CC Balance Transfers

[glitzy07]

Can someone explain CC balance transfers to me like I'm 5?  

We're currently paying off two credit cards as aggressively as we can afford to, but the interest charges amount to about 25-30% of the amount we're paying each month.  We haven't used the cards in months and don't plan to until they're paid off.  I'm wondering if a 0% balance transfer might be a good idea to make the money that we are throwing at the balance work harder for us.

TIA!

[polarbearfans]

That is how we took out a massive credit card my husband had from his college days. we were getting ready to buy a house the next year, and the mortgage specialist i talked to at the bank said we would never get out from that card at that rate. we opened a credit card the next day that had no transfer fee and 0% interest for a year. We paid off that entire balance within the year. Best decision we ever made.

[crashgizmo]

ditto polarbearfans. I did the same thing after my divorce when I had a bunch of credit card debt. If your credit is good you will probably qualify for good transfers. Be aware than a lot of balance transfers will have a fee (3% or something) but it still may be a better way to go depending on how much you have to pay off and how long it will take you.

GL!

[LoveTrains]

You should definitely look into it!

Most credit card transfers charge a fee, somewhere between 3-5% of the amount that you are transferring. However, 5% is still less than 25% in interest. You should look at your open cards and see what is the best offer that you have on there.

[mich1]

Another thing you might want to check is to see what happens to the interest rate if your balance is not paid off by the deadline. When I did this, I had for the life of the loan and was able to kill off 2 high interest cards this way.

Apparently, some are back charging interest on the whole balance if it is not paid off.....just like what many 0% offers you see in furniture/electronics stores do.

I've not seen any offers like this myself, but remember hearing that these offers are starting to pop up.

[glitzy07]

Dec 19, 2014 10:36:47 GMT -5 LoveTrains said:

You should definitely look into it!

Most credit card transfers charge a fee, somewhere between 3-5% of the amount that you are transferring. However, 5% is still less than 25% in interest. You should look at your open cards and see what is the best offer that you have on there.

Question: So if I sign up for a card that has a 3% fee on the balance transfer, is that amount just added to the total balance of the card? 

[glitzy07]

Dec 19, 2014 11:47:54 GMT -5 mich1 said:

Another thing you might want to check is to see what happens to the interest rate if your balance is not paid off by the deadline. When I did this, I had for the life of the loan and was able to kill off 2 high interest cards this way.

Apparently, some are back charging interest on the whole balance if it is not paid off.....just like what many 0% offers you see in furniture/electronics stores do.

I've not seen any offers like this myself, but remember hearing that these offers are starting to pop up.

Most of the ones I'm looking at have some variation of this:

"0% introductory APR for the first fifteen billing cycles after the account is opened.
 After that, your APR will be 12.99% or 20.99% based on your credit worthiness. This APR will vary with the market based on the Prime Rate."

I (hopefully correctly) assume at the that APR would only apply to the remaining balance at that time?

[LoveTrains]

Dec 19, 2014 11:58:30 GMT -5 glitzy07 said:

Dec 19, 2014 10:36:47 GMT -5 LoveTrains said:

You should definitely look into it!

Most credit card transfers charge a fee, somewhere between 3-5% of the amount that you are transferring. However, 5% is still less than 25% in interest. You should look at your open cards and see what is the best offer that you have on there.

Question: So if I sign up for a card that has a 3% fee on the balance transfer, is that amount just added to the total balance of the card? 

Yes.

Example: You transfer $1,000 to credit card X from Credit Card A. The rate is 0% until March 2016 (an offer I just received in the mail!) with a transfer fee of 3%. The rate reverts to the regular interest rate (say 18.99%) after that. 

Your new balance at credit card x is $1,030.

Some will allow you to do multiple transfers. So say you now want to add $5,000 from credit card B to this balance with this offer.

You transfer $5,000 with a fee of $150. That gets added to your $1030 balance for a new balance of $6,180, all at 0% until March 2016.  

[LoveTrains]

Dec 19, 2014 11:59:38 GMT -5 glitzy07 said:

Dec 19, 2014 11:47:54 GMT -5 mich1 said:

Another thing you might want to check is to see what happens to the interest rate if your balance is not paid off by the deadline. When I did this, I had for the life of the loan and was able to kill off 2 high interest cards this way.

Apparently, some are back charging interest on the whole balance if it is not paid off.....just like what many 0% offers you see in furniture/electronics stores do.

I've not seen any offers like this myself, but remember hearing that these offers are starting to pop up.

Most of the ones I'm looking at have some variation of this:

"0% introductory APR for the first fifteen billing cycles after the account is opened.
 After that, your APR will be 12.99% or 20.99% based on your credit worthiness. This APR will vary with the market based on the Prime Rate."

I (hopefully correctly) assume at the that APR would only apply to the remaining balance at that time?

If that is the language, yes, the APR only applies to the remaining balance at that time. 

[hrp22]

Look at the statement and get the exact rate that you are paying.  Not the effective rate as this uses the average daily balance.

Use a calculator to find out how much interest you will be paying in the time frame that you can comfortably pay it off.

Then calculate the fee for transferring balance to the new card.  Now days, most are 5% with some sort of cap and a minimum charge.  If your time frame is within the 0% time frame, and the balance transfer fee is less than the interest above, then I'd say do it.  Make sure that the non-promotional rate isn't retro-active on your entire balance you transferred if not paid in full by expiration date.  *** this is very important***read the terms.



  

[Deleted]

Look into Capital One. When I got the Venture card a few years ago there was 0% for a year and no transfer fee. I have been happy with the thus far.

[LoveTrains]

Dec 19, 2014 17:22:29 GMT -5 carrotsmakemefat said:

Only without a transfer fee! Discover and chase have no transfer fee options.

And make sure that if it reverts to a much higher rate after a year it's still worth it in terms of pay off (and not more out of pocket than paying the two you have now)

I completely disagree. The transfer fee might still be less than what she is paying in interest on a 25% interest rate. She should calculate it. 

[thedutchgirl]

I think it is illegal to back-date the interest these days if you don't pay off by the end of the promotional rate.

Note that generally, carrying the 0% balance means you are carrying a balance for the whole card. So, you have no grace period on purchases. That is, you pay interest on any purchases from the date of purchase. So don't use the card.