Need some advice from FV experts..

[mama2James]

Ok, here's my dilemma..

We currently have a line of credit account on which we consolidated our credit cards. The balance is 8893.29 as of our last statement. The interest rate is currently 10.74% and the monthly payment is $427.00

I have another credit card that is offering a balance transfer up to my limit which is $5,000. There is no balance on that card. The interest rate would be 0.99% until June 2009 and 7.99% thereafter for the life of the balance. There is a 3% one-time transaction fee for a balance transfer. That equals $266.79.

So what would you do? Transfer $5000 of the balance to the credit card and have the bank recalculate the monthly payment on the remaining $3,893.29, knowing that the amortization schedule will revert back to a "new loan" with the upfront interest. Or ask the card company to up my limit to cover a balance transfer for the entire amount? Or do nothing new at this time?

My motive is to pay less in interest overall. I would continue to make the same total monthly payment that I currently do on the debt.

Are there online calculators that will help me figure out the cold, hard facts about how each action would affect the bottom line?

[MomToTwoBoys]

Ok, here's my dilemma..

We currently have a line of credit account on which we consolidated our credit cards. The balance is 8893.29 as of our last statement. The interest rate is currently 10.74% and the monthly payment is $427.00

I have another credit card that is offering a balance transfer up to my limit which is $5,000. There is no balance on that card. The interest rate would be 0.99% until June 2009 and 7.99% thereafter for the life of the balance. There is a 3% one-time transaction fee for a balance transfer. That equals $266.79.

So what would you do? Transfer $5000 of the balance to the credit card and have the bank recalculate the monthly payment on the remaining $3,893.29, knowing that the amortization schedule will revert back to a "new loan" with the upfront interest. Or ask the card company to up my limit to cover a balance transfer for the entire amount? Or do nothing new at this time?

My motive is to pay less in interest overall. I would continue to make the same total monthly payment that I currently do on the debt.

Are there online calculators that will help me figure out the cold, hard facts about how each action would affect the bottom line?

You could sit down and do the math to figure out how much interest you'd be paying on the initial loan with minimum payments until the loan is paid in full. You can also do the split of $5000 to the loan with 0.99 interest rate until June and then up to 7.99%, then do the math on the remaining balance in the loan that has the 10.74% interest rate with the $427 minimum payment.

$8893.29 x 10.74% = $955.14 annual interest paid on the loan
$955.14 divided by 12 = $79.60 interest paid on the first payment

Balance Payment Remaining Balance Interest

$8893.29 $427.00 $8466.29 $79.60

Then take the interest paid, add it to the remaining balance, and that's your balance for the next month's payment. If your $427 is a fixed payment, it'll be easier to figure out the numbers from there.

If you were to transfer the $5000 to a 0.99% rate line of credit until June 2009, you would need to figure out the $5000 times the 0.99% interest rate and then do the math like I did above. Then, take the other amount that's left over and do the formula for that one too.

http://financialplan.about.com/gi/dy.../snowball.aspx

This might be able to help you a bit more. If my math was off, forgive me!

Check out this website too:

http://www.locumsgroup.com.au/LGMF05...alculated.aspx

Your loan balance may fluctuate during the month the amount of interest charged each month can vary. The formula used by us is:


Balance x interest rate x numbers of days in the current month, divide that whole number by 365 days in the year.