bank as the card you are trying to payoff, then you can use the calculators to make a more informed decision. However, remember it is important to make an apples to apples comparison to make the correct informed decision. As such, if for example you are comparing a payment of $100 monthly on the 19% APR card with the 0% card with 3% transaction fee, it is important to make sure that the payments are equal ($100.00). Otherwise, the information presented will not provide a proper means for comparison. |
Originally Posted by KennyBSAT
(Post 22222878)
How can you not find a single card with 0% on purchases? I am still convinced that the way to do your BT is by buying VRs or GC with a new card and paying off the old one. Especially with a manageable number like 3500. It could be opened by either you or SO.
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Originally Posted by KennyBSAT
(Post 22222878)
How can you not find a single card with 0% on purchases?
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Here's a very quick calculator. It lets you compare the total interest and fees paid between two scenarios. You can choose the initial balance and number of months to payoff (this assumes that you want to repay the debt in full by the time the promo period ends). For each scenario, you can choose the BT fee (in %) and promo interest rate (in %).
Using a scenario of $3500 balance, 24 month payoff, and comparison between 0% fee/4% APR and 4% fee/0% APR, the difference is de minimus, $148 in total interest/fees vs. $140. https://dl.dropboxusercontent.com/u/...omparison.xlsx |
Originally Posted by Joe1690
(Post 22226306)
In my opinion, to make an informed decision, you need to review several key pieces of information:
1) how much do you plan to put towards your balance each month? (the minimum balance due, a fixed amount monthly, or the minimum payment plus some additional extra payments at fixed schedules, or the minimum payment plus some additional extra payments at random times?) 2) Who is the current card issuer where you carry the balance. Banks will not let you complete a balance transfer from one of their cards to another card they also maintain, so for instance if your current balance is on a Chase card then that precludes you from completing a balance transfer to any other Chase card. It works the same way with all banks, Bank of America, Citi, Wells Fargo, Capital One, Barclays, etc. (This doesn't mean that you can complete manufactured spend on another card issued by the same issuer as your current card (Chase to Chase for instance) with a 0% purchase APR and use that to pay down your card with a balance. However, this does involve more work, time, gas, and risk. Once you understand your expected payment schedule and verify that the cards you have promotional offers on are not issued by the same bank as the card you are trying to payoff, then you can use the calculators to make a more informed decision. However, remember it is important to make an apples to apples comparison to make the correct informed decision. As such, if for example you are comparing a payment of $100 monthly on the 19% APR card with the 0% card with 3% transaction fee, it is important to make sure that the payments are equal ($100.00). Otherwise, the information presented will not provide a proper means for comparison. Thank you for your specific references in your posting. The $3500 in round number balance is from a credit union card opened in my DH's name only. It was a BT from another account that I think had matured after the initial 0% interest rate. We were already paying uncomfortable interest. After my DH started steady work, I didn't have enough time to cover all bases with shoes about to drop so I used whatever was out there to extend some balances. Considering we had not had any major home repairs since home purchase for 7 years, home repairs suddenly shouted for attention (broken hot water heater, a wind blown roof at the flash point that caused leaking in the garage, a back door AND frame installed incorrectly since 2006 that had been patched when it rained but could no longer be ignored) costing almost $3K. That amount was not from this balance but in addition to be paid out in check or another credit card. To your question about how much to be paid, well, BEST case scenario would be 12 months at 4% APR, I guess $285.00 a month. If I had a 0% with a longer term (15 months, let's say), I could lessen to around $245.00 a month. My credit score would hurt due to utilization but my DH's would be improved (as I would not close the CL which is $5K) and that would be good because we are hoping his overseas job is complete by then and we will move to an area where he will work same company, just in the US. He will take a hefty pay cut. We will move and he will need good credit to rent a house in the new location. Hopefully his signatory and credit would be sufficient without me. |
If you can get a business card, get it & do your BT there, it won't show up on your utilization. My 0% BT card is a business card with 2% fee for 11-12 months.
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MS to shake the 0% offer:
Card A - statement cuts 1/31 due date 2/25 $3k balance on this card Card B - statement cuts 2/10 due date 3/5 no balance 1/27 - MS on Card B for 3k, use BB or MO to pay off card A by 1/30 1/31 - Card A reports zero balance 2/1 - MS on card A, use BB or MO to pay off card B by 2/9 2/10 - Card B reports zero balance. Notice how the due date doesn't matter for this purpose. Rinse and repeat until you get an acceptable 0% offer. I would not continue this for the long term while carrying a balance. If you end up with an unexpected big bill like taxes, you will not have the ability to MS your way out of it. In general, MS with debt is bad. All of this is with the caveat that a real job pays a lot more than MS with unusual exceptions like the OM deal with Ink. If you can run around getting gift cards, you should be getting a real job unless you have a disability. If you can get a business card, you can MS the balance to it (if the current card with the balance has a high rate) and then wait as long as needed for the 0% to show up. You should apply for the business card when your credit report shows no balance due to MSing back and forth. That will give you the ability to move the $3k off of your credit report temporarily until a 0% offer shows up. The bottom line is to pay off the $3k ASAP. Get a second job. If that means converting UR to cash at 1CPM, then do so. |
Thanks for all the responses. :)
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