Credit advise

[fabiodriven]

Get ready for a snoozefest, I apologize in advance for such a boring thread.

I was talking with someone yesterday about transferring and consolidating some debt I have in order to get a 0% interest rate. My debt isn't killing me, I'm not overwhelmed, but I'm chipping away slower than I had in the past. After I sell my home all my debt will be wiped out, but for the time being, I feel like it would be silly for me not to take advantage of a 0% interest rate if it is indeed as easy to achieve as my friend led me to believe.

So the friend told me to basically "Just go on CreditKarma.com and find a 0% card and transfer your debt there." So I went to that site and poked around, but there are so many cards to choose from, and I really don't understand how it works. I saw cards that offered 21 months 0% on balance transfers, but when I read the find print it said something about adjustable APR's after four months or something like that. Soo... Is it 0% for 21 months or is something going to change after four months? I don't understand.

I'm guessing there are other people here who have done balance transfers and combined debt before. I have one credit card as well as a Care Credit card that I got to have some dental work done about two years ago. That was 0% but is no longer. I wanted to lump these two onto one card at 0% and then pay it off this coming spring or summer ideally, assuming I end up selling the house as I plan to.

If anyone has advise, thanks!

[Dirtcrasher]

Here's the deal.

Lets say you owe 10K. You may be paying 150$ a month in interest alone.

So, you get an offer to combine all your balances from multiple cards, or just the one you owe the most on.

They will charge you NO Interest for 18 to 24 months depending on the offer.

They also ALWAYS charge a fee for this service, usually 3 or 4%.

So, on 10K, that's 300$ or 400$ depending on offer.

You are paying that much in interest in 3 months, so it's worth transferring.

Once the 18 or 24 months are up, now you pay the interest rate THEY offered you. Some cards are 14.99%, some are more and some are less.

You just have to weigh your options....

[Dirtcrasher]

Oh, also, when you transfer your balance, again lets say 10K, your normal payment might be 175$ a month, and 150$ goes to interest alone!!

So your PRINCIPAL balance only drops TWENTY FIVE BUCKS!! If you pay the minimum.

Once you transfer that huge debt, again 10K, your new payments may be as high as 3 - 4 - 500$ a month. It's because they aren't making any money off of you with the 0% for 18-24 months.

Lets say 400$ a month at 18 months =7200$ OR at or 400$ a month at 24 months = 9600$.

In other words, if you keep up with your payment, you will be paid in full once the 18 - 24 months is up.

If not PIF at the end, the interest rate is now UP TO THEM depending on the offer, always read the fine print!!

Hope that helps you Johnny!!

P.S. This is what can make a person INSANE!! If a person can't handle more than the minimum, it can take 12 years to pay off 6000$. That's why some guys go NUTS when the wife/gf keeps charging and says "it's only 152$ a month jerk!!"... You get that...

[fabiodriven]

Thanks so much Steve. So at the end of the 18-24 months when it comes time to start paying interest, can you just transfer to another 0% and keep going? I was told that you can do this, but I'd like to confirm that.

[El Camexican]

I can’t add much to what D.C. said, but I will emphasize the fine print part. I’ve heard of some of these “deals” saddeling people with unpayable debt when the “free” or 0% periods expire.

I was just talking with a buddy about credit today. Three mutual friends of ours who at a glance would appear to be living fairly good lifestyles are all teetering on bankruptcy. All over 50, married with kids and working. Never really did anything stupid, just always had to have stuff before they could afford it and like to swipe the plastic. As house values went up second mortgages made the party even better.

When in doubt always remember that if something is too good to be true, it probably is.

[tripledog]

Thanks so much Steve. So at the end of the 18-24 months when it comes time to start paying interest, can you just transfer to another 0% and keep going? I was told that you can do this, but I'd like to confirm that.

My brother did that for years. He called it "kiting". His second ex wife (he is a bit of slow learner) left him saddled with over 50 grand of credit card debt. He was able to pay off his credit cards in less than 5 years.

[sledcrazyinCT]

Most important thing to remember is the zero percent is ONLY good for a year maybe 18 months.....BUT the company keeps track of interest charged from DAY ONE if not paid off IN FULL

Credit card companies love people who take on debt using their 0% introductory offers because they destroy you when you do not pay off your debt before the end date. Credit card companies fully expect people to carry their debt past the introductory date and then rape them for years to come....Unfortunately many people are irresponsible and end up like this...


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But because you will have equity when you close on your house leverage away on the zero percent - take full advantage of other peoples' capital!

Most cards charge 4 or 5% transaction fee on any transfers, but their are some that will hook you up with a 3% transfer fee.

Like crasher mentioned good to take advantage of lower interest rates if you can find good transfer deals.

Chase AKA JP Morgan offers good 0% deals with a Freedom Card. Discover is nothing special as far as offers.

Capital One and CitiCards are good to pick up since they offer 1.5 -2% cash back which does adds up....depending on credit rating there are 6 or so other companies that will currently offer 0% for the next 12 months, but if you do not have one of the three I mentioned go look them up and see what you can score.

[Dirtcrasher]

Thanks so much Steve. So at the end of the 18-24 months when it comes time to start paying interest, can you just transfer to another 0% and keep going? I was told that you can do this, but I'd like to confirm that.

Your welcome. Yes, when your done after that time period, you can roll it into another credit card offer.

I must get 6 offers a month!! Your monthly payment at least doubles, put for that time period, it's ALL principal! So after the time period, you may be close to 75% paid off.

They don't make money with the interest, so they just increase the monthly amount. But again, it's now ALL principal - well, plus the fee too.

And I think El was just touching on some of the hidden details. There are some cards that say "no interest for 2 years", "then 39.99% variable rate plus prime"....

So, you can get burned, but plenty of them are legit good deals. Try to avoid a variable rate if at all possible.

Anyhow, most of them are 0% for 18 months, 4% transfer fee, and then after that 18 months, 14.99% interest on your balance after that time period.

Hope that makes sense..

[sledcrazyinCT]

Make sure if you do a transfer that there are no recurring payments billed to that card because one additional transaction made to that 0% card will result in interest charges if you do not pay off your entire balance

[atc007]

I have nothing of value to say... But you can't turn the radio on in my area without hearing a commercial about NOT paying your credit card debt.. Do NOT let the credit card companies tell you that you have to pay them off, you don't! No bankruptcy or credit blemish,,, I have no clue what program they're pushing,but I hear it every time we're in the vehicle.

[Arky-X]

Make sure if you do a transfer that there are no recurring payments billed to that card because one additional transaction made to that 0% card will result in interest charges if you do not pay off your entire balance

I think what you are saying is don't make any other transactions using that card, right?

I remember looking into a 0% transfer for a large purchase and there was something about how payments and interest are applied for the 0% transfer and any charges after that. What I learned was, don't make any more charges on that card. If you have to use a cc for a purchase, use another that you know you can pay off at the end of the month.

[fabiodriven]

I think what you are saying is don't make any other transactions using that card, right?

I remember looking into a 0% transfer for a large purchase and there was something about how payments and interest are applied for the 0% transfer and any charges after that. What I learned was, don't make any more charges on that card. If you have to use a cc for a purchase, use another that you know you can pay off at the end of the month.

This is exactly why I started this thread, I had a lot of question that led to new questions. OK, so once I do this, I can forget about using my credit card is what you're saying? That actually makes a lot of sense and I was thinking about this very thing last night. I asked myself if this would be the case, if I would have to stop using my card once I did the transfer. In my head, I thought it was likely that I wouldn't be able to use my cards anymore. Thanks a lot for bringing this up. Because of this, and because I'll be able to pay these cards off relatively "soon", it might behoove me to stand by on the transfer for now.

[Shep1970]

John, I don’t know who you have your auto/credit cards/house insurance through but if your not using USAA bank you should. It’s for active/inactive service members and spouse also family. I’ve been using usaa since well forever (through my dad). Great company- someone always answers the phone (not a robot).

Auto ins- for me/wife/ and a new driver(aj) it’s under half the cost of any other co.
The inlaws- wife’s dad (marine)(was) just recently joined/swapped everything over and he couldn’t believe the savings he got.
I highly recommend it (if your not a member already)
It’ll save u some dough.
I’ve got/had everything through them, a nice no hassle credit card too.
Have done loans through them too.
They offer everything u could need
Shep

[fabiodriven]

John, I don’t know who you have your auto/credit cards/house insurance through but if your not using USAA bank you should. It’s for active/inactive service members and spouse also family. I’ve been using usaa since well forever (through my dad). Great company- someone always answers the phone (not a robot).

Auto ins- for me/wife/ and a new driver(aj) it’s under half the cost of any other co.
The inlaws- wife’s dad (marine)(was) just recently joined/swapped everything over and he couldn’t believe the savings he got.
I highly recommend it (if your not a member already)
It’ll save u some dough.
I’ve got/had everything through them, a nice no hassle credit card too.
Have done loans through them too.
They offer everything u could need
Shep

Boy oh boy, lol. Funny how one post can end up changing my day so drastically. I have never used USAA, but it seemed like such a good idea after you had suggested it. I started looking into it and had a lot of problems with the site, apparently because I had joined USAA over ten years ago and never used it. Once I got that squared away, I began poking around. I'm waiting on a quote for my truck but they gave me a quote for homeowner's insurance instantly. Unfortunately that quote meant nothing to me because I don't know what I'm paying already. I'm pretty happy with the bank I use so I don't know if I should be looking into changing all that. Lol, now I don't know what to do. Being a veteran it seems like I should have everything with USAA but it's just making my head hurt right now. Thanks a lot for bringing it up though Shep. If I can get my head on straight today then I might be able to get something accomplished with this.

[fabiodriven]

How would I go about adding all these things up and getting just two numbers to compare? Current bank and insurance vs USAA? That's what I need to see. I'd love to save some money but if it's going to piss me off in the process I might as well just keep paying whoever I already am.

[Shep1970]

Just call them- someone will walk u through it- the main branch is in Texas so it’s usually their time zone u go by. If that helps.
Good people though they (speak English):lol:

Shep

[Arky-X]

This is exactly why I started this thread, I had a lot of question that led to new questions. OK, so once I do this, I can forget about using my credit card is what you're saying? That actually makes a lot of sense and I was thinking about this very thing last night. I asked myself if this would be the case, if I would have to stop using my card once I did the transfer. In my head, I thought it was likely that I wouldn't be able to use my cards anymore. Thanks a lot for bringing this up. Because of this, and because I'll be able to pay these cards off relatively "soon", it might behoove me to stand by on the transfer for now.

I don't remember the details on the one I was looking into but I think it was like this;
https://www.creditcards.com/credit-card-news/purchase-zero-percent-balance-transfer-1582.php
It is an older (2013) question answered but it may still apply.

The federal Credit Card Accountability Responsibility and Disclosure Act requires that card issuers allocate payments in excess of the minimum payment to the balance with the highest interest rate.

In other words, you would need to make at least the minimum payment plus the additional charges you made in that billing cycle to avoid accruing interest on the new charge.

All it takes is discipline......that and cash.

[oldskool83]

There are a few sways to pat this off. There are online loans from lending tree or prosper.com That's basically like asking me for say $1000 to pay a bill then you pay me back monthly or weekly at a specified rate. No banks. Just me reporting a 1099 per my customers. My best friend get a new card every few months and transfers his debt over so his balance is always 0 but still pays his minimum or add 25-50 onto whatever his bill is at the time.

The best advise would come from a true debt consolidation or investment person, in which I am not.

ultimately if its CC debt the end goal is to abolish it. if you'd like more information on how my friend has been deferring his old debt to a new card so it does not keep building up I can ask him. Its been going on for 3 years after a bankruptcy.

[hoosierlogger]

Transferring the credit card balance to another credit card with 0% interest is an ok option if you are self disciplined enough to pay it off. I think you probably are self aware enough to do that. The trouble is that most people that do this just stop there because they think they have accomplished something. Same thing with debt consolidation. All you are doing there is putting all of your smaller debts into one big debt and stretching out the payments. The best way to get rid of debt is to pay it off and never use credit cards again. Look up "Dave Ramsey Baby steps". You wont like it, but its the best way out there. The wife and I started it over 7 years ago. We paid off $156,000 of credit cards, student, loans, car loans, house, and other stupid trailprotrailprotrailprotrailpro in 5 years. Because we dont owe anybody anything any more or pay interest on everything we can save money like crazy.

[sledcrazyinCT]

AAWWWWW just RE - FRY a 100% of what the house is worth .........and move to Thailand .........you`ll get some tail tonight for sure ...........tell us how you do !! ..........reverse mortgage sucks cause it`s only 60% .........sell this year ........buy after the bottom drops out ........it won`t be long............Oh Trumpy dump is so good for the economy .........i`d want to ripp his hair out .........he did a terrific job tearing my hair out !!
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[Dirtcrasher]

There's plenty of people out there that have no problem owing 50K in credit card debt, and it's the worst debt you can have.

Usually nothing left to sell to pay it off, just clothes, vacations and everyday bullshit.

It adds up fast!!

[86T3]

I flipped credit cards for years to pay down a large debt I had gotten into when I was starting my business. I never experienced a card that wpuld keep track of the accrued interest that wasn't payed for the term, i thought that was more for the furniture dealers who say "No payments for 8 months". IMO, this is a very good way to pay off debt for a couple reasons. If you find a card like Bank of America that has a good rewards program you can get free stuff or money with the your points. 2, credit card debt is insecure debt. That means if you default (No man plans to default but you should think of it as a protection) they can't come after your house, truck, tax returns. All they can legally do is harass you. Getting a loan through a bank to refinance will probably require some collateral. And 3rd, when you're done your credit score will be insanely high. I payed off something like 30k on 4 or 5 flips and now I have an 815 credit score. It's nuts.

I have no problem getting free loans from these kinds of companies that prey on stupid people. In fact, i kind of enjoyed it. I payed my credit car debt off a couple years ago and then started chilling at my student loan. I was pretty far into it so it wasn't worth flipping, i actually payed it off a month ago. All I have is a mortgage now, it's a good feeling to be somewhat in control again. Good luck, if you have any questions just shoot me a text

[fabiodriven]

So much great advice from everyone, thanks to you all. Ideally if my home sells when I'm planning on it selling, I'll wipe out all of my debt in one fell swoop. That's soon enough that I'm just riding it out for the moment.