Balance transfer question

**MomToTwoBoys** · 07-19-2008, 08:44 PM

DH was looking at doing a "balance transfer" of sorts from one CC to another. Here's our current situation:

The VISA is a 19.75% APR card with a balance of 5904/6000.

The Mastercard is a 11.4% APR card with a balance of 2100/5500.

DH wants to take 3400 off of the Mastercard and deposit it onto the VISA to lower the balance. He figures we'll save on interest and be able to put that extra amount towards any repayments.

Thoughts?

**Frugal Nurse** · 07-19-2008, 09:05 PM

NOOOOOOOOOOOOOOOOOOO!!
And that was all I was going to write.

I thought better of it.
Look at what your doing.
You'll be MAXING out the MC. STOP MAXING out CC's!!
It's not good for you.
You just maxed out the $6000 one (I assume) and just started paying it (as seen by the $5904 balance)

You'll be saving $100 at best (totally rough estimate). But it will cost you to make the cash transfer.

And you would have maxed out the lower rate card. You will only have the higher one for the 'true emergencies' (Like there's a death in the family and you need to fly home- that's the only time it should be used.)

I am assuming that it would max it out - otherwise you would not have said $3400 transfer as opposed to a $5904 transfer. If you made a $5904 transer to PAY OFF the CC, then you're saving substantial... b/c you'll FREEZE the Visa. Right?

Credit histories reflect the 'maxed out' stuff too.

Just snowball ALL you're extra cash and pay down the higher interest CC and call it a LESSON well learned.

If you transfer partial balance you will still have TWO payments. No matter what.

I just thought of something. Is REALLY a balance transfer? Or is a cash advance?

My first reaction is NO. But maybe there's some more information that was not given.

**Wendy99** · 07-20-2008, 12:17 AM

Good question, althought I'm not sure what the answer is ... frugal nurse has some good points .. i'll be checking back too , to see what other say - very good question

**IntlMom** · 07-20-2008, 12:31 AM

Ouchie Momma!!! Those are some seriously painful interest rates!!!!
19.75?!?! I can see how it'd be tempting to want to move some of that money around....but really, FN has some great thoughts....

**Wendy99** · 07-20-2008, 01:31 AM

was just thinking about this again ... sounds like our situation awhile back .... we had dh credit card at up around $7,000 (approx) and we transferred it over to our line of credit (much much lower rate) ... it didnt help us .. we just ran the credit card up again ... we ended up refinancing (which is really the same thing i guess as transferring it to the line of credit) .. then we rang them both up again & refinanced again .... just a cycle DONT DO IT !!! TAKE RESPONSIBILITY & GET THEM PAID OFF ... it sounds good at the time, but it's too tempting .. listen to frugal nurse

**Greebo** · 07-20-2008, 06:39 AM

Could you please explain DH's elaborate plan to borrow your way out of debt again? I'm not seeing how moving debt around solves the problem.

Seriously - you're only moving debt around. Your annual savings, *IF* MC leaves the rates alone, will amount to $284, if you never use the cards again.

Is saving $23.70 a month going to make that big of a difference in your snowball? No. Selling stuff, getting a 2nd job, etc., will.

HOWEVER - going against DR here a bit...

*IF* you CLOSE the Visa after you make the balance transfer, and snowball the Visa first instead of the MC, then I'll approve of the plan. But ONLY if you close the visa, cause if you don't, you know what's going to happen with it, right? What Wendy said. I've done it too. It doesn't work unless you eliminate the behavior at the same time.

**mombottoo** · 07-20-2008, 12:27 PM

Guess I'll be the odd one out here and give you my opinion...for what it is worth

!

If you are transferring using a no transfer fee option and the amount you are transferring is going to be charged less interest for the life of the transfer than the 11.4% than I'd say do it....but, (there is always a but isn't there?) immediately cut up the cards and close the account for the VISA.

Many time cc companies do a low rate/no fee transfer for the life of the transfer...if your cc company is giving you this option then do it! If they aren't then stick with paying them off as fast as you can and I'd start with the higher rate card.

**itlw8** · 07-25-2008, 11:16 AM

have you tried calling and asking for a reduction in the interest rate. if you have a good history of no late pays they will often lower it to keep your business.

We have transferred and it worked for us but I did it on a new 0% card for 15 months and it had no transfer fee and while I did not cancel the old card we put it away and do not use it.

one time I transferred to a very low fee for the life of the amount BUT you can not put anything on the account or it will be paid off last at the higher rate...

big problem is as soon as you do anything the old card will send you checks for a low temp rate.. DISTROY them or you will be in even more trouble.

for you unless you are offered a 0% rate for a long time I agree leave it alone and pay them off as fast as you can. As you pay down the balance a better solution may be offered but please call and ask for a lower rate you never know ... so what if they say no they may say yes