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Credit Card Question

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Credit Card Question  Reply with quote  

Hi! I am 22, and I currently have a $500 balance on a Capital One Journey card, which I got when I was 18. Recently I have realized that by making the minimum payment I'm not actually paying it down. I typically can't make more that the minimum because I'm a student and really make very little money, and have rent, car payment, etc. I've also become really unhappy with Capital One, because they've been very inflexible with me in the past, the interest rate is ridiculous (25%), late payment fee is $65, and they end their business day for making payments at 5pm.

I know it's not much debt to have but I want to get rid of it, because it feels like an awful lot compared to my income.

Discover keeps sending me an offer for a card that has 0% apr for 14 months, after that interest rate goes to between 16% and 19%, with only a 3% fee for a balance transfer. They also have a $35 late fee, and they don't end he business day until midnight for payments.

I keep thinking that it may be a good idea to get the discover card and transfer my balance, because 14 months times $25 would be $350 of my debt paid off paying just what I pay to CapitalOne right now,

Is this a good idea or not?
Post Tue Sep 24, 2013 12:14 am
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25% of your $500 debt is $125 annually. The fee for transfering it to the discover card is $15 and you get 14 months to pay it off. Yes, do anything reasonable to get away from that ridiculous rate. Just make sure that you pay off the balance in the 14 months and don't use credit cards to borrow money -- the rates are terrible! Credit cards are very useful, but not as a means of borrowing. If you are going use a credit card, pay it off monthly.
Post Tue Sep 24, 2013 12:29 am
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Just to build on what Publius says about borrowing on a CC. I've had a CC since about 1963 and I have yet to borrow money or pay interest. I use the CC for all of my purchases - even the smallest such as a buck in a McD drive-thru, I seldom use cash for anything. It is a tool, a convenience - don't have to carry/handle change. But it's a terrible way to borrow money - it is not an amortized fixed loan (such as a car loan), it is a revolving open ended consumer loan.

Yes, do what ever it takes to get rid of that 25% loan - your Discover plan sounds smart. Another possibility is to go to a credit union and refi the car, add $500 to the loan size and use the $500 to get rid of the CC loan.
Post Tue Sep 24, 2013 2:32 am
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Be careful about getting a new CC with 0% interest. I did that year ago with Household Bank CC. I didn't make very much money but had good credit. I applied for a new Chase CC with 12 month interest free on balance transfers and on the application I indicated I was transferring X amount of dollars which was 100% of the balance from the old card. In a perfect world it would've been an easy way to pay down the balance. However, when I received the card my credit limit was only half of what the amount I was trying to transfer. I ended up with two credit card bills since there was still half of the balance remaining on my old card high interest card and I had the only half on my newly maxed out credit card. Between the payments I just couldn't afford to pay off the new card before the promotion expired thus creating more CC debt.

If I could do it over again I would've have just took out an unsecured loan from a bank instead.
Post Fri Sep 27, 2013 12:59 pm
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Personally I don't think cc's are for everyone. Some people can handle the responsibilities of them and pay them off monthly and others spend like their in the Gov't which is out of control. I don't use credit cards, but use cash. And the reason being is that I tend to spend less, because it's real money and you can feel it leave your wallet, plus you can never overspend. With a cc it's easier to spend more then you would have because you don't feel the pain of the expense.

In fact Mcdonalds once did a study that found when people use cc's they spend more, so that's why they put credit card machines in their restuarants. So I would transfer the money as Publius suggested and work like heck to pay it off and for God's sake stop using the stupid card. Your a student and you aren't making good money yet, use cash.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Fri Sep 27, 2013 2:02 pm
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