How shoud I pay 0% credit cards?

**Squirt** · 11-21-2007, 09:41 AM

Okay, I now have what's left of my credit card debt on two 0% cards. I have also opened an HSBC savings account at 4.5% interest. It seems to me that the wisest thing would be to pay minimum payments on these cards while socking away all my extra money into the savings account. But I'm scared, and I don't know why.

I know one card is good for the next 11 months, and the other... I've had it for over a year, and it's still at 0%. I don't know how long that apr is good for.

These cards offered no-fee balance transfers, but they are from the same bank and are the only no-fee's I've seen. I doubt I'll get another offer like that when they run out.

**LexTysMommy** · 11-21-2007, 09:49 AM

First I would call to find out how long the 0% apr is on the one card. Then if you feel that you can pay off the one card in 11 months I would say pay minimum on that, and if need be you could always pull from savings to pay in 11 months if you haven't paid it yet.

Also if the other credit card that you dont know when the 0% apr ends has room left on it, have you thought of transferring the car payment to that? That is if it is 0% apr for years. Ya kno?

**Nightshade** · 11-21-2007, 12:12 PM

Sorry to say 0% cards are a trap for 99.9% of all who use them. Unless
you pay the card off FIRST then you will never come out ahead.

Paying off a credit card should always be the FIRST priority no matter
what lie they tell you for interest rate. Minimum payments are for the
very desperate or the foolish in any case.

One mis-step and your 0% can become 25>30% overnight.

You say you are nervous? Well, you have every right to be. You have
successfully backed yourself into a very bad debt corner. Congratulations.

**mikandmari** · 11-21-2007, 12:27 PM

Ouch. That response from Nightshade was unnecessary and uncalled for.

Obviously, if you have 0% credit cards, you have excellent credit. I work for a credit card bank, we don't hand out 0% offers for a year or more to many customers.

Make sure they are paid on time (I pay online to ensure this). And make sure you pay them off before the APR increases. If you're disciplined, it shouldn't be a problem... and with good credit you probably are. You could put the $$$ in savings at 4.5%, and pull it out to pay off this balance later.

I just received this same offer, 1 year at 0%, thru Chase Bank. Chase and Citibank are no longer raising interest rates for any reason other than your performance with their own company, so you can be sure that all of the 'better' lenders will follow suit. (The truth is, they are only doing this to keep the gov't. off their backs.)

**Jenna** · 11-21-2007, 12:38 PM

CC#1@0%: $1,371
CC#2@0%: $2,185
Vehicle@5.9%: $21,558

Change counted: $82.50
EF@4.5%: $100

How much disposable income do you have each month to pay on the cards and the car note, or to save? What does your retirement savings look like? Do you own a home or have children?

**Squirt** · 11-21-2007, 01:51 PM

LexTysMommy: I agree that stuffing extra money into the savings and then paying off the rest of the credit card would be the most efficient thing to do. It would take the discipline to pay attention and not go spend my savings. I think I trust myself 90% to do this correctly.

And yes, I do need to find out how much time is left on the older card. I think the limits on these cards are around $3000, so I wouldn't be able to put much of the truck payment on them.

Nightshade: You are correct, were I to make a late payment with some banks, my percentage rate would go to the default rate. Not with HSBC. I had automatic payments set up through their website, which expired after a year (?? I know...) I had a late payment, but they did not change my APR. I have changed my automatic payment method so this does not happen again. Also, I know credit card debt is bad debt-- That's why I'm here. I am changing my life.

MikeandMari: Yes, I do have excellent credit. I constantly receive 0% offers in the mail which allows me to choose between them. I didn't even have to pay a transfer fee to get these away from my accounts which charged interest.

I would very much like to put my extra money into savings and pay off the balance before the interest rate changes. I was looking to see if people thought this was a wise idea or not. I think that on my own, I wouldn't do this because I don't like having the debt hanging over my head.

Jenna: My "budget" up until lately has consisted of knowing how much money I have after I pay my bills, along with guesstimating how much I should set aside for food and gas. After I received my last promotion/raise, I realized that I have been spending my "extra" money for years and it was time to find out exactly where all of it was going. I have been keeping a budget spreadsheet for only one month (this month) so I don't know how accurate my data is.

My regular expenses are $881. This is truck, phone, dish, insurance, and rent. That's the bare bones, unless I got rid of that $6 dish subscription...

After that, I have $1413 for food, gas, etc. It looks like food, since I've changed my habits there, will be from $100 to $160, and gas $120 minimum. That leaves $1153. Obviously, some of that needs is allocated to irregular expenses, which I will put in my savings account. I'm having difficulty pinpointing how much to allocate those irregular things like medical, unexpected horse care, clothes, etc. I took some guesses and will be monitoring it. My estimation right now is that I could put $300-500 a month towards my debt. Does that look right?

I currently have no retirement. Our company does no matching with the 401k, so I think I will get a Roth IRA (good idea, or not?) I would like to put $200 and month towards this.

I do not own a home and do not have children. I will not be having children. I will have a home eventually. I do own 1/2 a horse- there is no board/feed fee, only 1/2 of hoof trimmings and veterinary care when we do not barter that with our vet/friend.

**sdrjeolsen** · 11-21-2007, 01:54 PM

Originally Posted by mikandmari

Ouch. That response from Nightshade was unnecessary and uncalled for.

Agreed.

We frequently get 0% offers. Used to be with no fees, now usually 3 or 4% $90 max. When there were no fees, I regularly took out money and deposited it in our savings. Always made minimum pmts and never missed, pd it back before the rate increased. Made a bit of interest off the CC company that way. Hey its extra money for just the task of keeping track of a due date. It has worked well for us.

In response to your question, You obviously have good credit and you already have the accounts open, so I say take full advantage. I agree with pp call the bank and find out when the last billing cycle before it adjusts is. Then plan accordingly. I'd sock the money into my savings and then when the 11 months is over pay the bal in full if possible. Just make sure you don't miss a payment or your rate will most likely ajdust up.

**Jenna** · 11-21-2007, 03:26 PM

Did you determine how much longer the second c/c will continue to have the 0% APR?

What are the minimum payments on the c/c's? the truck?

For the c/c that has 11 months @ 0%, I'd divide the total owed by 10 and pay off in 10 monthly installments - so it'll be PIF before the rate goes up.

How soon are you looking to buy a house?

I would have an efund of around $1k to cover emergencies since you don't have kids or a house.

I would also put some into a retirement account this year. You have until April to fully fund an '07 ROTH.

**became4347** · 11-21-2007, 10:52 PM

(Yeah, Nightshade, get a grip.)

Anyway, first I would call the other one and find out when the 0% ends. I would focus on paying off one, probably the one with the shorter 0% deal. You really don't have that much on both of your cards. I would hold off on the savings for right now. Tackle the card with the shorter deal with as much payment as you can each month while paying the other with the minimum ON TIME. When that one you're really focusing on is paid off, then do the same for the other one. How long will it take with ~$500/month? Around 7 months? After that you can really concentrate on getting your savings back up. Also, I would NOT put my car loan (nor any of the payments) on either credit card even if you could. Just keep paying that vehicle loan ON TIME as usual.

You have not put yourself in a corner. You are not a victim. You have all the power at this point, and it sounds to me like you have a very level head. You can do it. Heck, you ARE doing it. Keep it up and get those CCs paid off! Then you can get on with savings and retirement, etc., etc. But do whatever feels right to you and makes you feel safe and powerful.

PS-I sure would like to see a pix of you riding a 1/2 horse! LOL!

**Cricket1** · 11-21-2007, 11:21 PM

Hey--if I'm making more in interest than I'm paying...I'm taking my time paying that off. There is nothing wrong with 0%.

My auto loan is 0% and I could pay it in full, but I won't because I'm making more interest in investments. I will take my time paying of the van.

You'll be fine--just stay on top of the dates that the 0% changes (if it does).

**Michelle** · 11-27-2007, 03:49 PM

Originally Posted by mikandmari

Ouch. That response from Nightshade was unnecessary and uncalled for.

I'll say. Maybe if we ignore him he'll leave like he said he would last week.

**McD** · 11-27-2007, 04:01 PM

Squirt---I want to applaud you on your grace and class for handling an appalling comment.

I think if you have the self-discipline to make the minimums while saving to pay a lump payment towards the end adn in the meantime earn interest---GO FOR IT!

**PAVallygrl** · 11-27-2007, 04:08 PM

and the other... I've had it for over a year, and it's still at 0%. I don't know how long that apr is good for.

Be careful with that one. If you've had it for over a year or close to you may want to call them and find out when that expires. 0% cards if not paid back by the expiration date can charge you top interest and make it all retroactive.

If that one is coming due soon I would concentrate on paying that one off first.

As far as the other one, this is what I've done, but it require a lot of disiplin.

Let's say the amount due is $1,200. That would be $100 a month. So the CC company sends you a bill for let's say $25 minimum. Pay that minimum on time and put the remaining $75 into an ING or Emigrant Direct Account and LEAVE IT THERE. Do not touch it for any reason. when the year is just about up after doing this every month you should have got some interest on the balance in the ING/EmigrantDirect Account. Transfer what is still owed on the 0% card from the ING/EmigrantDirect account back into you checking account and send in the final payment. Keep the remaining interest in your ING/EmigrantDirect Account. As someone else said, it's nice getting paid the interest for just keeping track of a due date. But one must be very disiplined for this to work. I did it last year with a 0% interest card and made about $100 profit off the deal. Pretty Sweet.

**Squirt** · 11-27-2007, 04:49 PM

Thank you for all of your advice. I am going to make the minimum payments on the new balance transfer, put my extra money in savings, and set a reminder on my calendar so I will not forget when the remainder of the balance is due.

As for the other card, yes I have been putting off calling them. I hate waiting on the phone and I have trouble understanding foreign accents. These are only excuses. I'll check back in when I've done it so I can be accountable.

Thanks again for being so kind and supportive.

**baxjul** · 11-27-2007, 05:17 PM

Apparently he likes to come here, and get the "little fluff balls" all riled up. If he is as old as he says, then he would have at least a couple of manners, but it doesn't sound like that is the case. I suggest that we all ignore him, and don't let him get to us.

Squirt - no advice, just wanted to commend you on trying to get out of debt!!!!