Hi...should I transfer loan balance to 0% APR credit card?

[rbracch]

Hi there,

How is everybody? First, a big thank you to those generous folk who provided replies to my recent posts! I’m still trying to get my finances in better shape, so I was wondering if anybody had advice regarding this situation:

…recently, when chatting with a Chase customer service rep, she notified me that I was eligible for a card on which a 0% APR rate would last until 2014. This got me thinking – I have a couple of outstanding loans from my credit union, both under $10,000, that I am currently paying off. I was wondering if I should transfer the full balance of each of these loans to the 0% APR card, and in turn save some money that previously would have been paid as strictly interest to my credit union? But I’m not sure….here’s some more details:

1.) The first amount that I currently owe is $3,130 at an interest rate of 7.990% on a loan from my local credit union’s “safety” line of credit. Currently, I am paying $80 per month toward paying down this debt.

2.) The second amount that I currently owe is $7,081 at an interest rate of 3.240%, also a loan from my local credit union that was used to purchase my automobile. Currently, I am paying $247 per month toward paying down this debt.

…..here’s more questions about the pros and cons of a potential balance transfer:

1.) Should I be concerned about the impact of the balance transfer on my credit score? As of today, my credit score is pretty solid – as I have been paying any monthly bills on time for years, as well as not picking up any debt.

2.) Aside from the obvious issue of paying my monthly balances off on time and in full, are there any other key concerns that I should have about this process?

Many, many thanks,
RB

[sblatner]

What happens to the interest rate on the 0% balance in 2014? Will it go up to 19.99% and then you are not better off? Can you pay off the balance by 2014?

[fathappycows]

Good Question. And well done for getting your finances sorted. I'd definitely transfer the most you think you can pay off in the allocated timeframe from the account with the largest interest rate. Pay the minimum from the others to get the most money paid on this account.

eg If you can only pay $330 per month, and you need $100 for minimum payments, You should only transfer $230 x 12 = $2760 onto that new card. Then get this cleared before your interest rate goes up and cancel the card.

Those 0% deals are on all the time, watch out for them and you should be able to do the same trick again.

[thesimplemoneyblog]

Like fathappycows said, transfer what you can pay off during the 0% period. Be aware if the rate ratchets up to a higher rate than you are currently paying as that is how a lot of those cards can end up trapping you. There shouldn't be a negative impact on your credit report provided you make timely payments and don't have access to too much credit relative to your income. Having access to too much credit can be a negative though, and too many inquiries when trying to get a new card (including several 0% balance transfer cards) can pull your credit down too.

[Tonyall]

You simply have to sit down and do the math for your situation. There is almost certainly a catch, which will generally be much higher rates after the 0% period is finished. If you can earn enough to pay off those balances before the higher rates kick in, then go for it!

[bjl584]

Hi there,

How is everybody? First, a big thank you to those generous folk who provided replies to my recent posts! I’m still trying to get my finances in better shape, so I was wondering if anybody had advice regarding this situation:

…recently, when chatting with a Chase customer service rep, she notified me that I was eligible for a card on which a 0% APR rate would last until 2014. This got me thinking – I have a couple of outstanding loans from my credit union, both under $10,000, that I am currently paying off. I was wondering if I should transfer the full balance of each of these loans to the 0% APR card, and in turn save some money that previously would have been paid as strictly interest to my credit union? But I’m not sure….here’s some more details:

1.) The first amount that I currently owe is $3,130 at an interest rate of 7.990% on a loan from my local credit union’s “safety” line of credit. Currently, I am paying $80 per month toward paying down this debt.

2.) The second amount that I currently owe is $7,081 at an interest rate of 3.240%, also a loan from my local credit union that was used to purchase my automobile. Currently, I am paying $247 per month toward paying down this debt.

…..here’s more questions about the pros and cons of a potential balance transfer:

1.) Should I be concerned about the impact of the balance transfer on my credit score? As of today, my credit score is pretty solid – as I have been paying any monthly bills on time for years, as well as not picking up any debt.

2.) Aside from the obvious issue of paying my monthly balances off on time and in full, are there any other key concerns that I should have about this process?

Many, many thanks,
RB

A few things to consider:

1)Are you being extended enough credit on the 0% card to roll all of your other loans onto it?
2)Do you have the ability to pay off everything before the 0% interest ends in 2014?
3)Are there any balance transfer fees associated with doing this?

Also,
Your credit score shouldn't be effected by moving a loan from one place to another. Just don't close the old cards once you transfer the balances.

[woodie96]

Another thing to consider would be any transfer fees. Typically from what I have seen and read, they generally charge about 3% to transfer money to the 0% card.
With that said, it wouldn't benefit you much to move the 3.24% balance over.
If it were me I would concentrate on moving the 7.99 balance, pay what I needed to reduce that to zero before the introductory offer expires, and any extra, I would put towards the 3.24% one.

JMHO

[YLTL_Dan]

I used the 0% APR intro move while I was paying off my debt and it worked out well. As long as you confirm there aren't transfer fees and you feel like you can get it paid off before your 0% period runs out, I'd do it. If you can't get it paid off in time, you'll risk getting a huge bump or having to try and find another 0%.

[rbracch]

Thank you very kindly to all of those who replied! I feel SO much more informed on the whole process.....this is truly a great help. Peace, RB

[nimisht]

I concur with what some folks said. If you are planning to pay off your debt before the interest rate spikes to a double-digit figure, it would be a good idea to transfer your balance to a 0% APR credit card. Not only will you have the opportunity to save on interest, you will also be making payments that will go more toward the principal. I am unsure why the transfer would impact your credit score. Were you planning to cancel the original card?