Should I transfer my credit card Balance?

[Anonymous]

I am in debt - yes please don't judge! But I need financial advice.

My VISA card just told me I can transfer my Amex debt ($16,000) to them and not pay interest till Sept 2016. My VISA has no balance (I don't use it really). It's a 4% balance charge transfer, then the interest rate will be 10%.

I called AMEX and they lowered my rate from 17% to 16%. They couldn't do anymore.

I have excellent credit ratings and pay on time, and a huge chunk of the dept each month.

But I want to pay this off sooner rather than later and my interest each month on AMEX is almost $300. Would it make sense to transfer the balance to VISA?

thank you!

[Anonymous]

Not OP, but I am interested too.

[Anonymous]

I remember watching a Suze Orman show several years ago that recommended that people in debt leverage 0% interest cards to help them pay down their debt.

I did it and it worked beautifully.

I transferred my balance (grad school debt of $5k) to a 0% interest card then began to work on paying it down. I closed the old card. Then, I filed the actual new credit card away so I wouldn't use them.

I marked on my calendar when the 0% interest was to end so I could transfer the remaining balance before incurring interest.

I did this a few times until I had it paid off. I had no problems and it was a big help to me.

Most of the cards I found had the 0% for at least a year so I didn't have to transfer things very often.

[Anonymous]

So, it will cost you $640 to transfer the balance.

You'll save 600 basis points on the interest rate, or about $1,500 over the 19 months, give or take.

So, your net savings is around $860 over 18 months. Give or take.

Are you sure you'll be able to transfer the full $16,000?

[Anonymous]

Yes you should do it.

You'll save roughly $4,500 in interest over the next 18 months. If you continue making the same payments you are now, you'll pay down an extra $3,800 by Sept 2016 once you subtract the 600-700 transfer fee (actual amount dependent on your exact balance).

So if you are currently paying $600/month, you'll pay $5,400 off the principal over 18 months (actually a little more because interest will slowly decline with the balance but for the purpose of the example 5,400 is good). With the balance transfer you will pay $9,200 principal in 18 months by paying 600/month.

yes do it.

[Anonymous]

OP here - i really want to pay this down. I did a calculation on an on-line balance transfer calculator and it told me that I would pay $600 for the transfer fee (I'm paying almost $300 interest EACH MONTH) and my savings for 19 months would be almost $3500. I decided to do the transfer b/c I need all the help I can get to pay this down. I hate paying a couple grand each month but knowing it's going to the interest charge.

[Anonymous]

Yes. You'll save couple of thousand(plenty of transfer calculators online.)
So transfer fee will be $640. That's what you pay Amex in interest in about 2 months. I have to tell you that the transfer fee is high. Discover gave me 1.5% and I have just good credit.
Are you planning to be done paying it before Sept 2016 comes around? Even if you are not, 10% is still less than 16%.
Ask your Visa for a 3% transfer fee or even 2%. 4 is high, I've never paid that much.

[Anonymous]

Anonymous wrote:So, it will cost you $640 to transfer the balance.

You'll save 600 basis points on the interest rate, or about $1,500 over the 19 months, give or take.

So, your net savings is around $860 over 18 months. Give or take.

Are you sure you'll be able to transfer the full $16,000?

OP stated 300/month interest right now. That's $4,500 savings over 18 months minus the fee.

[Anonymous]

OP only you can answer - if you are sure you will continue to pay down your debt, i'd bite the bullet and transfer. For many people, though, once they transfer to 0%, the pressure is off and they start accumulating more debt.

[Anonymous]

OP here - thank you to all you financially minded people! I need to be better at keeping up with these rates.

[Anonymous]

Anonymous wrote:Yes you should do it.

You'll save roughly $4,500 in interest over the next 18 months. If you continue making the same payments you are now, you'll pay down an extra $3,800 by Sept 2016 once you subtract the 600-700 transfer fee (actual amount dependent on your exact balance).

So if you are currently paying $600/month, you'll pay $5,400 off the principal over 18 months (actually a little more because interest will slowly decline with the balance but for the purpose of the example 5,400 is good). With the balance transfer you will pay $9,200 principal in 18 months by paying 600/month.

yes do it.

I get a $860 savings. The delta in rates is 600 basis points (16% on AmEx versus 10% on Visa, plus the $640 transfer fee).

[Anonymous]

Anonymous wrote:

Anonymous wrote:So, it will cost you $640 to transfer the balance.

You'll save 600 basis points on the interest rate, or about $1,500 over the 19 months, give or take.

So, your net savings is around $860 over 18 months. Give or take.

Are you sure you'll be able to transfer the full $16,000?

OP stated 300/month interest right now. That's $4,500 savings over 18 months minus the fee.

But she's not going to zero. She's going to 10% from 16%.

[Anonymous]

Anonymous wrote:OP here - thank you to all you financially minded people! I need to be better at keeping up with these rates.

OP, I agree with the previous pp that said the fee is high. I almost mentioned that above. Most balance transfer offers are about 3%. I've seen them as low as 2%. I've never seen the 1.5% that the pp was talking about. If you haven't already done a transfer, look around for other offers. I know CitiCard is constantly offering 0% interest to me. Chase usually has a 3% transfer. Of course you're getting 18 months so that could be the reason for the extra 1% and if so, that's well worth it. You'd buy 50% more time for 1%. Still, look and see if you can get a 3% transfer fee for 18 months at 0 interest.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So, it will cost you $640 to transfer the balance.

You'll save 600 basis points on the interest rate, or about $1,500 over the 19 months, give or take.

So, your net savings is around $860 over 18 months. Give or take.

Are you sure you'll be able to transfer the full $16,000?

OP stated 300/month interest right now. That's $4,500 savings over 18 months minus the fee.

But she's not going to zero. She's going to 10% from 16%.

Re-read OP. it's "no interest" aka 0% for 18 months THEN 10%. I'd go so far as to say that it would be worth it just for the 10% rate. When combined with 0% for 18 months it's a no brainer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So, it will cost you $640 to transfer the balance.

You'll save 600 basis points on the interest rate, or about $1,500 over the 19 months, give or take.

So, your net savings is around $860 over 18 months. Give or take.

Are you sure you'll be able to transfer the full $16,000?

OP stated 300/month interest right now. That's $4,500 savings over 18 months minus the fee.

But she's not going to zero. She's going to 10% from 16%.

Re-read OP. it's "no interest" aka 0% for 18 months THEN 10%. I'd go so far as to say that it would be worth it just for the 10% rate. When combined with 0% for 18 months it's a no brainer.

Ah, I stand corrected. Read right passed that. You are correct.