Messed up on a great CC offer

[PJC74]

Recently received an offer from Discover for 14 month APR zero balance xfer fee. I have about 12k on a BOFA card with the 12 month 0% APR expiring on Dec 17th.

Procrastinated and didn't sign up for the card until Dec 1st. Called yesterday to initiate the balance xfer payoff and the rep told me that it will take at least 14 days for the payoff. This will put me over the due date for the BOFA card.

Now most likely I will have to use my emergency fund $$ to pay it off.

Anyone know if they can expedite a balance payoff on a newly printed account?

[dandarc]

Asking a bank to expedite anything seems likely to incur fees.

A few days of interest or even a month of interest won't cost that much. Just be sure to make a minimum payment if it is due.

Amortize the 2% or whatever it is of interest is over the 14 months - not so bad at all borrowing money at under 3% per year.

[Valhalla]

Why do you have any credit card debt at all?

I have a couple cards with 0% interest rate, I don't take advantage of it.  I charge everything to credit cards and pay them off in full every month.

The risk with 0% interest rate offers, is there's a small transaction fee that I don't like, and if you are late in making 1 payment, the APR jumps to 14% or 30%.

I don't like the risk.  Pay off your credit card debt and get rid of it.  If you don't have money outside of emergency funds to pay off credit card debt, then you shouldn't have bought what it ever was with the credit card, unless it was a life saving emergency procedure or something.

[PJC74]

I like to float the $$ on the 0% APR intro offers and put the emergency fund $$ into HISA.

[Valhalla]

I like to float the $$ on the 0% APR intro offers and put the emergency fund $$ into HISA.

Emergency fund isn't the money to pay off credit card though.  It's a true money set aside for unanticipated expenses.

[mtn]

Why do you have any credit card debt at all?

I have a couple cards with 0% interest rate, I don't take advantage of it.  I charge everything to credit cards and pay them off in full every month.

The risk with 0% interest rate offers, is there's a small transaction fee that I don't like, and if you are late in making 1 payment, the APR jumps to 14% or 30%.

I don't like the risk.  Pay off your credit card debt and get rid of it.  If you don't have money outside of emergency funds to pay off credit card debt, then you shouldn't have bought what it ever was with the credit card, unless it was a life saving emergency procedure or something.

Sometimes life deals you a shit sandwich and you have to deal with it as best you can. In my situation, we got hit with a gigantic loss of income and a gigantic bill all at once. My options were to

• (a) take the emergency fund down to nearly $0
• (b) pull from my Roth IRA contributions
• (c) sell the house
• (d) sell all my guitars and then some combination of (a),(b), or (c)
• (e) put it all on a credit card and get points, and do a balance transfer to a 0% credit card that also had a $0, 0% balance transfer fee.

I chose to put it on the credit card rather than take the emergency fund to $0, because as mentioned above, we had a significant loss of income and I was afraid we would need the emergency fund for something else.

Obviously not the recommended way to do things, but sometimes it is the best way.


OP, if I'm understanding correctly...
You have a 0% credit card that is going to jump to lets call it 25% on December 17. You won't be able to transfer the balance to a new 0% credit card until December 20 or so. Right?

If my understanding is correct about your situation AND about credit cards, the interest is compounded daily. This means that you'd only have about 3 days (or with business days, maybe 15 worst case scenario) of interest being charged. Even at a high rate and even with the $12k balance, how much would that be? I'd initiate the transfer and eat whatever interest fee, assuming there aren't some terms I misunderstood.

[Valhalla]

I count the open credit line on my credit cards as part of my emergency fund contingency, but I don't actively exploit 0% credit card offers as a wealth management tool.  It's literally pinching pennies, unless you have so much debt, that a 2% transfer fee is still worth the effort to get a 0% temporary loan.

I'd rather park my emergency funds in a high yield savings account, and use my credit cards for monthly spend that I have already budgeted cash for.

Playing these small shell games (with a significant penalty if late on a single payment) to generate a little bit more money is not worth my time.  I have much bigger fish to fry to try, like a more lucrative side hussle or work more hours at work.

[terran]

I like to float the $$ on the 0% APR intro offers and put the emergency fund $$ into HISA.

Sounds like you like to play with fire. At one point or another you're bound to get burned.

[solon]

OP, I think mtn has the right idea here. Go ahead with the balance transfer. It might cost you a few days of interest, but that will be a pretty small amount, and you will have gained an education.

I don't think you need to touch the emergency fund at all.

[PJC74]

Thanks Solon and everyone else for the sound advice. You're right, a few days interest on 12k, won't break the bank. I'll let the balance transfer just go through.

[NorthernBlitz]

I like to float the $$ on the 0% APR intro offers and put the emergency fund $$ into HISA.

Emergency fund isn't the money to pay off credit card though.  It's a true money set aside for unanticipated expenses.

Paying CC interest is a hair on fire emergency though (IMO anyway)

This case is an illustration of why CCs play these games. It's easy for us humans to mess it up. That leads. To checks written to Mr. Diamond (and friends)

[golfreak12]

Don't these guys charge you a 3% transfer fee ??
I haven't seen one without some type of transfer fee for a while now.

[Chris Pascale]

Why do you have any credit card debt at all?

Sometimes life deals you a shit sandwich

Well said, friend. Well said.

[DadJokes]

I like to float the $$ on the 0% APR intro offers and put the emergency fund $$ into HISA.

Emergency fund isn't the money to pay off credit card though.  It's a true money set aside for unanticipated expenses.

Paying CC interest is a hair on fire emergency though (IMO anyway)

This case is an illustration of why CCs play these games. It's easy for us humans to mess it up. That leads. To checks written to Mr. Diamond (and friends)

Agreed. Credit card debt is an emergency and is absolutely worthy of using an emergency fund on.

If you encounter another emergency down the road and don't have the emergency fund built back up, use another credit card then (and pay it back like the emergency it is).

[mtn]

Don't these guys charge you a 3% transfer fee ??
I haven't seen one without some type of transfer fee for a while now.

Not all of them: https://www.americanexpress.com/us/credit-cards/card/amex-everyday/?eep=25330&linknav=US-Acq-Shop-Consumer-VAC-Prospect-CardLink-AED

[Morning Glory]

Can you just take the emergency fund down to zero to pay off the old card, then put all new spending on the new 0% card until you rebuild the e fund?

[mtn]

To those that keep poo-pooing the idea...

Let's put yourself in a different state of mind. Here is the initial situation:
 

• You are a dual income family, making good money
• You have reasonable debts that are being paid off (1 mustachian car loan, if there is such a thing, 1 student loan that is being paid aggressively, and a mortgage)
• You are saving 15% to your 401k, 15% to your ESPP (with a 25% match), and have approximately $15k in your ESPP that will vest in about a year
• You have a $10k emergency fund, and at age 28, retirement accounts totaling roughly 1x your annual income

All of this is responsible if not mustachian, no? The only thing I would have done differently was saving to my HSA more aggressively, it was trivial at this point. Ok, now the event:

• You suddenly have a $7k doctor/hospital/ambulance bill in front of you. You were planning on it being $1,500
• Just as suddenly, you have to pay for a funeral. Despite shopping around slightly, in your grief it isn't an easy thing to do. You do the best you can,  but are still stuck with a $3k bill
• Because of the traumatic events above, your family loses approximately 1/2 of their income
• The dishwasher catches on fire. The house and kitchen, being the cheapest house you could find in the neighborhood, are a poor setup and not conducive to washing your own dishes for the post-op woman, so you need a new dishwasher
• This happened in late November, and you'll need ongoing psychiatric treatment which may or may not be covered by insurance, and as the new year is about to start will need to hit your deductible and out of pocket starting from $0 in January

Ok, so what is the best thing to do here? I see the following options:

• Use the emergency fund drawing it to $0
• Sell the house and move to a cheaper place- keeping in mind that you'll lose money on it due to closing costs (you haven't been there that long), and you've just gone through 2 of the most difficult things to deal with in life (loss of job, death) and would be willingly adding a 3rd
• Put it all on a credit card, get points, then transfer to a 0% intro APR and 0% transfer fee card, and proceed to pay the card down over the next year - at which time, approximately $15k will vest in your ESPP which you can sell (with long term capital gains tax)

Obviously there are other options. I could have negotiated with the hospital, but they basically offered a 3 month repayment plan, or they'd send it to collections where I would risk it hitting my credit report (they said it might). Collections was only offering me 12 months to repay it. I'm sure I could have negotiated for more time, but why? Ultimately I chose the credit card route. So far it has cost me a total of $28 one time in a late fee because I got a new phone and forgot to transfer the reminder. Not bad overall. Stupid for the $28, and I kick myself for it, but not bad overall.

Ultimately I didn't want to drive the emergency fund to $0, we were now a 1 income family.

What would you have done, other than start saving to the HSA earlier than I did? Because you can't go back in time and do that.

[dandarc]

Damn mtn that's rough. I've done the same thing just to spread out moving costs over about a year instead of all at once up front - not even in the same realm of what you're describing. Definitely a good move.

[undercover]

Of course there’s absolutely nothing wrong with using a credit card as part of your overall emergency fund strategy.

I guess the problem some may see with OP’s plan is just keeping the cash on hand from the card for really no reason at all since most balance transfers do come with some fee. The only realistic scenario for doing so would be to invest the funds I guess? But that effort to return ratio isn’t really worth it.

If you can’t cover the emergency with your credit card and pay it off within a reasonable time to incur very little interest, then really you can just sign up for a 0% balance transfer card at anytime and have everything within a few weeks anyway so I think that’s the reason one might question the OP.

[Cassie]

Setting up automatic payments is the best way to ensure you won’t get hit with a late fee.  Sometimes people need to use CC’s. Life happens.

[mtn]

Setting up automatic payments is the best way to ensure you won’t get hit with a late fee.  Sometimes people need to use CC’s. Life happens.

I've been burned on this one too many times by system errors - twice the automatic payment didn't happen and I got a late fee and interest charge (reversed both times), and three times it paid itself twice resulting in overdraft fees (again, they refunded the amount, but I was done with it at that point). This was years ago, by now I'm sure they're fixed, but I just am not comfortable with it.

[MilesTeg]

Recently received an offer from Discover for 14 month APR zero balance xfer fee. I have about 12k on a BOFA card with the 12 month 0% APR expiring on Dec 17th.

Procrastinated and didn't sign up for the card until Dec 1st. Called yesterday to initiate the balance xfer payoff and the rep told me that it will take at least 14 days for the payoff. This will put me over the due date for the BOFA card.

Now most likely I will have to use my emergency fund $$ to pay it off.

Anyone know if they can expedite a balance payoff on a newly printed account?

One month of interest isn't going to be that much. Don't empty your emergency fund over it. Just pay the interest and do the balance transfer when it's ready.

[golfreak12]

Don't these guys charge you a 3% transfer fee ??
I haven't seen one without some type of transfer fee for a while now.

Not all of them: https://www.americanexpress.com/us/credit-cards/card/amex-everyday/?eep=25330&linknav=US-Acq-Shop-Consumer-VAC-Prospect-CardLink-AED

Thats an Amex. The one hes talking about is Discover.
I get those all the time and its usually 3% transfer fee.

[frugalnacho]

Why do you have any credit card debt at all?

I have a couple cards with 0% interest rate, I don't take advantage of it.  I charge everything to credit cards and pay them off in full every month.

The risk with 0% interest rate offers, is there's a small transaction fee that I don't like, and if you are late in making 1 payment, the APR jumps to 14% or 30%.

I don't like the risk.  Pay off your credit card debt and get rid of it.  If you don't have money outside of emergency funds to pay off credit card debt, then you shouldn't have bought what it ever was with the credit card, unless it was a life saving emergency procedure or something.

Sometimes life deals you a shit sandwich and you have to deal with it as best you can. In my situation, we got hit with a gigantic loss of income and a gigantic bill all at once. My options were to

• (a) take the emergency fund down to nearly $0
• (b) pull from my Roth IRA contributions
• (c) sell the house
• (d) sell all my guitars and then some combination of (a),(b), or (c)
• (e) put it all on a credit card and get points, and do a balance transfer to a 0% credit card that also had a $0, 0% balance transfer fee.

I chose to put it on the credit card rather than take the emergency fund to $0, because as mentioned above, we had a significant loss of income and I was afraid we would need the emergency fund for something else.

Obviously not the recommended way to do things, but sometimes it is the best way.


OP, if I'm understanding correctly...
You have a 0% credit card that is going to jump to lets call it 25% on December 17. You won't be able to transfer the balance to a new 0% credit card until December 20 or so. Right?

If my understanding is correct about your situation AND about credit cards, the interest is compounded daily. This means that you'd only have about 3 days (or with business days, maybe 15 worst case scenario) of interest being charged. Even at a high rate and even with the $12k balance, how much would that be? I'd initiate the transfer and eat whatever interest fee, assuming there aren't some terms I misunderstood.

This may or may not be true depending on the card. I think this is true for most regular credit cards, but many store branded cards, or cards for one-off purchases (like new carpet, new appliances, etc) are not like this and will retroactively charge interest on the entire balance for as long as you've had it.  It sounds like it may just be a regular BoA card, but if not it would be a very costly mistake.  I'd say read the fine print to find out exactly how it works and exactly how much you will actually be charged for carrying that balance, even for a short period after the promotional period.

[NorthernBlitz]

To those that keep poo-pooing the idea...

Let's put yourself in a different state of mind. Here is the initial situation:
 

• You are a dual income family, making good money
• You have reasonable debts that are being paid off (1 mustachian car loan, if there is such a thing, 1 student loan that is being paid aggressively, and a mortgage)
• You are saving 15% to your 401k, 15% to your ESPP (with a 25% match), and have approximately $15k in your ESPP that will vest in about a year
• You have a $10k emergency fund, and at age 28, retirement accounts totaling roughly 1x your annual income

All of this is responsible if not mustachian, no? The only thing I would have done differently was saving to my HSA more aggressively, it was trivial at this point. Ok, now the event:

• You suddenly have a $7k doctor/hospital/ambulance bill in front of you. You were planning on it being $1,500
• Just as suddenly, you have to pay for a funeral. Despite shopping around slightly, in your grief it isn't an easy thing to do. You do the best you can,  but are still stuck with a $3k bill
• Because of the traumatic events above, your family loses approximately 1/2 of their income
• The dishwasher catches on fire. The house and kitchen, being the cheapest house you could find in the neighborhood, are a poor setup and not conducive to washing your own dishes for the post-op woman, so you need a new dishwasher
• This happened in late November, and you'll need ongoing psychiatric treatment which may or may not be covered by insurance, and as the new year is about to start will need to hit your deductible and out of pocket starting from $0 in January

Ok, so what is the best thing to do here? I see the following options:

• Use the emergency fund drawing it to $0
• Sell the house and move to a cheaper place- keeping in mind that you'll lose money on it due to closing costs (you haven't been there that long), and you've just gone through 2 of the most difficult things to deal with in life (loss of job, death) and would be willingly adding a 3rd
• Put it all on a credit card, get points, then transfer to a 0% intro APR and 0% transfer fee card, and proceed to pay the card down over the next year - at which time, approximately $15k will vest in your ESPP which you can sell (with long term capital gains tax)

Obviously there are other options. I could have negotiated with the hospital, but they basically offered a 3 month repayment plan, or they'd send it to collections where I would risk it hitting my credit report (they said it might). Collections was only offering me 12 months to repay it. I'm sure I could have negotiated for more time, but why? Ultimately I chose the credit card route. So far it has cost me a total of $28 one time in a late fee because I got a new phone and forgot to transfer the reminder. Not bad overall. Stupid for the $28, and I kick myself for it, but not bad overall.

Ultimately I didn't want to drive the emergency fund to $0, we were now a 1 income family.

What would you have done, other than start saving to the HSA earlier than I did? Because you can't go back in time and do that.

There are certainly a number crappy situations I could imagine where I would needing to run up CC debt.

But if I had CC debt, getting rid of it would be very high on my priority list.

My reading of the OP was basically:
- Should I use the cash I have to pay off my CC debt, or keep it as an emergency fund and slide between 0% interest CC offers?

For me, I would pay off the CC debt without ever thinking twice.

CCs have 0% offers to capture new debt at high interest rates.

The reason they do this is because humans often screw up the terms and end up paying interest (as in the OP).

And, having the emergency fund and the 0% interest might give someone the illusion that they are in a good financial position.

But that CC debt is a ticking time bomb. Especially when humans do other human things with that emergency fund (like Black Friday shopping or going on vacation). This may not be something the OP would do, but it's probably the normal behavior in the US.