Author Topic: Posting for a friend...  (Read 1571 times)

zoe2dot

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Posting for a friend...
« on: December 29, 2017, 09:19:22 AM »
No joke - really posting for a friend.  She's worried about anonymity so I told her I'd post her query.  I remain credit card debt free!

(Feel free to add any other questions to this thread--might be useful for one offs.  Or if there is another part of the forum that this would be a better fit for please let me know.) 

My friend has been hearing me talk about getting my finances in order with the help of this forum and has begun getting her own house of [credit] cards in order.   I've been looking at credit card calculators and realize I'm not yet at a point where I can speak with confidence. 

Below is her current credit card debt.  Card #1 is nearing the end of it's promotional rate.  I'm super proud that she's ready to tackle this before getting hit with that higher 18.99% rate.  A few weeks ago it wasn't on her mind.  That's YOUR influence at work by proxy!

Card 1:      Owe $7,437.57      Min Due $74.00      0.00% interest until 1/21/2018 then 18.99%
Card 2:   Owe $1209.75      Min Due $28.00      1.99% interest until 3/1/2018 then 9%      
Card 3:      Owe $9561.14      Min Due $200.00   interest is 9.25%
Card 4:      Owe $449.22      Min Due $full      interest is 16.99% (pays every month--this is current balance)
Card 5:   Owe $240.00      Min Due $full      interest is 27.99% (pays every month--this is current balance)   

She has these offers:

Offer 1: no transfer fee, 12 month introductory rate at 2.99%, then 9.00%
Offer 2: 3% transfer fee, 18 month introductory rate of 0.00%, then ??%
Offer 3: 3% transfer fee, 21 month introductory rate of 1.99%, then ??%

I saw this offer on nerd wallet:
Chase offer: no transfer fee*, 15 month introductory rate of 0%, then 24.74% (highest of variable range)
*on transfer made in first 60 days
https://www.nerdwallet.com/card-details/card-name/Chase-Slate-Elite

It seems like the Chase offer (if she gets approved) is the best bet...But what questions do we ask ourselves?

My ideas:
How much can you pay each month?
Should she also transfer Card #3 over?

Point us in the right direction!

Thank you & Happy New Year!

z2d





   










2Birds1Stone

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Re: Posting for a friend...
« Reply #1 on: December 29, 2017, 10:02:52 AM »
What is the question exactly?

What is her disposable income?

Hard to give advice without any background on your "friend".

zoe2dot

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Re: Posting for a friend...
« Reply #2 on: December 29, 2017, 10:12:10 AM »
The first question is: What should she do with card #1 as the introductory rate expires next month?

I will ask her what her disposable income is. 

We've just begun a review of her finances.  She is just getting started.We started with how much should be in her emergency fund, listed her monthly expenses and are now reviewing her debt.  I don't know her income.  Card #1 jumped out at me since the interest rate is ending next month.  In typing up the details it seems like the Chase card makes sense...but I can't speak with confidence so wanted some input.

When I did my own case study I got 1000 good suggestions but none of them were related to credit card debt since I pay off my monthly balance in full and don't have any other credit card debt.  (My case study is Two Houses, Zero Clues if you want to read it.)
« Last Edit: December 29, 2017, 10:30:28 AM by zoe2dot »

actonyourown

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Re: Posting for a friend...
« Reply #3 on: December 29, 2017, 10:43:37 AM »
Your friend must have a lot of disposable income as she owes $993.22 for one month's worth of payments.

1) She MUST start tracking her expenditures. No amount of card jumping will fix this situation. I'm in a similar situation (though nowhere near as bad) and she has to determine herself to pay off her loans if she is jumping to a 0% rate. If she is serious then this is required

2) To answer your question, there are better balance transfer cards than Chase. Bank of America has 18 months 0%. Check out NerdWallet for some ideas and categories.

3) if she gets a 0% card with $0 balance transfer in the first 60 days, she needs to consolidate cards 2 and 3.

4) If all of this is done, she will have $18,208.46 on this card and 18 months to pay it off. If she cuts back on a little spending, that is just over $1,000 per month

Short of other info, she definitely needs to rein in the spending.

ShoulderThingThatGoesUp

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Re: Posting for a friend...
« Reply #4 on: December 29, 2017, 11:11:48 AM »
Skipping the interest with a transfer is great, but she needs to stop going in to credit card debt. Does she have assets?

zoe2dot

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Re: Posting for a friend...
« Reply #5 on: December 29, 2017, 11:23:43 AM »
Thanks for the comments. 

I'll point out that if she combines cards 1, 2 and 3 onto a new 0% APR card the new total would be  $18,208.46 and it would look like this:

$18,208.46 / 15 months = $1,213.90/month (0 transfer fee, Chase card on nerdwallet https://www.nerdwallet.com/card-details/card-name/Chase-Slate-Elite)
$18,750.60 / 18 months = $1,041.69/month (includes 3% transfer fee, Bofa card on nerdwallet https://www.nerdwallet.com/card-details/card-name/Bank-of-America-BankAmericard#cardholder-reviews )
 $18,750.60 / 21 months = $893.08/month (includes 3% transfer fee, Citi card on nerdwallet https://www.nerdwallet.com/blog/top-credit-cards/nerdwallets-best-balance-transfer-credit-cards/?trk=nw_gn1_4.0#longest-0-APR-period )

*and that's with no new debt incurred


zoe2dot

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Re: Posting for a friend...
« Reply #6 on: December 29, 2017, 11:24:34 AM »
I'll find out about assets.

marty998

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Re: Posting for a friend...
« Reply #7 on: December 30, 2017, 03:58:19 AM »
Skipping the interest with a transfer is great, but she needs to stop going in to credit card debt. Does she have assets?

Yeah look this is the most important thing.

She can't just transfer all the debt to a new interest free card and continue to spend. It has to end now, cut up the cards.

fuzzy math

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Re: Posting for a friend...
« Reply #8 on: December 30, 2017, 09:09:54 AM »
She needs to cut up cards 4 and 5. She isn't at the point yet where she can responsibily use credit and these appear to be store cards. If one is target she can get a debit card. She needs to stop deferring her spending on a card and see it come out of her bank acct.

Without knowing much about her situation, I'm not sure she will qualify for that chase card you want her to get. $18k of credit is a lot to grant to someone In debt. Frankly the no interest deferrals are what has allowed her to continue to spend as she does.
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actonyourown

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Re: Posting for a friend...
« Reply #9 on: December 30, 2017, 09:44:47 AM »
Thanks for the comments. 

I'll point out that if she combines cards 1, 2 and 3 onto a new 0% APR card the new total would be  $18,208.46 and it would look like this:

$18,208.46 / 15 months = $1,213.90/month (0 transfer fee, Chase card on nerdwallet https://www.nerdwallet.com/card-details/card-name/Chase-Slate-Elite)
$18,750.60 / 18 months = $1,041.69/month (includes 3% transfer fee, Bofa card on nerdwallet https://www.nerdwallet.com/card-details/card-name/Bank-of-America-BankAmericard#cardholder-reviews )
 $18,750.60 / 21 months = $893.08/month (includes 3% transfer fee, Citi card on nerdwallet https://www.nerdwallet.com/blog/top-credit-cards/nerdwallets-best-balance-transfer-credit-cards/?trk=nw_gn1_4.0#longest-0-APR-period )

*and that's with no new debt incurred



Yes, that is what I am getting at.  Your friend doesn't have an interest problem solved by jumping cards (though, yes they are quite excessive), she has a spending problem magnified by the interest.  Tell her to gather everything she bought with that $18,000+ and see if it is even worth half of that or if she even remembers it all.  Getting all $18,208.46 to 0% will mean she isn't paying the card company for use of this money and that is it.

Basically, she needs to decide to change a lot more at this point to have any effect on her situation than just a balance transfer.

zoe2dot

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Re: Posting for a friend...
« Reply #10 on: December 30, 2017, 07:32:41 PM »
You're all 100% right about her choices.
She's just breaking the surface of awareness.
Just focused on getting card #1 onto a 0% intro card.
I'll mention that she might not be able to put all the debt on one card. 

Hargrove

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Re: Posting for a friend...
« Reply #11 on: December 30, 2017, 08:48:55 PM »
It's really not even to judge her over choices - we're saying the interest is the least important problem.

Yes, you can juggle your way to lower interest, but it doesn't matter more than positive cashflow and good spending habits. Here is the horror of what your friend has done, and what she needs to understand to make changes:

She bought stuff she didn't need.
In exchange for getting that stuff now, she bought a subscription to her own junk every month.
Her subscription to all the crap she's already bored of is currently $87.67.
Projecting current balances to non-promo interest rates, her subscription to her own crap is $212.43 a month just to own what she already has. This is projected interest, just to keep that stuff where it is and make no progress at all.

Even if she wanted money just to buy more junk, doing it without a credit card could allow her to spend an extra $212.43 a month on crap if she just stops spending it before she gets it. YNAB or Mint budgeting tools should be taken advantage of to show her where she's plowing her money, and even if she doesn't want to out herself on an internet forum, she could find much of the advice most of us would give her by reading 4 or 5 case study threads elsewhere here.
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