saltfish

Ok, so I just got signed up on a new credit card that has no interest on balance transfers for the next 9 months.

I currently have two other cards with higher interest rates. I would like to get the most out of this balance transfer opportunity. When I transfer the balances I would like to close the other two cards and just have one card, one payment, and no interest on the balance transfer for the stated amount of time.

Are there any tricks to balance transfers?

Any advice?

-SF

Bamrak

Not really, make sure your card doesn't have a balance transfer fee- that's about all I can think of. Also be doubly sure you cancel the other cards!

saltfish

Good point. Cancel and cut in half!

-SF

Averett

You really don't need to cancel the cards. Sometimes that will work against you with your credit score. But cutting in half is always a nice trick

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Absence is to love what wind is to fire. It extinguishes the small, it enkindles the great.

Force 10

Agreed with everything in the post except with canceling the other cards. I'm in the same mind that Averett is in. Last time I consolidated my CC's, I was owed a few hundred for one reason or another so keep an eye on the balance for at least a few months as you might find a negative balance.

saltfish

If I were to pay off my credit cards with CASH, is there a break on the payoff amount?

-SF

Averett

The sooner you pay, the less interest. Thats about it. You have to pay the amount you purchased things for, cant get past that.

__________________
Absence is to love what wind is to fire. It extinguishes the small, it enkindles the great.

Yakk

I don't know the American credit system very well, but:

Most balance transfers have the property that payments are put towards the lowest interest portion of the balance first.

So, say you have 4000$ in debt on your card, at the low low rate of 0.1%/month.

All other debt on the card goes at a 2%/month rate.

You spend 100$ on your new card. You then put 100$ on your card to pay off your expendature.

Balance on card is (same month) :
3900$ in 0.1%/month interest
100$ in 2%/month interest.

If you had a 2nd card, you could have put the 100$ purchase on that, then payed off the 100$ on your 2nd card, and ended up with:
4000$ in 0.1%/month interest
0$ in 2% interest
a much better situation.

Of course, after the first month, you will have:
4000$ in 0.1%/month interest
40$ in 2%/month interest
on your new card. And you can't pay off the 40$/month in high-interest debt, until you pay off the entire 4000$ in low-interest debt.

Whew.

It is possible your credit card isn't that sneaky, but why wouldn't they be? =)

(the above is based off my reading the small print on some non-American credit card agreements)

And remember, read the fine print. Salespeople's jobs are to sell to you, not act as legal advice.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

Force 10

Nope, it's all the same to them how they get paid. They're in it for the money. PERIOD.

saltfish

I guess the lower 'payoff' amount is only when you've not paid your bills for months.. ..they will settle with a smaller amount than the balance? Though, I've never been late on my bills.. .I wouldn't know.

-SF

enough

I just did a balance transfer and am psyched how much money it is going to save, but I have a few tips for ya. In my earlier life I used to be a supervisor at a credit card bank so I have a pretty good bead on what to look out for (thus the long post heh)

As mentioned, verify there are no fees for the transfer.

Never, ever be late on a payment after the transfer or you might risk defaulting to a higher variable rate and lose the 0% intro rate and end up paying 20% or something. I think setting up an auto-pay out of your checking account and then religiously checking that the payment goes through properly each month is the way to go.

The order payments are applied to the balance is key. If you already have a pretty high balance at a higher rate on the 0% balance and then transfer onto it, the transfer isn't as good of a deal for you. That's because your payments each month will be going to pay off your promotional 0% balance first and not even touch the purchase balance you racked up that is charging a higher interest rate. But it sounds like this is a new card to you, so probably not an issue for you, but still good info. Know that credit card companies will always apply your payment to the portion of your balance with the lowest APR/interest rate first.

Make sure you don't transfer the full amount of your credit limit. You need to leave a cushion so you don't go over-limit when finance charges are added. Over-limit fees are often over thirty bucks these days, avoid them. Also don't transfer any charges you are disputing, like if a business over-charged your card for a rental or something. You will lose all dispute rights once you transfer the balance, because to the law you have paid the disputed balance.

On your other cards make sure you verify that the transfer payment hits, but still plan on making your normal payment for the month. It can take over 10 days for the transfer payment to arrive and it would suck to get a late on your old credit card account because you thought your balance transfer would take care of it.

Also on your other cards, even if you transfered their full current balance it will not pay off the card, i.e. you will still owe money due to the finance charges/APR that already accrued on the balance before you transfered it. So make sure you follow up the next month and pay off the cards completely after your account cycles. Alternatively if you are feeling brave you can call customer service and ask for a payoff balance and send the check today.

And make sure if either of your old cards charges an annual fee that you demand that they let you have the card for free or cancel the card because you don't want some annual fee to sneak past you and then cause a late pay history over a stupid annual fee.

Yet more on your old cards... on leaving them open or closed I would say close one of the two so that you end up with two major credit cards total (VISA, MC, AMEX, Discover). Two credit cards is enough to build credit, and having worked at a bank I can tell you that having lots of open credit cards can actually hurt too. If you have a 0 balance on all your cards, but say have something like $30k of available credit between all of your cards I might not be too excited about loaning your $30k for a car if you were borderline since I don't know if you will run out and max out your cards after you get the car loan. It's almost to a banker as if you owe the money even if you don't on your available credit.

But not to diss having some credit cards, say like two. You still need to build history, but keep in mind going crazy with lots of credit cards is a bad idea. Also, having an account open for a long time can have benefits on your credit as it makes you look stable and often the credit card company will score your account higher if its been opened longer so things like requests for a lower APR and higher credit limits are easier to get. Of course if the bank for your older credit card sucks then ditch it LOL.

Finally, don't get the idea that using endless balance transfers in a cycle of opening new credit card after new card is a good idea for long-term financial health. There are people who literally try to get a new card every 6 months endlessly to get a balance transfer deal and then ditch the account once the deal ends and open a new one somewhere else. Every time you apply for credit it registers on your credit score as a negative in a way. It's called an inquiry and basically when someone is constantly applying for credit it can tend to look desperate to a bank, especially if they have a lot of inquiries but don't make a lot of money. But even people who make more can be negatively impacted if they try to open too many credit cards when they try to refinance something down the road.

Hope this wasn't TMI, heh, but having seen people get burned I felt compelled to share. Best of luck, and congrats on at least having good enough credit to get the offer!