The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: akoval23 on November 29, 2016, 07:36:12 PM
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Hello friends!
A friend of mine (see: not me) was looking for some advice on paying down some credit card balances. I mentioned that I had had some really excellent advice given to me in this forum, so they asked if I could pick all of your brains for some advice/recommendations.
My friend has about $5000 in credit card debt and researched around on ways to reduce the debt without incurring the heavy interest fees. Here are the particulars:
Credit card One: Capital One Platinum Mastercard
- Owe: $1,105
- APR: 23.15%
- Monthly Payment: $64
Credit card Two: Capital One QuickSilverOne
- Owe: $3,940
- APR: 23.15%
- Monthly Payment: $120
In their research, they stumbled across this article (https://www.nerdwallet.com/blog/credit-cards/chase-slate-review/ (https://www.nerdwallet.com/blog/credit-cards/chase-slate-review/)), which recommends the Chase Slate card as a means of transferring your balances and then paying them down. They praise the card for the following reasons:
- 15 months 0% APR
- $0 annual fee
- $0 introductory balance transfer fee (5% fee in 60 days after opening)
These are my questions:
- is this a sound strategy considering my friend's case and assuming they have good enough credit to qualify for this card?
- Has anyone heard of better cards out there for handling situations such as these?
- In addition, any general advice/tips/hacks for paying down credit cards (other than typical Mustachian strategies) would be VERY much appreciated.
As always, thank you for any help!
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I'd say that's a good strategy IF they plan on paying the card off within the 15-month 0% interest period, and also NOT incurring any more credit card debt on other cards.
I did that myself many years ago, when there was no balance transfer fee. I switched to a card that had travel points, and the transfer gave me enough points to get a free round-trip ticket from Philadelphia to Reno.
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After incurring an unexpectedly high expense this summer I got the Chase Slate card and transferred that balance to it off another card. Chase online made it a very easy experience to apply, and I don't use the Slate card for anything else other than parking the debt and getting rid of it.
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I use this strategy but not with this card.
Check that there are no balloon payments after the 0% period runs out. Set a plan to pay off the balance in 15 months. Put notes in the calendar to show how much needs to be paid off and when.
Cut up all the cards.
My friend has about $5000 in credit card debt and researched around on ways to reduce the debt without incurring the heavy interest fees.
Be certain that s/he understands that transferring a balance is not the same as reducing the debt. It allows them to pay off more of the debt because there is no interest but it doesn't magically cure the debt or the excess spending that lead to the debt.