Decision needed: 0% APR offer or steady low APR?

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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dakine1080
 
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Decision needed: 0% APR offer or steady low APR?

Postby dakine1080 » Tue Jan 05, 2016 8:00 pm

I have $10,000 worth of credit card dept on a high APR rewards card (16%) and want to pay it down without being charged a lot of interest in the process.
My decision rests between two choices to apply for and transfer my balance:

Both have 0% fee for transferring the balance itself, but with a crucial difference:

1. A 0% intro offer until September 2016 (8 months) for balance transfers, but 22% after that as well as a $39 fee
(Capital One Quicksilver One)

2. An 8% low ongoing rate, with 1% cashback on the balance transferred
(Barclays Ring)

The first one would allow me to get charged nothing, but I would need to switch again if I couldnt pay it all down by September, but the Barclays would offer me a long term solution without the need to do the same thing again in 8 months.

What is the forum's advice?


takeshi
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Re: Decision needed: 0% APR offer or steady low APR?

Postby takeshi » Wed Jan 06, 2016 8:29 am

Not the main consideration but rewards won't matter if you're carrying a balance.

It's your call to make. 0% on $10K seems like a significant benefit to me even if you can't pay it all off during the promo period. Why are you looking at a 0% offer for 8 months if you can't pay it down in that timeframe? There are longer 0% offers out there -- up to 21 months, IIRC.

You can use an interest calculator to compare the interest you'd pay with both options if you know how quickly/how much you can pay it down.

That said, with $10K you probably have high revolving utilization but there isn't enough info in your OP for us to determine that. It's possible that your $10K balance is on a card with a $30K or higher limit for all we know at this point. If you do have high revolving utilization then don't count a new card as a solution. High revolving utilization will constrict the limit and APR that you would qualify for (as well as 0% offers) and even affect approval.

If you have high revolving utilization the interest is something to consider but the revolving utilization is as well and you'll want to get that down ASAP.
Last edited by takeshi on Wed Jan 06, 2016 8:36 am, edited 8 times in total.

rockyrock
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Re: Decision needed: 0% APR offer or steady low APR?

Postby rockyrock » Wed Jan 06, 2016 8:30 am

dakine1080 wrote:I have $10,000 worth of credit card dept on a high APR rewards card (16%) and want to pay it down without being charged a lot of interest in the process.
My decision rests between two choices to apply for and transfer my balance:

Both have 0% fee for transferring the balance itself, but with a crucial difference:

1. A 0% intro offer until September 2016 (8 months) for balance transfers, but 22% after that as well as a $39 fee
(Capital One Quicksilver One)

2. An 8% low ongoing rate, with 1% cashback on the balance transferred
(Barclays Ring)

The first one would allow me to get charged nothing, but I would need to switch again if I couldnt pay it all down by September, but the Barclays would offer me a long term solution without the need to do the same thing again in 8 months.

What is the forum's advice?



I have no idea of your overall credit situation so it is hard to determine what the future may look like. Based off the limited info available here is what I'm thinking.

8% is better than what you currently have but is still pretty high for a balance like that. If I were in this situation, I would use the term 0% and hope I could find another in 8 mos if I didn't pay down the balance.

Good luck and remember: YMMV.
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Vattené
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Re: Decision needed: 0% APR offer or steady low APR?

Postby Vattené » Wed Jan 06, 2016 5:56 pm

If you haven't already done this, I think your first step should be budgeting a monthly amount to pay towards this debt (and planning on carrying through with at least this payment). What is the most you can reasonably afford and will likely actually pay on a consistent basis? That will give you a good idea of how long it will take to pay this off.

It's hard for us to make a good recommendation without knowing how feasible it is for you to pay down $10,000 that quickly. You say, "if I couldn't pay it all by September." Does that mean $1,250 a month is a reasonable amount for you to pay towards this balance? It's important to be realistic. If you think, at worst, it will take you a full year with an average monthly payment of $833, then 4 months with a low balance even at 22% won't amount to much interest. It may be worth it to go for Capital One and just eat a few months of high interest; it won't be a lot in absolute terms and likely won't be worth the hassle of transferring the balance. If that monthly amount is way more than you can realistically afford, it may be worth it to accept 8% interest.

Another caveat to consider is whether you'll be fine paying that $39 AF with Capital One. It shouldn't be the primary driver of your decision, and you may be able to PC to the no AF version or just close the card down the road, but if you are really on the fence it is a factor to think about more long term.
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CarefulBuilder14
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Re: Decision needed: 0% APR offer or steady low APR?

Postby CarefulBuilder14 » Wed Jan 06, 2016 6:08 pm

I'm puzzled as to why Chase Slate, Citi Simplicity, and Citi Diamond Preferred aren't in the running. Is some debt with Chase, other debt with Citi, and you only want to open one BT card?
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Re: Decision needed: 0% APR offer or steady low APR?

Postby kdm31091 » Fri Jan 08, 2016 5:22 pm

CarefulBuilder14 wrote:I'm puzzled as to why Chase Slate, Citi Simplicity, and Citi Diamond Preferred aren't in the running. Is some debt with Chase, other debt with Citi, and you only want to open one BT card?


I agree. While those cards offer lackluster/no rewards, they are great choices for long 0% periods. Since OP wants more time to pay off the balance, an 18 or 21 month offer would be ideal.

The Ring is an okay option, but keep in mind that you'd still be paying interest. The amount will be half of what you're paying now, but it's still going to keep accruing. I would lean towards a 0% offer to get this paid off and done once and for all, and make a budget plan to not allow it to happen again (of course, emergencies may be inevitable, but you know what I mean).



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