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Advice on repaying debt...

B

BigToque

Lifer
I'm going to go talk to someone at my bank CIBC, but I'm wondering if any of you guys have any adivce here.

I have:
[*]$15,000 line of credit with an $11,000 balance @ 7.25% (Prime + 3)
[*]$4,600 student loan @ 6.75% (Prime + 2.5)

I'm wondering if there is any way to consolicate the whole thing with a lower fixed interest rate?

I got an offer from Capital One with this "SmartSwitch" balance transfer with a 3.99% fixed rate. The catch seems to be that if you miss your payment your interest rate goes through the roof for a minimum of 9 months. (after 9 consecutive payments your rate drops back to the original rate).

I'm weary of doing this though even though I've never missed a payment.
 
Originally posted by: rdubbz420
Are you a homeowner?
Click to expand...

Nope. I'm 22 and live at home while going to university (2 more years).

I did get the line of credit without any cosigner. My credit score was 760 last time I checked (about a year ago).
 
Originally posted by: Stefan
The catch seems to be that if you miss your payment your interest rate goes through the roof for a minimum of 9 months. (after 9 consecutive payments your rate drops back to the original rate).
Click to expand...

This catch as you call it is common with ALL credit card issuers. BOFA offered me 2.99% fixed for life with 0% balance transfer fees with one catch, never miss a late payment. I know my due date is the 13th of every month, so I always login to online banking around the 8th and pay it.
 
Originally posted by: RossMAN
Originally posted by: Stefan
The catch seems to be that if you miss your payment your interest rate goes through the roof for a minimum of 9 months. (after 9 consecutive payments your rate drops back to the original rate).
Click to expand...

This catch as you call it is common with ALL credit card issuers. BOFA offered me 2.99% fixed for life with 0% balance transfer fees with one catch, never miss a late payment. I know my due date is the 13th of every month, so I always login to online banking around the 8th and pay it.
Click to expand...

Say they give me a limit of $20,000 and my transfer is $15,600. I know that the 15.6k is @ 3.99%, but is the rate for making purchases on the card?

IE, they say the rate applies to the balance transfered. If I pay the transfer debt down to $5,000 and I've racked up another $5,000 on other purchases, am I going to be billed with $5000 @ 3.99% and $5,000 at 19.9% or with the whole $10K be billed at 3.99%?
 
Originally posted by: Stefan
Originally posted by: RossMAN
Originally posted by: Stefan
The catch seems to be that if you miss your payment your interest rate goes through the roof for a minimum of 9 months. (after 9 consecutive payments your rate drops back to the original rate).
Click to expand...

This catch as you call it is common with ALL credit card issuers. BOFA offered me 2.99% fixed for life with 0% balance transfer fees with one catch, never miss a late payment. I know my due date is the 13th of every month, so I always login to online banking around the 8th and pay it.
Click to expand...

Say they give me a limit of $20,000 and my transfer is $15,600. I know that the 15.6k is @ 3.99%, but is the rate for making purchases on the card?

IE, they say the rate applies to the balance transfered. If I pay the transfer debt down to $5,000 and I've racked up another $5,000 on other purchases, am I going to be billed with $5000 @ 3.99% and $5,000 at 19.9% or with the whole $10K be billed at 3.99%?
Click to expand...

The offer has to state either 3.99% on PURCHASES or BALANCE TRANSFER, which is it?

More than likely it's 3.99% on balance transfer not purchases. If you paid your balance down to $5,000.00 your rate would be $5k @ 3.99% and any new purchases at the regular rate of 19.9%. Here's another dose of bad news. Let's say you do the balance transfer $5k @ 3.99% then you make purchases of $5k @ 19.9% --- whenever you make a payment, it's first allocated towards the LOWER interest rate of the two. So your interest will be paid towards the 3.99% first, meanwhile your 19.9% keeps accruing.

So you should use the Capital One ONLY FOR BALANCE TRANSFER @ 3.99% - do not use it for purchases.
 
Originally posted by: RossMAN
Originally posted by: Stefan
Originally posted by: RossMAN
Originally posted by: Stefan
The catch seems to be that if you miss your payment your interest rate goes through the roof for a minimum of 9 months. (after 9 consecutive payments your rate drops back to the original rate).
Click to expand...

This catch as you call it is common with ALL credit card issuers. BOFA offered me 2.99% fixed for life with 0% balance transfer fees with one catch, never miss a late payment. I know my due date is the 13th of every month, so I always login to online banking around the 8th and pay it.
Click to expand...

Say they give me a limit of $20,000 and my transfer is $15,600. I know that the 15.6k is @ 3.99%, but is the rate for making purchases on the card?

IE, they say the rate applies to the balance transfered. If I pay the transfer debt down to $5,000 and I've racked up another $5,000 on other purchases, am I going to be billed with $5000 @ 3.99% and $5,000 at 19.9% or with the whole $10K be billed at 3.99%?
Click to expand...

The offer has to state either 3.99% on PURCHASES or BALANCE TRANSFER, which is it?

More than likely it's 3.99% on balance transfer not purchases. If you paid your balance down to $5,000.00 your rate would be $5k @ 3.99% and any new purchases at the regular rate of 19.9%. Here's another dose of bad news. Let's say you do the balance transfer $5k @ 3.99% then you make purchases of $5k @ 19.9% --- whenever you make a payment, it's first allocated towards the LOWER interest rate of the two. So your interest will be paid towards the 3.99% first, meanwhile your 19.9% keeps accruing.

So you should use the Capital One ONLY FOR BALANCE TRANSFER @ 3.99% - do not use it for purchases.
Click to expand...

Alrighty, it only mentions balance transfer so I guess I've got my answer.
 
Yeah... I agree with what RossMAN just said. I did some home improvements a couple of years back and have floated the balance from one 0% card to another the whole time. I just make sure that I put those cards away, I don't EVER charge anything on them and I don't EVER miss an ontime payment. I've saved a bunch just by being disciplined about it.

BTW.... HOLY CRAP RossMAN! 51,000+ POSTS! Are you self employed? How do you find the time!?!?!

Joe
 
Keep them separate.
Cut the credit card and pay it down.

Pay the student loan as scheduled and then deduct interest during income tax filing.
 
Originally posted by: PhoenixOrion
Keep them separate.
Cut the credit card and pay it down.

Pay the student loan as scheduled and then deduct interest during income tax filing.
Click to expand...

I agree. Once you transfer student loans, you lose all the tax benefits of deducting your paid interest.

Also, if you transfer that much of a balance, DON'T use if for purchases. Often enough when cards offer a low balance transfer rate, their purchase rate is much higher, sometimes around 20%. The catch is when you make payments, they are applied to the lower interest rate items, meaning that you'd have to pay off ALL the low interest debt before you even touch the higher stuff. A few purchases could quickly add up in overall interest.

EDIT: Said the same thing as RossMan!
 
Yeah, make sure you BY ANY MEANS, miss a payment on ANY DEBT. They CAN find out and jack up your interest rates.
I had to watch a special on this in economics class in school. It's horrible what the credit card industry does.
 
Pay off the CC first. You always have the option to claim forebearance on the student loan if you can't pay it.
 
Originally posted by: Netopia
Yeah... I agree with what RossMAN just said. I did some home improvements a couple of years back and have floated the balance from one 0% card to another the whole time. I just make sure that I put those cards away, I don't EVER charge anything on them and I don't EVER miss an ontime payment. I've saved a bunch just by being disciplined about it.

BTW.... HOLY CRAP RossMAN! 51,000+ POSTS! Are you self employed? How do you find the time!?!?!

Joe
Click to expand...

I'm partially self-employed.

Actually it's a FuseTalk bug my real post count is around 328 I have no idea what happened 😉
 
Hmmmm..... must be the old "post count squared and then divided by two" bug... but even that's got a bug in it because your count should be 53,792!

BAH... computers! 😉

Joe
 
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