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Applying for a new CC to get balance transfer rates?

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    Applying for a new CC to get balance transfer rates?

    Is it worth applying for another credit card in order to try and get a good balance transfer deal? I have 5 cards, and a lot of credit card debt, but we are working hard to get it paid off. My credit score, despite the enormous debt, is still 721. I am never late on payments, just owe a lot of money. I'm not sure what kind of limit I would even get on a new credit card, and if it would even be worth applying for. Opinions? If you already had a lot of credit cards, would you apply for another one to try and save on some interest?

    #2
    I've done it, quite a few times actually. It just depends on your situation, and primarily what the interest rates are on the existing cards. Remember you'll pay I think 3% up front to transfer the balances (that may vary with the offer; I want to say there used to be a $150 maximum but that's not the case any longer). Most 0% offers these days are for around 18 months, so you'd need to calculate whether you'd save enough, after the 3% fee, to make it worth transferring. Ideally you'd pay the full amount off after the 0% interest expires, but if not of course you'll want to be sure the interest rate if you don't pay it off is lower than your current rates. (I had a few offers in the past that, rather than 0% for a limited time, were a low rate, 2-3%, until the balance was paid in full. I haven't seen any of those lately, but they were nice for transferring balances I knew I couldn't knock out in 18 months!)

    The amount you'd get on a new transfer card will probably depend on how much total debt you have and maybe usage ratio. My most recent 0% transfers were for $2700 and $3500, which isn't as much as I was wanting to transfer but is more within the range of what I could pay off completely in the 0% time period. (Our credit profile seem similar -- I have a couple of lates but they're from 3+ years ago, score is 720, but lots of credit card debt.) YMMV, of course!

    Comment


      #3
      I was carrying a lot of CC debt and had a couple coming out of 0% interest. Had the same credit score as you. I applied for a Chase Slate card: 0% interest for 15 months and ZERO balance transfer fee. They approved me initially for $5,000 then I called them and got that increased to $30,000. Made the transfer for free and paid it off in 12 months. That saved me a lot of interest.

      Just be careful when you get rid of all that credit card debt. Way too easy to go right back into debt. The folks on here have really helped me out. An emergency fund is critical. Also, a short term savings fund that covers irregular expenses has saved me from getting bak into debt. I pre-fund that and all the stuff that "popped" up in the past now gets covered by that fund. So far, it is working.

      Good luck.

      Tom

      Comment


        #4
        Here is the deal: do you want to become debt free and stay debt free? Or do you just want to manage the debt that you have?

        Serious question. Your answer will determine whether or not this is a good idea.

        You become debt free by paying off debt. While getting a 0% balance transfer deal may help you, the amount of interest that you save is pretty minimal in the grand scheme of things. Especially with 3% balance transfer fees.

        You don't become debt free by grinding through and constantly looking for new deals.

        So the first question you ask yourself is what are you looking to do. Once you answer that, you can determine whether or not a "one-time" balance transfer will help you along the way.

        The real problem with balance transfers (same as debt consolidation in general) is that you run the risk of building up balances once again. You need to know your goal, define your path, and make decisions in service of your goal.
        Check out my new website at www.payczech.com !

        Comment


          #5
          While I agree with the spirit of your reply, I don't agree with the technicals. If a 0% card is getting ready to expire and climb to 22% or higher, it absolutely makes sense to transfer it to another 0% card, regardless of your spending habits. I see this as 2 separate issues. WOuld you recommend this person keep a high interest balance on a CC while they determine the root cause of their problems? That is silly. Do the transfer, commit to zero debt. Live happy.

          Comment


            #6
            more information about my debt

            I have 5 cards and the interest rates vary from 6.99 to 12.79 (3 of them are in the 11-12% range). So not very high rates, but still I am paying interest! My utilization ratio is at about 95% (terrible, I know). I not, I repeat, NOT going to rack up more debt on any of these cards. I have hit my rock bottom and am committed to getting out of this debt.

            I do not intend to transfer a balance at 0% and work on paying that one off. I plan on transferring it at 0%, and then continue to focus on paying off the card with the highest interest rate. Of course, this is assuming that the rate on the new card won't then go up to 20% or something ridiculous. I figure at least for the 12 or 18 months, or however long the promo is good for, I will not be accruing interest on that portion of my balance.

            As I get these cards pad off, I will close some of them (nobody needs $75000 in credit available to them) and just keep 1or 2 of them. I am going to wait to do this until I have a good chunk paid off though, I don't want to pay off a card and then immediately close it, thereby hurting my debt/available credit ratio.

            Anything I am overlooking? Thanks for the input!


            UPDATE: I applied to 2 different cards and didn't get approved for either of them. It's okay, just increases my motivation to keep throwing every extra penny towards this debt so that I'm never in this position again! Once I get a large chunk paid off, maybe some balance transfer opportunities will come up on cards I already have.
            Last edited by frugalredhead; 03-21-2014, 07:34 AM.

            Comment


              #7
              I did forget to mention something that I should have mentioned earlier, so I apologize. Using 0% credit cards CAN be a useful tool for limiting interest and getting out of debt. But it is very important that it is part of an overall plan to get out and stay out of debt. If you are trying to use it as a stand-alone solution, then the amount of money that you save over time is minimal.

              Sorry, I kinda "shortened" one of my points in the original post without mentioning all of this.

              As long as you are using this as a PART of an overall plan, then that is cool. Just don't look at it as your genie-in-the-bottle like so many people do.
              Check out my new website at www.payczech.com !

              Comment


                #8
                @frugalred, can you identify spending triggers? While I like your determination to pay down CCs, I think it's necessary to write out a plan as 1st step towards commitment. Ist action is to take all but one CC out of your wallet, wrap in plastic and put it in the back of your fridge freezer. I suggest you list CC balances with interest rates. If you are willing to make a few short term changes, I think folks here can offer ideas to help get you on better financial footing. Many of us have worked through similar problems and hope to make it easier for you.

                Comment


                  #9
                  My spending trigger is my husband I just had to talk him out of a $150 paddleboat because it was "such a good deal". We already have kayaks for each of us and our 6 year old,, and the 3 year old rides with my husband or I. I hate being the bad guy, but somebody has to!

                  Here are my 5 credit cards:

                  Chase $7000 at 12.79%
                  Bank of America $22390 at 12.74%
                  Discover $11000 at 13.49%
                  Citibank $6000 at 6.99%
                  Capital One $24290 at 7.9%


                  I am paying off the Chase card first because my kids' daycare goes on that card. As soon as that is paid off (December 2014 according to my spreadsheet) I will pay off the Discover next. Then I'm torn between the Bank of America, which is obviously the next highest interest rate, or the Citibank, which will be close to being paid off by then. I'll probably just finish that one off.

                  While I haven't put any of cards in the freezer, literally, I only use the Chase card for gas and groceries. I had been only using my debit card, but I have security concerns and went back to using the credit card, but I am very careful about how much I charge. My husband now hates grocery shopping with me because of my couponing Any advice is greatly appreciated!

                  Comment


                    #10
                    Are you only paying the minimums on your cards? Paying extra on every card? Paying extra on only 1 card? If you're paying extra, rather than spreading the extra over several cards, you should focus it all on 1 card to get that one paid off quickly.

                    If you ever consider doing a balance transfer, you should be careful that if you still have a balance after the 0% period is over that they can't back charge you on interest for not paying it off before the 0% period finished.

                    Also, while it's great that you're working to pay off the debt, it sounds like you (or your husband) have a spending problem, not necessarily an income problem. If you're willing to post a breakdown of your income and spending budget, the folks on this site would gladly provide some feedback and suggestions on where you might be able to save a little more and free up additional cash to throw at the debt.

                    Comment


                      #11
                      I am paying all of my extra from my 2nd job on the cards in the order I listed them. So right now all my extra is going to pay off the Chase card, and then the next, and so on.

                      We certainly have had a spending problem in the past. I feel comfortable saying that we do not anymore. Neither one of us wanted to talk about money because it was always an issue in both of our families when we were kids, but we are on the same page now and all is good.

                      Thanks for all the advice on here, I really appreciate it!

                      Comment


                        #12
                        Originally posted by tomhole View Post
                        I was carrying a lot of CC debt and had a couple coming out of 0% interest. Had the same credit score as you. I applied for a Chase Slate card: 0% interest for 15 months and ZERO balance transfer fee. They approved me initially for $5,000 then I called them and got that increased to $30,000. Made the transfer for free and paid it off in 12 months. That saved me a lot of interest.

                        Just be careful when you get rid of all that credit card debt. Way too easy to go right back into debt. The folks on here have really helped me out. An emergency fund is critical. Also, a short term savings fund that covers irregular expenses has saved me from getting bak into debt. I pre-fund that and all the stuff that "popped" up in the past now gets covered by that fund. So far, it is working.

                        Good luck.

                        Tom
                        Yep, the Chase Slate card is without a debt the best for paying down debt: 0% interest and no balance transfer fees.

                        Of course, there is a way to get around balance transfer fees if you're clever and disciplined enough: take your income, pay it entirely toward your *old* credit card, and then put all of your expenses on the new card until the original CC balance is $0.00. Never tried it but in theory it should work.

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