Question about credit cards and transfering balances

[Kyuuryou]

So. I have 2 cards I'm trying to pay off.

Balance | Max | APR
$9000 | $19000 | 12%
$3000 | $12000 | 29% (payment mixup made it goto max)

I have an offer on the $9000 card for 0% balance transfer. Reading the fine print says that if I transfer a balance, any payment I make will goto the lowest APR. I figure it's a good thing for the CC companies to offer 0% to transfer from another card because that guarantees you will be paying interest on the initial sum since there will be the 0% buffer you have to go through first.

What I'm thinking of doing is transferring the $9000 to the $3000 card, then transfering it all back to the first card taking advantage of the 0% balance transfer till March 2008.

I think this will help a lot with the interest I pay and save me about $1500. I pay $1800 a month to these cards and I don't use them, they just go down(just got a full time job from college).

What do you think? Do CC companies watch for this kind of thing? Could I get into trouble anywhere?

Any advice would be much appreciated!

 

[SoulAssassin]

This is very possible, the only thing you have to do is determine what the bt fees are. Some cards charge 3% with no maximum amount. It will probably still work in your advantage but just find out ahead of time what the fees are. If it makes you feel better, the other thing you can do is have the 29% card pay off the 9K, and then have the 0% card do a direct deposit in your checking account which you then use to pay off the 29%. Who is the creditor offering the 0%?

 

[Kyuuryou]

Bank of America

The fees arent too bad esp considering I would have 0% APR until the card is paid off!

 

[kranky]

That's a reasonable plan, but the fact you have a 29% rate due to a payment mixup is a red flag. Can you be sure you'll never have another problem which could cause you to lose the 0% rate?

As SoulAssasin said, read the fine print carefully to see if there's a transaction charge on the 0% balance transfer. 3% is not unusual, but sometimes there isn't a charge. Just be sure you know the terms.

You are right to make sure you clear the balance from that card before putting a 0% BT on it. You'll be paying it off before the 0% rate expires in March 08?

 

[Kyuuryou]

I plan on it. Even if I don't it will just go back to 12%.

The problem with the 29 rate was I got what I was thought was ambitious and payed above what I thought my payment would be be too early once. It was usually $190 but I payed $300. However, i did this during what was still the previous billing cycle. So I paid twice that cycle. For 4 months after that I kept paying what I thought was on time but was really a month behind everytime. It was weird. Oh well. live and learn.

The whole debt thing has been a great experience for me. I look forward to when it's all gone and that money I would sending to the CC can just start stacking up.

 

[OulOat]

Also make sure how they will charge the bt fees. Will it be to the card or separately? If the former, make sure the bt + fees don't go over the cc limit.

 

[SoulAssassin]

Originally posted by: Kyuuryou
Bank of America

The fees arent too bad esp considering I would have 0% APR until the card is paid off!

BAC is typically 3% with no max. Let's assume the other is as well. So you pay 3% to transfer 9k to the 29% account which is $270 and you pay 3% to transfer 12k to the 0%. You just paid $630 in fees. Interest on your 3K at 29% is roughly $72.50 per month and the 9K at 12% is roughly 90/month so you're about 162.50/mo in f/c. 630/162.50 = 3.9 so you're looking at roughly 4 months to break even. If it's a 6 month promo you'll end up slightly ahead (assuming 3% fee in each direction) and barely worth doing (only because you'll move the 29% to 12% over the long term). Just transfer the 3K to the 9K. If it's a 12 month promo go for it. If you can reduce/eliminate fees go for it. Also keep in mind that in the next 2 months you can have the 29% card paid off if you snowball it and just pay the minimum on the BAC card.

edit: I missed where you said it was 0% until it's paid off. Was that a solicited offer (ie something they sent you in the mail). Discover and a couple other are running 0% for life promos...I wasn't aware BAC was doing it. Are there any requirements for making purchases each month? Not to beat a dead horse, but make sure you read the fine print.

 

[Kyuuryou]

Alright! I didn't think anyone would really care about the big picture so I just posted a simple sample situation to make sure the whole transferring back and forth thing was OK. Since you guys are so helpful I'll post all the juicy details and what I plan to do.

Card | Balance | Max | APR
1 | $3400 | $4300 | 5.9
2 | $3100 | $11600 | 29.99
3 | $9200 | $10000 | 0 till Nov '07
4 | $12000 | $19000 | 12.24 (about $120 a month)

Card 4 is the one with the 0% deal till March '08. I need to get the balance off of there first though. I have about $4000 in the bank I can throw to any card at the moment(getting back from vacation).

I was going to transfer all the balance from Card 4 to the rest of the cards to get it to a zero balance, then transfer it all back at 0%. However, Card 2 hates me and won't let me transfer a balance to this card(described above why they hate me).

I was just messing around with the online thing for Card 3 and they instantly approved increasing the credit limit to $15000.

Salary is $62500 that comes out to $1800 after taxes every two weeks. Rent and bills comes to about $1100 a month. I'm shooting for sending $1900 to the credit cards every month.

My plan:

I have $5500 now I can transfer to Card 3 that will be zero till Nov. I'm thinking I can transfer $5500 from Card 4 to Card 3, pay $4000 from bank to Card 4 and that should bring it to $3500 with its 12.24 apr. That's not bad. Then I can transfer all my APR carrying balances to it at 0% until March '08.

After all that it should look like:

Card | Balance | Max | APR
1 | $0 | $4300 | 5.9
2 | $0 | $11600 | 29.99
3 | $9200 | $10000 | 0 till Nov '07
4 | $14500 | $19000 | 12.24 on $3500(I don't know how much this will be a month) and 0 on the rest.

I should be able to get Card 3 paid off by the end of the year if I don't take another vacation(which I probably will

By then I should be able to fish up another 0% offer since my credit score will go up and I can shuffle everything around again and hopefully not have to pay much of an APR again.

BTW, here's the fine print on transfering to Card 4:

"The transaction fee for balance transfers is 4% of each transaction, minimum $10, maximum $90 and the Minimum Finance Charge is $1.50."

$90 is nice!

What do you think?

 

[Kyuuryou]

Crap. Big hole in the plan. It looks like I can't transfer between 3 & 4 because they are both BOA cards.

I transfered the balance from 2 to 3 just now. I'm going to wait a month and then call 3(Chase) and see if they can lower my APR and balance transfer APR so I can shuffle off of BOA and back on to it.

What a pain!

 

[SoulAssassin]

Bank of America will let you do a direct deposit into your checking account.

 

[manlymatt83]

Originally posted by: Kyuuryou
So. I have 2 cards I'm trying to pay off.

Balance | Max | APR
$9000 | $19000 | 12%
$3000 | $12000 | 29% (payment mixup made it goto max)

I have an offer on the $9000 card for 0% balance transfer. Reading the fine print says that if I transfer a balance, any payment I make will goto the lowest APR. I figure it's a good thing for the CC companies to offer 0% to transfer from another card because that guarantees you will be paying interest on the initial sum since there will be the 0% buffer you have to go through first.

What I'm thinking of doing is transferring the $9000 to the $3000 card, then transfering it all back to the first card taking advantage of the 0% balance transfer till March 2008.

I think this will help a lot with the interest I pay and save me about $1500. I pay $1800 a month to these cards and I don't use them, they just go down(just got a full time job from college).

What do you think? Do CC companies watch for this kind of thing? Could I get into trouble anywhere?

Any advice would be much appreciated!

I've done it, but you may encounter two problems;

1) Random rate jacking
2) Random cli
3) Double reporting on your Credit report, which COULD cause #1 or #2

#3 is the most common.

Here's how it works.

Say you have a $5000 balance on one card, and you transfer it to a new card.

The new card will most likely report your new $5000 balance QUICKER than your old card will report your $5000 payment. Credit card companies don't like to report $0 balances quickly. In FACT, if I were you, I would leave $1 on the old card.

For a month or two, you may have a $10000 balance reported on your credit report even though you really only have a $5000 balance.

Watch for this.