Found a way around balance transfer fees?

[herdjohnson]

I've been working on paying down some credit card/personal loan debt that I married in to, and I have a plan that I wanted to run by the board.

Generally as most of you know, balance transfers usually come with a 3-5% balance transfer fee (except for the Chase Slate recently which I definitely took advantage of for part of the debt)

I have 13k in credit card debt I'm currently paying down on an interest free promo period on a Chase Freedom. I'm not sure I'm going to be able to get it paid down by December when the promo period expires.

Right now all of my spending goes onto a credit union credit card that is paid off every two weeks when I get paid. My plan now is to open a new credit card that has 0% APR for 18 months (and not one that is 0% on purchases made in the first 60-90 days), and start making all of my normal purchases on it. Then, when the bill comes due, I'll pay the minimum on that card, and the rest of what I would normally pay off on the Chase Freedom card. If I'm thinking about this correctly, this will roll my balance slowly from one card to the other, extending my 0% offer. Am I missing anything obvious about why this wouldn't work?

[phantom]

The numbers geek in me would be pretty tempted to try your plan. It seems mathematically sound. But, here are two issues that I see:

1. With using 0% offers there's always some danger that you won't get the new card paid off before the 0% expires and you end up paying more than you otherwise would. By "transferring" variable amounts of money to the 0% card, it's going to get even trickier to figure out when you need to stop adding to the debt on the card and start getting it paid off before you get burned. It might be a lot more planning for minimal savings in the long run.

2. You might find it harder to keep your spending low than you would if you were paying off what you spend every month, thus making it harder to get your debt paid off. If you're currently using a budget and doing a good job of sticking to it, maybe it won't matter that the money you spend isn't money you have to come up with right away. But, I think there's a definite psychological trap there.

[Weird Tolkienish Figure]

I've been working on paying down some credit card/personal loan debt that I married in to, and I have a plan that I wanted to run by the board.

Generally as most of you know, balance transfers usually come with a 3-5% balance transfer fee (except for the Chase Slate recently which I definitely took advantage of for part of the debt)

I have 13k in credit card debt I'm currently paying down on an interest free promo period on a Chase Freedom. I'm not sure I'm going to be able to get it paid down by December when the promo period expires.

Right now all of my spending goes onto a credit union credit card that is paid off every two weeks when I get paid. My plan now is to open a new credit card that has 0% APR for 18 months (and not one that is 0% on purchases made in the first 60-90 days), and start making all of my normal purchases on it. Then, when the bill comes due, I'll pay the minimum on that card, and the rest of what I would normally pay off on the Chase Freedom card. If I'm thinking about this correctly, this will roll my balance slowly from one card to the other, extending my 0% offer. Am I missing anything obvious about why this wouldn't work?

Yes I've had this idea for a while, and it is sound. You can move around all sorts of debt around this way, legally. Including student loan debt to dischargable debt (for example).

It's called using the fungibility of money to your advantage. Just have to be disciplined about it, don't be tempted to go "hog wild" on your everyday purchases because in your mind it's "ok" to be taking on more debt.

[snafu]

I see your point and since you are disciplined suggest it be a two pronged effort which includes reducing expenses for the short term. It's a good idea to track every dollar spent since you'll be living off money not yet earned. Is partner onboard and co operating with your plan to get their personal loan/CC debt paid off as efficiently as possible? To keep from jumping from the fry pan into the fire, I'd be tracking the sum charged by the number of months available @ 0%. Keep an eye out for new offers too.

[herdjohnson]

The numbers geek in me would be pretty tempted to try your plan. It seems mathematically sound. But, here are two issues that I see:

1. With using 0% offers there's always some danger that you won't get the new card paid off before the 0% expires and you end up paying more than you otherwise would. By "transferring" variable amounts of money to the 0% card, it's going to get even trickier to figure out when you need to stop adding to the debt on the card and start getting it paid off before you get burned. It might be a lot more planning for minimal savings in the long run.

2. You might find it harder to keep your spending low than you would if you were paying off what you spend every month, thus making it harder to get your debt paid off. If you're currently using a budget and doing a good job of sticking to it, maybe it won't matter that the money you spend isn't money you have to come up with right away. But, I think there's a definite psychological trap there.

Thanks for the response! It's the numbers geek in me that wants to try this too

1. I wouldn't participate in a card that uses deferred interest. That's a dangerous game, that even someone as anal about checking all finances every day doesn't like to play. And the way my budget is built, it doesn't really matter where the purchases are made. I'm just switching the payoff payments from one card to another.

2. As I said above, my budget is pretty locked down... the only thing that would change is the color of the card in my hand when I make my normal purchases.

[herdjohnson]

I see your point and since you are disciplined suggest it be a two pronged effort which includes reducing expenses for the short term. It's a good idea to track every dollar spent since you'll be living off money not yet earned. Is partner onboard and co operating with your plan to get their personal loan/CC debt paid off as efficiently as possible? To keep from jumping from the fry pan into the fire, I'd be tracking the sum charged by the number of months available @ 0%. Keep an eye out for new offers too.

I've already done some of that. Cancelled cable and removed some unused subscriptions.

And I should have been clearer. When I get paid, I transfer the allocated funds to a second account that funds my normal spending for the next two weeks. If I need cash, I take it from that account. And when I get paid again, those are the funds that are used to pay off the credit card, and the fund gets replenished. So I'm not living off money not yet earned, I just enjoy getting the free rewards from the Credit Union card (about 30-40 bucks a month).

She was previously married and was in charge of the budget, which she hated. She's totally on board with me running things and getting the debt paid down.

[herdjohnson]

Yes I've had this idea for a while, and it is sound. You can move around all sorts of debt around this way, legally. Including student loan debt to dischargable debt (for example).

It's called using the fungibility of money to your advantage. Just have to be disciplined about it, don't be tempted to go "hog wild" on your everyday purchases because in your mind it's "ok" to be taking on more debt.

Don't worry, my 9 tab Excel budget wouldn't think of letting me run hog wild

[Weird Tolkienish Figure]

Don't worry, my 9 tab Excel budget wouldn't think of letting me run hog wild

One thing that will keep you from saving as much money as you think though, you will still be paying interest on the original loan amount, while you are whittling it down. This may negate some of the savings from your plan. You need to sit down and do the math.

Frankly you might just find it's worth it to pay the balance transfer fee or not to transfer at all.

Have you tried the Chase Slate Blue card? It has a 0%APR period as well as 0% fees for balance transfers.

[herdjohnson]

One thing that will keep you from saving as much money as you think though, you will still be paying interest on the original loan amount, while you are whittling it down. This may negate some of the savings from your plan. You need to sit down and do the math.

Frankly you might just find it's worth it to pay the balance transfer fee or not to transfer at all.

Have you tried the Chase Slate Blue card? It has a 0%APR period as well as 0% fees for balance transfers.

Check the original post... the original loan is 0% thru December. This is a backup plan in case I can't get it paid before then.

I have the Chase Slate card. I transferred the personal loan to that card, and the credit card debt to Chase Freedom. Freedom is 0% thru December and Slate is 0% thru June.

[kv968]

I've been working on paying down some credit card/personal loan debt that I married in to, and I have a plan that I wanted to run by the board.

Generally as most of you know, balance transfers usually come with a 3-5% balance transfer fee (except for the Chase Slate recently which I definitely took advantage of for part of the debt)

I have 13k in credit card debt I'm currently paying down on an interest free promo period on a Chase Freedom. I'm not sure I'm going to be able to get it paid down by December when the promo period expires.

Right now all of my spending goes onto a credit union credit card that is paid off every two weeks when I get paid. My plan now is to open a new credit card that has 0% APR for 18 months (and not one that is 0% on purchases made in the first 60-90 days), and start making all of my normal purchases on it. Then, when the bill comes due, I'll pay the minimum on that card, and the rest of what I would normally pay off on the Chase Freedom card. If I'm thinking about this correctly, this will roll my balance slowly from one card to the other, extending my 0% offer. Am I missing anything obvious about why this wouldn't work?

If I'm reading it correctly this would work but then you'd have to have the money to pay off the balance on the 0% card in 18 months. There may not be any interest charged on the purchases you made in those 18 months but after that it's more than likely that then the interest would kick in on the remaining amount.

So the way I see it is this...Say by doing this you could pay off the Chase Freedom by December (7 months). In the meantime, starting now, you charge all of your spending on the new 0% card and pay the minimum. Let's say that's $1000/month until December and the minimum payment is $50. So by December you would have about $6700 on that card ($7000 charged - $300($50 min. for 6 months). That would leave you 12 months left on the 0% intro rate and if you were to pay that off before the interest kicked in then you'd have to pay $558/month. Otherwise if you were to just to pay the minimum for the whole 18 months you'd be in the same position of having to roll over the remaining $6100.

If you find a card where the purchases made in that period are NEVER charged interest then its a different story but I'd make sure since most do start to charge after the intro period.

For example, here's Citi's Simplicity Card 0% 18-month agreement:
" After the introductory period ends, the standard purchase APR will be applied to unpaid promotional balances, new purchases and new balance transfers."

Just check to make sure.