Balance transfer offers and existing balances

[jabcool52]

I have a question about balance transfers and paying off my debt. I currently have a few CCs (3-4, of which I only use 2 on a regular basis and one used because of the balance transfer offer). I have a Bank of America Better Balance Card (0% balance transfer rate until November 2014 and 21.99% after that), an American Express Gold card (17.24% APR) and a credit union card (10.99% APR). I currently have a balance on all three cards. I use the Bank of America card exclusively to pay off the existing balance with the goal of paying it off--but life got in the way and I had to put more money on the other cards for a rather expensive travel mistake that required me to buy a $1,500 plane ticket. So the Amex card has a balance of around $2,100, the credit union card $1,000 and the BoA card $1,400. I also get $25 taken away from my balance every quarter in which I pay more than the monthly minimum (which I do), giving me an extra savings of $100 a year, in addition to incentivizing paying more than the minimum.

Originally I planned to pay off the BoA balance before 0% balance transfer offer ended and not carry a balance on any of my cards, but that didn't happen and I now have a balance on every card. I am a bit more financially stable now, so I won't have to add more to those balances, but I know I won't be able to pay everything off by November. But now BoA is offering me another 0% balance transfer until December 2015, and I'm tempted to transfer as much of the Amex card balance as possible to the BoA card so I won't have to pay as much interest.

I'm concerned though that the new balance transfer will make it so that whatever I pay off on the BoA card will go towards the new balance and not towards the old balance. In other words, as of November 2014, I won't have paid off either balance transfer and I'll start accruing interest on the $1,400 I already owe on the card. Am I correct in this assumption? Would I be better off transferring the existing Amex balance to another, new card with a 0% balance transfer offer? I know Discover has one that's fairly attractive, but I don't know if this will be a good deal for me. I have fairly good credit (715 according to Creditkarma), but will opening another card set me back a lot? Likewise, will another balance transfer negatively affect my credit? Any advice would be greatly appreciated.

[dczech09]

Hi jabcool52! Welcome to the forum!

Please see this link:

http://www.bankrate.com/financing/credit-cards/clarification-on-payment-allocation-rule/

Due to the CARD Act, any monies over the minimum payment are applied to the balance with the higher interest rate. So any monies that you send to BOA above and beyond the minimums would be applied to your other card which would expire in November of 2013. If I were you, I would still direct BOA to do this, however the CARD Act pretty much sends the rules in your favor in this situation.

What I would do is look at opening this card if at all possible and transfer as much credit card debt to this card as possible. If this wipes out your Amex card and/or your credit union card, then great! Close the card once the balance is cleared. Do this with ALL of your credit cards, expect maybe the very last one. There is no reason to have so many credit cards, so get rid of them as you can.

Make sure that you are on a balanced budget, you avoid racking up more debt, and ensure that this does not become an issue again. I understand the balances were caused by unforeseen circumstances, but that is exactly where an emergency fund would have come into play.

Stay on a budget.
Build up an emergency fund.
Kill the debts as quickly as possible.
Stop borrowing more money.

You have a good idea in mind by looking into this other 0% card and saving on interest, but please make sure that you set up a plan that works for you in the long-run. If you are not careful, you run the risk of falling backwards. And luckily the CARD Act benefits you!

[jabcool52]

Well, I already have one balance transfer offer on the BoA card, which I am using. They're offering me another though. It won't be enough to transfer the entirety of my current balances though, I only have $1,100 left on my credit limit with the BoA card. My income is limited for now because I'm back in school, but I should be making a decent amount in a year and will be working as much as possible during breaks. Making a balanced budget is possible, but saving any money for an "emergency fund" is going to be difficult--my partner and I are going to be saving up for him to immigrate with me to Australia (around $4,000).

Would I perhaps be better off applying for the Discover It card after all and hoping for a credit limit of more than $1,100 to make a bigger balance transfer?