| Transfering to 0% APR?? Good idea? |
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Cornfused
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| Transfering to 0% APR?? Good idea? |
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I have 10K of debt on a Discover, 7K of it at 21% with the other 3K at 12%. I am thinking about applying for a new card with an intro offer of zero % apr for 18 months. Is this a good idea if I can get the entire 10K transfered? What if I can only get around half transfered? Will it effect my credit score? Should I close the new acct. once paid off? I will be able to pay off the 10K within the 18 mths. of the intro apr offer. Any and all advice is welcome. thanks in advance.
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Sun Mar 01, 2009 3:57 am |
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oldguy
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You probably won't get the whole thing, but take whatever they give you.
Make sure not to use the card for other things or you'll end up paying interest on the loan. I don't even activate the 'zero' cards. My score is over 800 and I've done it several times so I don't think it hurts your credit much. I took the 'zero' loans and invested the money in stocks - this was from 2003 to 2007 so it worked well, I wouldn't try it now. 
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Mon Mar 02, 2009 12:51 am |
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littleroc02us
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You need to stop using credit cards first. Then you should transfer the 7k to a low interest rate credit card and then work like heck to pay them off as soon as possible. Get an extra job, sell stuff, whatever it takes. Just think how much each year your paying in interest. Cash is king!
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Mon Mar 02, 2009 2:14 pm |
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No-Brainer
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quote:
Originally posted by littleroc02us
Cash is king!
In my opinion this is simply not true. Having a credit card that you use correctly can be a huge benefit. It provides a way out if you buy something that ends up being a problem and the kickbacks send us on a nice trip each year. Just pay the balance each month and it works in your favor.
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Tue Mar 03, 2009 5:57 pm |
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littleroc02us
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I believe you forgot one very important detail. Credit cards have risk, cash doesn't. With Credit cards they can change your interest rates at will, there can be a mess up with the us postal sercive getting your bill to the creditor on time, you might forget to pay on time, etc.... Also, it has been proven that when you use credit cards to make purchases you tend to spend more. McDonalds has made a living on this idea. Look at Sears. They make most of their money off of financing.
With Cash none of these problems occur.
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Wed Mar 04, 2009 5:31 pm |
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No-Brainer
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quote:
Originally posted by littleroc02us
I believe you forgot one very important detail. Credit cards have risk, cash doesn't. With Credit cards they can change your interest rates at will, there can be a mess up with the us postal sercive getting your bill to the creditor on time, you might forget to pay on time, etc.... Also, it has been proven that when you use credit cards to make purchases you tend to spend more. McDonalds has made a living on this idea. Look at Sears. They make most of their money off of financing.
With Cash none of these problems occur.
If cash has no risk, just try losing some and waiting for some honest soul to call you to return it. Credit cards are protected against anyone else using it, even if you're the one who got careless and lost it.
I have NEVER had a rate problem when I pay it off each month and since I am a responsible adult, I have never spent a penny I didn't mean to. Sears has NEVER made a penny from me that wasn't built into the profit of what I bought, I use my Discover instead of a Sears card and I don't have ANY propitiatory cards at all.
So your argument doesn't hold water for me.
Oh, and who mails payments? I pay online.
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Wed Mar 04, 2009 5:39 pm |
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littleroc02us
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I forgot one word: Bank Card. I didn't actually mean to walk around with a pile of cash. Bank Card. No hassle, totally protected by my credit union. I can rent a car, reserve a hotel, order tickets, etc.... When I use it the bank takes it out of my account immediately.
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Thu Mar 05, 2009 2:17 pm |
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Zector
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All very good ideas. You are way ahead to lower your interest as much as possible.
But be warned!! When you move over the amount, close the old accounts! Fix your problem of spending more than you have. That is why the "cash" system is so highly rated; you only spend what you have. Credit cards have pros too, with points and no fee for your purchases, where interact charges you a fee, and some people pay more than 30$ a month on interact (bag of chips here, gum there etc). A credit card would be much cheaper, or better yet cash to not have these fees. Given you pay the credit card off in full each month (this would be much cheaper than interact).
Before you move any money around, sit down go threw your finances, and live within your means. By taking on more credit and not fixing the problem, you may find in a year the new card is racked out at 20%, and the old cards are back up to the brim.
From time to time I take advantage of these 6 months or whatever 0% interest to make some money up for other ventures. But as mentioned, don’t use the card. Any purchase on the card will rack full interest until the 0% amount is paid off.
Long and short, look at why you are racked up first. Stop the growth of debt, reduce interest rates, and continue to pay as much as possible, not just the new minimum payment and you will be free in no time.
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Thu Mar 05, 2009 3:36 pm |
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No-Brainer
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What all this comes down to is make more and you won't need to worry. People who get into financial trouble are usually not earning enough.
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Thu Mar 05, 2009 4:42 pm |
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Zector
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quote:
Originally posted by No-Brainer
What all this comes down to is make more and you won't need to worry. People who get into financial trouble are usually not earning enough.
I hope this is only for encouragement for people to go out and make more... There are people who make some serous money who have bad management skills and just end up in a proportionally extremely high level of debt - income ratio or broke.
Good money management skills do not need a higher level of income. Keanu Reeves vs MC Hammer is a good example of people who made a lot but with very different financial skills. Keanu saved and invested the money he made from the matrix movies and is very secure not needing to work again, where Hammer squandered it all away left with nothing. The same type of thing happens at all income levels, but making more does not fix anything.
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Fri Mar 06, 2009 2:42 am |
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littleroc02us
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Plus the more realized income you have the more you are taxed. No one likes taxes.
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Fri Mar 06, 2009 10:29 pm |
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Equity Sweat
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If you are responsible, charge everything to a credit card. As long as you pay the balance every month you:
1.) Get rewards.
2.) Have fraud protection.
If you pay cash you aren't getting your 1% back (from Discover for example) and are carrying around cash which is risky.
If you pay with a debit card you donot have the same level of fraud protection.
If you have no self control and will carry a balance, a credit card is a crippling idea however.
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Sat Mar 07, 2009 6:37 pm |
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littleroc02us
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A four-part study found what many financial planners already knew: People spend more money when using credit cards compared to cash purchases. People also spend less when they look at their expenses in detail, the researchers found.
Consumers simply feel the pain of paying more when they part with cash, the researchers, led by Priya Raghubir at New York University, write in the September issue of the Journal of Experimental Psychology: Applied.
* In one study, 114 participants estimated how much they would spend using cash vs. credit for a well-described restaurant meal. "People are willing to spend (or pay) more when they use a credit card than when using cash," the authors wrote.
* In a second test, researchers highlighted the future pain of paying by having 57 participants estimate food expenses for an imaginary Thanksgiving dinner item by item, rather than just as a total. When they did this, the cash-credit spending gap closed. When people confronted the detailed reality of expenses, it no longer mattered whether they used cash or something else, the scientists conclude.
* Then 28 participants were given a detailed shopping list to work with. In a questionnaire format, spent more when they used a $50 gift certificate instead of $50 cash.
* Finally, 130 participants were given $1 cash or a $1 gift certificate to buy candy. At first, they were more willing to spend the gift certificate than the cash. But after holding the gift certificate in their wallets for an hour, they became less likely to spend it, indicating the the certificates came to seem more like real money.
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Mon Mar 09, 2009 1:37 pm |
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No-Brainer
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And someone probably furnished them with a grant to do the study. I get plenty of incentive to control my expenses every month when I see the statement and couldn't care less what some study group concluded on who knows who.
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Mon Mar 09, 2009 2:00 pm |
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kjb516
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quote:
Originally posted by littleroc02us
A four-part study found what many financial planners already knew: People spend more money when using credit cards compared to cash purchases....
Oddly enough, I have found the complete opposite to be true for me. For most of my married life, I lived under the shadow of credit card debt. With the recent dissolution of the credit card debt (preceeded by the dissolution of the marriage), I have found it far more painful to pull out a credit card than to pay cash.
I now track my credit card charges on a daily basis and can track my balance throughout the month to keep it payable in full at the end of the month. In addition to getting rewards cash back and fraud protection, this a credit card for every purchase allows very detailed tracking of my expenses. Cash on the other hand simply evaporates from my wallet without a trace.
Perhaps it was getting free from a truely monsterous credit card balance to train myself to never abuse plastic?
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Fri Mar 20, 2009 10:58 pm |
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