Author Topic: Balance transfer Q: 18months/0% vs 24months/5%  (Read 8048 times)

mudshark

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Balance transfer Q: 18months/0% vs 24months/5%
« on: April 18, 2013, 12:49:37 PM »
Howdy folks!

Normally, when a single no-brainer low interest offer comes by for balance transfers I can usually get a pretty decent idea if I should pull the trigger or not, but sometimes if I have too many options my eyes will glaze over!  I'm not completely financially illiterate but old promo rates have just expired and now this is such a time.

I'll just get right to it and hope that to you mustachioed ones the answer will be obvious!

VISA card "A" (credit union):   $5250 at 8.5%
VISA card "B" (Chase Slate):  $7125 at 15%
Discover debt: $2300 at ZERO% until 1/14

Chase Slate offers:  0% until 3/14 -OR- 2% until 9/14  [1% fee for either]

Discover card offers: 0% for 18 months [3% fee] -OR- 5% for 24 months [no fee].

I imagine I cannot pay off the Chase card with the Chase offer so
the credit union gets paid from Chase and Chase gets paid from Discover.
I plan to leave Discover alone for now.

Historically I've usually been able to pay all my minimum payments PLUS another $150 to $250 on each payment except during months when things get tight as they sometimes do!

What do you folks think my next balance transfers ought to be?

Thanks much!
« Last Edit: April 18, 2013, 02:40:02 PM by mudshark »

iamsoners

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #1 on: April 18, 2013, 12:58:28 PM »
ummmm, facepunch, you're debt is an emergency and you need to get off of this little roller coaster.  Use the transfers to your benefit for the moment, but you should really stop playing the game and just pay these debts off.

If I were you, I'd probably transfer them all to the 5% Discover card, and focus on paying that down ASAP while also planning to have a full payoff amount ready for the other Discover balance come Jan 14th.

tuyop

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #2 on: April 18, 2013, 01:48:47 PM »
Howdy folks!

Normally, when a single no-brainer low interest offer comes by for balance transfers I can usually get a pretty decent idea if I should pull the trigger or not, but sometimes if I have too many options my eyes will glaze over!  I'm not being completely financially illiterate but old promo rates have just expired and now this is such a time.

I'll just get right to it and hope that to you mustachioed ones the answer will be obvious!

VISA card "A" (credit union):   $5250 at 8.5%
VISA card "B" (Chase Slate):  $7125 at 15%
Discover debt: $2300 at ZERO% until 1/14

Chase Slate offers:  0% until 3/14 -OR- 2% until 9/14  [1% fee for either]

Discover card offers: 0% for 18 months [3% fee] -OR- 5% for 24 months [no fee].

I imagine I cannot pay off the Chase card with the Chase offer so
the credit union gets paid from Chase and Chase gets paid from Discover.
I plan to leave Discover alone for now.

Historically I've usually been able to pay all my minimum payments PLUS another $150 to $250 on each payment except during months when things get tight as they sometimes do!

What do you folks think my next balance transfers ought to be?

Thanks much!

I'm pretty sure the 0% with a 3% fee is a better option than the 5% with the 0% fee. That seems pretty straightforward, doesn't it?

You should probably focus on putting MUCH more money on those credit cards than you already do, rather than sweet balance transfer dealz. Also, don't pay $250 on all of the cards at once, pay minimums on all but your highest interest rate until it's gone, then roll that amount over onto the new ones. It's called a "debt snowball".

iamsoners

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #3 on: April 18, 2013, 02:58:28 PM »
Someone check my algebra, but here's what I'm thinking:

Add your $250 payment to the Discover card now--this should put you on track to have the balance paid off by the time the 0% deal is done.

Then, you have the other 12,375 of debt. Assuming you make payments of $300/month (no idea what minimums are on cc's really), with
Discover 0% at 18 months.  ((12375)*1.03)-10*300= you'll have around $9746 when you have to find a new card and do this again.
Discover 5% at 24 months.  ((12375)e^(.05*1.3333))-16*300= you'll have around $8428 when you have to do this again.

Obviously, the 5% card is lower by $1318 but that also represents 6 more months of payments by you (6*300=1800).... aww hell, I should just make a spreadsheet huh?

I guess my point about the face punch is this: it's a good start and you're doing better than most Americans, so congratulations--sincerely. But your payoff timeline is still pretty long--can you throw anything else at these debts to make them go away faster so you don't have to do another new offer in 18 or 24 months? It sure would shorten up the math necessary :)

mudshark

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #4 on: April 18, 2013, 03:19:34 PM »
VISA card "A" (credit union):   $5250 at 8.5%
VISA card "B" (Chase Slate):  $7125 at 15%
Discover debt: $2300 at ZERO% until 1/14
Chase Slate offers:  0% until 3/14 -OR- 2% until 9/14  [1% fee for either]
Discover card offers: 0% for 18 months [3% fee] -OR- 5% for 24 months [no fee].
I plan to leave the Discover balance alone for now.
Historically I've usually been able to pay all my minimum payments PLUS another $150 to $250 on each payment except during months when things get tight as they sometimes do!
I'm pretty sure the 0% with a 3% fee is a better option than the 5% with the 0% fee. That seems pretty straightforward, doesn't it?
Nothing is obvious to me unfortunately.  I do not know how to calculate what is how much for how long.
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You should probably focus on putting MUCH more money on those credit cards than you already do
Every spare penny I have already goes to paying off this old debt from an emergency several years ago. There is no additional money to be used for paying debt.
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Also, don't pay $250 on all of the cards at once, pay minimums on all but your highest interest rate until it's gone, then roll that amount over onto the new ones. It's called a "debt snowball".
Up until this month *ALL* interest rates were between 0% and 2% so just paying off EVERYTHING ASAP before promo rates expired was the strategy. 
Your point about combining *ALL* available monies as a single over-payment toward a single highest rate is indeed something I would normally do but with all rates near zero I was just trying to over-feed all of them! 
I didn't see one account that I should necessarily get rid of first.

My problem is I don't know how to calculate
1- Which Slate offer to use to transfer the Credit Union $5250 balance to or
2- Which Discover offer to use to transfer the Slate $7125 balance to.

Back to the point about throwing any and all money I can at a single account to make it go away faster...  Maybe one account isn't at a higher rate BUT extrapolating on that axiom suggests I should throw it all at a single low-interest balance (pick one!) that I can make go away fastest. (Another calculation I have no idea how to make!)

Thanks folks, you guys rock!

Alex in Virginia

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #5 on: April 18, 2013, 03:25:59 PM »

Chase Slate offers:  0% until 3/14 -OR- 2% until 9/14  [1% fee for either]

Discover card offers: 0% for 18 months [3% fee] -OR- 5% for 24 months [no fee].

I imagine I cannot pay off the Chase card with the Chase offer so
the credit union gets paid from Chase and Chase gets paid from Discover.
I plan to leave Discover alone for now.

What do you folks think my next balance transfers ought to be?

Thanks much!

The Chase 1-yr offer is equivalent to paying 1% annual interest for a year.

The Discover 18-mo offer is equivalent to paying 2% annual interest for 18 months.

The Discover 24-mo offer is equivalent to paying 2.5% annual interest for 24 months.

Your best deal is the Chase 1-yr offer.  Throw all the credit union Visa balance you can at it.

Still, throw as much of the Chase Visa balance as you can at the Discover 18-mo offer because you'll be saving LOTS (the difference between paying 15% interest and the 2% equivalent rate of that balance offer).

The Discover 24-mo offer is the least attractive to me.  Let it slide.  If you've got 2 balance transfer offers in front of you now, it's a pretty good bet that more offers will come your way later.

BTW, doing serial 0% balance transfers is a budgeting tactic I have used for many years to painlessly whittle down some pretty huge credit card balances I accrued in a "past" financial life . (Thank God I'll be zeroing all that remains of them by this August!)

Good luck!

Alex in Virginia

mudshark

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #6 on: April 18, 2013, 03:35:43 PM »
Add your $250 payment to the Discover card now--this should put you on track to have the balance paid off by the time the 0% deal is done.
Your message came in while I was replying to another.  This point is exactly something I just touched on in my last message!  Once the 2 balances I need to transferred are moved where should I direct the spare resources I've so far been spreading around?
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Then, you have the other 12,375 of debt. Assuming you make payments of $300/month (no idea what minimums are on cc's really), with
Discover 0% at 18 months.  ((12375)*1.03)-10*300= you'll have around $9746 when you have to find a new card and do this again.
Discover 5% at 24 months.  ((12375)e^(.05*1.3333))-16*300= you'll have around $8428 when you have to do this again.
Obviously, the 5% card is lower by $1318 but that also represents 6 more months of payments by you (6*300=1800).... aww hell, I should just make a spreadsheet huh?
Last Slate minimum was $166, last Credit Union minimum was $110.  Not sure how that helps. Nor do I have any idea in the least about any calculations!  WAY over my head!
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I guess my point about the face punch is this: it's a good start and you're doing better than most Americans, so congratulations--sincerely. But your payoff timeline is still pretty long--can you throw anything else at these debts to make them go away faster so you don't have to do another new offer in 18 or 24 months? It sure would shorten up the math necessary :)
Yea, face punch maybe a bit strong!  It is after all something that (not that you could have known) is the residual damage from a huge emergency a few years back.  I have been handling it very well if I do say so myself and still managed to keep my 3 credit scores pretty high!  I'm proud of how well I've done.
And, I certainly plan to keep it up, ergo my question here about what to do next. :)

DK

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #7 on: April 18, 2013, 05:50:47 PM »

Keep the "Discover debt: $2300 at ZERO% until 1/14". Ideally move VISA card "A" and "B" to the Chase Slate offer 0% w/1% fee. If you can't move all of it, move as much as you can, since the 1% fee is the best out of the lot. What you can't move onto the Chase, put the rest on the Discover 0% w/3% fee.

So hopefully you will end up with:

Discover debt: $2300 at ZERO% until 1/14
Chase Slate offer: 5250+7125 = 12375 0% until 3/14

You only gave what your minimum payment was on two of them, so if taken together let's say your new minimum is 270, and on the discover we'll guess 100.

Since you have 0% now on all of them, you won't actually be reducing any compounded interest you pay, so it doesn't matter what the extra money goes to. BUT, since the discover 0% will be over first, plus it's the lower of the amounts, put your extra money towards that. If you're averaging about $200 extra, plus the guess of 100 for the min payment, that's $300/month towards it. $2300/$300 = 7.6 months. We'll say 8 months, so doing this will eliminate that one in 12/13, a month before your 0% will run out. Now all you have is what's left on the other one.

With your min payments, that one is down to $10215 in 12/13. Since the other one is paid off though, now instead of your min payment of 270, you can add in the 300 on the other one and pay $570/month to knock it down more quickly. That only knocks it down to 8505 by the time that 0% runs out, so you will want to transfer it again and keep on paying the 570/month on it. Hopefully you can find another 0%/yr, because in 15 months paying 570/month that one will disappear too.

So less than 2 years and you can be free of it. Hopefully less if you can push more than than your avg 200/month extra at it.

tomk2

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #8 on: April 19, 2013, 06:22:29 AM »
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I imagine I cannot pay off the Chase card with the Chase offer so
the credit union gets paid from Chase and Chase gets paid from Discover.

I wouldn't assume that. Unless it's explicitly stated somewhere, I bet Chase would do it.

Others have already given you some good advice on how to do the transfers. What I would like to suggest is that you play around with Microsoft Excel a little bit using the =FV, =PMT, =NPER functions to understand how loans work. Use the built-in help or search for Excel MVP websites to learn more about how to use the functions. Once you have a good understanding of these functions, you'll be in a much better position to analyze offers.

Good luck with your payoff!

mudshark

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #9 on: April 19, 2013, 08:52:04 AM »
So, since you folks seem to agree (and please let me know if you disagree) that I want to put *ALL* of my interest-carrying balances on the Chase "0% for 11 months with a 1% fee" offer, here's the plan, :

1- X-fer full Chase balance to Credit Union
2- Pay off credit union w/ Chase offer.
3- Pay minimums on the Chase
4- Throw all over-payments to the Discover balance.

Since I do get such offers all the time, by the time any promo rates above expire I should have another chance to shuffle money early next year.

BTW, soners - If you do make a spreadsheet that'll let me compare offers I'd be interested to see that!

Thanks all, much appreciated!
RG

Jack

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #10 on: April 19, 2013, 09:13:04 AM »
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I imagine I cannot pay off the Chase card with the Chase offer so
the credit union gets paid from Chase and Chase gets paid from Discover.

I wouldn't assume that. Unless it's explicitly stated somewhere, I bet Chase would do it.

I would assume exactly the opposite: that Chase wouldn't even let you get the new card at all (even to transfer a balance from a non-Chase card) since you're already a customer. That's what they told me when I tried it, at least...

superheropunk

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #11 on: April 19, 2013, 09:50:33 AM »
I offer a different take on this and don't think a balance transfer is the way to go....

From your description you mention "Historically I've usually been able to pay all my minimum payments PLUS another $150 to $250 on each payment except during months when things get tight as they sometimes do!"

Are you earning more than you spend consistently each and every month?

Then you make this statement, "What do you folks think my next balance transfers ought to be?" The word next in it.. LOL...

As a former credit addict, balance transfers are not a good option if you haven't learned in the first place to pay your credit cards off each month if you are going to have them (for rewards, etc.) and especially if you don't have an emergency fund while you have a lot of debt to pay and paying only the minimums... Something will end up happening and while you had all the good attentions of paying your balance transfer and not accumulating new debt, you did accumulate new debt and the balance transfer just became another debt to pay on top off all your new debt.

I suggest taking your lumps in the form of paying interest and use it one of those life lessons so you can get out of the viscous credit card debt cycle and stay out of it....

« Last Edit: April 19, 2013, 10:03:03 AM by superheropunk »

mudshark

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #12 on: April 19, 2013, 03:33:57 PM »
Are you earning more than you spend consistently each and every month?
I am NOW.  Several years ago we had a couple of cataclysmic events and if it wasn't for credit I'd be homeless now.  The debt was WELL over 20k at one point and if it wasn't for a series of low-interest offers I'd never have rebounded as well as I've been able to do.
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Then you make this statement, "What do you folks think my next balance transfers ought to be?" The word next in it.. LOL...
Which *is* funny how cavalier it sounds in that statement without the benefit of full context!
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As a former credit addict, balance transfers are not a good option if you haven't learned in the first place to pay your credit cards off each month if you are going to have them (for rewards, etc.) and especially if you don't have an emergency fund while you have a lot of debt to pay and paying only the minimums... Something will end up happening and while you had all the good attentions of paying your balance transfer and not accumulating new debt, you did accumulate new debt and the balance transfer just became another debt to pay on top off all your new debt.
Yea, that part doesn't really apply. I am better than just really good at paying off debts and not adding any more new debt to the balance. Over-extending myself using credit is neither a habit nor an ongoing issue.
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I suggest taking your lumps in the form of paying interest and use it one of those life lessons so you can get out of the viscous credit card debt cycle and stay out of it....
Here is where I have to disagree...  No matter how you got where you are punishing yourself by paying more interest than you have to to teach yourself a lesson is not a good idea methinks.

tomk2

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #13 on: April 20, 2013, 10:18:30 AM »
I would assume exactly the opposite: that Chase wouldn't even let you get the new card at all (even to transfer a balance from a non-Chase card) since you're already a customer. That's what they told me when I tried it, at least...

Oh, that's totally lame. When I was in the OP's position a few years ago, Bank of America had no problem opening new accounts and transferring balances for me. But that was a different company, and the year 2007, so YMMV, I guess.

superheropunk

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #14 on: April 22, 2013, 01:39:55 PM »
Think about this...

Why do credit card companies even offer balance transfers at 0%?

Don't think in the end it is too benefit consumers..... It is better just too pay the balances off as quickly as possible rather than a balance transfer.

Insanity

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #15 on: May 10, 2013, 01:32:45 PM »
Think about this...

Why do credit card companies even offer balance transfers at 0%?

Don't think in the end it is too benefit consumers..... It is better just too pay the balances off as quickly as possible rather than a balance transfer.

I am not sure if this was rhetorical, but my guess is they actually do it to get the transfer fee on larger sums of money and take interest earning potential away from competitors (thought they sometimes do it to themselves given the cross-market of them).  Then they also feel they'll make money on new purchases.

For instance, we have a boatload of money on a CC that was 0% transfer 0% purchases till September of this year.  We had a major medical expense.  We used this card for a transfer and medical purchases (it adds the value of being easier to report to the IRS if they happen to audit us for our medical deduction last year). 

I am not considering transferring the outstanding balance to another card (yes, this is greater than 10K) that will have 0% until sometime next year.

Don't know if we'll do it or just pay it off.

Joet

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Re: Balance transfer Q: 18months/0% vs 24months/5%
« Reply #16 on: May 10, 2013, 03:15:41 PM »
I went with a Chase Slate yesterday to ease into Lending Club [0% balance transfer , 0% no fee transfers first 60 days, 0% on purchases]

I have no revolving debt, but I'm using it to put normal monthly expenses [~4k/mo] on it for 2 months to jump start my lending club account.

Not sure if that answers your question but it seems unequivocally the best balance transfer card avail right now.