Wednesday, February 17, 2010


This is what I have been waiting for!   A balance transfer offer!!!!

CC4, which I reactivated at the holiday, has the lowest interest rate of any of my cards.  9.24% (and until July, it is only 1.2% for purchases).  They haven't had a balance transfer offer in awhile, but alas, there is one available until March 13.

Now before I got down this path, I need to do the math (I am a poet!).

The balance transfer offer is for 9.99% (plus a 5% fee) good for 6 months.  Then back to the regular rate.  While the balance transfer rate is actually higher than my CC rate (9.24%), it is WAY lower than the 19.24% we pay on CC1.  As of today, I have just over $7,000 in available credit.  And while I know it is bad to "max out" a card, wouldn't the savings justify it, since the balance will drop much more quickly?

So let's say we choose to transfer $6000.  With the 5% fee, we are actually at $6300.  Still below the limit, so we are ok there.

Here is the interesting thing.  There is almost no advantage.  It will take me the same amount of time to pay it back.  There is a slight interest break, but it is less than $1000 when you account for the 5% transfer fee. 

I thought it was because I am only able to transfer about a third of the high interest debt.  So I figured out what it the numbers would be assuming I was able to transfer the whole balance.  I saved about 4 month over just transferring the third.

I keep trying different versions, and none of them are really save that much money.  Is the bottom line it just isn't a good move? Am I missing something???

1 comment:

  1. You might try calling and asking for a fee-less transfer, though be careful! And make sure they really do it.
    I don't think you're missing anything. Though I'm no mathematician. Or poet. ;)