save or pay off card

[mercuryguy]

Hi,
I have a 0% credit card, the 0% expires in june and i just got my tax refund($5,300), should I wait until june to pay the credit card or put that money in ING savings ( how much money will it make in ing direct with 4.5% APY in 2 months and how to calculate it).
The interest rate on the card after june is 13.99%

What do you guys think.

Thanks.

[krayziebone33]

I can definitely tell you're new here, even if I didn't see that this was your first post. What is the balance on the card? You don't have to worry about it now since you have the 0% introductory rate; however, if you even think this is your only opportunity to pay the balance before June, then pay the balance. If you think you'll be able to pay it off some other time before June, then put the money into a savings account for now, but go with something better than the 4.5% that ING is running. (ING )

Visit this thread:

http://www.savingadvice.com/forums/i...ngs-rates.html

[mercuryguy]

Originally Posted by krayziebone33

I can definitely tell you're new here, even if I didn't see that this was your first post. What is the balance on the card? You don't have to worry about it now since you have the 0% introductory rate; however, if you even think this is your only opportunity to pay the balance before June, then pay the balance. If you think you'll be able to pay it off some other time before June, then put the money into a savings account for now, but go with something better than the 4.5% that ING is running. (ING )

Visit this thread:

http://www.savingadvice.com/forums/i...ngs-rates.html

Thanks for the reply.
The balance on the card is 13,000. I know I was careless before but now I have got my head straight and trying to get rid of all these balances.
I have 2 big balances on Amex and AAA visa, both totalling to 25,000.
I need to find some 0% BT credit cards with no balance fee to transfer and pay off. I'm afraid my credit score isn't that great.

[poundwise]

Based on all the information you've provided I would say that the best thing would be to pay those funds against card debt. Not necessarily the one you referred to in the first post but against whichever card has (or will have in June) the highest interest.

As you stated that you may have difficulty getting more 0% offers approved, and since you can't do that perpetually anyway, the only thing that makes sense it to attack that debt (in total) starting now.

Best wishes!

[creditcardfree]

You'll probably make just under $40 in two months on $5300.

What are the interest rates on your other cards? How much extra are you paying towards the debt every month?

It is a good idea to be looking for other offers and move the money around while you try to pay these large balances down.

[mercuryguy]

Originally Posted by creditcardfree

You'll probably make just under $40 in two months on $5300.

What are the interest rates on your other cards? How much extra are you paying towards the debt every month?

It is a good idea to be looking for other offers and move the money around while you try to pay these large balances down.

Here is the overview of my debt.
I have 6 credit cards.

1. Amex
Balance on purchases is – 4000 – 15.29% var
Balance on Balance transfer – 8500 – 5.99% fixed
Credit limit – 13,300
( I made the mistake of purchasing after I did the BT, so now my monthly payments are going only towards the BT and not on purchases, it sucks)

2. AAA visa
Balance – 13,000 - 13.99%
Credit limit , 14,400 ( ba*ta*ds reduced it when I tried to increase it online yesterday, it was 15,000 before)

3. Sears card
Zero balance
Credit limit is $400

4. Walmart
Zero balance
Credit limit is $1,400

5. Chase rewards visa
Balance – $1, 200 – 23% var
credit limit - $5,000

6. Bank of America visa
Balance – $3,575 – 0% for 6 months after 18% variable
( did a balance transfer to chase card)
Credit limit - $4,000

I make 50,000 per year, married with a new born. Wife doesn’t work and a stay at home mom.

Thanks.

[Ima saver]

I would pay off cards 5 and 6 now. take those payments and pay them on another credit card each month. Put the cards away and don't use them again.

[disneysteve]

Originally Posted by Ima saver

I would pay off cards 5 and 6 now. take those payments and pay them on another credit card each month. Put the cards away and don't use them again.

I agree. Pay off 5 since it has the highest interest. Pay off 6 because that will be the next highest interest when the 0% expires.

Also, adjust your withholding so that you no longer get such a huge tax refund. You need that money NOW, not next April.

[poundwise]

Originally Posted by disneysteve

I agree. Pay off 5 since it has the highest interest. Pay off 6 because that will be the next highest interest when the 0% expires.

Also, adjust your withholding so that you no longer get such a huge tax refund. You need that money NOW, not next April.

Good posts! (This one quoted and the previous one as well.)

[Ima saver]

Well, he is getting enough back to completely pay off those two cards and have two payments out of his way, plus he can make bigger payments on another card.

[th_tan]

definately pay off your cards 1st, as it should be your priority. You'll pay more in finance charges as well.

[Ima saver]

If he pays off card 5 and 6. he can then attack cards 1 and 2. I think I would throw all extra money on card 2 and pay it off first.

[mercuryguy]

Originally Posted by Ima saver

If he pays off card 5 and 6. he can then attack cards 1 and 2. I think I would throw all extra money on card 2 and pay it off first.

So what do you guys suggest.

I should attack No 2

or

Pay off No 5
and
Pay off No 2, since No 6 is 0% for 6 months.

Thanks.

[disneysteve]

Originally Posted by mercuryguy

Pay off No 5
and
Pay off No 2, since No 6 is 0% for 6 months.

If you do this, are you positive you will have enough money to pay off #6 before the 0% expires? If so, that might not be unreasonable.

[mercuryguy]

Originally Posted by disneysteve

If you do this, are you positive you will have enough money to pay off #6 before the 0% expires? If so, that might not be unreasonable.

No, I won't have enough money to pay off 6, since I also am planning to pay higher payments on No 1.

[disneysteve]

Originally Posted by mercuryguy

No, I won't have enough money to pay off 6, since I also am planning to pay higher payments on No 1.

Then I would pay off #6 since once the 0% expires, that will be your highest rate card. Pay it off before it starts accruing interest.

[PRICEPLUS]

Me I would pay off 5 and 6 and clear them off the chart and then I would go after #2.

The Amex is essentially 2 loans because the 4000 at 15.29 is not going to be touched as you pay off the 8500 at 5.99 fixed. Don't put anymore debt on that card. That is what absolutely killed me the last time my wife went on a spending binge! (That is another story-read my blog)!

The killer is that the 4000 at 15.29 is variable rate. Geez don't make a late payment. I don't know if the 13000 on the AAA is variable but the amount and the interest at the present time makes me say pay it down. Reassess as time goes by!

Compare mortgage rates, home loans, CD rates, auto loans, credit cards, mortgages and more has excellent calculators for you to analyze your credit card payments!

Well that is my take on it for what it is worth. Once you pay off two then attack the last one and get yourself out form under. I did it and so can you! Good Luck!

[cptacek]

I would immediately pay off #5 and #6 because #5 is 23% interest and #6 will be 18%. These are your highest rate cards, and the refund will allow you almost wipe them away (add some other money to them to get them completely paid off), freeing up some of your cash to put towards other debts.

Now, I've had this work sometimes before, sometimes not. I've included a note with my payment to a card similar to your #1, with two different interest rates on the balances, and asked that they apply the payment to the higher percentage. Like I said, sometimes it works, but it usually only works once. I would try to scrape together a pretty big amount and do it once. If they don't apply it to the higher amount, they will at least apply it to the lower amount. If they don't allow you do do it, then concentrate on #2.

The reason I say concentrate on #2 is that if they don't allow you to pay down the higher interest rate on #1, then you have to consider that as one debt. You have $8500 @ 5.99% and $4000 @ 15.29%.

Interest on the $8500 should be about $42.43 per month (Principal * Rate * 1 month / 12 months in a year) or ($8500 * .0599 *1 / 12) = $42.43

Interest on the $4000 should be $50.97 per month ($4000 * .1529 * 1 / 12) = $50.97

So you are paying $93.40 on a debt of $12500. That is an effective interest rate of 8.96% per month. It's not important, so if you want to skip this part, that is fine, but I got this by:
=> Interest = Principal * Rate * 1 month / 12 months in a year
=> Interest * 12 months in a year = Principal * Rate * 1 month
=> Interest * 12 months in a year / Principal = Rate
=> $93.40 * 12 / $12500 = .0896 = 8.96%

So, now you have one debt of $12500 @ 8.96% and one debt of $13000 @ 13.99%. So, I would pay off card #2.

[mercuryguy]

Thanks for the replies, very helpful!!!

I'm planning on doing this

* Pay off 5 ASAP ( $1,250)
* Put $2,000 into the ING saving acct
* pay the rest of my tax refund ($2,000) to No. 2
* I can make payments on No. 6 since its still on 0% APR for 5 months.

What do you guys think?

Thanks.

[disneysteve]

Originally Posted by mercuryguy

I'm planning on doing this

* Pay off 5 ASAP ( $1,250)
* Put $2,000 into the ING saving acct
* pay the rest of my tax refund ($2,000) to No. 2
* I can make payments on No. 6 since its still on 0% APR for 5 months.

What do you guys think?

I think the 5 people who have replied all said the same thing: pay off 5 and 6 first. Then work on 2. I'm not understanding why you are still planning to do it the way you say above. Your refund is large enough to eliminate 6, which has the highest rate once the 0% expires. You've said you don't have enough to pay off 6, so in essence, your above plan is focusing on a 13.99% debt instead of an 18% debt which doesn't make sense.