Author Topic: Keep 0% Credit Card Balance?  (Read 2433 times)

frugaliknowit

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Keep 0% Credit Card Balance?
« on: July 23, 2014, 08:41:02 AM »
This may be splitting hairs, but I wanted some opinions:

About 5 years ago, I did a 0%, no fee cash advance maneuver of $4,000 to fund part of my very expensive dental surgery (about $14,000).  Since then, I've paid off all of my heloc (piggy back) and have $1,500 left on the advance and no other non-mortgage debt.  I have in excess of one year's expenses saved (part of the reason my emergency fund is so big is that if I loose my job and find another, I might have to buy a car) and am averaging a 2.5% return on my cash using kasasa checking accounts.

Should I continue paying $40 per month for the next 3 years or be done with the little monkey?  Suze Orman and Dave Ramsey would say get rid of it...

Seņora Savings

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Re: Keep 0% Credit Card Balance?
« Reply #1 on: July 23, 2014, 09:07:07 AM »
Mathematically you should keep it.  For the purpose of simplifying your life you should get rid it.  I've got you earning about $56 on it by keeping it ($1500*1.025^1.5), since you'd be keeping the money for an average of half a year.

lax4life93

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Re: Keep 0% Credit Card Balance?
« Reply #2 on: July 23, 2014, 09:21:09 AM »
I
Mathematically you should keep it.  For the purpose of simplifying your life you should get rid it.  I've got you earning about $56 on it by keeping it ($1500*1.025^1.5), since you'd be keeping the money for an average of half a year.

I agree with her points.
Keeping it vs paying it off is going to have little to no financial impact.
What I think IS important, is the mentality of eliminating debt and doing whatever you can to avoid it.
I sleep better at night with no debt vs any debt at 0%... and it is the little things that lead to paradigm shifts and good habits :)

simonsez

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Re: Keep 0% Credit Card Balance?
« Reply #3 on: July 23, 2014, 09:27:49 AM »
If you have the diligence, keep it if you assume inflation is lower than your return.

I have no idea what your utilization is but the only other consideration would be to pay it down until your utilization could not run the risk of penalizing you if you need your credit score to be tip-top in the next 3 years.

Is this truly a monkey on your back or an instrument that you derive extreme satisfaction from by coming out ahead?  Whichever of those voices is stronger, go with it.

frugaliknowit

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Re: Keep 0% Credit Card Balance?
« Reply #4 on: July 23, 2014, 09:45:45 AM »
Utilization is insignificant.  One reason for keeping it is it keeps the card "active".  If I pay it off, I would probably feel the need to put something on it a few times per year so the issuer does not close it on me.  This is my oldest card.

Jack

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Re: Keep 0% Credit Card Balance?
« Reply #5 on: July 23, 2014, 10:24:39 AM »
I
Mathematically you should keep it.  For the purpose of simplifying your life you should get rid it.  I've got you earning about $56 on it by keeping it ($1500*1.025^1.5), since you'd be keeping the money for an average of half a year.

I agree with her points.
Keeping it vs paying it off is going to have little to no financial impact.
What I think IS important, is the mentality of eliminating debt and doing whatever you can to avoid it.
I sleep better at night with no debt vs any debt at 0%... and it is the little things that lead to paradigm shifts and good habits :)

You know what's funny? If somebody posted on this site "I don't need it, but if I bought X widget for $56 I'd 'feel better'" then everybody would be facepunching them for it.

arebelspy

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Re: Keep 0% Credit Card Balance?
« Reply #6 on: August 13, 2014, 10:25:07 AM »
I
Mathematically you should keep it.  For the purpose of simplifying your life you should get rid it.  I've got you earning about $56 on it by keeping it ($1500*1.025^1.5), since you'd be keeping the money for an average of half a year.

I agree with her points.
Keeping it vs paying it off is going to have little to no financial impact.
What I think IS important, is the mentality of eliminating debt and doing whatever you can to avoid it.
I sleep better at night with no debt vs any debt at 0%... and it is the little things that lead to paradigm shifts and good habits :)

You know what's funny? If somebody posted on this site "I don't need it, but if I bought X widget for $56 I'd 'feel better'" then everybody would be facepunching them for it.

Agreed. Though "widget X to simplify my life in some way for the next six months" may be a bit more justifiable.

I've often been tempted to pay off low interest debt, but I like the willpower it takes to keep it, and invest the money instead.
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