Any credit card/interest experts here?

[de8212]

I just purchased something and financed it for 3 yrs through the business I bought it from. I have 5.99% interest for the 3 years.
I also have a credit card that is offering 4.90% interest for the lifetime of any balance transfer.
Would it be worth it to transfer the balance to the Credit card? Is there any catch on how these people figure up interest that would be a disadvantage?

thanks

 

[tikwanleap]

Three things to check for come to mind:

1. Is the original balance on a credit card? I think you can only tranfer balances from another credit card. (Someone correct me if I'm wrong.)

2. Is there a balance transfer limit on the new credit card? It may be in the fine print.

3. Is the low rate temporary or permanent? If temporary, are you able to pay off the balance before the interest rate rises? (oops nevermind on this one. Just reread your post a second time)

 

[CPA]

The big issue in this type of transfer is what will be the transfer fee on the 4.9% card and the amount of interest calculated from the day of the transfer to the first payment (balance transfers are calculated like cash withdrawals on ccs - interest is calculated on the day of the transaction). Will you be able to recoup those costs over the three year period. My guess is most likely yes.

 

[BrunoPuntzJones]

What is the normal rate on the card?

Let's say you buy something for $1000 and your rate is 7%

You move your $2500 balance on the 3 year item @ 5.99% over to your card

Most will make you pay off the $2500 balance first, then you pay off the $1000. So seems like a good deal to get the 4.90, but when you are paying 7% on that $1000, it bites you in the ass.

Works the same way with those checks you get from your CC.

 

[Rastus]

Originally posted by: BrunoPuntzJones
What is the normal rate on the card?

Let's say you buy something for $1000 and your rate is 7%

You move your $2500 balance on the 3 year item @ 5.99% over to your card

Most will make you pay off the $2500 balance first, then you pay off the $1000. So seems like a good deal to get the 4.90, but when you are paying 7% on that $1000, it bites you in the ass.

Works the same way with those checks you get from your CC.

He's right, also in the fine print it might say that you have to use the card twice per month or you are in violation and can lose the low interest rates. Hello 19%. Also, if you are late with just one payment, you're screwed.

 

[de8212]

Thanks for all the good points.

CPA
Not sure I folllow you but I'm sure it's because I'm slow./

What is the normal rate on the card?

Not sure, I thnk 13% or so. But I don't have a balance on there and I never will (unless I did the transfer).

I know there's not a fee associated with the transfer.

Still undecided on this. Lets say I borrowed 5000.00 and am paying 150.00 per month on the current card. So in 3 years I would have paid 5400. So that's 400.00 in interest.
If I transfered the 5000 (providing I haven't made a payment )over to a CC and paid 150 per month, would it be less than the 400 interst paid (since the rate is over 1% lower on the CC)?

Did that make sense?

 

[StageLeft]

One consideration is that if you have limited credit a CC plus that loan will benefit your overall credit score more than just the loan finished now and then only a CC. If the finance amount is low 1% will be insignificant almost in monthly payments.

 

[de8212]

If the finance amount is low 1% will be insignificant almost in monthly payments.

yeah, that's what I figure.


5000 loan @ 5.99% for 36 months = 152.09

5000 loan @ 4.90% for 36 months = 149.63

Seems almost not worth the paperwork/phonecalls.

Just thought I'd ask.

 

[StageLeft]

Originally posted by: de8212

If the finance amount is low 1% will be insignificant almost in monthly payments.

yeah, that's what I figure.


5000 loan @ 5.99% for 36 months = 152.09

5000 loan @ 4.90% for 36 months = 149.63

Seems almost not worth the paperwork/phonecalls.

Just thought I'd ask.

No I don't think it would be, and keeping the loan on there for a longer period of time should benefit your credit score more significantly (down the road anyway).

 

[Evadman]

Paging RossMAN to OT, RossMAN to OT: STAT