Balance transfer on existing Freedom acct

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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daniel2304
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Balance transfer on existing Freedom acct

Postby daniel2304 » Tue Dec 10, 2013 11:55 pm

So I have a balance transfer offer from Chase Freedom. I had this card for 2 years with $6,500 limit. My current balance on this is about $150. I haven't done balance transfer before, so I've been reading this forum to figure the risk. But I'm still confused on how it works.

1/ So if I do a balance transfer from Chase Freedom to Discover, whom I will make payment for? I read somewhere saying I'm still making payment to Discover, but I don't think it would make any sense.

2/ And because of this balance transfer, shouldn't I put any new purchase on my Chase Freedom to avoid interest?

The offer will allow to transfer a balance with 0% interest until Feb/15 with 2% fee and have to made before 1/31/2014.

Thanks for any advice. I appreciate it.
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.


sj632
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Postby sj632 » Wed Dec 11, 2013 2:30 am

Consider that when doing that as it may end up being the same or more as any interest you would pay on the card it is already one. It is good pratice to only charge what you can pay off in full to avoid interest.

When you transfer it, you make payments to the card it was transfered to.

How long do you have left on the 0%? will you be able to have all charges paid by the end of the 0%? Credit card companies do this in hope of creating a habit of carrying balances so they can get their interest fees.

Hope that helps

samhradh
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Postby samhradh » Wed Dec 11, 2013 6:13 am

Your post is a little confusing. After reading it a few times, here's what it seems you are saying: Chase offered you a balance transfer offer of 0% interest until Feb 15 for a fee of 2% of the balance.

It only makes sense to transfer your Discover balance to your Freedom if the 2% fee is less than the interest you will pay to Discover and you will be able to pay it off by Feb 15.

1) You pay whoever now holds your debt. If you transfer from Discover to Chase, you pay Chase.

2) You can add new purchases to your Freedom if you wish. Remember, the most important thing to do is pay your balance in full every month unless you have 0% APR. If you can pay your monthly expenses and a part of your balance transfer every month while remaining under your CL, there's no reason to stop using your Freedom. Your regular charges will be subject to your normal APR. The 0% only applies to the balance transfer.

Only do the balance transfer if you cannot afford to pay Discover.
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

daniel2304
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Postby daniel2304 » Wed Dec 11, 2013 9:59 am

Thanks for your responses,

My situation is not that bad. I haven't pay any interest to any issuer so far. On June, Discover offered me a cash back bonus for $250 if I used $1,500 each month from July to December. I've been successful in maintaining that expense and paid it full every month. One thing I forgot in my math is that my tuition is due in full in Jan, 14. I still have a couple months of free interest on Amex but my school does not take Amex. So I charged it on Discover and it made this balance way higher than it supposed to be. I can pay it full but doing that will make my checking account's balance go lower than $1,500 and Chase will charge $35 monthly fee for that.

The balance I'm about to transfer is only $2,000, so the fee might be $40. $40 for the whole year to make payments I think it's worth it. Also, my investment will yield a bigger amount if I hold it for another year.

I can totally apply for a new card with free interest to pay for my tuition but I'm afraid they will flag me as "rate surfer" as someone mention in this forum sometimes ago. So, paying $40 for them once in a while may worth it :D

@samhrad: Thanks for your patience to figure out what I was trying to say. English is not my first language, so I have so many ESL issues. That's also the reason why I have to do the disclaimer though. I'm working on perfecting it. Thanks so much for your help!
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.

daniel2304
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Postby daniel2304 » Wed Dec 11, 2013 12:51 pm

Oh, and the reason I asked about adding new purchase because Chase Freedom gives 5% bonus cash back on gas on the first and the third quarter next year. I was afraid adding new purchase will kick out the 0% interest on the balance transfer. So would I be able to make payment to pay my monthly expense in full and part of my balance transfer? How does the payment work on this type of situation?
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.

samhradh
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Postby samhradh » Wed Dec 11, 2013 9:44 pm

daniel2304 wrote:So would I be able to make payment to pay my monthly expense in full and part of my balance transfer? How does the payment work on this type of situation?


I've never done a balance transfer so I'm not sure how the statement looks. I imagine there will be two areas: one for new transactions and one for the balance transfer. Can anyone speak to this?

Also, I wouldn't be concerned about credit card companies thinking you're only after sign up bonuses. You only have the two cards and you use them both. While it depends on your credit score and how recently you opened a line of credit, I wouldn't discount the idea of getting a new card with 0% APR for a year. Maybe the citi Dividend Platinum Select or the Simplicity?

No worries about the ESL. Props to you for navigating the American credit market. We love credit!
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

daniel2304
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Postby daniel2304 » Wed Dec 11, 2013 9:56 pm

I have more than 2. In fact, I have about 11 cards. My Amex Blue Sky has 26K limit, still on promotion of free interest (a jump from 9K5, thanks to this forum, I did a credit limit increase online for 27K, and it turned back to offer 26K and I accepted). I've taken advantage of free interest promotional offers each and every card I have applied since 2012, so I was concerned a little bit about it.

Good news is Discover just posted $350 ($250 bonus + 1% regular + 5% bonus quarterly) cash back today, so it outweighed the $40 fee. I can breath now :D
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.

daniel2304
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Postby daniel2304 » Thu Dec 12, 2013 12:33 am

This message contains useful information for promotional balance transfer on existing credit card. However, it only holds true in my situation, my bank and my account. Read at your own pleasure but take any action at your own risk.

"I would like to inform you that, you need not make two
separate payments on your account. When we receive your
minimum payment, generally it will be applied to your
account beginning with the balances carrying the lowest
Annual Percentage Rate (APR), and then to the balances
with the highest APR. Any payment amount received that is
over your minimum payment will be applied to your account
beginning with the balances carrying the highest APR, and
then to balances with the lowest APR.

Your payment will first be applied to your statement
balance. If your statement balance is paid in full, the
remaining amount will then be applied to any current
activity.

If you have two balances carrying a promotional APR at the
same rate, balances that will expire soonest will be paid
first. If you have two balances carrying a promotional APR
at the same rate and the same duration, the promotion
which was first established on the account will be paid
first.

Also, if your account has a balance transfer balance at
0.00% promotional APR
and if you are using your card for
purchases, you cannot avoid interest charges
. We regret
that you cannot pay off only your purchase balance in full
each month
to avoid interest charges. If any part of the
balance is carried forward into the next billing cycle,
even at a 0.00% APR, the entire balance is considered to
be a revolving balance, and interest charges will be
billed
. You will not be assessed interest on the balance
transfer balance but will be assessed interest on
purchases."
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.

samhradh
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Postby samhradh » Thu Dec 12, 2013 10:13 am

Wow. Good to know. So if you transfer a balance to your Chase then you can't put any new charges on it or you'll lose the 0% APR? Definitely don't take them up on the offer!
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

daniel2304
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Postby daniel2304 » Thu Dec 12, 2013 10:30 am

I believe I only lose the grace period, which means any purchases will be charged interest rate of 17.24 right after I used. I either freeze the card because the cash back wouldn't be worth the interest (in case I do the balance transfer), or I have to yield the balance transfer somewhere else. Still think about it
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.



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