balance transfer wise or not

[mailorderannie]

I just bought a house, first of all. I will need to use every money saving tip I know of to meet all payments--because of credit debt I'm repaying.
I owe apx. $343/month on a signature loan at 11.4%, balance $12,000. I owe $149/month on my Visa credit card at 9.75%, balance of $5,900, and a car payment of $150/month. I do have a good credit rating. Taking on the new, higher mortgage payment will be tough, but I did really well on finding the lowest cost possible to meet the needs--very well. Would it be wise to find a 0% interest deal and transfer my owned balance to create some breathing room. You can believe me when I say I'll be as tight-fisted as a tightwad. I'm 58 years old and work. A second job wouldn't really be too feasible. I would have liked to pay down the debt more before the home purchase, but there were mitigating factors. I managed it all as best I could. I would like to free up a little cash to make the plan work--as I have over $500/month going out on these payments. The auto loan needs to remain, as it is only 3.75% or something like that, and the Visa rate isn't too bad--but the signature loan cost me almost $2,000 in interest last year. Thank you for any thoughts and ideas!! (This is my first post.)

[davlat]

Hay.. be careful, there could be balance transfer fee (some ask 3% and no upper limit) then there are CATCHs
(assuming that u won't pay more than 343+149 / month excluding car loan)
You can't pay all within the 0% period so after intro rate, what is the card's interest rate..

For example: Let's say you transfer 2000 from 12000 loan to 0% interest.. for same length as ur current plan (43 months), ur payment reduces to $284 so about $60.. Then u pay with that $60 to 2000, u can only pay $720 within 0% period (assuming 12 months intro period).. So the left $1380 must be paid with the interest rate after intro period...

Rule of thumb.. 0% intro works on loan which you normally can pay (with normal plan/interest) within 0% intro period.... or after-intro-interest rate is lower than your current interest rate...

Suggestion: You can also find some cards that offer lower rate (about 4.9%) to the end of your balance... eg. Blue from Amex... 4.99% for life of balance... But you can't miss any payment...
If you transfer all (12000+5900), u pay 455/ month and 4900 loan will end 5 months earlier.
If you pay 492/ month (like right now), all loans end at 40 months (approx. save 2200)

But if you are confident about finding 0% deals every 12 months.. and if you have emergency rescue plan, why NOT...0%

Most important thing is if you use card for balance transfer, NEVER use that card in purchase or cash advance.... that ruin the whole strategy 'cuz (usually) purchase and CA have interest and according to most credit aggrement, You can pay only the lowest interest first on the same card. So those P/CA will be all the way to the end of your loan (that cost more)

[mailorderannie]

Thank you Davlat!! That's an excellent rundown of options and points I need to be aware of and take into consideration. Even though I have a very good credit rating, it's so scary to me what they can do to you if you're late with a payment. After all, anything could happen. I would for sure not want to deal with a company that could penalize you if you were late with any payment anywhere anytime by slapping a huge interest rate on you. I would almost rather pay the interest I'm paying now as to take that risk--but, I need to be brave and do the smarter thing. I hope to never carry a balance over 90 days without paying in full, or maybe even 30 days, once I'm out from under--if I can make it from here to there that is. I'll make it! Thank you so much for taking the time to give me this information, Davlat!!!

[mailorderannie]

Writing again to add, as I read that again, I see some real genius there...moving only part of the balance to the zero card and working it wisely. I'm sure going to think about doing this. Thanks again, Davlat!!!

[mekish]

It might be worth paying the 3% transfer fee depending on how much interest you are currently paying on the credit card and how long the interest free period is!

[mailorderannie]

You're right, Mekish--if I can get up the nerve to take the plunge. My credit union is my safe place. They won't raise my interest rate on me or do any other dasterdly deed such as that--but I paid almost $2000 interest on the big loan last year that is 11.4% interest. Not sure about the credit card. Right now, I'm facing a larger mortgage payment starting next month and the prospect of moving that large amount of debt over to someone who would chop my head off at the drop of a hat, but charge me little to no interest. I want to do the right thing... (I also plan to do continue to do some shopping at the $ store, pack my lunch for work, extend my dog food with boiled chicken and rice, extend my cleaning supplies, laundry detergent and dishwasher powder with borax and baking soda--and any other good money saving tips I can come up with.)

[Mike_Joiner]

Main point is that balance transfer is just a stay of execution. There needs to be a concrete plan for paying off the principle debt when the interest free period is over. Also we need to bear in mind "interest free" is a misnomer as you have to pay a circa 3% transfer fee which is an interest payment even if they want to call it a transfer fee.

[mailorderannie]

Originally Posted by Mike_Joiner

Main point is that balance transfer is just a stay of execution. There needs to be a concrete plan for paying off the principle debt when the interest free period is over. Also we need to bear in mind "interest free" is a misnomer as you have to pay a circa 3% transfer fee which is an interest payment even if they want to call it a transfer fee.

Interesting analagy, Mike. It's all rather foreboding and depressing, isn't it. Sometimes I feel more optimistic about it than at other times, but beneath it all, I know the only real answer is to pay it off.

[Ima saver]

I wish you much luck mailorder!! (also turning off the hot water heater for most of the day saves a bunch. I only turn mine on when taking a shower or running the dish washer.)

[mailorderannie]

Originally Posted by Ima saver

I wish you much luck mailorder!! (also turning off the hot water heater for most of the day saves a bunch. I only turn mine on when taking a shower or running the dish washer.)

Hi, Ima! Now that's some good saving advice I hadn't thought of. I'm collecting money-saving tips and hope to actually Do Them - hopefully! Thanks!!

[Ima saver]

I live in a really big house and my electric bill is usually under $100 a month. It has saved me a lot of money.

[mailorderannie]

Originally Posted by Ima saver

I live in a really big house and my electric bill is usually under $100 a month. It has saved me a lot of money.

uhhhhh....we must talk, Ima!!

[darsh999]

I will rather pay 3% transfer fee depending on how much interest one iscurrently paying on the credits and how long the interest free period is!

[mailorderannie]

Welcome to the board, Darsh!! Thanks for your thoughts on this!!

[wildnuttysquirrel]

yea welcome tot he board dash.