Balance Transfer - is it worth it?

[ingrownstudentloans]

Long time creeper, first time poster -

As my name suggests, I am having trouble growing my mustache because of significant student loans (graduated May '11 with 120k, all from grad school - I had several offers for full rides, but had to go to the "better ranked school", don't worry, I have already facepunched myself for this...multiple times).  I have worked slowly to bring the loan balances down, and within the past 4 months have gotten really aggressive at knocking these down (should break below 100k by 12/31).  My loans are as follows:

$16,058 (3%) - Private adjustable rate (PAR)
$14,034 (6.5%) - Federal fixed rate (FFR)
$13,524 (3.5%) - PAR
$13,238 (6.5%) - FFR
$12,436 (6.5%) - FFR
$8,277 (7.5%) - FFR (targeting this one because of the higher interest rate)
$8,227 (6.5%) - FFR
$8,227 (6.5%) - FFR
$8,227 (6.5%) - FFR
= $102,251

I recently received an offer from my cc company for a 24 month balance transfer with 0 fees and an APR of 4.99%.   With my credit availability (carry a $0 balance each month) I can pay off the remainder of the higher interest and some of one of the smaller loans.  Based on the fact that I have been paying significantly above the minimum required on these loans, paying back the amount within 24 months would not be an issue. 

If I max out my credit limit for this card on the offer ($12,000) and pay it off in its entirety within 24 months, my rough math indicates i would save $500 over the two years...unless somebody else calculates it differently, math was never my forte'.  My income is too high for the student loan interest deduction, so that is a non-issue.

I was wondering if anyone has had experience with these types of offers, and if they are more trouble than they are worth? I have always been fairly conservative when it comes to leveraging credit and playing these types of games, but if it makes sense (and cents) I think I will do it.

What do you guys think?  Thanks in advance.

P.S. for everyone else that is working on student loans, I will be throwing down a serious gauntlet challenge for the start of next year, stay tuned.

[Catbert]

I would probably do it, although will a few tweaks.  If this is your only cc then don't do it immediately.  You don't want to have one maxed out credit card.  Get a second card if you don't have one already.  Use one for daily use and one for the balance transfer.  Two reasons:  if your single cc is maxed out your FICO will take a hit based on you maxing out available credit  plus if you continue to use the card they have rules (which I don't understand) about how to apply your payments so that you'll pay interest on your monthly charges. 

A bigger problem is how to execute the initial "transfer".  On another thread, posters indicated that student loan servicers don't take credit cards.

[auntbecky]

P.S. for everyone else that is working on student loans, I will be throwing down a serious gauntlet challenge for the start of next year, stay tuned.

I'm in!

[ingrownstudentloans]

Thanks for the reply, Mary.

I have other cards, and this card is actually one that I hardly ever use anyway, so access to credit would not be an issue. 

As for the transfer, the offer came with these blank checks that I could use like a normal (albeit extra large) payment.  I wish the loan service company accepted credit cards . . . my main credit card allows me to use reward points for student loan payments, it would be an awesome spiral of incredibleness.

[TickInTime]

Haha! My forte. 

Let us begin:  You do need a second CC for this to work and it needs to be from a company I will call "kind". AMEX is a good option, Chase is another.  The premise is this. You cannot make student loan payments by CC so you need to get the balance transfer into spendable cash (your checking account).  Open the second card (I used Amex) and transfer the total you need for the loans to this new ZERO BALANCE card. It does not matter than you owe nothing on card 2. Once the funds show up as a credit on card 2 you call them and explain how utterly silly you were and need the credit mailed to you in the form of a check (they are required by law to refund you the credit).

Wait for the check in the mail... Deposit into bank... Pay student loans.

The important part here is that the company is a reputable one. They are required to refund you any credit, but they do not have to do it with any urgency (up to 60 day wait) AMEX overnighted me the check!

I wrote this on my phone. So pardon any spelling/clarity issues.

[ingrownstudentloans]

TickInTime - thanks for the insight.  The balance transfer is being offered through my Discover card, and when I called them to ask about it they had two pieces of fantastic information:

1 - they consider payments made to a student loan under the offer to be a balance transfer (so no need to shift between cards), not a cash advance (so the low rate offers apply); and

2 - they have another offer that is even more advantageous to my situation.  They have a 0% APR balance transfer for 12-months (with a 2% transaction fee) which will save me even more money.

Thanks again for the insight - I think I am going to pull the trigger and play their game :)

[Mazzinator]

Your student company may not accept the check from the cc company..or at least mine didn't. I wrote the check to myself and deposited into my bank, then made the payment to the SL.

Then, i paid the min payment to the cc, until nearing the end of the promotion. So, say you can pay $2000 extra, then pay the min for the first 6 months (or 18 for the 24month promo), then put the $2000/month to the cc to pay it off for the last 6 months.

This way you are maximizing your $2000 each month to the highest interest loan.

Just make sure you WILL pay it off in time.

Also, check out Chase Slate.. It has NO transfer fee and 0% for 15 months. Good luck!!!

And i will join you on the Gauntlet too!

https://creditcards.chase.com/credit-cards/slate.aspx