Managing Debt with Balance Transfer Question

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Managing Debt with Balance Transfer Question

Postby MeanGreen » Wed Feb 03, 2010 12:53 pm

I owe $8,440 on a Bank of America credit card at 27.24%
I believe I have 'good' credit, but not necessarily 'great' (couple late payments here and there)
I can pay $300 per month, just above what the minmum payment is now.
It will take 3 years an 8 months to pay this off, at $4,600 paid in total interest.
How would I best use 0% balance transfer (for hopefully a year, but possibly 3-6 months) cards that I may apply for?

Should I leave any balance on the original card? Should I assume I will need multiple cards to carry the balance? Should I pay any balance transfer fees? If so, how much? Should I do it at all if the application process is going to damage my credit, and then what if I only get offers that are not for as much or as long as I'd want? What would be a good plan of attack on this debt?

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You need to get that debt moved to lower rate

Postby jeffysdad » Thu Feb 04, 2010 6:46 am

Generally, any BT offer that is less than 6 months is not worth the trouble, and you should definitely try to get something for 12 months as long as the rate is decent.

You've obviously calculated what you'll pay out in interest at your current rate, so any offer that gets you down from that is good, the more the better, obviously.

I would move the entire balance.

Shop around to find the best offer before applying for cards. You'll probably end up applying for two or three cards over the next year or two and that can ding your credit rating, but not much.

If you're declined for a card, call them up and ask why. Sometimes the application can be reinstated; it might have been kicked out for multiple pending applications. This happened to me once.

BT fees used to usually be capped at 3%, not so much anymore. Figure out what you'll be paying in fee before doing the transfer.

When I used to do BTs I would do them on the phone with a customer rep. and ask them explicitly what the fees would be, etc. Ask what the BT fee is, what the APR is, when it expires, etc. Make them spell everything out for you.
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US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

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Postby Mogul of Pineapples » Sat Feb 06, 2010 10:05 pm

Yes, Jeffysdad is right. Especially about the balance transfer fees, it's important to pay attention to those. They used to be 3%, but now they are often 5%. That's why a 6 month balance transfer offer isn't worthwhile even if it is 0%.

The 27.24% APR Bank of America is charging you is total highway robbery. What was it before?

You may also want to consider a credit union and see if you apply for a personal loan and/or a loan collateralized by your house, car, or some other property. Literally anything would be better than the 27.24%.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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Postby phanio » Sat Feb 27, 2010 11:34 am

Wow - 27.24% - wow - from just a few late pays - wow. I would not worry about a small blip on your credit - you definiately need to move away from this - the comment about finding a term loan from a credit union or community bank may be your best bet.

Another thought - but be weary of transfer fees - is if you can only get 6 months at 0% from your transfer - then do it every 6 months as long as it is below the costs of the transfer fees.

Example, in 6 months on $8,440 at 27.24 percent - your interest charges would be roughly $1,050 - thus, if your transfer fees are below that amount - it would be to your benefit.
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